# US Economy



## a_majoor (27 Jan 2008)

We are not immune to the temptations to debase our own currency either, and were pretty enthusiastic proponents of doing this under "Trudeapia":

http://online.wsj.com/article/SB120105077515308369.html



> *The Dollar and the Market Mess*
> By BILL WILBY
> January 23, 2008; Page A25
> 
> ...


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## boxseats (28 Jan 2008)

This is a very good discussion of the topic.  I am not sure I see a clear successful conclusion, here, or in other things I have read, elsewhere.  I would be interested in reading ideas, from members here, about what could be a successful conclusion in the years to come.


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## armyvern (28 Jan 2008)

boxseats said:
			
		

> This is a very good discussion of the topic.  I am not sure I see a clear successful conclusion, here, or in other things I have read, elsewhere.  I would be interested in reading ideas, from members here, about what could be a successful conclusion in the years to come.



A clear, successful conclusion in what sense boxseats??

I'm not sure I'm getting your meaning. Everything and everyone is always evolving -- what is a clear & successful conclusion today -- may not be tomorrow. Nor may you and I have the same "basis" for determination of what clear & successful entails.

I see many sucessful and clear conclusions in many things, including threads on this forum. Yet, if I choose to go about looking for those that are unclear & unsuccessful -- I will find those too.

One usually finds what they are looking for ... quite often at the expense or detriment (or ignoring) of threads etc that do not support their own "conclusions" or definition of "success." That is the greatness of democracy. One can discuss things without fear of reprisal because their definitions and opinions differ from another.


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## aesop081 (28 Jan 2008)

ArmyVern said:
			
		

> A clear, successful conclusion in what sense boxseats??



I'm wondering the same thing. Economies have their ups and downs. The US economy has recovered from some serious dipd in the past and will recover from this as well.


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## boxseats (28 Jan 2008)

CDN Aviator said:
			
		

> I'm wondering the same thing. Economies have their ups and downs. The US economy has recovered from some serious dipd in the past and will recover from this as well.



Good.  Confidence in the US economy.  Very good.  See, Thucydides, nothing to worry about regarding debasing the CAD.  There are ups and downs in the past and will {sic} recover from this, too.  





			
				Thucydides said:
			
		

> We are not immune to the temptations to debase our own currency either, and were pretty enthusiastic proponents of doing this under "Trudeapia":




Whew!  And to think I had been wondering about this, including debasing of currencies, for years and what would happen in the classical economics framework that did not include the debt structures that are in place now, as the wsj article mentioned. 



> ....  system that developed for the packaging and underwriting of debt, and the excess liquidity  ....


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## armyvern (28 Jan 2008)

boxseats said:
			
		

> Good.  Confidence in the US economy.  Very good.  See, Thucydides, nothing to worry about regarding debasing the CAD.  There are ups and downs in the past and will {sic} recover from this, too.



Uhmmm, perhaps I'm missing something here --- or you are seeing something that isn't there??

I didn't see Thucydides worrying about debasing the CAD, nor did I see him expressing a lack of confidence in the US economy. He simply posted a news article, or do you just take his simple posting of such as an expression of a lack of confidence in your economy? If that's the case, you're stretching it. I think his comment accompanying the posted article ... actually expresses the opposite view in that this is a normal event which occurs in economies, which eventually recover.


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## aesop081 (28 Jan 2008)

The one thing i will say about the curent goings-on in the US economy and sub-prime mortgages :

"Banks, you should have seen the crissis coming, you caused it"


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## a_majoor (30 Jan 2008)

The thrust of the article was the dangers of allowing a currency to become debased, something which can happen when politicians persue short term goals without reference to "classical economic structures". This is the root cause of the so called "Sub Prime" crisis; excessive monies pumped into the housing market through US government subsidies, creating a housing bubble.

Since politicians tend to be rather timid by nature, and often fail to challenge the status quo, it is quite possible or even probable that a nation can move into this position by default. Imagine the press reaction if President George W Bush had actively intervened in 2005 by pulling federal dollars _out_ of the housing market to prevent the possibility of a meltdown..........


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## boxseats (31 Jan 2008)

I think the subprime market exists not because of the politicians (including the Federal Reserve Bank monetary policies), but because of the private banking and capital markets players, outside the government.  The ability to create derivative products and synthetic debt instruments to such a degree is way beyond what classical economics structures postulate.  Derivatives, and as they have grown, started only in the 1980’s with a simple interest rate swap.  But now all the successor instruments play a pivotal role in the capital markets.  These are from the private or publicly traded financial firms, not public or quasi-public sector influences. 

Of course, I can see an argument for  linking powerful private sector interests with powerful political influences.  But, I think the political influence is just a “derivative”.


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## a_majoor (2 Feb 2008)

The private sector can create almost anything; the problem is the government using the powers of the State to meddle in the economy. If the US government hadn't pumped billions of dollars into the housing market, the crisis may still have happened, only on a smaller scale and without economy wide (and indeed global) implications.


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## a_majoor (5 Feb 2008)

Jerry Pournelle on the crisis:

http://www.jerrypournelle.com/view/view503.html#Friday



> The Fed is pumping more money out in the hopes of restarting the housing boom and bringing it down a bit less abruptly. In so doing they tax fixed income and retirement savings.
> 
> Clearly the government hates people who save money, and will do anything it can to tax those economic traitors. Or perhaps it's simple greed?
> 
> ...


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## a_majoor (20 Mar 2008)

As usual, the regulatory failure which brought on this mess is being ignored and market capitalism is being attacked and blamed. Please note which US president is responsible for the sub prime mess to begin with......

http://www.nationalpost.com/opinion/columnists/story.html?id=c78e55d9-0969-481a-9b02-edf69d2c80d9&k=90



> *Road to heaven still paved with free markets*
> 
> Terence Corcoran,  National Post  Published: Thursday, March 20, 2008
> 
> ...



Oh, and an explanation as to how this happened (quite funny in a sad way): http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1


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## a_majoor (31 Mar 2008)

A view of how America is doing:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080328.wcoessay0329/BNStory/specialComment/home?pageRequested=all&print=true



> Globe essay
> *A turning point in the U.S.?*
> 
> JEFFREY SIMPSON
> ...


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## a_majoor (2 Apr 2008)

The financial markets are very complex and interrelated (one reason to *avoid* intervention in the markets); an interview with one of the people responsible for creating some of the currently available new instruments:

http://www.technologyreview.com/Biztech/20501/?nlid=978



> *On Markets and Complexity*
> Economist Robert C. Merton talks about the current crisis, risk, and financial engineering.
> By Nate Nickerson
> 
> ...


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## a_majoor (19 Apr 2008)

The blowback from the Subprime mess expands:

http://www.newyorker.com/talk/financial/2008/04/21/080421ta_talk_surowiecki



> The Financial Page
> *Iceland's Deep Freeze*
> by James Surowiecki April 21, 2008
> 
> ...


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## tomahawk6 (19 Apr 2008)

Congress mandated that mortgage lenders should loosen their borrower standards to allow folks with D credit to buy a house. They did and surprise D borrowers lived up to their credit histories.Naturally Congress refuses to shoulder the blame.


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## a_majoor (27 Apr 2008)

Someone needs to take a stand, even if it means falling on their sword:

http://www.latimes.com/news/opinion/la-oe-thurow11apr11,0,3591916.story



> From the Los Angeles Times
> *It's got to hurt before it gets better*
> There are solutions to high oil prices, the housing crisis and outsourcing, but they require some sacrifice.
> By Lester C. Thurow
> ...


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## tomahawk6 (27 Apr 2008)

The markets always have an ebb and flow. I remember in the 80's the housing markets on both coasts tanked due to overpricing. There was a correction and the markets took off again until the market slowed down last year. Congress mandated that mortgage lenders should lend to risky customers and now look what we have.

The bigger problem is our poor energy policy.We rushed into ethanol without considering the effect it would have on food prices. Congress wont allow more domestic drilling and the building of new refineries and even if they agreed today we wouldnt see an improvement for 10 years. Congress needs to realize that alternative fuels/technologies isnt a substitute for oil - unless we look at oil shale and coal liquification. We have more of both than any country in the world.


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## Brad Sallows (27 Apr 2008)

Actually, plenty of people observed that chasing a small fraction of net energy at the cost of other agricultural production was a bad idea before it kicked off.  The effect was considered, but it was ignored.


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## tomahawk6 (27 Apr 2008)

Mormons keep a year's supply of canned goods on hand for an emergency.


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## Colin Parkinson (28 Apr 2008)

tomahawk6 said:
			
		

> The markets always have an ebb and flow. I remember in the 80's the housing markets on both coasts tanked due to overpricing. There was a correction and the markets took off again until the market slowed down last year. Congress mandated that mortgage lenders should lend to risky customers and now look what we have.
> 
> The bigger problem is our poor energy policy.We rushed into ethanol without considering the effect it would have on food prices. Congress wont allow more domestic drilling and the building of new refineries and even if they agreed today we wouldnt see an improvement for 10 years. Congress needs to realize that alternative fuels/technologies isnt a substitute for oil - unless we look at oil shale and coal liquification. We have more of both than any country in the world.



Actually it makes sense to save your own reserves and use up other peoples easy to access oil, as oil starts to require more and more money to access, you can turn to your easier to access reserves while the rest of the world has to spend large amounts to get oil. I suspect that oil use in the US will peak soon and as new technologies kick in the need for oil per person will decline. Plus the US & Canada have domestic access to good quality coal which can already be burnt far cleaner than previously. Coal with new tech will likely remove a lot of the demand for oil for power plants and if it can be converted for non-energy uses it will remove a demand there as well.

North America needs to invest in new highly effect and clean refineries and new nuclear plants that are well constructed. Possibly something like the new small Toshiba reactors will make for a lot more local power which also means a more stable grid.


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## adaminc (29 Apr 2008)

What I don't understand is why is the Bank of Canada inflating our currency just to keep it slightly worth less than the American dollar? Exports? 

It can't be that simple. 

As long as I have been alive (not long, 25 years), the US Dollar has been higher, our Exports were "Cheap" to the US, and when our economy starts to thrive, and our dollar rises, they whine about the prices of Imports (our Exports) going up, so our Govt fixes our dollar so that the Exports are "Cheap" again? Maybe I am missing something big, maybe exporters here in Canada didn't like the loss of customers who couldn't afford to import from Canada and shifted to China. Maybe someone here could explain it?


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## a_majoor (1 May 2008)

From Chaos Manor. The views of the elites have critical impact on the rest of us (they have far more resources to implement their visions than we do, and they can always buy us off, or hire mercenaries to keep us down, depending on the situation at hand). While this is coming from the view of Globalization, it is driven as much by American elites as anyone else:

http://www.jerrypournelle.com/mail/2008/Q2/mail516.html#Zakaria



> *Fareed Zakaria's view. This opens a new debate.*
> 
> Dear Jerry,
> 
> ...


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## a_majoor (29 Jul 2008)

The housing bubble was a pretty direct result of Government intervention in the US economy (dating back to the Clinton Administration, plenty of blame to go around here). What is really frightening is the "solution" seems to be more of the same: bail out the mortgage market and keep going with the dysfunctional policies:

http://www.jerrypournelle.com/view/2008/Q3/view528.html#Fannie



> There's a pretty good diatribe on Fannie Mae and Freddie Mac in today's Wall Street Journal. It was all good intentions, but those two institutions were inevitably going to cause bubbles and evade responsibility; and bailing them out now without full reform including stripping them of the ability to spend public-derived money on lobbying and "public relations" is a ghastly mistake. We are going to regret these hastily constructed bailouts.
> 
> What all this illustrates is just how little our Congress understands the United States, and this seems to apply to the long term members who are on relevant committees as well as to those who just got there, or those who've been there a long time but became "specialists" in military or foreign affairs. Incidentally, how many remember that until he was named as VP Candidate by G HW Bush, Senator Danforth Quayle was the "respected junior senator from Indiana" who had in fact made a good reputation as a military and foreign policy expert. Of course the day he ran for VP he became an idiot, but that's pretty inevitable given our media.
> 
> ...


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## a_majoor (20 Aug 2008)

The lessons of the 1930's (and indeed 1970's) are readily available, but some people just don't study or understand history. BTW, it is not just the US Democrats (this time), but also look at Mr Dion's "Carbon Tax" proposals, British Labour Party's economics or the interior workings of the EU:

http://www.washingtonpost.com/wp-dyn/content/article/2008/08/17/AR2008081702079.html



> *Five Ways to Wreck a Recovery*
> 
> By Amity Shlaes
> Monday, August 18, 2008; A11
> ...


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## a_majoor (3 Sep 2008)

The coming demographic woes of Russia, the EU and China have been highlighted in other threads, this blog post is a good summary of the dangers and opportunities:

http://friendlymisanthropist.blogspot.com/2008/09/demographics-paint-rough-financial.html



> *Demographics Paint A Rough Financial Picture*
> 
> I keep hearing that the European Union will challenge American power. Not with the pending demographic problem Europe faces they will. Worse, they don't seem prepared for it. Neither does Japan - who was supposed to overtake America in the 1980s.
> 
> ...



The really scary part is the first waves of Demographic troubles will arrive in the 2020's, as China's "One Child" policy comes home to roost. (in Mark Steyn's immortal words: "China will become the first gay superpower since Sparta"). Russia will see its population crash in the 2030's, and Canada and the EU will be in the same boat, although perhaps a bit later. No one seems to have taken any steps to deal with this (although it really isn't clear what sort of steps can be taken, short of having Mormons repopulate the world).


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## Edward Campbell (12 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is a comment by noted US economist Robert Shiller:

My *emphasis* added
http://www.theglobeandmail.com/servlet/story/RTGAM.20080911.wcofannie12/BNStory/specialComment/home


> Why Fannie and Freddie got rescued
> 
> ROBERT SHILLER
> 
> ...



A lack of ‘good faith’ and of all the legal/moral problems that accompany it is a HUGE problem for China, potentially, possibly a _transformational_ problem: one that could overturn the Red Dynasty and plunge that huge country into revolutionary chaos.

It is not just a Chinese or Asian problem, however. It _infects_ North America and Europe, too. In this article, also from today’s _Globe and Mail_, former Bank of Canada Governor David Dodge noted that:

(My *emphasis*, again)


> Much of the blame for the current credit crisis ... is the evolution of mortgage-backed securities that allowed banks to shift increasingly risky U.S. mortgage loans off their balance sheets into *poorly understood securities sold around the world*.
> 
> The “ridiculous” motivation behind the mortgage-backed securities ... was for banks to avoid the cost of setting aside capital reserves as required by bank regulators to cushion against potential losses. Once the mortgages morphed into securities, he said *traditional caution about credit risk was abandoned* and regulators learned too late that the innovations would trigger billions of dollars of losses.


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## a_majoor (15 Sep 2008)

Unwinding the housing bubble will be a long and arduous task, but real solutions exist. Too bad most politicians (from _any_ party in _any_ democracy) seem so unwilling to take the appropriate steps:

http://strongconservative.blogspot.com/2008/09/credit-crisis.html



> *The Credit Crisis*
> 
> Today was a historic day for the markets as Bank of America purchased Merrill Lynch and Lehman Brothers declared bankruptcy. These moves highlight the deep problems associated with the credit crisis and tightening lending conditions in America and throughout the world.
> 
> ...


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## Edward Campbell (16 Sep 2008)

If only it was so simple.

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ are two opinion pieces that deal with the subject. There is some wisdom in each:

First, from England, by Lord Skidelsky who is, amongst other achievements a noted biographer of John Maynard Keynes:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080915.wcoecon16/BNStory/specialComment/home


> Teetering between Keynes and Friedman
> 
> ROBERT SKIDELSKY
> 
> ...



As Lord Skidelsky suggests the *liberal* (I would say conservative) ‘cycle’ of the ‘50s and ‘60s was more ‘successful’ than the most recent *conservative* (I would say liberal) cycle but he explains that each cycle is quite different from all the others. The pendulum is, of course, the thing to watch. The ‘regulated’ cycle did, indeed, result in cronyism and corruption under Kennedy, Johnson and Carter. The Reagan/Bush response was, however, too extreme – the market, like the bureaucracy is full of greedy rascals. The pendulum will swing back, again, but, as usual, it will probably swing too far back to the Keynesian side.

Capitalism works; it works far, far better than any of the alternatives (socialism, communism, etc). But capitalism requires watchdogs. Just as some soldiers suggest that there are sheep (*our* peace-loving people), wolves (the not so peace-loving folks on *their* side) and the sheepdogs (the soldiers who protect the former from the latter) so there are sheep (the people), wolves (the predators that always exist, everywhere, including on Wall Street and Main Street) and sheepdogs in the financial markets – the sheepdogs are the regulators. But even sheepdogs can _morph_ (or evolve) into wolves – and they often do when too much regulation is in place.


Second, from Canada, is by _Globe and Mail_ columnist Derek DeCloet:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080916.wrdecloet16/BNStory/Business/


> It's a history-making financial crisis, and it's not over yet
> 
> DEREK DeCLOET
> 
> ...



He recites a litany of financial sins: “Borrowing short term and lending long. Too many assets, accumulated too quickly, by people with too much confidence. Hubris. Too much debt.”

Essentially greedy bankers loaned money to people who should not have been allowed to borrow, not in a sensibly ‘regulated’ system. Greedy people used the *apparent* increase in value of their homes to finance consumer spending and greedy bankers allowed that, too.

I agree with DeCloet, the end of the crisis is not near – it (the crisis) is going to spread. But “*the end is not nigh*, this is not 1929 (see Skidelsky on circuit breakers – that are working).

But there is another problem.

The US is no longer the globe’s dominant economy.

For about 65 years the whole world has depended upon and benefited from the hard, smart work and *desire* for a better life of the US worker/consumer. For 20 of those years the US workers (with a few Canadian and fewer Australian helpers) carried the whole burden: their production and consumption lifted everyone. Then Europe and Japan began to contribute – both producing and consuming. The global economy (supply and demand) got stronger, because it was more diversified, and it grew because the _neo-cons_ are 100% right: a rising tide does lift all boats. But now the US share of consumption is too high relative to its share of production. Europe and Japan are being displaced by China and India. More 'players,' more supply and demand, makes for a stronger global system but imbalance in the biggest, albeit no longer dominant, economy weakens the whole thing.

Canada is even worse off, in some respects, because we are too dependent on US consumption for our incomes. US consumption must shrink and our production must either find new consumers or shrink.


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## tomahawk6 (16 Sep 2008)

The hardest thing for a politician to do in the face of public demand is to do nothing.Reagan did nothing and the economy righted itself. If the government intervenes it will take much longer for the economy to recover.I dont believe the government should bail out public companies that fail.So far this year the stock market is down 18% hardly 1929.


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## GAP (16 Sep 2008)

tomahawk6 said:
			
		

> The hardest thing for a politician to do in the face of public demand is to do nothing.Reagan did nothing and the economy righted itself. If the government intervenes it will take much longer for the economy to recover.I dont believe the government should bail out public companies that fail.So far this year the stock market is down 18% hardly 1929.



I agree....they got themselves into it, benefitted by it, now pay the piper.... (what I do feel (a little )sorry for is the investors, but they also picked a stock with a good/high return...


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## a_majoor (16 Sep 2008)

Lord Skidelsky is incorrect on one point; this market crash, like almost any other, is a result of _regulatory_ failure, not _market_ failure.

Greed and Hubris exist at all times and places (and as Edward notes, there is no guarantee that regulators don't become greedy and corrupt. Eliot Spitzer comes to mind....), so when the US Congress allowed "Freddy" and "Fannie" to move into the subprime market and continued to allow the market to assume the securities issued by them were backed by the US Government, the wolves followed in droves. One could (and should) argue that since government caused this mess, they should not place the burden of resolving it on the hapless taxpayers (most of whom are in no way involved in creating this crisis. Others could (and should) call for government to retreat further from capital markets (and indeed all markets), since their powers are creating distortions that ripple through the economy.

The market *always* works, and indeed this is a perfect example. People responded to the perverse incentives that the Congress allowed, and now they are reacting quickly and efficiently to the unbalanced nature of the credit market as it currently exists. Government bailouts will distort the information investors need, and probably lead to a series of "jolts" as investors respond to new conditions, attempt to sell as the distortions become clear then react to new levels of government intervention. 

As for call for increased regulation; it did a wonderful job this time  :. Why should anyone assume it will work any better next time? Allowing the market to be distributed amongst many smaller competitors reduces the overall risk, and simple regulations stressing open "books" and transparency to investors is probably all that is really needed, along with the courts of law to arbitrate contract disputes. Certainly, unethical companies would find themselves punished in such a market, as investors could clearly see problems as they arise. (Anyone who dosn't take the time to read their statements will not be helped by a regulator in any event, and gets what they deserve).


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## Edward Campbell (17 Sep 2008)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is a change in _tone_ from Wall Street:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080916.wbanksglobal17/BNStory/Business/home


> ‘Significant risk' of global recession, Snow says
> 
> KEVIN CARMICHAEL
> 
> ...




The effective _nationalization_ (à la Nicaragua) of AIG is unprecedented. Early reports suggest that the _Fed_ could not cobble together a  ‘coalition of the willing’ to rescue AIG with private money.


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## GAP (17 Sep 2008)

Makes you wonder who's next....Fanny Mae, Freddy Mac, AIG, ....

If things turn around quickly ( a year or two) the US may benefit, but if many more come calling as the article points out, I don't think the Government can commit to much more...


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## tomahawk6 (17 Sep 2008)

Well to be fair AIG is a loan and the company is profitable just not much cash on hand. The tax payer is in a win win situation as far as AIG is concerned default and the government gets assets valued at $1 trillion or AIG repays the loan with interest.


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## Edward Campbell (17 Sep 2008)

tomahawk6 said:
			
		

> Well to be fair AIG is a loan and the company is profitable just not much cash on hand. The tax payer is in a win win situation as far as AIG is concerned default and the government gets assets valued at $1 trillion or AIG repays the loan with interest.



That's fair _spin_, I guess, but I don't see it as good news.

AIG has had to pledge a whopping *80%* of its stock - ownership of its $1 Trillion - for a loan worth a measly 8.5% of its 'value.' That means the Fed doesn't believe (or cannot confirm) AIG is 'worth' $1 Trillion, in fact the Fed is saying that the 'fair value' (before _due diligence_) of AIG is about 10% of that, around $100 Billion, and AIG is so desperate for cash that it agreed.


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## Edward Campbell (17 Sep 2008)

The loss of its traditional AAA credit rating, as forecast in this story which is reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ web site, would have a HUGE psychological impact on investors and _ordinary_ Americans alike. In practical terms it would allow China to demand even higher rates for its ‘loans’ to the US Treasury.



> Pressure building on U.S. debt rating: S&P
> 
> Reuters
> 
> ...


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## Edward Campbell (19 Sep 2008)

News on the economic front, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080918.wbanks19/BNStory/Business/home


> Shares soar as U.S. plans to expunge bad debt
> 
> BOYD ERMAN
> 
> ...



The “Resolution Trust” system was set up by the George H.W. Bush administration in 1989. By 1995 it had managed to “settle” nearly $400 Billion in ‘distressed assets.’

The global markets are, early Friday morning (2008-09-19), reacting favourably:

Dow 30 Futures: +2.6%
FTSE (London): +7.9%
DAX (Germany): +4.3%
CAC (Paris): +4.4%
Hang Seng (Hong Kong): +9.6%
Nikkei (Tokyo): +3.8%
Straits Times (Singapore): +5.4%

To paraphrase Churchill: This is not the end, it is not even the beginning of the end but it might be the right move to signal the end of the beginning. There will be shocks, mergers, bankruptcies and losses, all over the world, but there is a ‘plan’ to deal with a credit crisis. It will be the ‘end of the beginning’ IF Bush and Pelosi can manage to put national interest ahead of partisan interest – and I don’t have much faith in either of them when it comes to dealing with the economy. 

China and Russia, with stock exchanges that are more closely related to Las Vegas casinos than to Wall Street brokerages, will suffer. It will be interesting to see how the governments concerned respond.


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## Edward Campbell (19 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Ottawa Citizen_ is a mildly provocative opinion piece by Prof. Randall Germain of Carleton University:

http://www.canada.com/ottawacitizen/news/opinion/story.html?id=72780162-b49e-43e9-909c-a0981385ce2d


> Randall Germain . America in decline
> *Wall Street's meltdown has dealt a serious blow to U.S. leadership in the world, and a possibly fatal one to the cause of global economic liberalization*
> 
> Randall Germain
> ...




Germain is not totally of base: America’s *relative* power is less than it was – not because America, proper, is less powerful but because so many other countries are much more powerful than they were 20 or 50 years ago.

And he correctly says that “Canadians ought to pause before celebrating this development unreservedly ... how will we fare? Who will buy our goods and services, and will the prices be fair? Where will we find investors in our firms and industries ... and most importantly, in such a world with whom will we -- all 33.5 million of us -- become economically integrated? Ironically, it can only be the U.S., but by then it may be so busy looking after itself”.

In my opinion we need to *strengthen* the Canada/US Free Trade _area_ – as I have suggested elsewhere – to preserve and enhance our place in a market that, despite being challenged by Europe and Asia, will remain big, safe, familiar, rich, dynamic, close and friendly.


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## Flanker (19 Sep 2008)

GAP said:
			
		

> Makes you wonder who's next....Fanny Mae, Freddy Mac, AIG, ....



Morgan Stanley?

http://www.bloomberg.com/apps/news?pid=20601087&sid=aVxmXRFbSlbM&refer=home

With such massive government interventions, it is not surprising many see resemblance to USSR-style economy ...

http://market-ticker.denninger.net/archives/586-Welcome-To-The-USSA.html


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## tomahawk6 (20 Sep 2008)

AIG is a loan.Freddie and Fannie were quasi government agencies they definitely need to be reformed. The best thing we can do is government regulation out of the markets. Congress caused the mess in the mortgage market by insisting on lending to people who couldnt afford a house. They were lending to people who were just out of BK for gods sake.


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## Edward Campbell (20 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is one opinion, from a journalist/business writer, on how we (the US, especially) ended up here:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080919.whouses0920/BNStory/International/home


> Bringing down the houses that built America's economy
> *How convoluted financial products and misguided government policy crippled the Big Five investment banks*
> 
> SINCLAIR STEWART
> ...



A few comments:

•	Not everyone agrees that the repeal of Glass-Steagall or the ascendancy of Milton Friedman are the ‘root causes’ of the current crisis;  

•	The political ‘left’ in America was fascinated with _Reaganomics_ – especially the idea of _trickle down economics_ that says “a rising tide lifts all boats” (an aphorism that is most often credited to John F Kennedy). There is little doubt that many of Reagan’s reforms, especially the precipitous decline in the growth of new regulations, made life and investing safer for risk takers – who got rich or richer *because they had some resources to put at risk in the first place* and whose wealth did “trickle down.” But *trickle* was the right word: not too much wealth went down to the bottom and it went there slowly. This explains, in part, why Democrats led the charge to make cheap mortgage money easily available to more and more people. Home (property) ownership is, rightfully, seen as the keystone to prosperity. (Parenthetically, given that this idea is well known and supported in the ‘left,’ ‘centre’ and ‘right’ sectors of the political spectrum one wonders why so many politicians are so opposed to *property rights*.)

•	A “bubble” was inevitable as soon as greed (for more bank profits) was married to greed (for individual prosperity). Too much ‘cheap’ money was loaned to too many people who were very, very poor – indeed quite unacceptable – risks. The ‘housing bubble’ will last for a long time – many years. The housing sector is one of the keystones of America’s prosperity because, as mentioned above, a house is for many, probably most _ordinary_, middle class Americans (and Canadians, too) the foundation of their ‘property’ and ‘property’ is the key to enduring, low risk wealth. Additionally, the housing sector is a HUGE employer – generating millions of the well paid, low skill jobs that keep the lower middle class “_upwardly mobile_.” New home construction has fallen to levels not seen in decades; that means that more and more people cannot find half decently paid jobs that they, with their limited education and skill sets, can do.

•	Stewarts’s final line about Wall Street, and the world, needing fewer Merrills and more Lynch’s is very cautious, very prudent – very Scots!

In the 19th century, small, timorous, laggard Canada was built by Scots; big, risk-taking, aggressive, _creative_ America was built by Englishmen and Germans. Does culture matter?  >


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## GAP (20 Sep 2008)

The fallout and forthcoming recession in the US is going to hit Canada obliquely, but it will hit us as the truth hits home in the US

They will be a decade climbing back out of this, but at this date, I would venture that those making the big decisions on the bailout have no clue to what extent, and how deep it is going to cut...


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## Edward Campbell (20 Sep 2008)

GAP said:
			
		

> The fallout and forthcoming recession in the US is going to hit Canada obliquely, but it will hit us as the truth hits home in the US
> 
> They will be a decade climbing back out of this, but at this date, I would venture that those making the big decisions on the bailout have no clue to what extent, and how deep it is going to cut...




I agree, and so does Martin Feldstein, in his Q&A session reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_. 

These are, probably, very much the same the questions you, Army.ca members, want to ask. You may not find too much comfort in the answers.

http://www.theglobeandmail.com/servlet/story/LAC.20080920.GRANO20/TPStory/?query=martin+feldstein


> Market may swing but guru still sees gloom ahead
> 
> MARGARET WENTE
> 
> ...




Remember, this is John McCain’s economic _guru_; what he thinks is, pretty much, what McCain thinks, too.

I agree with him re: Obama’s math. Taxing the ‘rich’ will not provide enough money. The money has to come from somewhere, everywhere, in fact. The best source is a growing economy but Feldstein says that will take time – a long time.


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## GAP (20 Sep 2008)

I have been lightly following McCain's campaign....what he is saying, if it is based on this guy's input, he's not being coherent.

I don't get any of this out of McCain's speeches, so either he or his speech writers need to get their act together....


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## tomahawk6 (20 Sep 2008)

The bailout has an upfront cost to the taxpayer,but in the end may not cost the treasury very much at all. AIG is a loan and is a profitable company that ran into a cash crisis. They are very likely to repay the loan with interest. The Treasury has made a smart decision to simply take all the mortgage paper off the books of all the banks/brokerages. One has to remember that behind every mortgage is a property so its not like they are unsecured loans.


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## GAP (20 Sep 2008)

tomahawk6 said:
			
		

> The bailout has an upfront cost to the taxpayer,but in the end may not cost the treasury very much at all. AIG is a loan and is a profitable company that ran into a cash crisis. They are very likely to repay the loan with interest. The Treasury has made a smart decision to simply take all the mortgage paper off the books of all the banks/brokerages. One has to remember that behind every mortgage is a property so its not like they are unsecured loans.



The major loss on the bailout (with houses as security on these mortgages is that the mortgaged value of the houses is inflated by upwards of 200%) is the difference between real value and book value and the cost of now managing this size of a portfolio to figure out what they have and do not have..


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## tomahawk6 (20 Sep 2008)

The houses do not have inflated value.They do reflect normal ebbs and flows in property values over the life of a 30 year mortgage.Also these mortgages generate income for the investor. It is true that some mortgages default but so far its 2% nationwide which isnt a big deal.


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## Edward Campbell (20 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ web site, is a report that says the ‘toxic mortgages’ (what I have been calling ‘distressed assets’) are worth going to cost $700 Billion to write off:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080920.wbillionfigure0920/BNStory/Business/home


> Rescue plan price tag: $700-billion
> 
> JULIE HIRSCHFELD DAVIS
> Associated Press
> ...


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## Edward Campbell (20 Sep 2008)

More interesting financial/economic news, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_ web site:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080920.wmorganstanley20/BNStory/Business/home


> Morgan Stanley board meets to weigh options
> 
> JESSICA HALL
> Reuters
> ...



It makes sense for CIC (China Investment Corp) to take a bigger stake in one of the ‘distressed assets’ holders. The Chinese are taking a pounding, as big holders of US debt, so they may want to sign up for some of the US taxpayer funded relief. A hundred billion here, a hundred billion there, and pretty soon you’re talking real money, to paraphrase the late Senator Everett Dirksen.


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## tomahawk6 (20 Sep 2008)

The US cannot afford Obama. If anyone still doubts that Obama is a socialist this article should throw a bit of cold water on your face.

http://www.usnews.com/blogs/capital-commerce/2008/2/20/does-obama-want-a-trillion-dollar-global-tax.html

Does Obama Want a Trillion-Dollar Global Tax?
February 20, 2008 10:39 AM ET | James Pethokoukis | Permanent Link 


I know we still have nine months to go before Election Day, but I may already have a winner for my "Understatement of the Election Season" Award. Right at the end of his big economic speech last week in Wisconsin, Democratic front-runner Barack Obama, last night's big primary winner in that state, said the following:

In the end, this economic agenda won't just require new money. It will require a new spirit of cooperation and innovation on behalf of the American people. We will have to learn more, and study more, and work harder. We'll be called upon to take part in shared sacrifice and shared prosperity.

Let's stick with that "new money" part for a moment. For starters, that "new" money is, of course, "your" money, your tax dollars. And it's a lot of money. Obama has proposed a couple of hundred billion buckaroos in new government spending along with new tax increases. But Obama may have just been getting started. Back in December, Obama sponsored the "Global Poverty Act," a bill that proposed the following (Efharisto to the American Thinker for spotting this one):

To require the President to develop and implement a comprehensive strategy to further the United States foreign policy objective of promoting the reduction of global poverty, the elimination of extreme global poverty, and the achievement of the [U.N.] Millennium Development Goal of reducing by one-half the proportion of people worldwide, between 1990 and 2015, who live on less than $1 per day.

What this bill would do, in short, is commit the United States to the U.N. declared goal that industrialized countries should spend 0.7 percent a year of their gross domestic product on foreign aid. Over the next decade or so, that would work out to around $850 billion. When the bill passed the Senate Foreign Relations Committee last week, Obama said that "as we strive to rebuild America's standing in the world, this important bill will demonstrate our promise and commitment to those in the developing world. Our commitment to the global economy must extend beyond trade agreements that are more about increasing corporate profits than about helping workers and small farmers everywhere."

How to pay for our penance? Economist Jeffrey Sachs, an advocate of this idea, has a suggestion:

We will need, in the end, to put real resources in support of our hopes. A global tax on carbon-emitting fossil fuels might be the way to begin. Even a very small tax, less than that which is needed to correct humanity's climate-deforming overuse of fossil fuels, would finance a greatly enhanced supply of global public goods.

So not only does Obama want to raise taxes on Americans making over $250,000 a year and eliminate the $102,000 wage cap on Social Security taxes, he perhaps wants to tack on another trillion dollars in taxes to pay for dramatically increased foreign aid. Of course, we could just borrow the money. Obama, after all, has not stressed balancing the budget during this campaign, instead promising to eventually put the budget on a "pathway" to being balanced.

And would such a commitment of money work anyway? Here is what Sachs critic William Easterly, an economic professor at New York University, wrote in the Journal of Economic Perspectives in 2003 on the topic:

Aid agencies have misspent much effort looking for the Next Big Idea that would enable aid to buy growth. Poor nations include an incredible variety of institutions, cultures and histories: millennia-old civilizations in gigantic China and India; African nations convulsed by centuries of the slave trade, colonialism, arbitrary borders, tropical diseases and local despots; Latin American nations with two centuries of independence and five centuries of extreme inequality; Islamic civilizations with a long history of technical advance relative to the West and then a falling behind; and recently created nations like tiny East Timor. The idea of aggregating all this diversity into a "developing world" that will "take off" with foreign aid is a heroic simplification.... The macroeconomic evidence does not support these claims.... The goal of having the high-income people make some kind of transfer to very poor people remains a worthy one, despite the disappointments of the past. But the appropriate goal of foreign aid is neither to move as much money as politically possible, nor to foster societywide transformation from poverty to wealth. The goal is simply to benefit some poor people some of the time.

Another option proposed by geopolitical strategist Thomas Barnett, who advocates that the United States partner with China and India to create a heavily armed global peace corps (our expertise and firepower, their manpower) to bring security to failed states in Africa and elsewhere across the globe. With a relatively safe environment established, private direct investment could then pour into those countries.


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## tomahawk6 (20 Sep 2008)

Since the start of the Bush presidency:

DOW UP 40 POINTS IN PAST MONTH... UP 18% PAST 5 YEARS... UP 44% PAST 10 YEARS...


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## GAP (20 Sep 2008)

tomahawk6 said:
			
		

> Since the start of the Bush presidency:
> 
> DOW UP 40 POINTS IN PAST MONTH... UP 18% PAST 5 YEARS... UP 44% PAST 10 YEARS...



What goes up, must come down......the faster it goes up, the faster it comes down


That applies to budgets, stockmarkets, my ego......etc


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## tomahawk6 (20 Sep 2008)

It is good for retirement accounts though.


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## armyvern (20 Sep 2008)

GAP said:
			
		

> What goes up, must come down......the faster it goes up, the faster it comes down
> 
> 
> That applies to budgets, stockmarkets, my ego......etc



Uhmmm ... this is (both sentences) applicable to everything EXCEPT gas prices - just to be clear.  >


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## GAP (20 Sep 2008)

ArmyVern said:
			
		

> Uhmmm ... this is (both sentences) applicable to everything EXCEPT gas prices - just to be clear.  >



It applies to gas prices also (if you include the indigestion you get each time you go to the gas station...)


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## Kirkhill (21 Sep 2008)

This seems noteworthy.



> Sunday, September 21, 2008
> Bush Called For Reform of Fannie Mae & Freddie Mac 17 Times in 2008 Alone... Dems Ignored Warnings



via Gateway Pundit


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## Flanker (21 Sep 2008)

tomahawk6 said:
			
		

> It is good for retirement accounts though.



As for good retirement, I strongly doubt it. 
US are bankrupt.
The current credit crisis is only a small echo of a hidden iceberg of future debt problems.



> Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.
> 
> Why is the Medicare figure so large? There is a mix of reasons, really. In part, it is due to the same birthrate and life-expectancy issues that affect Social Security. In part, it is due to ever-costlier advances in medical technology and the willingness of Medicare to pay for them. And in part, it is due to expanded benefits—the new drug benefit program’s unfunded liability is by itself one-third greater than all of Social Security’s.
> 
> ...



Richard W. Fisher is president and CEO of the Federal Reserve Bank of Dallas
http://dallasfed.org/news/speeches/fisher/2008/fs080528.cfm


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## tomahawk6 (21 Sep 2008)

An 18% return average over 5 years is hard to beat. No the US isnt bankrupt.


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## Edward Campbell (21 Sep 2008)

Flanker said:
			
		

> ...
> US are bankrupt.
> The current credit crisis is only a small echo of a hidden iceberg of future debt problems.
> 
> ...




The number, $99 Trillion, is HUGE – Fisher needs a huge number to make his argument for change (an argument with which I wholeheartedly agree, by the way) so he chose an *infinite* horizon. That means that there is some, finite time within which American may elect more fiscally responsible legislators.

America can change, Fisher and I would say must change; we know that because America has done so before.

Americans are good at rolling up their sleeves and solving tough problems: they don’t like it very much but they’re good at it – thankfully.


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## tomahawk6 (21 Sep 2008)

GDP is $13.8 trillion .This means an output of $46,000 per person or 10th in the world.


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## Kirkhill (22 Sep 2008)

Edward,

Can you help me with this one?

How much of the world's currency and holdings are denominated in US funds?  And against that what fraction does $1 Trillion represent?


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## Edward Campbell (22 Sep 2008)

Kirkhill said:
			
		

> Edward,
> 
> Can you help me with this one?
> 
> How much of the world's currency and holdings are denominated in US funds?  And against that what fraction does $1 Trillion represent?




Not an easy question, Kirkhill.

The best source for information is in the quarterly reports of the  Bank of International Settlements.

Most people estimate the world’s GDP at something about $65 Trillion and the BIS tracks $65 Trillion in assets and liabilities and it looks like *about* ⅓ of all assets and >⅓ of liabilities are held in US dollars.

But the number change, upwards, when purely domestic transactions are excluded – which is as it should be because, within their own boundaries, most countries use only their own currencies for all ‘public’ purposes.

There were some fairly authoritative estimates, two or ten years ago, that the dollar share of global *transactions* (to which I think your question relates) was falling, steadily from 90% (1960s) to 70% (1999/2000) and to even 50% (2007/08). But the numbers appear to include a _Euro-zone trap_ because it appears, to me that the use of the € is often counted as _international_ when it is, in fact, between euro-zone countries and, therefore, arguably domestic, _vis à vis_ the €.

But, there are real and _notional_ dollars (and euros, too). The $65 Trillion is ‘real’ – national banks, central banks and commercial banks, can point to $65 Trillion in ‘real’ assets and liabilities within their borders. But there are many more trillions (and *quesstimates* – which, in my opinion is what all of the are – vary wildly from a few dozen trillion dollars to many hundred of trillion dollars) in *notional* dollars. Almost all of those _@#$%&_ derivatives are denominated in US dollars and *no one knows* how much is out there and how they are spread, but we do know that they were, mainly, traded in $(US). I have read estimates that derivatives, hedged bets, really, account for two to six times the ‘real’ assets under management in each brokerage house. Scary.

I think something under ⅔ of the world’s _real_ debt is denominated in $(US) as is as much as ¾ of the _notional_ debt. *BUT* if the new _‘Resolution Trust_' can write down the real ‘distressed assets’ (≈$(US)1 Trillion) then will not the _notional_ assets, no matter where in the world they are held, also be written down, automatically?

*Dunno!*


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## tomahawk6 (22 Sep 2008)

I feel the need to once again stress that the treasury is getting assets in exchange for dollars. Even if all the mortgages were non-performing [only 2% are] the underlying value is the property itself.Normally foreclosed properties sell for what the bank is owed which is a discount between the property value and the outstanding loan balance. I dont like the idea of the treasury being the nations mortgage lender but thats where we are in the interim. By taking these loans off the books of the financial institutions they are strengthened as a result.


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## Edward Campbell (22 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is yet more news about the US economy:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080922.wrcrisismain22/BNStory/Business/home


> Democrats decry 'humbling' Wall St. Bailout
> *U.S. Treasury chief pitches $700-billion plan to Congress*
> 
> BARRIE MCKENNA
> ...



There are two ‘stories’ here:

1.	Can the Democrats in the Congress resist the temptation to try to use the bailout plan to strengthen Obama’s position by insisting on ‘more’ (money) for Main Street? It will be pure, simple pork-barrelling if they do that; and

2.	The Fed is, clearly (to me, anyway) still not convinced that the ‘bottom’ is near, much less here. Giving Goldman Sachs and Morgan Stanley commercial bank status – and, therefore, ‘protection,’ is a move to counter the pessimism that could, too easily, turn to panic.


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## tomahawk6 (22 Sep 2008)

Goldman Sachs and Stanley's change of status will allow them to operate as a bank and take deposits,but it will also require them to face increased regulatory requirements.


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## Edward Campbell (22 Sep 2008)

tomahawk6 said:
			
		

> ... Normally foreclosed properties sell for what the bank is owed which is a discount between the property value and the outstanding loan balance ...



And therein lies a temporary (but temporary might equal 10 years!) but serious problem. The total discount is not clear, yet, but it is, clearly, greater than “normal” and it appears to be growing.

A small share of the rich US housing market is still a very big problem – especially for lower middle class employment, rather than just for “Wall Street,”"Bay Street" and "The City." The very people who are losing their home building (and home building dependent) jobs are the ones who are likely to default on their overvalued mortgages. Those ‘distressed assets’ are what US taxpayers – middle class workers in the main – are being asked required to buy. Taxes may have to rise to pay that bill; when taxes go up disposable income/consumption falls – consequentially; falling consumption = fewer jobs = more mortgages in default. Downward spiral, anyone? This is just one of the examples of the “Wall Street” <> “main Street” interaction.

We (everyone in the world) aren’t at the “bottom” yet. We need to get there (in what, 2010?) and then start, however hesitantly, to grow again before this crisis *begins* to resolve itself. Until then the US taxpayer is being asked required to defend the whole world, including China and Russia,  from a deep recession. As I said elsewhere: Americans are good at responding to crises- thankfully.


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## tomahawk6 (22 Sep 2008)

I suspect the discount was already factored into the bailout price. The Treasury is hardly going to pay face value. I just dont see a downside to this deal right now. The Federal Budget alone is something like $2.9 trillion. These loans also generate monthly payments which will go into the Treasury.


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## Edward Campbell (22 Sep 2008)

tomahawk6 said:
			
		

> I suspect the discount was already factored into the bailout price. The Treasury is hardly going to pay face value. I just dont see a downside to this deal right now. The Federal Budget alone is something like $2.9 trillion. These loans also generate monthly payments which will go into the Treasury.




See my comments, above, in answer to Kirkhill. I think the discount has been *guesstimated* into the price in so far as it represents the *real* ‘distressed assets.’ Since I do not believe that anyone knows the ‘value’ of the *notional* (hedged) ‘distressed assets,’ or even who holds them all, I do not believe they are in any way realistically ‘factored into’ the price. BUT, I repeat, they *may* disappear when, rather than if, the *real* ‘distressed assets’ are written off. 

But, basically, T6, I agree that this is a ‘good thing’ because I cannot see any other alternative. The US taxpayers survived the 1989 _Resolution Trust_ exercise without too much problem – and it may be that this crisis is, proportionately smaller than the _thrifts_ fiasco of 20 years ago.


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## GAP (22 Sep 2008)

These investment houses unloaded Billions of $$ around the world over the last couple of years....is the bailout going to cover these ...now....international investors?


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## Edward Campbell (22 Sep 2008)

GAP said:
			
		

> These investment houses unloaded Billions of $$ around the world over the last couple of years....is the bailout going to cover these ...now....international investors?



No!

At least I hope not.


It is quite enough to ask require the US taxpayers to clean up Wall Street's mess; Bay Street and The City (and Beijing) can and must look after themselves.

BUT, the fed has extended 'protection' to the UK branches of Goldman Sachs and Morgan Stanley, so ...  ???


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## Kirkhill (22 Sep 2008)

Many thanks to both you, Edward and to T6.

Would this be a fair assessment?

If I assume that the available "real" supply of US dollars is the smaller numberguesstimate of $65,000,000,000,000 (vice the manifold larger "notional" number)
And I further assumed that 100% of the outstanding mortgages were non-performing (vice the 2% stipulated by T6)
Leaving the Federal Treasury on the hook with absolutely worthless paper and zero assets (which ignores the real value, however minimal, of the property underwriting the mortgages)

Would it be fair to suggest that the generalized impact of this $700,000,000,000 buy out, could be seen as a one time inflationary event, or alternately as a devaluation of the US dollar, with a magnitude on the order of  700/65,000 or approximately 0.1% globally?

If the actual default rate is 2% as T6 seems to suggest (if I understand correctly) then that impact would drop from 0.1% to .002%.  Likewise, if I were to assume  a 10 fold greater Notional supply of US Dollars then the impact would further drop from .002% to .0002%.

My sense of things is that the US Treasury, is not just the US's lender of last resort, it is, like the Bank of England before it, also the world's banker.  

While even the US economy will have a bit of trouble digesting a $700,000,000,000 surge in new money (if it were all to come due in one day as opposed to 10 years) in terms of the worlds economy and the soundness of the US dollar trading system it seems to me to be well within the absorption capacity of that system.

I would further suggest that when Britain Ruled the Waves and the Bank of England and the Government of Britain were joined at the hip (visible but unacknowledged) Britain managed to finance many wars, hiring and equipping other countries to do the fighting (The Seven Years - French and Indian Wars comes first to mind but it also applies to the Napoleonic Wars).  It would occasionally go into deficit, causing the Pound Sterling to fall against the Gold Standard but by and large, over the centuries from 1694 to 1944 the world's financial system was firmly grounded and survived war, famine, plague, pestilence, recession and depression.   And Britain and the Bank of England invariably profited.

My sense is that Bretton Woods was the unmaking of that old system and the making of the US Treasury and the US Government as arbiters of the new system - with all its inherent advantages.

I don't think that the US economy can be looked at in isolation.  I think it has to be seen as the primary beneficiary of a global economy which largely runs on inertia.

I do agree however, that as you - Edward - have said about Canadians and Politics, "perception is reality" that the economy is one area where intangibles like trust and panic and perception trump balance sheet facts.

While governments may fall and depositors may fail I don't believe that the system will be harmed.

Very few people liked having the world's economy in the hands of HMG and the Bank of England (least of all T6's revolting colonials  )but they accepted it because it was the safest haven where laws actually meant something.  I don't see investors seeing a better haven now than the US Treasury.  Russian Ruble? Chinese Yuan? Anything in Europe - including dear old Britain?

Faut de mieux! Least-Worst.


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## Edward Campbell (22 Sep 2008)

I  don’t agree with your assumptions, Kirkhill. The US money supply (M2) equals about $7 Trillion, not $70 Trillion. See:  http://www.federalreserve.gov/releases/h6/current/ The $65 Trillion is the world’s GDP, the US GDP is, as T6 says, around $14 Billion or about 20+% of global GDP being generated by about 5% of the world’s population (a *productivity* factor of 4 – Canada, by contrast, produces 1.5% of the global GDP with 0.5% of the population for a *productivity* factor of only 3).



> My sense of things is that the US Treasury, is not just the US's lender of last resort, it is, like the Bank of England before it, also the world's banker.



Bingo! And, risks and all, the US taxpayer reaps the rewards of that – remember all those _invisible exports_?

The *relative* ‘cost’ of the bailout (for the US taxpayer) is higher than you would get with a $70 Trillion ‘base,’ but, as I said earlier, I’m guessing that, in *relative* terms the burden is less than in 1989 when the Savings and Loans blew up in our faces. Some might argue that the perceived _relief_ when (mid ‘90s) the _thrifts_ fiasco was behind us spurred the decade of prosperity that allowed Jean Chrétien and Paul Martin to balance Canada’s budget by screwing the rich provinces and relying upon an expanding economy to generate more and more revenue and allowed Bill Clinton to lead during a decade of fiscal exuberance.


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## GAP (22 Sep 2008)

E.R. Campbell said:
			
		

> No!
> 
> At least I hope not.
> 
> ...



Looks like this answered my question.....

Canadian banks look for opportunities in U.S. crisis
Updated Mon. Sep. 22 2008 11:38 AM ET The Canadian Press
Article Link

TORONTO -- Canadian financial institutions are exploring opportunities in the American financial-sector crisis, and some may be in line for a share of the U.S. government's massive rescue plan. 

The U.S. Treasury Department said during the weekend that institutions from outside the United States will be eligible for assistance in the planned US$700-billion taxpayer takeover of impaired debt instruments. 

"If a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution," Treasury Secretary Henry Paulson said Sunday. 

The original sketch of the rescue plan would have excluded non-U.S. based banks.  
Paulson has also expanded the proposal to include all toxic assets, not only those related to the collapse of the American housing market. 

The Treasury Department -- which remains in negotiations with congressional leaders -- said banks with "significant operations" in the United States should be included. 

"How `significant operations' would be defined is uncertain, but it seems to suggest that the Royal Bank of Canada (TSX:RY), Toronto-Dominion Bank (TSX:TD) and Bank of Montreal (TSX:BMO) would qualify," BMO Capital Markets chief economist Sherry Cooper commented Monday morning. 

Those three Canadian banks have large American commercial banking subsidiaries -- the Royal concentrated in the U.S. Southeast, TD in the Northeast and BMO in the Midwest. 

"We will continue to see deleveraging of the U.S. financial system; as well, banks will be raising additional capital," Cooper noted. 

Observers see this as an opportunity for Canada's banks, whose capital reserves remain robust. They also would have tailwinds in takeovers from the relatively strong Canadian dollar and their high share values compared with the ravaged stock prices of American banks and insurers. 
More on link


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## Kirkhill (22 Sep 2008)

Thanks for continuing to guide my thinking here Edward.

So if I stipulate my error on the M2 (vs M3, M4 or L?) and my further error on the approximately 40%? of Global GDP that is actually US Dollars (thus taking 70 Trillion down to 28 Trillion on GDP, 14 Trillion on US GDP and 7 Trillion on M2?) then 700 Billion represents something between 10% of M2 and 2.5% of US denominated global GDP?

Given that, wouldn't the impact still be ameliorated by the time factor (not all loans will default at the same time), the default rate (not all loans are likely to default) and the real value of the properties (not all properties will have zero value - in fact given what I understand to be neighbourhood clustering effect dilapidated properties may actually have improved value because small dilapidated lots can be amalgamated for a more generalized property redevelopment).

I guess what I am trying to come to terms with, as ever, is that no matter how much the press tries to sell soap,  the situation is seldom as bleak as reported.


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## GAP (22 Sep 2008)

Somebody has done alright by way of the sub-prime market.....

Fairfax makes $2.1-billion gain on credit default swaps
The Canadian Press  
url= http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20080922.wfairfax0922/business/Business/businessBN/ctv-business]Article Link[/url]

TORONTO — — Fairfax Financial Holdings Ltd. disclosed Monday that it has $2.1-billion (U.S.) in realized and unrealized gains on credit default swaps.

This includes cash proceeds of $574.5-million as of Friday on sales of credit default swaps — derivatives which transfer the risk that a third party will fail to repay debt — with a notional amount of $3.22-billion, the amount of risk covered.

“Beginning in 2003, we took significant steps, including the purchase of credit default swaps, in an attempt to protect our balance sheet from investment risks,” said Prem Watsa, chairman and CEO of the Toronto-headquartered insurance holding company, which keeps its accounts in U.S. dollars.

“Given the unprecedented events of the past week, we felt it was prudent to update shareholders on the progress of our credit default swap sales prior to the date that we would customarily report our third-quarter results, particularly since we have an active share buyback program.”

Monday's disclosure showed that Fairfax has sold credit default swaps last year and so far this year with a notional amount of $8.9-billion, for which it paid $197-million and realized $1.85-billion to clear $1.65-billion.

It still holds credit default swaps with notional amount of $12.9-billion, for which it paid $238.1-million and which are currently valued at $684.9-million, for an unrealized gain of $446.8-million.

Fairfax noted that “the credit default swaps are extremely volatile, with the result that their market value and their liquidity may vary dramatically either up or down in short periods, and their ultimate value will therefore only be known upon their disposition.”
More on link

So, from the looks of it, they still hold 12.9 Billion currently valued at 684.9 million, but at this point in the game have realized all their costs as of last Friday, and the rest will be gravy   somewhere between the difference of 684.9 million and 12.9 Billion ...


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## Edward Campbell (22 Sep 2008)

Kirkhill said:
			
		

> ...  the situation is seldom as bleak as reported.



That's right. BUT: The situation is serious; this is a real crisis; investors - rarely famous for being able to focus on facts - are frightened; the regulators are trying to prevent panic.

As in all crises, there are, also, opportunities. While, I repeat, we haven't reached the "bottom" - yet, it is a good time to start "bottom feeding." Some really first rate companies with bright futures are being sold, today, at _fire sale_ prices and some smart people - the infamous _smart money_ people - are buying, before the more cautious move.

I, ss Merrill Lynch used to say, am *bullish on America*. At my age I have a 20-30 year active investment window and the "bulls" have always won when the 'window' is more than about 10 years. I expect to win, again.


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## a_majoor (22 Sep 2008)

The example of the Resolution Trust for the "S&L" crisis of the 1980's does not inspire confidence. The Resolution Trust was mandated to deal with the toxic assets of S&L's, but as they worked to unload mortgages and securities from distressed S&L's under their authority, this caused a corresponding reduction in the value of the mortgages and securities that underpinned S&L's in general. As the value of their asset base was eroded by the actions of the Resolution Trust (attempting to follow the mandate of the Congress), these S&L's became distressed, and then fell under the control of the Resolution Trust, in an ever expanding spiral.

The Resolution Trust is a perfect example of Regulatory failure in action; if the few distressed S&L's that had aggressively exploited the rules and fallen into trouble were simply allowed to fail, the pain would have been sharp and local, rather than essentially destroying the entire S&L industry in the United States (and incidentally making "Freddy" and "Fannie" enormously more powerful than they would otherwise have been).

Perhaps the one "out" has been alluded to; one economic ratio that is overlooked is the ratio between "stocks" and "flows". The stocks of real value in the United States is well over $50 trillion USD (houses, factories, land, real property), while the flows of cash is a fraction of this value (although a significant fraction, especially when "notional dollars" are taken into account). Since there is a vast store of underlying real capital (and "live" capital in the sense of Hernando De Soto's formulation) the tools are available for Edward's hoped for rebuilding of America.


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## a_majoor (23 Sep 2008)

The counter argument to the bailout:

http://www.damianpenny.com/archived/011949.html



> The Atlantic's Steven Landsburg on the bailout:
> 
> What's clear is that a bunch of financial institutions have made mistakes and lost money. What's unclear is why anyone (other than the owners and managers) should care. People make mistakes and lose money all the time. Restaurants fail, grocery stores fail, gas stations fail. People pick the wrong stocks, they buy the wrong cars, and they marry the wrong spouses without turning to the Treasury for bailouts.
> 
> ...


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## tomahawk6 (23 Sep 2008)

Breaking News:

FBI Investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG for Potential Fraud


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## oligarch (23 Sep 2008)

tomahawk6 said:
			
		

> Breaking News:
> 
> FBI Investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG for Potential Fraud



Damn! This could be bigger than Enron and Yukos!


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## Kirkhill (24 Sep 2008)

tomahawk6 said:
			
		

> Breaking News:
> 
> FBI Investigating Fannie Mae, Freddie Mac, Lehman Brothers and AIG for Potential Fraud




American Spectator




> "You look at Obama's economic advisers, the guys he has counted on from day one and who have raised him a ton -- and I mean a ton -- of money: Franklin Raines and Jim Johnson, both of them are waist to neck deep in the mortgage debacle."
> 
> Both Raines and Johnson have served as CEO of Fannie Mae, with Raines taking over from Johnson. Both are key political and economic advisers to Obama.
> 
> "How can Obama go out with a straight face and saw it was Republicans who made this mess, when it is his key advisers who ran the agencies that made the big mess what it is?" says a Democrat House member who supported Sen. Hillary Rodham Clinton. "It's his people who are responsible for what may well be the single largest government bailout in history. And every single one of them made millions off the collapse that are lining Obama's campaign coffers.




Who knows what the FBI may turn up.


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## a_majoor (24 Sep 2008)

This could be a very scary moment in US History, using the financial crisis to subvert the US Constitution:

http://pumpkin-watch.blogspot.com/2008/09/uss-mo-strong.html



> *Michelle Malkin:*
> 
> Both parties in Washington are about to screw us over on an unprecedented scale. They are threatening us with fiscal apocalypse if we don’t fork over $700 billion to Treasury Secretary Henry Paulson and allow him to dole it out to whomever he chooses in whatever amount he chooses — without public input or recourse. They are rushing like mad to cram this Mother of All Bailouts down our throats in the next 72-96 hours. And right there in the text of the proposal is this naked power grab: “*Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency*.”
> 
> ...


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## tomahawk6 (24 Sep 2008)

Alot of things we do arent covered by the Constitution.


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## Edward Campbell (24 Sep 2008)

This article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ addresses two points raised here:

FBI investigating Wall Street; and

My question: “Can the Democrats in the Congress resist the temptation to try to use the bailout plan to strengthen Obama’s position by insisting on ‘more’ (money) for Main Street?”


http://www.reportonbusiness.com/servlet/story/RTGAM.20080923.wbankswashington24/BNStory/Business/home


> FBI launches probe into Wall Street meltdown
> *Fraud investigation comes as Federal Reserve chief urges Congress to approve $700-billion bailout lest U.S. suffer Main Street ruin*
> 
> BARRIE MCKENNA
> ...




The FBI investigation can do nothing but good. If it clears the companies and executives – or, at least, does not find enough evidence to charge anyone with anything – then the markets will be calmed, a bit. If the FBI finds that someone did something (criminally) wrong then Americans, especially, will be _comforted_ when they are hauled into court.

Chris Dodd and Barney Frank appear to have answered my question with a resounding “*NO!*


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## Kirkhill (24 Sep 2008)

To reiterate some old thoughts.  Governments may do as they wish but the inertia of the market prevails.

If the price of oil rises it is because the value of the dollar has fallen - not the inverse.  The price of oil in dollar terms has risen by an Order of Magnitude (10 fold) since Bretton Woods in 1944. The price in terms of Gold Bullion still shares the same order of magnitude. (Chart to follow later when I return to my own computer)




> .....No other nation ever had it quite so good. Before the dollar, the pound sterling was the pre-eminent monetary brand. But when Britannia ruled the waves, the pound was backed by gold. You could exchange pound notes for gold coin, and vice versa, at the fixed statutory rate.
> 
> Today’s dollar, in contrast, is faith-based. Since 1971, nothing has stood behind it except the world’s good opinion of the United States. And now, watching the largest American financial institutions quake, and the administration fly from one emergency stopgap to the next, the world is changing its mind.
> 
> ...



Source - NYT Sept 24 2008, James Grant Op-Ed

Edit:  And in 1972 the oil producers of the world ran screaming from the dollar driving the price of oil through the roof and, in reaction to having their primary asset valued at the whim of Nixon's Treasury, fought back and were vilified as having created an oil Cartel.   Enter Inflation.  Enter NEP.  


You want protection?  Buy Reality.

Porkbellies, Oil (actual, real in the barrel oil, not prospects of oil), Land, Gold and toilet paper, and be prepared to barter.


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## a_majoor (24 Sep 2008)

An alternative view as to the underlying cause of the collapse (and probably even more valid then many others)

http://www.jerrypournelle.com/view/2008/Q3/view536.html



> *Fred and Fan and the Financial Crisis*
> 
> I see that Obama has written to protest the massive payouts to the CEO's of Fannie Mae and Freddie Mac. Of course Obama already got his in the form of campaign contributions; and of course the usual lobby benefits. Long Time readers will recall I have been in opposition to Fred and Fan for many year.
> 
> ...


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## tomahawk6 (25 Sep 2008)

Great explanation of the bailout and what it may acheive.

http://biglizards.net/blog/archives/2008/09/democrats_try_t_1.html

Democrats Try to Hijack the So-Called "Bailout"
Congressional Corruption 
Hatched by Dafydd 
Republicans see the collapse of the mortgage market as a potential catastrophe that requires emergency measures... but an aberration caused by government intrusion into the market, not an indictment of capitalism and free markets.

Democrats see it as proof positive that capitalism has been proven to be a fad that will soon pass away, like pet rocks... and a golden opportunity to reintroduce failed liberal fascist economic policies straight out of the platforms of Woodrow Wilson, Franklin Roosevelt, and Jimmy Carter.

Which George W. Bush will show up... the veto-wielding Bush with a spine that we've seen in Democratic spending legislation after the 2006 elections -- or the wimpy, appeasing Bush that we've seen in legislation on racial preferences, Israeli-Palestinian "negotiations," and Republican spending prior to the 2006 elections? The choice will spell the difference between a small-footprint intervention or a massive repudiation of decades of progress on free-market economics.

But first, let's again talk about how we got into this mess.

Subprime mortgages, securitization, and toxic assets
This is the crux of the crisis: Back in the cretaceous period, when a bank or S&L issued a mortgage, it held that mortgage until the borrower paid it off. But in the contemporary era, what starts out as a mortgage is typically bundled with other mortgages into a "mortgage-backed securitie" (MBS) -- essentially bonds that can be traded on the open market. Bizarrely, in the process, bad debt automagically becomes good investment.

How are MBSs created? Let me quote from an excellent sumary in a newsletter by John Maudlin (free registration required):

Let's jump back 18 months. I spent several letters going over how subprime mortgages were sold and then securitized. Let's quickly review. Huge Investment Bank (HIB) would encourage mortgage banks all over the country to make home loans, often providing the capital, and then HIB would purchase these loans and package them into large securities called Residential Mortgage Backed Securities or RMBS. They would take loans from different mortgage banks and different regions. They generally grouped the loans together as to their initial quality as in prime mortgages, ALT-A and the now infamous subprime mortgages. They also grouped together second lien loans, which were the loans generally made to get 100% financing or cash-out financing as home owners borrowed against the equity in their homes.

Typically, a RMBS would be sliced into anywhere from 5 to 15 different pieces called tranches. They would go to the ratings agencies, who would give them a series of ratings on the various tranches, and who actually had a hand in saying what the size of each tranche could be. The top or senior level tranche had the rights to get paid back first in the event there was a problem with some of the underlying loans. That tranche was typically rated AAA. Then the next tranche would be rated AA and so on down to junk level. The lowest level was called the equity level, and this lowest level would take the first losses. For that risk, they also got any residual funds if everyone paid. The lower levels paid very high yields for the risk they took.

Then, since it was hard to sell some of the lower levels of these securities, HIB would take a lot of the lower level tranches and put them into another security called a Collateralized Debt Obligation or CDO. And yes, they sliced them up into tranches and went to the rating agencies and got them rated. The highest tranche was typically again AAA. Through the alchemy of finance, HIB took subprime mortgages and turned 96% (give or take a few points depending on the CDO) of them into AAA bonds. At the time, I compared it with taking nuclear waste and turning it into gold. Clever trick when you can do it, and everyone, from mortgage broker to investment bankers was paid handsomely to dance at the party.


So what started as mortgages -- ranging from very secure prime mortgages, which are doing fine, to lousy subprime mortgages for too much money to borrowers who really didn't have either the credit history or income to justify such loans, many of which are currently in default 60 days or more -- were, by the magic of "securitization," turned into bond-like securities; and in the process, many of the bad and even defaulted loans were transmaugrified into AAA-rated investments.

The banks and other financial institutions that securitized mortgages (and resecuritized already securitized MBSs) would make their nut by skimming some percent, typically fifty basis points (0.5%), off the loan rate; thus, if they began with a package of mortgages at 6.5% (they tried to bundle like with like), they would securitize them into an MBS that paid 6%, keeping the difference -- and hoping there would be few enough defaults that the mortgages would produce more than 6% net.

What happens when loans are defaulted is very complicated and not really germane to this post; they created different tiers, or "tranches," with different ratings -- AAA down to junk -- for different prices, that distributed the losses from worst tranch up to best. Not important here.

But defaults, of course, are where the whole pyramid scheme broke down. While housing prices continued to rise, everybody was happy and there were few defaults. But starting a couple of years ago, when the housing bubble burst and the mortgage default rate shot up, a bunch of banks found themselves holding very insecure securities, losing money hand over teakettle. The crash began among the lenders and spread to secondary markets (the MBSs and CDOs) and even tertiary markets (insurance underwriters like AIG). In short order, institutions all over the world found themselves holding pieces of paper whose value was impossible to determine -- which are referred to as toxic assets.

Toxic assets are illiquid, meaning they cannot be bought or sold because nobody knows how much to offer for them; they are frozen. If you hang onto them, they might regain some value later... or they could disappear completely. Worse, illiquid securities see their ratings drop; and current law forbids some types of funds from holding anything but AAAs... which means they may be forced by law to sell -- but unable to sell because of illiquidity!

Not only that, but current law also requires that such securities be "marked to market," meaning they must be valued at the last price offered by some institution that was desperate to sell -- because of the law in the previous paragraph. Thus, even institutions that didn't have to sell their toxic assets had to reprice them; this meant that a number of financial institutions suddenly did not have sufficient reserves for the amount of loans or leveraging they had out. That meant they needed to get hard cash and fast... which meant they would have to panic-sell a bunch of securities, precipitating a new round of re-rating and re-valuating.

Eventually, nobody had a clue what anything was worth anymore; and nearly every financial institution in the world, it seems, was involved up to the fourth cervical vertebra in this mess.

It was that uncertainty that caused the mortgage market to collapse. It's like trying to buy a car when all you can see is a grainy photo in a newspaper: You can't test-drive it, inspect it, or even kick the tires. You don't even know whether it contains an engine... how can you possibly make any kind of offer whatsoever?

Worse yet, the seller has never seen the car either, and he knows no more about it than you!

So what is to be done? Obviously, since the problem is the inability to set a value for these instruments, which makes them impossible to buy or sell (illiquid), the solution is to find a way to value them. Enter the Paulson-Bernanke emergency rescue plan.

Treasury presses the reset button
As proposed by Secretary of the Treasury Henry Paulson and Chairman of the Federal Reserve Ben Bernanke, the putative "$700 billion" "bailout" is actually neither: It will neither cost that much, nor will it bail out those financial institutions that wrote bad loans for people they knew were not likely to be able to pay them off.

As I understand it, here is the basic plan. Note that I'm drawing this from many sources, it's not yet written in stone -- or even in ink -- and I can't give you sources. If you want more information, you're on your own! But here is what I've been able to glean:

The Treasury is given authority to spend up to $700 billion (outstanding at any particular moment) to buy MBSs, CDOs, and related instruments that have become "illiquid." These "toxic assets" will be purchased from their current owners at a huge discount... meaning the banks and other investors who purchased these pigs in pokes will, in fact, take a significant financial hit... they're not being "bailed out."
So the Treasury can buy up these toxic assets; what do they do with them?

I believe the plan (which has not yet been formalized in legislation) is to create a Treasury owned and managed resolution corporation that will take ownership of these toxic assets. Analysts will then pore through each MBS, determining the status of all the underlying mortgages and making a report publicly available. This will make the opaque assets completely transparent. All the financial fundamentals will be visible, so analysts at private companies can examine all of the securities and decide how much they would pay for each. 

The resolution corporation will then auction off each of the the now-transparent MBSs, selling it to the highest bidder; that very action allows the market to reset the value of the security.

That is why I characterize this rescue operation as "pressing the reset button."

Once some corporation has examined the fundamentals of the security and offered the winning bid for it, the MBS becomes (by definition) liquid; it is no longer a toxic asset. Its value has been reset... and it can go up or down after that point based upon subsequent, well-understood events (defaults, repayments, prepayments) in the underlying mortgages and reevaluations based upon other, market-based criteria. In other words, it becomes just like a mutual fund.

The crisis was the inability to value MBSs; the solution is to reset their values. The beauty of the Paulson-Bernanke plan is that this resetting is done by the free market, not by government decree.

Finally, note this point:

When the Treasury-owned resolution corporation auctions off the now-transparent MBSs, it can use that money as income. Since the asset is now much more valuable than before (having been scrubbed into transparency), if it becomes saleable, then it will certainly sell for more than the discounted rate at which the corporation bought it. In other words, the resolution corporation will make a profit on every security it resells -- so the program will not actually cost $700 billion... it may even end up completely in the black.
That's why the Paulson-Bernanke plan is neither a bailout -- the so-called beneficiaries in fact must pay dearly for their folly -- nor massively expensive, since it resells most of the securities it bought, and at a profit. It could still end up costing money, depending on how many of the MBSs end up still toxic even after the complete report (if too many of the underlying mortgages are in default, for example); but the losses won't be anywhere near $700 billion, and they may be less than the profits.

Democrats: fingers in the pie, finger in your eye
But the loyal opposition is not content to use the Paulson-Bernanke emergency mortgage-market rescue plan to rescue the mortgage market from the current emergency; how dull that would be, especially in an election year. Rather, they see America's crisis as their opportunity to enact or re-enact by extortion every awful, failed, thoroughly discredited, socialist-populist scheme they have tried, or always wanted to try, over the past century. Senate Democrats demand:

Contingent stock in every, single company that sells its toxic assets to the resolution corporation; this would give the federal government a degree of ownership of virtually every bank, savings and loan, or other financial institution in the entire country. It is liberal fascism at its purest, and it would lead directly to much greater government control of private capital. 

They demand that bankruptcy judges be allowed to rewrite the terms of the underlying mortgages, in order to "provide direct assistance to homeowners caught in the foreclosure crisis"... in other words, to allow people who took out loans much too big for houses they could not afford to nevertheless keep those houses, even though they cannot make the payments. All at the expense of financial institutions that are teetering at the brink as it is.


Democrats demand "limits on the pay of top executives whose firms seek help." That is, Congress would set the salaries and bonuses of executives working at companies that are in serious trouble because of the mortgage meltdown... and that's always worked out so well in the past!


They also have structural demands:


The 44-page Senate proposal, pulled together by Senator Christopher J. Dodd, Democrat of Connecticut and the chairman of the banking committee, would require the Treasury to run the rescue plan through a new "Office of Financial Stability" to be headed by an assistant treasury secretary. It would also establish an "Emergency Oversight Board" to monitor the bailout effort, made up of the Fed Chairman, the chairman of the Federal Deposit Insurance Corporation, the chairman of the Securities and Exchange Commission; and two non-government employees with "financial expertise" in the public and private sectors, one each appointed by the majority and minority leadership in Congress.

In addition, the Senate proposal would require monthly reports to Congress, rather than the biannual reports that would be required under the Bush administration’s proposal.


This sounds like an invitation to micromanagement -- and unless I miss my guess, the "Emergency Oversight Board" will somehow end up stuffed with former members of the Clinton administration and/or Barack H. Obama's campaign, like Franklin Delano Raines, James Johnson, and Jamie Gorelick... the same people who ran Fannie Mae and Freddie Mac into the ground and ran many of the very multinationals that offered subprime loans, hedge-funds and other derivatives, or that insured these toxic assets, thus creating the crisis in the first place.


While former Clintonista (and now Charlie "Tax Ducker" Rangel's lawyer) wants the Democrats to go even further:


Barack Obama has tried to run as a unifying centrist. Now it may be time for him to clear the fog and talk, walk and sound like a true FDR liberal -- reminding the American people that at times like this, the government is a friend, not an enemy, contrary to conservative theology. Indeed, now may be the time for him and the Democratic Congress -- urged on as recently as Thursday by Treasury Secretary Henry Paulson -- to take the next 30 days to enact something reminiscent of FDR's first 100 days. It should be more than just a $700 billion bailout. It should also include billions to help homeowners avoid foreclosure, to assist the auto industry, to upgrade the nation's infrastructure, and to spur development of alternative energy sources.One can always trust Democrats to find a way, in any crisis, to throw gasoline at the bull.

President Bush (and the upcoming President John S. McCain) must remain stalwart and demand an up or down vote on a clean version of the Paulson-Bernanke rescue plan... no add-in spending, no wage and price controls or upgrading the nation's infrastructure, and specifically, no damned earmarks.

Anything less than this standard of rectitude and disinterested statesmanship would be an economic betrayal of America... and must lead to electoral ruin for any party which puts immediate self-gratification ahead of national economic survival.


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## a_majoor (25 Sep 2008)

The option to do nothing:

http://pajamasmedia.com/blog/an-alternative-to-the-wall-street-bailout/



> *An Alternative to the Wall Street Bailout*
> 
> September 24, 2008 - by Arnold Kling
> 
> ...


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## Edward Campbell (27 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is a rather bleak view of the US economic situation:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080926.wrcover27/BNStory/Business/home


> A nation of debtors
> 
> DAVID EBNER
> 
> ...




As I have said, and as John McCain said last night, this is, in Churchill’s words, not the beginning of the end of the crisis – it may just be the approach of end of the beginning. We have not found the “bottom” yet, and things cannot start to get better until they have reached that “bottom” point.


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## GAP (27 Sep 2008)

In following what is happening regarding the "bailout", I find nobody has any clear understanding of 

1. what happened (maybe they just don't want to point the finger)

2. what's the best way to sort it out

3. how is this going to affect the everyday person

on that basis, I don't think people or businesses are going to do anything dramatic, except sit tight and wait for a glimmer of change.....


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## muskrat89 (27 Sep 2008)

I am not an economist, but I can tell you that for the most part - average, everyday people like the ones I work and socialize with - are NOT happy with this bailout. This is from people of both political stripes. This is seen merely as more Government rescuing of fat cats that squandered and mismanaged millions of dollars.

"What about all the small companies? What about me? Where's our bailout?", are the types of comments I hear. Reading about WaMu's chairman getting a $20M wage package for 17 days of work doesn't help.


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## Edward Campbell (27 Sep 2008)

muskrat89 said:
			
		

> I am not an economist, but I can tell you that for the most part - average, everyday people like the ones I work and socialize with - are NOT happy with this bailout. This is from people of both political stripes. This is seen merely as more Government rescuing of fat cats that squandered and mismanaged millions of dollars.
> 
> "What about all the small companies? What about me? Where's our bailout?", are the types of comments I hear. Reading about WaMu's chairman getting a $20M wage package for 17 days of work doesn't help.



A lot of economists aren't happy either - and, as nearly as I can tell, the unhappiness is spread all across the political spectrum: far left to extreme right, albeit not for all the same reasons.

As to those overcompensated *celebrity CEOs*, see my comments here.


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## tomahawk6 (27 Sep 2008)

Well the credit markets are poised for a meltdown. No credit and the economy will grind to a halt with the attendant layoffs. If that happens opinions will no doubt change. The bailout is intended to free up the credit markets and allow for these mortgages to be sold in an orderly fashion. If the US economy grinds to a halt so will the global market place - depression is the quaint term economists use I think. I for one dont want to see door #2.


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## tomahawk6 (27 Sep 2008)

Looks lik a deal is close.



> So it looks like a deal is shaping up
> 
> Treasury purchases plus mbs insurance (cantor)
> 
> ...


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## tomahawk6 (27 Sep 2008)

Ok the deal is once again off. This latest news isnt good at all. Could be bank runs next week. Congress needs to fully fund FDIC and provide protections for money market accounts.



> The huge European bank Fortis is apparently about to fail. The ripple effect on the American banking system could be disastrous, with bank runs, liquidity crises, and stock sell offs possible Monday. Wachovia may well fail next week. As Larry put it, this really will be 1933 soon if we don't move rapidly to stabilize the banking system


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## GAP (27 Sep 2008)

> Wachovia may well fail next week



Wachovia has been in a bidding war since the start of the year.....the bidders have all backed off since the talk of a bailout, hoping to pick up Wachovia at a bargin basement price....


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## tomahawk6 (27 Sep 2008)

I have a brokerage account with Wachovia. Panic is a powerful force and a simple run on a few banks can get out of control. I have zero confidence in the democrat Congress to do whats right.


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## a_majoor (27 Sep 2008)

History is not comforting on this point:

http://thesecretsofvancouver.com/wordpress/fdr-lengthened-the-great-depression/economy



> *FDR Lengthened The Great Depression*
> 
> One of the new Liberal key talking points is that FDR oversaw the Great Depression - Obama and Biden have repeatedly stated this. The implication is that the left can steer us through this financial crisis.
> 
> ...


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## a_majoor (28 Sep 2008)

Is there a potential solution? If these calculations are correct then there is a potential "out". On the other hand, allowing politicians to get their hands on this amount of money and resources is probably an invitation to an even greater disaster.....

http://pajamasmedia.com/blog/uncle-sams-multi-trillion-dollar-oil-lockup/2/



> *Uncle Sam’s Multi-Trillion-Dollar Oil Lockup*
> 
> September 26, 2008 - by Tom Blumer
> 
> ...


----------



## Lockness (28 Sep 2008)

Some good info in this paper...

*"Proposed $700 Billion Bailout Is Too Little, Too Late to End the Debt Crisis; Too Much, Too Soon for the U.S. Bond Market"*Submitted by Martin D. Weiss, Ph.D. and Michael D. Larson Weiss Research, Inc.
to United States Congress Senate Banking Committee and House Financial Services Committee September 25, 2008

http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf

excerpts from Executive Summary....


> New data and analysis demonstrate that the proposal before Congress for a $700 billion financial industry bailout is too little, too late to end the massive U.S. debt crisis; and, at the same time, too much, too soon for the U.S. Government bond
> market where most of the funds would have to be raised.
> 
> *I. Too Little, Too Late to End the Debt Crisis.*
> ...



Some interesting tidbits with the banks at risk of failure... HSBC has a financial ranking of D+ with a 721% exposure to derivatives based on capital.  Wachovia has a C+ ranking and 78% exposure.  Citibank has a C- rank and 279% exposure.

In my opinion, keeping all your savings in U.S. based paper assets (stocks, bonds, T-bills, dollars) and hoping the government and banking system will protect your wealth is a losing strategy.  It seems to me that the Fed seems intent on hyperinflating their way out of this mess with endless bailouts of everyone until there is a final death spiral of the US dollar when foreign debt holders dump their dollars.  

If you don't hold it you don't own it.... so cash, stock and bond certificates, land (preferably waterfront), gold/silver, commodities, foreign assets in stable countries.  Stick to the 3 B's - beans bullets and bullion.

Another good resource is Chris Martenson's crash course...

http://www.chrismartenson.com/crashcourse

Interesting times


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## Edward Campbell (28 Sep 2008)

Well, according to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, the bailout package is crafted, for better or for worse:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080928.wbailout28/BNStory/Front/home


> Deal reached on bailout plan
> 
> CHARLES BABINGTON AND ALAN FRAM
> Associated Press
> ...




To see if it is working at its *real* goal: stopping the panic amongst too easily frightened ‘investors,’ watch the LIBOR numbers.

LIBOR = London Interbank Offered Rate; it is the rate of interest at which banks borrow funds from each other in the London interbank market. LIBOR is the primary benchmark for global short term interest rates. It is the basis for contracts on many of the world’s major futures and options exchanges and most Over the Counter and lending transactions.


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## GAP (28 Sep 2008)

Interesting description of AIG's downfall.....there are a number of articles on the page, but the one I am posting is called

*The London Office*
  Article Link

  The insurance giant’s London unit was known as A.I.G. Financial Products, or A.I.G.F.P. It was run with almost complete autonomy, and with an iron hand, by Joseph J. Cassano, according to current and former A.I.G. employees. ~~~ A onetime executive with Drexel Burnham Lambert — the investment bank made famous in the 1980s by the junk bond king Michael R. Milken, who later pleaded guilty to six felony charges — Mr. Cassano helped start the London unit in 1987. ~~~ The unit became profitable enough that analysts considered Mr. Cassano a dark horse candidate to succeed Maurice R. Greenberg, the longtime chief executive who shaped A.I.G. in his own image until he was ousted amid an accounting scandal three years ago. ~~~ But last February, Mr. Cassano resigned after the London unit began bleeding money and auditors raised questions about how the unit valued its holdings. By Sept. 15, the unit’s troubles forced a major downgrade in A.I.G.’s debt rating, requiring the company to post roughly $15 billion in additional collateral — which then prompted the federal rescue. ~~~ Mr. Cassano, 53, lives in a handsome, three-story town house in the Knightsbridge neighborhood of London, just around the corner from Harrods department store on a quiet square with a private garden. ~~~ He did not respond to interview requests left at his home and with his lawyer. An A.I.G. spokesman also declined to comment. ~~~ At A.I.G., Mr. Cassano found himself ensconced in a behemoth that had a long and storied history of deftly juggling risks. It insured people and properties against natural disasters and death, offered sophisticated asset management services and did so reliably and with bravado on many continents. Even now, its insurance subsidiaries are financially strong. ~~~ When Mr. Cassano first waded into the derivatives market, his biggest business was selling so-called plain vanilla products like interest rate swaps. Such swaps allow participants to bet on the direction of interest rates and, in theory, insulate themselves from unforeseen financial events. ~~~ Ten years ago, a “watershed” moment changed the profile of the derivatives that Mr. Cassano traded, according to a transcript of comments he made at an industry event last year. Derivatives specialists from J. P. Morgan, a leading bank that had many dealings with Mr. Cassano’s unit, came calling with a novel idea. ~~~ Morgan proposed the following: A.I.G. should try writing insurance on packages of debt known as “collateralized debt obligations.” C.D.O.’s. were pools of loans sliced into tranches and sold to investors based on the credit quality of the underlying securities. ~~~ The proposal meant that the London unit was essentially agreeing to provide insurance to financial institutions holding C.D.O.’s and other debts in case they defaulted — in much the same way some homeowners are required to buy mortgage insurance to protect lenders in case the borrowers cannot pay back their loans. ~~~ Under the terms of the insurance derivatives that the London unit underwrote, customers paid a premium to insure their debt for a period of time, usually four or five years, according to the company. Many European banks, for instance, paid A.I.G. to insure bonds that they held in their portfolios. ~~~ Because the underlying debt securities — mostly corporate issues and a smattering of mortgage securities — carried blue-chip ratings, A.I.G. Financial Products was happy to book income in exchange for providing insurance. After all, Mr. Cassano and his colleagues apparently assumed, they would never have to pay any claims. ~~~ Since A.I.G. itself was a highly rated company, it did not have to post collateral on the insurance it wrote, analysts said. That made the contracts all the more profitable. ~~~ These insurance products were known as “credit default swaps,” or C.D.S.’s in Wall Street argot, and the London unit used them to turn itself into a cash register. ~~~ The unit’s revenue rose to $3.26 billion in 2005 from $737 million in 1999. Operating income at the unit also grew, rising to 17.5 percent of A.I.G.’s overall operating income in 2005, compared with 4.2 percent in 1999. ~~~ Profit margins on the business were enormous. In 2002, operating income was 44 percent of revenue; in 2005, it reached 83 percent. ~~~ Mr. Cassano and his colleagues minted tidy fortunes during these high-cotton years. Since 2001, compensation at the small unit ranged from $423 million to $616 million each year, according to corporate filings. That meant that on average each person in the unit made more than $1 million a year. ~~~ In fact, compensation expenses took a large percentage of the unit’s revenue. In lean years it was 33 percent; in fatter ones 46 percent. Over all, A.I.G. Financial Products paid its employees $3.56 billion during the last seven years. ~~~ The London unit’s reach was also vast. While clients and counterparties remain closely guarded secrets in the derivatives trade, Mr. Cassano talked publicly about how proud he was of his customer list. ~~~ At the 2007 conference he noted that his company worked with a “global swath” of top-notch entities that included “banks and investment banks, pension funds, endowments, foundations, insurance companies, hedge funds, money managers, high-net-worth individuals, municipalities and sovereigns and supranationals.” ~~~ Of course, as this intricate skein expanded over the years, it meant that the participants were linked to one another by contracts that existed for the most part inside the financial world’s version of a black box. ~~~ Goldman Sachs was a member of A.I.G.’s derivatives club, according to people familiar with the operation. ~~~ Few knew of Goldman’s exposure to A.I.G. When the insurer’s flameout became public, David A. Viniar, Goldman’s chief financial officer, assured analysts on Sept. 16 that his firm’s exposure was “immaterial,” a view that the company reiterated in an interview. ~~~ Later that same day, the government announced its two-year, $85 billion loan to A.I.G., offering it a chance to sell its assets in an orderly fashion and theoretically repay taxpayers for their trouble. The plan saved the insurer’s counterparties but decimated its shareholders. ~~~ Lucas van Praag, a Goldman spokesman, declined to detail how badly hurt his firm might have been had A.I.G. collapsed two weeks ago. He disputed the calculation that Goldman had $20 billion worth of counterparty risk to A.I.G., saying the figure failed to account for collateral and hedges that Goldman deployed to reduce its risk. ~~~ Regarding Mr. Blankfein’s presence at the Fed during talks about an A.I.G. bailout, he said: “I think it would be a mistake to read into it that he was there because of our own interests. We were engaged because of the implications to the entire system.” ~~~ Mr. van Praag declined to comment on what communications, if any, took place between Mr. Blankfein and the Treasury secretary, Mr. Paulson, during the bailout discussions. ~~~ A Treasury spokeswoman declined to comment about the A.I.G. rescue and Goldman’s role. The government recently allowed Goldman to change its regulatory status to help bolster its finances amid the market turmoil. 


    9/27/2008 12:29:49 PM
 Rick
More on link


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## tomahawk6 (28 Sep 2008)

Well the FDIC and SIPC protect deposits in banks and brokerage accounts. I dont know if depositers in other countries have this protection but it does provide a safety net for most americans and foreign investors.


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## GAP (28 Sep 2008)

tomahawk6 said:
			
		

> Well the FDIC and SIPC protect deposits in banks and brokerage accounts. I dont know if depositers in other countries have this protection but it does provide a safety net for most americans and foreign investors.



I am under the impression from reports last week, that if the foreign banks maintained personnel and outlets in the US for the purposes of banking/investment then they are eligible......this would probably leave those foreign investors that bought sub prime mortgage packages (or whatever they are called) out in the cold...


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## tomahawk6 (28 Sep 2008)

According to info on the deal I have seen[it seems to change] the Treasury will be able to buy the mortgage backed securities from any entity. I want to stress that these mortgage securities are not worthless.People are still making their mortgage payments.Property values are down now but they will rebound in a few years.So if you dont have to sell them right now,then in time they can be sold at a profit.

I am more concerned by the credit crisis that this plan may not address at all.Cash right now is king.In many parts of the country you cant buy a car new or used. This may shut down factories,layoffs and it will spread.I think this is worst case.


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## Lockness (28 Sep 2008)

tomahawk6 said:
			
		

> Well the FDIC and SIPC protect deposits in banks and brokerage accounts. I dont know if depositers in other countries have this protection but it does provide a safety net for most americans and foreign investors.




My understanding is that FDIC insures up to $100k in bank deposits and SIPC insures up to $500k for brokerage accounts.

If a brokerage goes bankrupt, it might be some time before you can recover your stock or bond certificates if they are holding them for you.  So what happens if you want to sell them in the meantime?  You can't because they are frozen until the bankruptcy gets settled.  Some have suggested that it is prudent to obtain your certificates from the brokerages (probably for a small fee) if you have worries about their financial state.  This way you can sell them when you want to.

The Fed has also stated that they will insure money market mutual fund accounts.  Does this mean money market managers can take on extra risk to obtain higher returns with no penalty for poor judgement?

This market is becoming so difficult to invest in with ad hoc rule changes and intervention causing unintended consequences.


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## GAP (28 Sep 2008)

tomahawk6 said:
			
		

> According to info on the deal I have seen[it seems to change] the Treasury will be able to buy the mortgage backed securities from any entity. I want to stress that these mortgage securities are not worthless.People are still making their mortgage payments.Property values are down now but they will rebound in a few years.So if you dont have to sell them right now,then in time they can be sold at a profit.
> 
> I am more concerned by the credit crisis that this plan may not address at all.Cash right now is king.In many parts of the country you cant buy a car new or used. This may shut down factories,layoffs and it will spread.I think this is worst case.



Have you heard anything but tripe on what they are going to do, if anything, on the high interest rates these subprime mortgages are demanding on resigning? If they don't stop the defaulting, nothing is going to change in this market....


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## Edward Campbell (28 Sep 2008)

The actual default rate is not all that high – 2 or 3%, I think, but 2 or 3% of the US mortgage market is a HUGE number. The problem is, of course, focused on the $1.5± Trillion _sub-prime_ mortgage market where the default rates is more like 10-20%.

The problem is that many (most?) US mortgages (worth $12 Trillion) have shrunk in value and too many Americans were using their home mortgage as an ATM – refinancing as, years-after-year just a few years ago, home values rose. That’s the source of the very serious credit crunch.

The other problem with the US housing situation is that there is now a huge oversupply of nearly new homes on the market which means that the market for brand new homes has all but dried up which means, in turn, that all those well paid, low skill home building jobs are gone, too. That means less demand for new cars and new textiles and new almost anything - which means more job losses. I repeat: downward spiral, anyone?

We are not at the “bottom” yet.


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## GAP (28 Sep 2008)

If that is true ER, I don't see this bailout doing zip for solving the problem for anybody but friends of congress and senate....


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## Edward Campbell (28 Sep 2008)

GAP said:
			
		

> If that is true ER, I don't see this bailout doing zip for solving the problem for anybody but friends of congress and senate....



The bailout (combined with other measures) needs to address two issues:

1. Easing the credit crisis by putting 'liquidity,' real money, back into the market so that people can buy 'stuff' - preferably stuff made in America by American workers, but stuff all the same; and

2. Prevent panic by 'investors' who, when collected together, _morph_ into a timid beast with a very, very low IQ.

Both are aimed at helping 'ordinary' Americans on Main Street - not the bunches of crooks and bunglers on Wall Street and K Street.


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## tomahawk6 (28 Sep 2008)

Tripe Gap ? I think I have a better handle on the situation than most. We have had housing dips in the past and everytime the market comes back.The coasts seem to see bigger swings than the middle of the country. We bought our house 9-10 years ago for around $350,000 and today its worth close to $800,000 at least thats wht my property tax is based on. The house may or may not sell for that today but it will in time. A cousin in California sold their 1400sf house for $1.4m now thats just crazy.They moved back to the midwest found a 4000sf house on a lake for $600,000 and banked the difference.


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## GAP (28 Sep 2008)

E.R. Campbell said:
			
		

> The bailout (combined with other measures) needs to address two issues:
> 
> 1. Easing the credit crisis by putting 'liquidity,' real money, back into the market so that people can buy 'stuff' - preferably stuff made in America by American workers, but stuff all the same; and
> 
> ...



Giving these companies money with getting back nothing solves the liquidity problem how? Is the government physically buying stakes in these companies or physically buying defunct mortgages? I still don't see where just putting money into circulation benefits anybody but the companies receiving it.

when they took over fanny Mae and Freddy mac, they took a huge chunk of equity to compensate......as far as I can see there is no such thing anticipated here.


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## Bruce Monkhouse (28 Sep 2008)

tomahawk6 said:
			
		

> . We bought our house 9-10 years ago for around $350,000 and today its worth close to $800,000



..and in 5 years it could be worth 50,000.


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## Edward Campbell (28 Sep 2008)

GAP said:
			
		

> Giving these companies money with getting back nothing solves the liquidity problem how? Is the government physically buying stakes in these companies or physically buying defunct mortgages? I still don't see where just putting money into circulation benefits anybody but the companies receiving it.
> 
> when they took over fanny Mae and Freddy mac, they took a huge chunk of equity to compensate......as far as I can see there is no such thing anticipated here.




While they will get some ‘security,’ I think this part is, mainly, about buying up he bad debt and writing it off or down.

This article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ explains what one reporter thinks Hank Paulsen and Nancy Pelosi are saying:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080928.wbailout0928/BNStory/Business/home


> Congress expected to pass $700-billion rescue package
> 
> JULIE HIRSCHFELD DAVIS
> 
> ...



I think the answer to your question, an answer, I’m guessing you don’t want to hear, is: *“the government would pump as much as $700-billion into beleaguered financial firms that are starving for cash, taking over huge amounts of devalued assets from the companies in the hopes of unlocking frozen credit.”* The rationale is: *”If we* [the US government] *do not do this, the trauma, the chaos and the disruption to everyday Americans' lives will be overwhelming, and that's a price we can't afford to risk paying*”.

The debt is ‘devalued’ – some is quite worthless, a lot has 10, perhaps even 60% of its value. We’re not going to know exactly how much worthless debt was, in effect, purchased from rich bankers/investors for *real money* by the long suffering US taxpayer until several years from now – by which time, Paulson, Pelosi _et al_ hope, we they will have forgotten.

T-6 is right. For most Americans the ‘lost’ values in their homes and portfolios will return – not this year, maybe not until 2010 or even later, but measured over any 20+ year period the US economy always has gotten bigger and better and there is no reason to believe the same will not happen over a period that _embraces_ 2005-2015.


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## tomahawk6 (28 Sep 2008)

Edward is quite right about the historical value in the housing market. Stock prices fluctuate. If you are a long term holder of say Exxon it doesnt matter much what todays price is. It only matters if you are going to sell your stock.People/pension funds that invested in Lehman have seen their positions wiped out. This bailout wont help them. The Treasury will be buying the MBS's and others assets and then will hold the securities until such time as the markets reset and the paper regains value.Right now defaults in the mortgage market is under 2%. Those properties are listed with a real estate agent and available for purchase- if the buyer has cash or can get credit. This is where the credit crisis has to be resolved. Buying foreclosed properties will make a person pretty well off when the credit markets are solvent again.Until that time keep your assets liquid.


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## Lockness (28 Sep 2008)

E.R. Campbell said:
			
		

> The bailout (combined with other measures) needs to address two issues:
> 
> 1. Easing the credit crisis by putting 'liquidity,' real money, back into the market so that people can buy 'stuff' - preferably stuff made in America by American workers, but stuff all the same; and
> 
> ...



"Just-released Federal Reserve Flow of Funds data show that, beyond mortgages, there are another $20.4 trillion in private sector
consumer and corporate debts, plus $2.7 trillion in municipal securities outstanding."

http://www.moneyandmarkets.com/files/documents/Final-Bailout-White-Paper.pdf

This amounts to debts about $68,000 per U.S. person not counting mortgage debts, the national debt of $10 trillion and $50 trillion in social security and medicade debts.  All told it is likely in $100 trillion range for $300k debt per U.S. person and rising.  This simply is too much debt and is not sustainable.  

The U.S. consumer seems to have been living well beyond their means for the last 30 or so years and exponentially increasing the last 5 years by using the "free money" from their housing ATM machines.  Increasing credit to the market so that people can buy more 'stuff' is not what is needed.  In the short run it just keeps the boat afloat a little longer but it doesn't solve the underlying problems.  Most of the 'stuff' is made in China anyways so China receives the production benefits.

What is needed is for the U.S. consumer to start living within their means, reduce spending on 'stuff' that returns no value, paying off debt, saving money to reinvest in self liquidating debt asset businesses and increase productivity.  China is currently handing the U.S. and the western world their economic asses.  But the U.S. may get the last laugh if they default on all their pretty paper they handed China for tangible goods.  Then again the children's toys from China are tainted with lead, not to mention the poison in baby milk formula.

The U.S. taxes savings and provides tax rebates for debts (mortgages).  The U.S. rewards corporations that have made poor, bad, or outright fraudulent decisions with bailouts and penalizes the taxpayer and saver through the "hidden" inflationary tax.  The more incompetent and fraudulent you are the more you are rewarded, the more honest and hard working you are the more you are exploited.  The incentives are in the wrong place.  Gains are capitalized to the elite, losses are socialized to the masses.

The U.S. is a great nation and have some of the best people I know and will recover and get through this crisis.  The economic system needs to be restructured starting with a sound money policy.


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## Edward Campbell (28 Sep 2008)

I agree, pretty much up and down the line, with Lockness’ assessment:

•	$300k debt per U.S. person and rising.  This simply is too much debt and is not sustainable.  X

•	The U.S. consumer seems to have been living well beyond their means for the last 30 or so years by using the "free money" from their housing ATM machines.  X

•	What is needed is for the U.S. consumer to start living within their means, reduce spending on 'stuff' that returns no value, paying off debt, saving money to reinvest and increase productivity. √

•	China is currently handing the U.S. and the western world their economic asses. X

•	The U.S. may get the last laugh if they default on all their pretty paper they handed China for tangible goods. ?

•	The U.S. taxes savings and provides tax rebates for debts (mortgages). X

•	The U.S. rewards corporations that have made poor, bad, or outright fraudulent decisions with bailouts and penalizes the taxpayer and saver through the "hidden" inflationary tax. X

•	The U.S. is a great nation and have some of the best people I know and will recover and get through this crisis. √

•	The economic system needs to be restructured starting with a sound money policy. √

*BUT* I cannot imagine the impact of a major US default on its debt. I’m not sure the global economy, not, at least, as I understand it, could absorb the impact.

My mean, cold Scots soul would be satisfied if we allowed the chips to fall where they might – and, by the way, I hold (thankfully not too many) shares in Bank of America, Bank of New York Mellon Corp, JPMorgan Chase & Co, MetLife, Morgan Stanley, and Wells Fargo & Co. But, as with a default on the debt, I have trouble imagining the impact*s* – and there would be plenty of ‘em: economic, social, political, even strategic - of a broad, general Wall Street collapse.

I’m guessing that Bush _et al_ are taking the best consensus advice – most of which is coming, I admit, from Wall Street insiders, Paulson included – and doing what they can to solve the problems they can see.


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## Lockness (28 Sep 2008)

The advantages of holding the world's reserve currency is the U.S. will never default on their foreign debts in a classical sense.  They just print more dollars as needed to pay the bills.  If we all could be so lucky.

Its been 37 years since the U.S. currency was taken off the gold standard.  The question is how many more months/years can this system be sustained?


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## Edward Campbell (28 Sep 2008)

But printing more money takes us back to another very unpleasant experience, the 1970s, doesn't it?


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## tomahawk6 (28 Sep 2008)

Here is a comparison of the final bill.

http://www.dcexaminer.com/opinion/blogs/TapscottsCopyDesk/Comparison_of_original_Paulson_bailout_to_compromise_proposal.html


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## Lockness (28 Sep 2008)

E.R. Campbell said:
			
		

> But printing more money takes us back to another very unpleasant experience, the 1970s, doesn't it?



I absolutely agree but that is what is happening and it seems to be accelerating with the U.S.'s current policymakers and by extension to the G-7 central bankers.  We are all in this together although Canada maybe better positioned than most with debt load under control and falling, a nation of savers, and a country of resources.  The U.S. is probably in a much more vulnerable position now than the 1970's with little to no savings, equity tied up in illiquid assets that are falling in value, stock market in decline, energy prices rising, a large part of their manufacturing now outsourced to developing countries, and vulnerable to interest rate increases due to all their high debt loads.  Its worrying times if you are caught unprepared.


*"Dollar Death Ray #1"*
by Ned W. Schmidt, CFA, CEBS
Schmidt Management Company
September 26, 2008

http://www.financialsense.com/editorials/schmidt/2008/0926.html



> Our graph this week is of the Dollar Death Ray, which is aimed directly at the value of the U.S. dollar. This plot is an extension of that which was introduced in last week's Gold Thoughts. In the graph is plotted the year-to-year change in Federal Reserve bank credit. In simplest terms, it is the rate of expansion of the asset side of Federal Reserve's balance sheet. Latest data was released Thursday, 25 September. In this case, it has been adjusted for a circular transaction created by Treasury supplemental financing of the Federal Reserve which was recently done. Federal Reserve bank credit, or U.S. base money, has now been expanded at a record level. Rarely, if ever, has a major central bank intentionally inflated its balance sheet in such an inflationary manner.
> 
> (see link for graph)
> 
> ...


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## Edward Campbell (28 Sep 2008)

Here in a picture of that graph:









Just imagine turning it upside down to see the future value of the $(US)!


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## GAP (28 Sep 2008)

Just listening to ABC news. In addition to the 700 billion plan there was an additional 25 billion approved for the three big automakers. They had been asking for 50 billion. In the spring budget 25 billion was approved under the energy budget, but the government just approved the other 25 billion they wanted....no guarantees whatsoever. 

Apparently there was 15 billion given to the airlines after Sept 11.....gee that was done quietly.


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## retiredgrunt45 (28 Sep 2008)

> If you own paper assets instead of Gold, be prepared for the value of your wealth to deteriorate.



Sounds familiar, as when the DOT COM bubble burst. Filthy rich one day, poor as a church mouse the next... 

*Financial Weapons of Mass Destruction*
By Sean Gonsalves, AlterNet. Posted September 22, 2008.

http://www.alternet.org/columnists/story/99812/financial_weapons_of_mass_destruction/


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## tomahawk6 (28 Sep 2008)

There are strings of course.



> Under provisions of the new legislation, not only US carmakers are eligible for the guarantees but also suppliers and foreign automakers with plants in the United States that are more than 20 years old -- Nissan and Honda's US operations qualify.


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## Edward Campbell (29 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s _Financial Times_ is what I think is a pretty fair and fairly ‘conservative’ reaction to the ‘bailout’:

http://www.ft.com/cms/s/0/622c4c02-8d8e-11dd-83d5-0000779fd18c.html?nclick_check=1


> Backing Paulson’s bank bail-out
> 
> Published: September 28 2008 20:07 | Last updated: September 28 2008 20:07
> 
> ...


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## Edward Campbell (29 Sep 2008)

The first of several steps is accomplished. According to recent reports the US House of Representatives voted 220-198 to move the bill forward towards a final vote.


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## Edward Campbell (29 Sep 2008)

E.R. Campbell said:
			
		

> Well, according to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, the bailout package is crafted, for better or for worse:
> 
> http://www.theglobeandmail.com/servlet/story/RTGAM.20080928.wbailout28/BNStory/Front/home
> 
> ...




The pain is spreading according to this article which is reproduced under the Fair Dealing provisions(§29) of the Copyright Act from today’s _Globe and Mail_:

http://www.theglobeandmail.com/servlet/story/RTGAM.20080929.winterbank0929/BNStory/Front


> Global money markets still frozen
> 
> JAMIE MCGEEVER
> 
> ...


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## Edward Campbell (29 Sep 2008)

And here, also reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ web site, is some reaction from some experts:

http://www.theglobeandmail.com/blogs/markets


> Holding the applause
> David Berman,
> 
> David Berman has been writing about business and investing since 1995. He began his career at Canadian Business magazine, where he wrote full-length features on a range of topics, from goose slaughterers to broadcasters. Later, he moved to MoneySense magazine, where his emphasis turned to investing. More recently, he worked at the Financial Post as an investing writer and daily columnist. He has a bachelor of arts degree from the University of Toronto and studied journalism at Ryerson University.
> ...


 

I suppose we can say that enthusiasm is restrained.


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## Edward Campbell (29 Sep 2008)

As of 1400 1415 Hrs (Eastern) the vote is *failing* *has failed* in the House of Representatives: 207 (Yea) vs 226 (Nay). Republicans are 2:1 *against* their president's plan - amended though it was by Nancy and her boys.

President George W Bush cannot command the loyalty of his own party, even when he runs about, à la _Chicken Little_, squawking about a falling sky.

At 1410: the stock indices are: TSX *–870* and Dow30 *-565*. Those are HUGE expressions of *lack of confidence* in the US economy.

Is the sky falling? No. Is the US economy in trouble? Yes. Is Canada’s economy in trouble? Not as much as Canadian investors fear. Is the US political system working? Yes. Is it working well? No. Are things going to get better? Yes – eventually. Are things going to get worse? Yes – lots and soon.



Edited to insert situation at 1415 Hrs.


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## GAP (29 Sep 2008)

The dominos are continueing to fall

Citigroup buys Wachovia bank assets for $2.2B
As part of all-stock deal, Citi will acquire deposits, loans from nation's fourth largest bank. Citi also to raise $10B in stock sale, cuts dividend.
Last Updated: September 29, 2008: 1:53 PM ET
Article Link

NEW YORK (CNNMoney.com) -- Citigroup will acquire the banking operations of Wachovia for $2.2 billion in an all-stock deal announced Monday, following much speculation over the weekend about the fate of the nation's fourth-largest bank. 

To help finance the transaction, Citigroup said it would raise $10 billion through a sale of common stock and announced it would slash its quarterly dividend yet again, cutting it in half to 16 cents a share to preserve capital. 

As part of the deal, Citigroup will acquire Wachovia's massive deposit network, giving it more than $600 billion in deposits in the U.S., about a 9.8% market share, and broadening its presence in such key regions as the Southeast and the West.

At the same time, Citi will assume about $53 billion in the Wachovia's debt and take hold of the same loan portfolio that ultimately sank Wachovia in the end.

Of the more than $300 billion in loans it absorbs, Citigroup said it would cover up to $42 billion of losses on those loans, while the Federal Deposit Insurance Corporation will be on the hook for anything beyond that. 

In exchange, the FDIC will get preferred stocks and warrants worth about $12 billion.

Banking regulators stressed that consumers who bank with Wachovia would not experience any interruption in service and that their deposits remained protected.

"Today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits," said FDIC Chairman Sheila Bair.

The FDIC noted that Wachovia did not 
More on link


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## Celticgirl (29 Sep 2008)

I hope there is a Plan B...

U.S. Congress Rejects Bailout Bill


 :-\


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## a_majoor (29 Sep 2008)

> I hope there is a Plan B...



How about no bailout at all and let the market clear in a rapid fashion? Since incompetent congressional legislation (dating back to the late 1990's) caused the disaster, then I would suggest we don't let the Congress get involved again.


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## Redeye (29 Sep 2008)

And if you had a well diversified portfolio instead of betting it all on tech, you had a couple of miserable years that worked themselves out when the market recovered.



			
				retiredgrunt45 said:
			
		

> Sounds familiar, as when the DOT COM bubble burst. Filthy rich one day, poor as a church mouse the next...
> 
> *Financial Weapons of Mass Destruction*
> By Sean Gonsalves, AlterNet. Posted September 22, 2008.
> ...


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## muskrat89 (29 Sep 2008)

From a Fox News commentary:  http://foxforum.blogs.foxnews.com/2008/09/29/jpinkerton_0929/

I kinda like this:




> September 29th, 2008 3:42 PM Eastern
> 
> No to the Bailout: We Can’t Let Bankers Try to Blackmail America
> 
> ...


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## Rodahn (29 Sep 2008)

Well, I tried to talk to the financial guy today, but he couldn't be located. He was later discovered curled up under his desk in the fetal position.........

I think that there is yet to be further fall out from the American markets, hopefully due to different regulations it won't affect us as badly here in Canada. Though I rather doubt this will be the case, as our economies are so intertwined.


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## Edward Campbell (30 Sep 2008)

I am philosophically inclined to the _Jacksonian_ view to which muskrat89 referred: let the stupid and venal pay the price.

It will *feel good*, for a couple of billion small investors and it will *be good* for the global financial system if a few hundred bankers and CEOs are bankrupted – maybe even tossed in jail. There is no great harm in a few thousand of the over-paid _thirtysomething_ traders being put on the street. Equally, those middle class Americans who, stupidly and greedily, used their home mortgages as under-secured ATMs deserve the pain they are about to feel, don’t they?

Of course I will feel a wee, tiny bit of regret about the job losses amongst the ordinary workers in the banks and financial services businesses and for the shoe salesmen and dry cleaning shop owners and the like, the folks who served all those now unemployed Wall Streeters and who, therefore, also have to start looking for new jobs.

Amongst those paying the price will be those ‘stupid’ enough to have signed up for the _American Dream_ and who are now about to be homeless – those who bought houses they ought to have known they could not afford, just because some smart, well dressed lady in a mortgage broker’s office told them it was OK - not just OK, but certain to bring them the security of home ownership. Of course the workers in the home building industries – those who did nothing at all wrong – are also going to pay: there are almost no new homes being built. They are looking for new jobs – jobs that are harder and harder to find because there are too many people chasing too few jobs.

When fewer and fewer people have jobs they stop buying new cars, too. That means that people get laid off in Detroit and Oshawa and Osaka, too.

The market works; it is working, right now. It will, efficiently and effectively, rebalance itself. But the market is not famous for its social conscience or its kindness. When it corrects itself it requires that we all pay – perhaps with just some _paper losses_, perhaps with our jobs and savings.

Philosophically I’m inclined to let the market do its work in its own way. But I can afford that view. I’m retired – I have no job to lose; I have no mortgage; I have a sufficient pension; I don’t need to take any money out of my investment accounts right now, so my ‘losses’ are notional.

Not everyone can afford to be so philosophical. Those were the people President Bush and Hank Paulson were trying to help but those were the same people who said “No!” to bailing out Wall Street. Well, now they will reap what they sowed.


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## GAP (30 Sep 2008)

I got hit by the recession in the early nineties....when all these young 20-30 somethings were competeting  for the same jobs I was, I suddenly found ability and job loyalty don't always get you what you want. So in the space of 5 years, I renewed my electronics certification, became certified as a computer technician, then went on and became a computer programmer. If it had not been for the recession I wouldn't have put the effort out to change away from mechanical systems, but I was determined to not be put in that position again.

There were a lot of people exactly like me, doing exactly the same process.....they bettered themselves, increased their marketability, and busted their tails to get there. The cream (heh) rises to the top (or at least a little way up)

The coming recession in the US will have the same effect, except it will be massive and nowhere near as smooth.....


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## Edward Campbell (30 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is an article explaining the _grassroots_ opposition to the bailout:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080929.wrbanksgrassroots30/BNStory/Business/home


> Wall Street bailout trips over grassroots
> 
> PAUL WALDIE
> 
> ...




It isn’t ‘just’ _ordinary_ Americans who oppose the bailout. Some pretty smart economists also think that the only effective way – and the most efficient way – to solve the crisis is to let the market sort itself out in its own (often cruel) way.


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## muskrat89 (30 Sep 2008)

And if Andrew Jackson isn't the voice of reason, how about Ted Nugent?  

http://arizonahuntingtoday.com/desertrat/2008/09/27/ted-nugent-on-the-bailout/


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## Edward Campbell (30 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is another article which explains what might – likely will – happen to Canada as a result of this US housing/credit crisis:

http://www.reportonbusiness.com/servlet/story/RTGAM.20080929.wbankseconomy30/BNStory/Business/home


> Canadians brace for 'bloodbath' as credit tightens, money dries up
> 
> KEVIN CARMICHAEL and ANDY HOFFMAN AND GREG KEENAN
> 
> ...




It may be a _Wall Street_ problem but it will sideswipe every Main Street in Canada and the USA before its is solved.


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## Edward Campbell (30 Sep 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _National Post_, is another piece with which I fundamentally agree:

http://www.nationalpost.com/news/story.html?id=847962


> Financial markets go up and down as they should
> 
> Terence Corcoran, National Post
> 
> ...




I think the bailout is designed to help ease the (inevitable) pain that *will* be felt on _Main Street_ in Canada and the USA. Believe it or not, multi-millionaire _Goldman Sachs_ insider Hank Paulson IS on the side of the little guy. But the ‘little guy’ says (s)he doesn’t want help, and (s)he doesn’t, yet, because the pain hasn’t made it to her/him, yet. And investors are, as Corcoran suggests, worried about big things like the ‘real’ value and worth of their investments and, beyond that, many suspect that $700 Billion is _waaaaay_ too little to do much good – but they aren’t sure what, if anything, will do ‘good’ for the markets.


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## Kirkhill (30 Sep 2008)

I find myself wondering if there aren't commonalities between this current financial crisis and Global Warming.

At least in terms of attitudes.  There are those that argue a proactive response and those that argue a reactive response. One group wants to prevent change. The other group is inclined to accept change and deal with the consequences.

I think I find myself in the latter group.  I am not convinced that in a global market of many, undefined and undefinable trillions, that 700 billion is really going to make any kind of long term impact.  Also, the longer this crisis goes on, with the market making its own sputtering adjustments the harder it is for me to define this as a crisis.

If the market dislikes uncertainty (except for those traders that thrive on uncertainty) how much more damaging must it be for the prospect of a 700 billion intervention to be hanging fire?  Would it not be more defensible to announce the end of the intervention,  watch how the chips start to fall and then act to deal with the real, actual and measurable effects?


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## chanman (30 Sep 2008)

E.R. Campbell said:
			
		

> Not everyone can afford to be so philosophical. Those were the people President Bush and Hank Paulson were trying to help but those were the same people who said “No!” to bailing out Wall Street. Well, now they will reap what they sowed.



I wonder if that attitude will change when pension funds start to disclose their losses.  Given the interest rate those need to produce, they can't be parked in the safest of investments.  Are they insured in any way?


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## Edward Campbell (30 Sep 2008)

Kirkhill said:
			
		

> I find myself wondering if there aren't commonalities between this current financial crisis and Global Warming.
> 
> At least in terms of attitudes.  There are those that argue a proactive response and those that argue a reactive response. One group wants to prevent change. The other group is inclined to accept change and deal with the consequences.
> 
> ...




But there’s a third group, I think, that opposes *this* response (the bailout) because they perceive it to reward those they blame for the crisis. This same group, however, will want demand scream for a bailout when the crisis, *inevitably* impacts them.

I’m inclined to join Kirkhill in the second group (must be those mean, hard Scots hearts) but I understand, I think why President Bush and Secretary Paulson want us all in the first group: they want to prevent the anguished screams and the bigger bailout the third group will require.


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## GAP (30 Sep 2008)

Lets not lose sight of what caused this.....Clinton (Democrat)wanting all Americans to be able to buy a home and have a chicken in every pot (oops...not him)....

He initially put the idea and legislation forward that it would be OK, and the Republicans and Democrats both passed legislation loosening laws and regulations. Kinda like putting cheese in a mouse trap.

The mice (homebuyers) went for it, in a big way.....look at the escalating prices of homes that were selling for 4 and 5 hundred thousand, when the realistic price should have been maybe 70-80 thousand (if you were generous....have you seen some of these dumps?)

Greedy little bankers and their ilk dove in  and then offloaded the mortgages, thinking the other guy would pay the price..

There are so many players all trying to get their piece of the pie, that the slap down is just deserts....


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## a_majoor (30 Sep 2008)

Given the various manipulations in the proposed bailout plan, as well as the rather cynical attempt to get the GOP on board for political cover when the thing blows up, I am more firmly in the stand back and let this clear naturally camp. Remember, attempts to play with the federal reserfve caused the great crash of 1929, and the "New Deal" extended the Great Depression by increasing government manipulation of the markets for capital, labour and credit.

Yes, there will be shocks to every element of the economy, and the spillover will affect the Canadian economy, but a short purge is probably preferable to constant uncertainty as the Market attempts to react to the somewhat random actions of government interventions. That said, I could make a case for using the crisis to clean house on the government side: end earmarks and corporate welfare and use the savings to deliver a middle class tax cut to provide some extra resources to weather the storm:

http://theanchoressonline.com/2008/09/29/rush-echos-the-anchoress/



> *Rush echos The Anchoress - UPDATED*
> 
> UPDATE: Nancy Pelosi poisoned her own meal ticket.
> 
> ...


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## tomahawk6 (30 Sep 2008)

Video that had 1.2m hits the first day it was out.

http://www.youtube.com/watch?v=1RZVw3no2A4&eurl


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## Kirkhill (30 Sep 2008)

E.R. Campbell said:
			
		

> ...(must be those mean, hard Scots hearts) ....



It was them that got us to this place in the first instance.   Everybody knows Adam Smith.  But they are less kenspeckle (yin o' thae nasty Scots words the Campbells micht no ken sae weel)  with William Paterson.  

"The bank hath benefit of interest on all moneys which it creates out of nothing."


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## Lockness (1 Oct 2008)

*"McDonald’s Deemed More Credit-Worthy than U.S. Government"*By Juhana Rossi
Translated By Henri Rautonen
September 26, 2008

http://watchingamerica.com/News/7016/mcdonalds-deemed-more-credit-worthy-than-the-us-government/



> The State of Finland and fast-food chain McDonald’s are now deemed more credit-worthy than the U.S. when measured by prices of CDS-derivatives (credit default swaps).
> 
> The insurance risk-premium for a 10-year U.S. treasury bond shifted on Friday up to 0.3% according to a broker in a Finnish bank. In practice this means that if an investor wishes to insure 10 million dollars worth of U.S. T-bonds against a government default the insurance will cost 30,000 dollars. Such an insurance for the same amount of investments on Finnish bonds cost on Friday only about half of that at 16,000 dollars. Even loans to McDonald’s would be cheaper to insure than U.S.-bonds, at 28,000 dollars per 10 million.
> 
> ...



Interesting times indeed.


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## Edward Campbell (1 Oct 2008)

E.R. Campbell said:
			
		

> Well, according to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, the bailout package is crafted, for better or for worse:
> 
> http://www.theglobeandmail.com/servlet/story/RTGAM.20080928.wbailout28/BNStory/Front/home
> 
> ...




The LIBOR is at 5.03%, down from near record highs yesterday, but still more than twice as high as the Federal Reserve's prime rate.

So what?

That means that, despite low rates from the Feds, banks will not lend to one another (except at a 100%+ premium) because they are afraid that too many banks will default and fail to pay back loans. That means business, for example, cannot borrow, except at very high rates - maybe not at all, in order to e.g. buy new stock. That means people get laid off at both the business that could not borrow money and at the supplier that lost an expected order and then another, and so on.


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## Kirkhill (1 Oct 2008)

I've been interested in the, to my mind, contrarian reaction of the oil market.

I would have expected oil prices to rise (working on the basis that that would reflect a lack of confidence in the US Dollar and, by inference the US Government and Treasury).  Instead the price of oil has dropped some $20 dollars per barrel, or 17%.   Does that mean that the oil producers (the Saudis etc) are still betting on the Dollar, or might it be more appropriate to say that they are Backing the Dollar, attempting to alleviate some of the pressure on the Dollar by keeping the price down?

I should also note that the price ticked back up with speculation that the "package" is to be reintroduced.


What am I missing here?


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## GAP (1 Oct 2008)

The speculators.....the oil price is what it is based on market speculation....and if the speculators do not have massive lines of credit to buy and sell, the price will settle based on supply & demand only


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## Kirkhill (1 Oct 2008)

Good point GAP.

Thanks.


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## Edward Campbell (1 Oct 2008)

The oil markets are forecasting reduced demand caused by a contracting economy: fewer factories, people driving less and so on.


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## GAP (1 Oct 2008)

E.R. Campbell said:
			
		

> The oil markets are forecasting reduced demand caused by a contracting economy: fewer factories, people driving less and so on.



Would that be enough to drive it down to the prices it presently is....I would think they would try to keep the price higher if that was the case , at least in the short term to get as much as they can....


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## Edward Campbell (1 Oct 2008)

First: Most oil trades are in futures. Futures trading is a combination of (hopefully informed) guesstimating and gambling.

Second: The oil markets haven't made much sense for about a year.


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## GAP (1 Oct 2008)

E.R. Campbell said:
			
		

> First: Most oil trades are in futures. Futures trading is a combination of (hopefully informed) guesstimating and gambling.
> 
> Second: The oil markets haven't made much sense for about a year.



Thanks and True


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## Lockness (1 Oct 2008)

One futures contract in oil is 1000 barrels.  Margin rules in the futures exchange allow $1 to control about $15 of a futures contract.  Further leverage can be obtained by borrowing from low interest nations such as Japan with the Bank of Japan interest rates siting at only 0.5%.

http://www.investopedia.com/articles/optioninvestor/07/energy_market.asp



> Futures contracts offer speculators a higher risk/return investment vehicle because of the amount of leverage involved with commodities. Energy contracts in particular are highly leveraged products. For example, one futures contract for crude oil controls 1,000 barrels of crude. The dollar value of this contract is 1,000 times the market price for one barrel of crude. If the market is trading at $60/barrel, the value of the contract is $60,000 ($60 x 1,000 barrels = $60,000). Based on exchange margin rules, the margin required to control one contract is only $4,050. So, for $4,050, one can control $60,000 worth of crude. This gives investors the ability to leverage $1 to control roughly $15. (Find out more about leveraging in What is the difference between leverage and margin?)



So with the amount of leverage available it is not hard for a multimillion or billion dollar hedge fund to cause an impact on the market place.  The CFTC for example is investigating manipulation in the silver markets by two banks shorting silver in August.

http://online.wsj.com/article/SB122231175151874367.html


Global oil demand forecasts for 2009 has fallen to less than forecasted but it is still increasing than previous years.

http://omrpublic.iea.org/



> Forecast global oil demand has been lowered for both 2008 and 2009, following weaker deliveries in the OECD. World demand averages 86.8 mb/d in 2008 (+0.8% or +0.7 mb/d versus 2007 and 100 kb/d lower than previously estimated) and 87.6 mb/d in 2009 (+1.0% or +0.9 mb/d year-on-year and 140 kb/d lower than in our last report).



Less demand possible in the U.S. but don't count Asia out to keep global demand and prices higher.  China real GDP growth rate for 2007 was 11.4% which should increase their energy and oil demands going forward if their growth continues. 

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html

Is it any wonder billionaire investors such as Jim Rogers have setup shop in Singapore to capture the China and surrounding region growth story.


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## a_majoor (2 Oct 2008)

An interesting video from Newt Gingrich

http://strongconservative.blogspot.com/2008/10/newt-on-fixing-bailout.html



> *Newt on Fixing the Bailout*
> 
> Former Speaker of the House Newt Gingrich provides fascinating insight into the problems that led to the financial crisis triggered by the sub-prime mortgage meltdown.
> 
> ...



Follow link to see the video


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## GAP (2 Oct 2008)

Spoonful of pork may help bitter economic pill go down
Article Link

WASHINGTON (CNN) -- The Senate's financial rescue plan may have a better chance of passage because it's padded with pork that may be tasty enough to get reluctant House members to bite.

Most of the $110 billion in additions, such as a tax credit for research and development and an increase in insurance for bank accounts, would have broad economic impact.

The benefits of others, though, may not be so evident to most taxpayers.

For example, the proposal includes an excise tax exemption for a very specific type of arrow used by child archers. 

According to Steve Ellis of Taxpayers for Common Sense, a nonpartisan watchdog group, current law places an excise tax of 39 cents on the first sale by the manufacturer, producer or importer of any shaft of a type used to produce certain types of arrows. 

"This proposal would exempt from the excise tax any shaft consisting of all natural wood with no laminations or artificial means to enhance the spine of the shaft used in the manufacture of an arrow that measures 5/16 of an inch or less and is unsuited for use with a bow with a peak draw weight of 30 pounds or more," Ellis wrote. 

The estimated cost of the proposal is $2 million over 10 years, he wrote.  Follow the progress of the $700 billion bailout plan »

Oregon Sens. Ron Wyden, a Democrat, and Gordon Smith, a Republican, were the initial sponsors of the arrow provision. According to Bloomberg News, the earmark provision would be worth $200,000 a year to Rose City Archery in Myrtle Point, Oregon. 

A Wyden aide said the Oregon senator did not ask that the provision be added to bailout package, but that doesn't fly with Ellis.

"The bottom line is, this is benefiting a very few manufacturers, and I think most Americans who are either concerned about the bailout package or concerned about the economy are going to be wondering why a provision benefiting wooden arrow manufacturers is catching a ride on the package," Ellis said.

The Taxpayers for Common Sense also reports that the proposal includes such mouthwatering morsels as these:


Creation of a seven-year cost recovery period for construction of a motorsports racetrack: Track owners currently follow a seven-year depreciation schedule and write each year's depreciation off their taxes. The IRS wanted to increase the depreciation timetable to 15 years, which would mean the track owner's depreciation would be cut in half. The measure in the keeps the seven-year depreciation schedule for two years and would cost taxpayers $100 million.


A refund of excise taxes to Puerto Rico and the Virgin Islands for rum: A $13.50 per gallon excise tax is placed on rum imported into the United States. The measure extends to December 31, 2009, a refund of $13.25 per gallon tax back to Puerto Rico and the Virgin Islands, which are both U.S. territories. The refund has been in place since the early '90s. The measure would cost taxpayers $192 million.


Income averaging for amounts received in connection with the Exxon Valdez litigation: The measure would allow the plaintiffs who won damages from Exxon Mobile for the oil spilled by the Exxon Valdez to average the award over three years rather than treating it as income in a single year. The measure was backed by Alaska Rep. Don Young and would cost taxpayers $49 million.


Secure rural schools and community self-determination program: The program replaces revenue rural communities used to enjoy from the sale of federal forest land. The measure is sponsored by lawmakers from Oregon and Idaho. The program would cost taxpayers $3.3 billion.


Deduction of state and local sales taxes: The measure allows citizens who do not pay state income taxes to deduct the amount of sales tax they pay over a year from their federal income tax for two additional years. States that benefit include Texas, Nevada, Florida, Washington and Wyoming. The measure would cost taxpayers $3.3 billion.


Provisions related to film and television productions: In order to keep movie production in the U.S., production companies would be allowed to deduct the cost of producing the films from their taxes. Rep. Diane Watson, D-California, has been one of the program's biggest supporters. The measure would cost taxpayers $478 million over 10 years.
More on link


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## tomahawk6 (2 Oct 2008)

This bailout plan is disgraceful.Whats worse is that according to the Constitution bills relating to money have to come out of the House first.


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## Redeye (2 Oct 2008)

tomahawk6 said:
			
		

> This bailout plan is disgraceful.Whats worse is that according to the Constitution bills relating to money have to come out of the House first.



Disgraceful, perhaps, but the potential damage to the broader US economy of basically frozen credit markets and liquidity evaporating is extremely dangerous.  Without access to credit facilities businesses grind to a halt - it's a vicious circle because those who lose their jobs then stand much greater chance of losing their homes.  Personally I'd love to see the "financial wizards" who thought all these sidebets on loan assets were a good idea hanged, drawn, and quartered - or gibbeted throughout Lower Manhattan, but that's not going to happen, nor really help.

Ideally a situation like the Swedish Bank Rescue would be an ideal way to deal with the problem while saving taxpayers money in the long run (because in exchange for the bailout the Treasury would take an equity stake in the recipients, later selling it off when the markets recover) but America just wouldn't stomach it because it is basically a socialist intervention... and while most Americans have no idea what socialism even really is they know it's evil.  What continues to gall me about the whole thing is some of the GOP types who talk about big spending while somehow glossing over the fact that a GOP President has basically run the US economy into the ground and continues to do so.  They talk about $700-bil for this plan while glossing over the $635-bil (if I remember the number right) that was handed to DoD last week - and the immense cost of Bush's Folly in Iraq.  It makes watching the debates there a hoot when they talk about Republicans being against out of control spending and "big government" when that's exactly what the Bush legacy is!

The worse thing I wonder about is when the mess spreads into Europe, especially the UK.


----------



## tomahawk6 (2 Oct 2008)

I have come to the conclusion that this so called economic crisis is contrived for political gain. There does not seem to be a problem with people being able to get car loans, mortages and more credit cards.Most of the banks seem to be in decent shape. The current state of the economy is due more to the effects of high gas/fuel prices. So far all the problem players have been bought out,merged or were bailed out - except Lehman hardly the stuff of a depression.

Then look at the so called bailout with $150b in pork not at all related to the bailout.If the House passes the bill we will see a package of $1Trillion or more. The House will want to forgive these bad loans - so called NINJA loans given to minorities.A NINJA loan is short for no income,no job and no assets. All courtesy of our democrat friends running Freddie/Fannie with their allies in the Congress. I would have loved to get a home loan under those conditions.

I now feel that no bailout is the best thing for the country.
Look at Europe's bailout which say billions given to the banks to losen the so called credit crunch. Guess what ? The banks arent lending they are just sitting on the new money.


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## GAP (2 Oct 2008)

Soooo.....they pass the 700 billion bailout and the markets nosedive tomorrow, and the Monday after.....what do they do, commit ANOTHER 700 billion?

There's your proverbial 800 lb gorilla nobody is talking about.....


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## oligarch (2 Oct 2008)

You need a few hours to basically gain a pretty deep COCEPTUAL (not technical) knowledge on the financial cirsis currently underway, watch the playlist:

http://www.youtube.com/view_play_list?p=945E4F0ED131E4D1

If you want to save time, then I suggest watching the vids in this order

Mortgage Backed Securities I, II, III
Collaterelized Debt Obligations
Bailout 5, 6, 7, 8, 9, 10 (or all 10 if you dont know the basics of assets, liabilities, and owner's equity)

Enjoy the knowledge!


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## Redeye (2 Oct 2008)

There is no political gain to any identifiable party in this mess.  There is not going to be any loan forgiveness, and the net cost at the end of the day is not clear.  When the Treasury (in its neo-Resolution Trust plan) buys up all those mortgage-backed securities then credit markets should loosen up considerably (interbank loan rates are presently staggering and costs of funds are massive - so not a lot of lending is going on at high levels and the conditions are very austere).  In the end, a great deal of those subprime mortgages are not in default and are in fact being serviced, meaning those securities actually have some value in the long run.  It's not as good as what the Swedes did in 1992 but it's not a bad solution either.  Trying to be partisan about it is pretty foolish, but I'm not surprised as it's pretty clear which side of the spectrum you're on.  If you think that fuel prices have anything significant to do with the situation, then you're not really seeing what's happening, as that's got virtually nothing to do with it.  It's making things even tighter for the middle class/working class but it's not at all the root cause.  I do agree that it's hardly the stuff of a depression, but it's still a real mess and simply allowing the markets to clear without intervention will prolong and make worse a bad situation.

I will say I never cease to be amazed with the amount of pork that winds up in any US legislation, especially that has little or nothing to do with the actual subject at hand.  That's quite a difference from Canadian legislation which is generally free of such nonsense - but stronger party discipline mitigates the need to buy off factions.



			
				tomahawk6 said:
			
		

> I have come to the conclusion that this so called economic crisis is contrived for political gain. There does not seem to be a problem with people being able to get car loans, mortages and more credit cards.Most of the banks seem to be in decent shape. The current state of the economy is due more to the effects of high gas/fuel prices. So far all the problem players have been bought out,merged or were bailed out - except Lehman hardly the stuff of a depression.
> 
> Then look at the so called bailout with $150b in pork not at all related to the bailout.If the House passes the bill we will see a package of $1Trillion or more. The House will want to forgive these bad loans - so called NINJA loans given to minorities.A NINJA loan is short for no income,no job and no assets. All courtesy of our democrat friends running Freddie/Fannie with their allies in the Congress. I would have loved to get a home loan under those conditions.
> 
> ...


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## a_majoor (3 Oct 2008)

The conclusion is more than a bit rosy (since the United States is the destination for fully 85% of our exports), but the fundamentals of our bank system are sound:

http://network.nationalpost.com/np/blogs/fullcomment/archive/2008/10/02/the-financial-crisis-for-dummies-why-canada-is-completely-immune-from-the-u-s-mortgage-meltdown-kind-of.aspx



> *The financial crisis for dummies: Why Canada is immune from a U.S.-style mortgage meltdown*
> Posted: October 02, 2008, 12:41 PM by Jonathan Kay
> Jonathan Kay
> 
> ...


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## muskrat89 (3 Oct 2008)

> but I'm not surprised as it's pretty clear which side of the spectrum you're on.








> the fact that a GOP President has basically run the US economy into the ground and continues to do so.





> and the immense cost of Bush's Folly in Iraq.


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## Redeye (3 Oct 2008)

muskrat89 said:
			
		

>



Now, it wasn't meant to say there's anything wrong with that - though on re-reading it may have seemed that way - and to be fair my wife is a very, very committed Democrat (probably the only one from the county she is registered to vote in, but nevertheless...)  but in the case of tomahawk6's posts on US politics there is no ambiguity in his opinion.  It remains to be seen - and I'm interested to see - how this all ends.


----------



## oligarch (3 Oct 2008)

Redeye said:
			
		

> In the end, a great deal of those subprime mortgages are not in default and are in fact being serviced, meaning those securities actually have some value in the long run.



Therefore, as a tax-paying individual who also has a mortgage that ends up in one of these residential CDOs, I in effect will be buying my house twice! Once with the debt that I will continue to dilligently pay, the other with the tax-payer dollars I will provide the government with (part of which being inflation tax in the future, once they get the printing presses going). What a great plan!!

Why not take those 700 billion and pay off the toxic debt? or establish a 'rescue fund' for INDIVIDUALS who can't pay their mortgage? Or better yet, establish a fund and would take over SME lending while the banks are allowed to go bankrupt? Or, given that 700 billion > book equity of all the large i-banks, ESTABLISH NEW i-BANKS!!! The new banks can loan to the old ones and the strong ones will survive! Sheesh of all the posibilities the US manages to take the stupidest one, but the one most profitable to the high ranking executives. Things will never change.


----------



## tomahawk6 (3 Oct 2008)

> Why not take those 700 billion and pay off the toxic debt? or establish a 'rescue fund' for INDIVIDUALS who can't pay their mortgage? Or better yet, establish a fund and would take over SME lending while the banks are allowed to go bankrupt? Or, given that 700 billion > book equity of all the large i-banks, ESTABLISH NEW i-BANKS!!! The new banks can loan to the old ones and the strong ones will survive! Sheesh of all the posibilities the US manages to take the stupidest one, but the one most profitable to the high ranking executives. Things will never change.



 :


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## Lockness (3 Oct 2008)

Lessons from the Japan Credit Crisis...

"*Responding to Financial Crises: Lessons to Learn from Japan’s Experience"*
Koyo Ozeki | August 2008

http://www.pimco.com/LeftNav/Global+Markets/Japan+Credit+Perspectives/2008/Japan+Credit+Perspectives+Aug+2008.htm

Excerpt....


> The financial crisis sparked by the subprime loan problem has intensified to the point where U.S. and European governments have had to extend support to financial institutions, and we believe that governments will need to widen and deepen the scope of this support framework in the near future. Japan’s experience in dealing with bad loans and financial crises serves as an insightful lesson about public support. In this special edition of Japan Credit Perspectives, we reflect on Japan’s financial crisis in the 1990s and early 2000s, then compare it to the present situation in the U.S., and consider the implications for government action.
> 
> Part 1: A Brief History of Japan’s Financial Crisis
> 
> ...



Many parallels to the U.S. credit crisis.  It appears the U.S. is in Phase 3 with bankruptcies of major banks and injecting taxpayer money into financial institutions to no avail.  Some good stuff in this report if you are interested.... See link


----------



## tomahawk6 (3 Oct 2008)

O'Reilly Hammers Congressman Frank

http://www.youtube.com/watch?v=RAuOEdttjZQ&eurl

New Republican ad.
http://www.youtube.com/watch?v=exxVZTKq1vA&eurl\


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## DBA (4 Oct 2008)

oligarch said:
			
		

> Therefore, as a tax-paying individual who also has a mortgage that ends up in one of these residential CDOs, I in effect will be buying my house twice! Once with the debt that I will continue to dilligently pay, the other with the tax-payer dollars I will provide the government with (part of which being inflation tax in the future, once they get the printing presses going). What a great plan!!
> 
> Why not take those 700 billion and pay off the toxic debt? or establish a 'rescue fund' for INDIVIDUALS who can't pay their mortgage? Or better yet, establish a fund and would take over SME lending while the banks are allowed to go bankrupt? Or, given that 700 billion > book equity of all the large i-banks, ESTABLISH NEW i-BANKS!!! The new banks can loan to the old ones and the strong ones will survive! Sheesh of all the posibilities the US manages to take the stupidest one, but the one most profitable to the high ranking executives. Things will never change.



If your mortgage ends up in one of the CDOs it is then owned by the government with all the other mortgages purchased by the government at a discount over face value. If a lot of them don't default the government will end up making money. Possibly a *lot* of money. By clearing some bad debt off the books of the banks they will be more able to make mortgage loans. Hopefully to people who actually have a chance to pay them back so the problem doesn't repeat. The goal is to prevent a lock up of the credit/mortgage market which would harm even those with good mortgages like anybody having to refinance in the next year or two.


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## a_majoor (5 Oct 2008)

A video of hearings held in 2004 on the GSE's. Note the reaction of the Democratic members and consider what would have happened if the problems had been addressed in 2004 instead of festering until 2008.....

http://cjunk.blogspot.com/2008/10/blame.html

And a very interesting summary of the whole sad affair, with a positive prediction:

Edgelings.com - http://pajamasmedia.com/edgelings -




> *The End Of An Era*
> 
> October 3, 2008 - by edgelings
> 
> ...


----------



## a_majoor (6 Oct 2008)

Salim Mansur on the history of the crisis:





> Columnists / Salim Mansur
> *U.S. mess started with Carter*
> 
> By SALIM MANSUR
> ...


----------



## a_majoor (6 Oct 2008)

Sweden had a similar problem, and here is how they fixed it. Maybe there are lessons for us in this?

http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html?ei=5124&en=a70a39e48f33b9d5&ex=1380254400&partner=permalink&exprod=permalink&pagewanted=print



> *Stopping a Financial Crisis, the Swedish Way*
> By CARTER DOUGHERTY
> 
> Correction Appended
> ...


----------



## tomahawk6 (8 Oct 2008)

Seven central banks this morning cut interest rates to help stabilize global financial rates. This is an important step to help turn the markets around. This is the exact opposite of what happened during the depression.


----------



## a_majoor (8 Oct 2008)

A different way of looking at the numbers. I am not clear what the blogger means by "In reality, given that the debt is incurred and owned by the same borrower and could easily be papered over by an Act of Congress", since taken literally it would mean revoking Social Security, which won't go over well with the Boomer voters. 

The longer term hope lies in demographics. If the United States maintains its birthrate, they will have the workers to man the factory floors and soldiers to man the barricades while China, Russia and the EU tank due to their population implosions. Canadians are going along with the EU WRT population, but in our case, I suppose we will be "recolonized" by Americans seeking land and opportunity (and they will be socially conservative "Red State" Americans, since the "Blue Staters" are also following the EU, Russia and China down the demographic slope). 

This is very much a long term issue, since the effects of the demographic implosions will start making themselves felt @ 2020 and continue until the 2040's at a minimum. We will live in _interesting times_.

http://westernstandard.blogs.com/shotgun/2008/10/the-fiscal-bala.html



> *The Fiscal Balance of the American Federal Government*
> 
> I, for one am a little bit tired of hearing about how “the United States is bankrupt” from people with a minute level of knowledge of international finance.  In truth – despite recent setbacks – the U.S. Federal Government is probably in the best shape of any major world government when one measures total debt, assets, and ability to borrow.
> 
> ...


----------



## a_majoor (9 Oct 2008)

Manipulating the economy has always been a tactic of the wealthy and powerful to maintain their advantage over the rest of us:

http://www.americanthinker.com/2008/09/how_allies_of_george_soros_hel.html



> *How allies of George Soros helped bring down Wachovia Bank*
> By Ed Lasky
> 
> Wachovia Bank, a major institution, has seen its stock plummet and its continued viability called into question, as the nation's financial crisis muddles forward. [Update: shortly after publication of this article, Citigroup agreed to purchase Wachovia's banking operations in a deal facilitated by the FDIC.]
> ...


----------



## Edward Campbell (11 Oct 2008)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ may be a major development:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081010.wgm1010/BNStory/Business/home


> GM, Chrysler exploring merger: reports
> 
> The Associated Press
> 
> ...



This may have a major _psychological_ impact on America, indeed on the world. For many, many millions of people, around the world, the automobile and electricity are the _marques_ of the ‘modern.’ The car and the auto industry are also the classic defining attributes of modern America – every school-child in China learns that Henry Ford decided that workers must be paid enough to buy a Ford motorcar. (See the rest of the story re: the $5.00/day issue here.)

The demise of one of two “big three” may save tens of thousands of jobs but it will be a blow to the American public’s morale.


----------



## tomahawk6 (11 Oct 2008)

Companies come and go.Nothing is forever.


----------



## a_majoor (11 Oct 2008)

Considering the "Big Three" are posting quarterly losses equal to the economic output of small nations or Canadian provinces, it is surprising something like this hasn't been considered far sooner.

The only other way GM might "survive" is to cast off the overarching structure and devolve into several competing brands (Chevrolet, Pontiac, Buick, Oldsmobile etc were all independent companies at one time, and "might" be able to compete as individual marques again free of the "drag" of the GM corporate bureaucracy). This would be the end of GM, but perhaps the salvation of the US auto industry.


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## tomahawk6 (11 Oct 2008)

The Big Three's global operations seem to be profitable.Their domestic business has stumbled due to IMO overregulation and bad union contracts. Anytime you pay laid off workers full time wages you cant survive.


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## TCBF (11 Oct 2008)

tomahawk6 said:
			
		

> The Big Three's global operations seem to be profitable.Their domestic business has stumbled due to IMO overregulation and bad union contracts. Anytime you pay laid off workers full time wages you cant survive.



- Yup.  Far better to keep the workers employed building a quality product that people want to buy offered at a competitive price.  But no, they dropped the ball on both counts and now have more former employees than current employees. Essentially, they are a health-care provider that also builds a few cars on the side.


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## GAP (11 Oct 2008)

tomahawk6 said:
			
		

> The Big Three's global operations seem to be profitable.Their domestic business has stumbled due to IMO overregulation and bad union contracts. Anytime you pay laid off workers full time wages you cant survive.



The Auto Sector is a prime example of unions destroying their own nest.....


----------



## Edward Campbell (12 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s _Globe and Mail_ web site: is an analysis of the _maybe_ merger:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081011.wmergeranalysis1011/BNStory/Business/home


> Auto merger has many pitfalls, few advantages
> 
> GREG KEENAN
> 
> ...



I’d almost forgotten about the _creation_ of American Motors in 1954 – then the biggest merger in US history – and its demise in 1987, when Chrysler bought the remnants.


----------



## a_majoor (13 Oct 2008)

VDH reminds us the classical values of thrift and hard work are the ones that really count in the end:

http://article.nationalreview.com/?q=YzlkMmI2M2NiZjkyN2JlYWIxMGFmYWVkNzg5NmFkNDU=



> Wall Street 101
> *If a promised return on an investment seems too good to be true, it probably is.*
> 
> By Victor Davis Hanson
> ...


----------



## Edward Campbell (14 Oct 2008)

Thucydides said:
			
		

> Considering the "Big Three" are posting quarterly losses equal to the economic output of small nations or Canadian provinces, it is surprising something like this hasn't been considered far sooner.
> 
> The only other way GM might "survive" is to cast off the overarching structure and devolve into several competing brands (Chevrolet, Pontiac, Buick, Oldsmobile etc were all independent companies at one time, and "might" be able to compete as individual marques again free of the "drag" of the GM corporate bureaucracy). This would be the end of GM, but perhaps the salvation of the US auto industry.




For more on the rumoured Chrysler/GM merger and its possible effects on Canada see here.


----------



## a_majoor (16 Oct 2008)

As it becomes ever more clear that legislative mischeif was the primary cause and driver behind the current financial crisis, we should be very wary of legislative "solutions" to the crisis. Unfortunatly people and some paniced legislators can cause a great deal of damage by the pressue to "do something". On the other hand, since the crisis was entirely forseeable, you have to wonder how much encouragement was being given by politicians to promote other agendas?

http://article.nationalreview.com/?q=ZjY3Y2VmNTZkYjhhYzdjYzNmZTMyN2M0ZDJmZDEyYjA= 



> *Obama’s Cover-Up*
> The truth about deregulation.
> 
> By Peter Ferrara
> ...


----------



## Kirkhill (16 Oct 2008)

Thucydides,

As much as all of this is true, it just doesn't matter.

Kim Campbell and Goebbels had it right.  Elections are no time to discuss policy and the bigger the lie the easier it is to make it the truth.

There is a very small percentage of the population that is swayed by argument during an election.  It seems that an ever increasing proportion of westerners that might be amenable to rational discussion, are feeling like the middle balls in those chains of swinging balls (you know the ones, battered from left and right but never going any place) and have decided " a pox on all your houses".  They just don't care any more.

I was interested to read your Galtian Strike submission.

In point of fact that is what will happen if Obama and the Dems ever institute the policies  they promise.  And there won't have to be any organizer to make it happen.  It is what happened in France.  It happened in Pre-Maggie Britain.  It happened in Denmark.  

In Denmark you were taxed something like 110% of your overtime income.  Consequently nobody worked overtime.  Productivity was no great shakes.

Raise taxes?  Swedes went to Britain.  Brits went to the US or Switzerland.  French went to Monaco or Luxembourg.  All of them went to the Bahamas or the Turks and Caicos.  No Problem.

1945 to 1975 - 30 years for the Brits to figure out the problem
1932 to 1980 - 48 years for the Yanks
1930s to ca2000 - 70 years for the Scandinavians
1789 to 2008 and still counting for the French

Time for the two generation pendulum to swing again so that we can all relearn what our grandparents learnt.


----------



## GAP (18 Oct 2008)

Wall Street banks in $70bn staff payoutPay and bonus deals equivalent to 10% of US government bail-out  
Simon Bowers The Guardian, Saturday October 18 2008 
Article Link

Financial workers at Wall Street's top banks are to receive pay deals worth more than $70bn (£40bn), a substantial proportion of which is expected to be paid in discretionary bonuses, for their work so far this year - despite plunging the global financial system into its worst crisis since the 1929 stock market crash, the Guardian has learned.

Staff at six banks including Goldman Sachs and Citigroup are in line to pick up the payouts despite being the beneficiaries of a $700bn bail-out from the US government that has already prompted criticism. The government's cash has been poured in on the condition that excessive executive pay would be curbed.

Pay plans for bankers have been disclosed in recent corporate statements. Pressure on the US firms to review preparations for annual bonuses increased yesterday when Germany's Deutsche Bank said many of its leading traders would join Josef Ackermann, its chief executive, in waiving millions of euros in annual payouts.

The sums that continue to be spent by Wall Street firms on payroll, payoffs and, most controversially, bonuses appear to bear no relation to the losses incurred by investors in the banks. Shares in Citigroup and Goldman Sachs have declined by more than 45% since the start of the year. Merrill Lynch and Morgan Stanley have fallen by more than 60%. JP MorganChase fell 6.4% and Lehman Brothers has collapsed.

At one point last week the Morgan Stanley $10.7bn pay pot for the year to date was greater than the entire stock market value of the business. In effect, staff, on receiving their remuneration, could club together and buy the bank.

In the first nine months of the year Citigroup, which employs thousands of staff in the UK, accrued $25.9bn for salaries and bonuses, an increase on the previous year of 4%. Earlier this week the bank accepted a $25bn investment by the US government as part of its bail-out plan.

At Goldman Sachs the figure was $11.4bn, Morgan Stanley $10.73bn, JP Morgan $6.53bn and Merrill Lynch $11.7bn. At Merrill, which was on the point of going bust last month before being taken over by Bank of America, the total accrued in the last quarter grew 76% to $3.49bn. At Morgan Stanley, the amount put aside for staff compensation also grew in the last quarter to the end of August by 3% to $3.7bn.
More on link


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## Edward Campbell (24 Oct 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is more grim news:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081024.wusmarkets1024/BNStory/Business/home


> Wall St. futures frozen after plunge
> 
> LEAH SCHNURR
> 
> ...




A couple of words, especially for those prone to fear and, worse, panic:

•	Traders *are not* investors. Some investors - many, many investors, actually - are, finally, in panic mode and they are proving Stephen Harper right: this is a good time to buy. But the real investors are sitting pat (and unhappy) while the traders move the markets; and

•	The underlying ‘real economy’ – resources, agriculture, manufacturing, technology, finances, services and so on – is still there, there is still (albeit reduced) demand for everything in the ‘real economy’ and the law of supply and demand remains immutable, notwithstanding anything Jack Layton _et al_ might say. Demand will increase as soon as the current oversupply is reduced, as it will be. When demand increases prices go up production lines are reopened, jobs are created, demand rises again and so on – until the next ‘bust.’ 

_Bubbles_ and _busts_ appears to have adopted something like a ten year cycle. Buy now and be ready to sell out, quickly, in 2017/18.  ;D


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## Lockness (25 Oct 2008)

Excess supply is not causing the drop in commodity prices despite the prospect of a global recession reducing demand.

On the commodities side there are current low inventories for such things as base metals (copper, lead, zinc, nickel) and agriculturals  (corn, grains, soybeans).  The current low pricing is causing supply to cut back further as mining operations are approaching or beyond their cost of production.  Expansion and development projects are being shelved and the industry is hunkering down, hoarding their cash, and trying to keep costs low to ride out the storm.  

Unprecedented times where the current supply/demand levels should be keeping prices higher but the reported forced selling of "paper" long positions by hedge funds and piggybacked by speculators is driving prices below cost of production.  This should be a short term deleveraging effect and either corrects in the short term with a rapid spike in commodity prices to sustainable levels or the reduced supply will lead to widespread shortages.  Eventually the prices will have to make their way back up to bring more production online to keep up with demand and reach an equilibrium.  Who knows whether the prices have bottomed yet.  

A good indicator of commodity price bottoming will be when the U.S. dollar reverses its parabolic rise.  The big player commercial traders are reported to have huge short positions on the US dollar now expecting a dramatic fall anyday.  Gold, oil, commodities, Canadian dollar and TSX would rally hard from their oversold lows if/when that were to happen.  Maybe the Price Protection Team can keep the US dollar together until after the presidential election.  Interesting times.


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## muskrat89 (1 Nov 2008)

This is exactly why the average person (in my opinion) is against the "bailout". No accountability, no change of ways - just wallow up to the trough. When small businesses "make mistakes", they go under. 

http://www.azcentral.com/12news/news/articles/2008/10/31/20081031aigwoes-CR.html



> *AIG plans conference despite financial woes*
> 
> 1Oct. 31, 2008 10:24 PM
> 12 News
> ...


----------



## a_majoor (2 Nov 2008)

Forecasting the state of the US economy under an Obama administration. Short version: the last time (like every time before) these policies were applied, the economy headed towards the tank. History is a useful tool; too bad most people don't choose to learn from it:

http://tcsdaily.com/article.aspx?id=010209A



> *Which Clinton Economy Does Obama Admire? *
> By Rafael Resendes : BIO| 31 Oct 2008
> 
> During his acceptance speech, Barrack Obama eloquently voiced the need for America to return to the successful economic policies of the Clinton Presidency when the nation prospered, and people came before Wall Street.  But which term was he referring to?
> ...


----------



## a_majoor (5 Nov 2008)

VDH on the root causes of the financial crisis. You can extrapolate what actions will end the crisis and what actions will not. Ontario's running a deficit is a "not" action, we will have to watch and shoot to how the Congress and Administration will act:





> *It’s the Debt, Stupid*
> by Victor Davis Hanson
> Tribune Media Services
> 
> ...


----------



## a_majoor (6 Nov 2008)

The markets reacted to the victory:

http://www.powerlineblog.com/archives/2008/11/022010.php



> *It's A Bit Late...*
> November 5, 2008 Posted by John at 8:41 PM
> 
> ...for investors to notice that pretty much everything Barack Obama wants to do will hurt the economy. Today, *the stock market plummeted around five percent on Obama's election.* At least, that's how it was being reported this morning as the collapse occurred. Later in the day, accounts softened to downplay Obama's election as a cause of the market slide.
> ...


----------



## muskrat89 (6 Nov 2008)

The lunacy continues.....

http://www.foxnews.com/story/0,2933,447749,00.html



> *Automakers Ask Congress for 'Immediate' Funding*
> 
> Thursday, November 06, 2008
> 
> ...



The remainder of the article can be found at the link posted.....


----------



## a_majoor (7 Nov 2008)

Who says you can't demand it both ways?

http://www.slate.com/blogs/blogs/kausfiles/archive/2008/11/05/whirl-of-change.aspx



> How About At Least Making Them Choose? So
> the UAW wants a $25 billion bailout and an end to the secret ballot ... Because Wagner Act unionism clearly worked out so well for Detroit. ... 9:31 P.M.



Expect more of this and a frenzied push by the Congress to "bail out" everyone in trouble and "stimulate" the economy while showering expensive favors on their Union supporters. At this rate the US dollar will resemble monopoly money by 2012.


----------



## Edward Campbell (8 Nov 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, is an interesting report on the impact of the financial/credit crisis on Europe:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081107.wrcover1108/BNStory/Business/home


> European (dis)union
> *It's been 10 years since the birth of the euro zone, and the dream of global economic clout. But now the blanket is tearing, threatening a disastrous derailment of the monetary union*
> 
> BRIAN MILNER AND SUSAN SACHS
> ...



As this report makes clear, the US sub-prime mortgage mess is only the _catalyst_ that provoked the crisis. Europe is in worse shape than North America because it had made more bad policy choices over the past 20 years.


----------



## GAP (8 Nov 2008)

As this mess accelerates in the EU watch the companies in Canada that were bringing in Guatemalans, Mexicans, Ethiopians, suddenly start hiring Europeans hit hard by the recession. Canadians who think it is beneath them to move and work in the west and north, are suddenly going to find the well very dry. Learning to ask "do you want fries with that?" may well become their mantra.....


----------



## Edward Campbell (12 Nov 2008)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_ is more news from the _subsidize everything and everyone_ crowd, led by George W Bush:

http://www.reportonbusiness.com/servlet/story/RTGAM.20081111.wcitimortgages1111/BNStory/Business/home


> U.S. moves to prop up those at risk of foreclosure
> 
> BARRIE MCKENNA
> 
> ...




Politically, at the new style _retail politics_ level, it is hard impossible to resist bailing out hundreds of thousands, even millions of home owners. In many respects there’s no point in punishing middle class homeowners who, with a combination of naivety and greed, bought into the idea that their home could be a safe ATM. But, if too much personal debt is the *real, core problem* then maybe the surest way out is to write down/write off all those bad debts – foreclose and put the debtors out on the street, _en masse_, and resell the properties.

There is an old adage that if one wants to get out of a hole the first thing one must do is to stop digging.


----------



## Old Sweat (12 Nov 2008)

To whom does the foreclosers sell the properties? There are very, very many attracitve properties, but others are in the double wide category.


----------



## Edward Campbell (12 Nov 2008)

Old Sweat said:
			
		

> To whom does the foreclosers sell the properties? There are very, very many attracitve properties, but others are in the double wide category.



Texas is not one of the most severely hurt states and the Dallas area appears to be doing fairly well. I'm told that in some of the newer suburbs there is a very brisk resale market and foreclosed homes are moving quickly, at relatively low prices. Several people are asking themselves if now is the time to buy another house, as a mid to long term investment (mortgages rates being in the 5.5% range).

The rental market also appears to be good because many of the people who lost their houses are not poor - they have jobs, they have cash on hand. They simply bought too much house three or four years ago and when their variable rate mortgages went sky-high they stopped paying, lived 'free' for a few weeks, even months and are now looking to rent a house - often in the same suburb! - and they are able to pay the rents being asked.


----------



## a_majoor (12 Nov 2008)

Fixing the mess. I "hope" the new Administration and Congress will "change" their approach of social engineering, bailouts and regulatory excess, but I doubt it:

http://newenergyandfuel.com/http:/newenergyandfuel/com/2008/11/07/four-economic-mistakes/



> *Four Economic Mistakes*
> November 7, 2008 | 6 Comments
> 
> While America is filled with joy and consternation over the election and the results I’ve been thinking about what should be done about the economy. The more obvious thing is to list the “For God’s Sake, Don’t Do This List.” It’s a rather short. Founded in hard experience by America’s economy, visible to any student of economics, these few principles need be engaged in your thoughts to estimate the future.
> ...


----------



## Drag (12 Nov 2008)

If there is a bailout of the Big Three it should include clauses for union contract renegotiation, not that I am hopeful that the Democrats will demand it.  I saw somewhere that the average autoworker costs GM about $150K per year when you add up the wages and benefits.  The same article said that the average university professor made about $100K.  With all due respect, assembly line work is not worth $150K / year.  Japanese automakers operating in North America pay out, on average, only about $95K per worker per year and are in good shape.  Sorry UAW, if you want to keep working, you have to be ready to come back down to earth.


----------



## a_majoor (12 Nov 2008)

_This_ will really help the economy:

http://www.usnews.com/blogs/capital-commerce/2008/11/10/is-obama-planning-a-surprise-tax-hike.html



> *Is Obama Planning a Surprise Tax Hike?*
> November 10, 2008 02:46 PM ET | James Pethokoukis
> 
> I have been arguing that Barack Obama's tax hike plan represents a floor, not a ceiling. (And even that floor seems to fluctuate.) I recall that some House Democrats, like Charlie Rangel, were pushing a for a "millionaire" surtax during the last Congress.
> ...


----------



## Kirkhill (12 Nov 2008)

Here's one for those that are a lot brighter than me, it is in keeping with the move to "ease terms":

What would be the impact of renegotiating "failing" mortgages, via Fanny and Freddy, at 99 year terms?  Make the principal payment vanishingly small and effectively just carry the interest on the loan.

As to the tax hike.....as I said before, keep our rates reasonable and we may end up being the beneficiary .... Canada as the Switzerland of North America, but with oil.


----------



## a_majoor (13 Nov 2008)

Japan's huge property bubble burst at the end of the 1980's (just about the same time various talking heads were predicting Japan would overtake America as the world's biggest economy), but their government failed to force Japanese banks to take non performing assets off the books.

The Japanese economy essentially deflated for the next decade (economic stimulus packages and reducing the prime rate to effectively 0% did nothing to help [say, that sounds pretty familier]) due to the drag of the non performing assets. Using Freddie and Fannie to carry non performing debt would have similar impact on the US economy, although since the failed mortgages are a smaller percentage of the overall US economy, the effect "should" not be so severe.

Most of the various bailout packages proposed or implemented are having no or negative effects on the economy (witness the Asian stock markets dropping after the Chinese package was announced) since they are totally counterproductive. The crisis is caused by an excess of debt in the system, systematically increasing debt through deficit spending (or preventing the debt:wealth ratio from coming into balance by attacking wealth in the form of higher taxes or malformed regulation) *IS* being factored into the global stock market, which is reacting to policies which reduce future growth, future profits and future savings.

I think we are reaching a real crisis point. Either the debt is wrung out of the system (and quickly; allowing GM to fail would probably kick off the process and get it over with through a cascade of bankruptcies in a year or so), or attempt to "stimulate" or "rescue"  the economy, and wring the debt out by devaluing money through rapid increases in inflation. I lived through the inflationary 70's, and saw what it did to my parents; I would never wish that on anyone.


----------



## a_majoor (15 Nov 2008)

A long article which explains some of the financial aspects of the problem and how it became so amplified: remember, if the CRA hadn't been enforced and banks "encouraged" at gunpoint to start making these sub prime loans, the foundation of all these derivatives would not have existed in the first place. Incentives and lack of understanding or transparency inside Wall Street took care of the rest.

http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom

Long article, but well worth it.


----------



## a_majoor (15 Nov 2008)

I'd vote for this guy. If he represents the "new wave" of Republicans, maybe people will be able to be "proud of America for the first time (since 2008) in 2012". Where is the rest of the team?

http://online.wsj.com/article/SB122670755063129989.html?mod=rss_opinion_main



> *Don't Bail Out My State*
> South Carolina's governor says more debt isn't the answer.
> By MARK SANFORD
> 
> ...


----------



## a_majoor (17 Nov 2008)

Well, there will be a chance to try this in 2012:

http://pajamasmedia.com/blog/want-change-lets-try-truly-free-markets/



> *Want Change? Let’s Try Truly Free Markets*
> 
> Posted By Rand Simberg On November 17, 2008 @ 12:00 am In . Column2 03, . Positioning, Money, Politics, US News | 10 Comments
> 
> ...


----------



## a_majoor (22 Nov 2008)

Some sectors of the US economy are doing just fine (and I'll bet we can see the same if we look carefully around us in Canada as well):

http://drhelen.blogspot.com/2008/11/underground-economy.html



> *The underground economy *
> I read with interest an article entitled, In Ethnic Enclaves, The U.S. Economy Thrives (Hat tip: Newsalert):
> 
> 
> ...


----------



## HunterADA (23 Nov 2008)

Thucydides said:
			
		

> banks "encouraged" at gunpoint to start making these sub prime loans



I wasn't aware anyone was forcing banks to sell low initial rate, "exploding" adjustable-rate mortgages. Here I've been under the impression this whole time that mortgages with three year teaser rates followed by a reset to a rate that gives the homeowner a much higher payment were something the banks came up with all by themselves, and eagerly snapped up by both stupid home buyers and real estate speculators looking to flip the house long before the payment changed.

When I see states like California, Florida, Arizona and Nevada topping foreclosure lists ( http://www.realtytrac.com/states/index.html ), with the first two far in the lead, it doesn't scream 'welfare mom with ten kids and no income that the bank was forced to give money to'. It does point me towards bubble-like housing markets that have been rising at a rate far above inflation or typical investment returns. It does point me towards some of the most lucrative places in the nation for real estate speculation in the last decade. And it does point me towards banks that, having made the loans, knew they were bad and did their best to securitize and dump them on somebody else, then figured the securities they were buying from everyone else to sustain their own profits were somehow better than the trash they were unloading on the market.

Nobody forced the banks to develop these investment vehicles, least of all Clinton and the (mostly Republican-controlled anyway) Congress of his administration that you seem to be implying. Alan Greenspan said in April, 2005, "today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s." Are you saying the Republican-controlled Congress, with the Republican president, was to blame for that statistic? Or that they were so weak a majority that they couldn't influence a situation like that?

That same self-proclaimed lifelong Republican supported the 2001 tax cuts that the Democratic congressional minority criticized as unsustainable and unfair. (Hey, I've never had a problem with them, I pay _half_ the tax on investment income that I do on the income I get from my job. Schleps who actually make all their money from working for a living might disagree.) They even went so far as to lable the man a political lapdog and hack who would do anything to appease the party in power. And in his testimony before Congress last month, Greenspan said ""Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief."

He expected banks to act responsibly, look out for their long-term interests, and prudently safeguard their capital while making skilled decisions to generate revenue for depositors. Basically, the kinds of things the traditional vision of a banker encompasses.

Oops. His bad.


----------



## DBA (23 Nov 2008)

HunterADA said:
			
		

> I wasn't aware anyone was forcing banks to sell low initial rate, "exploding" adjustable-rate mortgages. Here I've been under the impression this whole time that mortgages with three year teaser rates followed by a reset to a rate that gives the homeowner a much higher payment were something the banks came up with all by themselves, and eagerly snapped up by both stupid home buyers and real estate speculators looking to flip the house long before the payment changed.



Banks were forced to lend to some groups of people that should never have been given loans. Bundling them into securities was a way for banks to protect themselves and shed the risk. The government assisted them in doing this with expanding the operations of Freddie Mac/Fannie May along with other programs and legislation/regulations. Write loan (get fees), bundle and securitize (get more fees) then sell shares in the bundle (more fees). Once the cycle completes the risk is gone. Banks got greedy and pushed the cycle to be big and fast without any regard to caring about the risk of the various loans. Helping them was the rest of the financial industry who made these bundles look like something other than what they were: bundles of very risky loans with a significant chance of default. 

The teaser rates and lack of checking for any ability to repay was because they didn't care about the risk of the loan as it would not be their problem once it was bundled and sold to some suckers. Keep in mind a lot of the bank's loses are just the loans they had in hand when the scheme collapsed and they could no longer bundle and sell them as some form of investment instrument. The inflated money supply for the housing market made it into one huge bubble that has burst causing grief for a lot of people. Lots of greed, stupidity, deceit  and blame to go around.


----------



## a_majoor (23 Nov 2008)

The Community Reinvestment Act (a Carter Administration program) didn't really become an issue until the Clinton Administration began to threaten banks with regulatory enforcement of the act (it had been ignored for the most part through the '80's and bankers were still able to use sound mortgage practices when lending). Once the Clinton administration started the process, radical groups like ACORN would start shakedown lawsuits against banks that still persisted in looking for steady income and low debt/equity ratios from potential buyers. I will have to refind the link, but a certain lawyer named Barrak Obama apparently filed at least one lawsuit against a Chicago bank along with or in conjunction with ACORN, claiming that looking for debt/equity and income was "redlining" and racially motivated.

Since the power of the State was behind these lawsuits (in the form of the CRA), bankers really had no choice but to comply. As DBA points out, positive incentives were found in the form of securitization. Consider, however, that without the enforcement of the CRA, the entire process could never have begun.

Now we have the same gang of idiots who decided the CRA was a good idea and fought against regulating "Freddie and Fannie" in 2003 AND 2006 also want to seize control of people's savings (401 and IRA accounts), introduce national healthcare and pick winers and losers in the general economy (starting with the Detroit "Big Three"). If they do as good of a job as they did with the banking and mortgage industry (and there is no evidence they will do anything differently [i.e. spreading gravy to their friends at your and my expense]) then the next four years will be very rough sledding indeed.


----------



## HunterADA (23 Nov 2008)

DBA said:
			
		

> Banks were forced to lend to some groups of people that should never have been given loans.



Agreed.



> The inflated money supply for the housing market made it into one huge bubble that has burst causing grief for a lot of people. Lots of greed, stupidity, deceit  and blame to go around.



Also agreed. But the above is still not anywhere close to the proximate cause of this issue. It makes just as much sense to invoke the S&L scandal in relation to the current crisis as it does to lay the blame on an ill-advised attempt to mingle EO and finance. And I'm still curious about where this seizure of my retirement account is coming from, aside from certain fear-mongers.


----------



## Kirkhill (23 Nov 2008)

With all the talk of the New New Deal I found this 2002 lecture  fascinating.  I was pointed to it by Gateway Pundit.

It is a good, easy and humourous read and needs to be read in its entirety.

Just remember FDR's Stamp Collection as you are reading this.




> [Why the New Deal Failed
> Speech given by Burt Folsom at Conservative University 2002
> The following are remarks excerpted from Dr. Burt Folsom's lecture at AIA's Conservative University on why Franklin Roosevelt's New Deal failed.
> 
> ...


----------



## muskrat89 (23 Nov 2008)

> I'm still curious about where this seizure of my retirement account is coming from, aside from certain fear-mongers.



http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html



> Democratic leaders in the U.S. House discuss confiscating 401(k)s, IRAs
> 
> By Karen McMahan
> 
> ...


----------



## Kirkhill (23 Nov 2008)

Remainder of the above article on Roosevelt's New Deal



> We changed in that short period of time from being a country of states, private charity, and solving our own problems, to a country of people who tried to get the most out of the government. In fact, the more poorly you run your city, the better case you have for getting the most out of the government. The poorly run states and cities have the best case for getting the most money.
> 
> Now, what I want to do is talk about the other side, the side the textbooks almost always omit. How did we paid for this? We have to look at the taxes. The textbooks say, "Oh, Roosevelt was trying. He had programs to help people." And then they'll mention these government programs. Well, where'd the money come from? The textbooks are quiet. Well, I am not going to be so quiet.
> 
> ...


----------



## SeaKingTacco (23 Nov 2008)

So the best thing the US (and any other) government can do is cut taxes and the size of itself?


----------



## TCBF (24 Nov 2008)

SeaKingTacco said:
			
		

> So the best thing the US (and any other) government can do is cut taxes and the size of itself?



- Cut the RIGHT taxes, get the gummint out of places it has no business being and promote competition in all other areas.


----------



## a_majoor (24 Nov 2008)

As usual, the wron people and policies are getting the blame for today's problems. Lets remember to write the MSM and correct their amneisia wherever and whenever we can:

http://reason.com/news/show/130222.html



> *Obama's Clinton Problem*
> Deregulation made the prosperity of the 1990s possible. Just ask Bill Clinton.
> John Berlau | November 21, 2008
> 
> ...


----------



## HunterADA (24 Nov 2008)

muskrat89 said:
			
		

> http://www.carolinajournal.com/exclusives/dems-target-private-retirement-accounts.html



While it makes great political fodder, the Carolina Journal is being a little less than truthful. Actually, that's not quite right. It's being a _lot_ less than truthful, worse than any wooden puppet ever was. But on the bright side, its stories are getting spread all over the nation!

The truth is available at factcheck.org for anyone to read. If you'd rather get your information straight from the primary source instead of taking my or anyone else's word for it, the video of the House committee meeting is available to watch. The exact issue is at about 33:23, though she starts speaking shortly after the half-hour mark.

The Democrats are not trying to seize my retirement account or anyone else's. Ghilarducci herself is not proposing that. The sky is not falling, the Obama-worshipping jackbooted thugs are not coming, and Chicken Little tastes pretty darn good once he's been deep-fried. However, some people are lying and fear-mongering, and hoping others will buy what they're pandering. You were sold a bill of goods.


----------



## Kirkhill (24 Nov 2008)

And on the subject of comfort food......

Here comes the new boss, same as the old boss....



> Rubinomics Recalculated
> 
> By JACKIE CALMES
> Published: November 23, 2008
> ...



So Thucydides, the Dems are "owning" deregulation, free trade and balanced budgets - Bill's legacy.  And Obama has hired all these guys to fix the current problem.  They are about as radical as Stephen Harper.

Of course the fact that as a Bank Director Rubin seems to have been less than sterling..... and Obama is engaging in the tried and true Chicago formula of nepotism.

Daltry had it right.  I starting to feel much better now. ;D >

Meanwhile the moonbats are getting nervous - that is those that aren't true believers and are convinced that The Saviour has a plan.

Loachman called it right.  Empty Suit.

Edit:

Oops - forgot the Source

And while I'm here I may as well add this from the Left (Huffington Post)



> As progressives, we can view President-Elect Obama's emerging economic team in one of two ways. Either he has disappointed us by picking a group of Clinton retreads--the very people who brought us the deregulation that produced the financial collapse; the fiscal conservatives who in the 1990s put budget balance ahead of rebuilding public institutions. Or we can conclude that he has very shrewdly named a team of technically competent centrists so that he can govern as a progressive in pragmatist's clothing--as he moves the political center to the left.



And this from Salon



> One of the first things Barack Obama did after winning the election two weeks ago was put an old-school political brawler in charge of his White House. Next, he saved Joe Lieberman. Then, he met with John McCain, and asked Hillary Clinton to run his State Department. For good measure, he's also apparently weighing whether to keep George W. Bush's Defense secretary, Robert Gates, on at the Pentagon.
> 
> This is the guy Republicans called a socialist, maybe a Marxist, and National Journal said was the most liberal member of the U.S. Senate? McCain aides were saying on Election Night that their own polling showed 60 percent of the country thought Obama was a liberal (and many voted for him anyway). Barely two weeks into the transition, that number might already be dropping fast.
> 
> ...



Couple all this with the rave reviews for the House Slave from Zawahri and Ahmadinejad's handlers as well as the extremely mobile Hillary and I am starting to see why the Stock Market is rallying.


----------



## muskrat89 (24 Nov 2008)

HunterADA - "Sold a bill of goods"? You certainly are a smug one. I wasn't sold anything. You asked where people were getting it, and I gave you a link.

As far as FactCheck.org.... please. For every link I post discrediting FactCheck, you can find one countering the discredits. I'm sure we can link, and counter-link, til the cows come home. In the end, no one is going to change your mind and well - you seem to believe you already know what I think anyway...

http://patterico.com/2008/09/23/unmitigated-garbage-from-factcheckorg-on-obamas-second-amendment-record/

Perhaps you were "sold a bill of goods" when it comes to the objectivity of FactCheck?


----------



## GAP (24 Nov 2008)

Obama won.......period

He has earned the right to give it a try....period

bitch about it in 4 years


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## HunterADA (25 Nov 2008)

muskrat89 said:
			
		

> HunterADA - "Sold a bill of goods"? You certainly are a smug one. I wasn't sold anything. You asked where people were getting it, and I gave you a link.



It's more polite to say "Someone lied to you" than "Why are you lying to us?". I figure that's a little hostile for me to start out with in my first half-dozen posts on this board. If I'm wrong, and that's the correct question to be asking, please let me know.

I also included the primary source, a video recording of the actual hearing. If you don't believe me and you don't believe Factcheck.org, you can watch that. The entire statement that's been circulating around was made up out of whole cloth. It's false, and actually listening to the hearing proves that. If you don't  have a few hours to watch Congressional hearings, the summary is there for your convenience.


----------



## a_majoor (25 Nov 2008)

While the President Elect gives me "Hope" that he will "Change" the way he governs from the electoral rhetoric, there is still good reason to believe otherwise:

http://www.slate.com/id/2200667/



> *Why Washington Hates Wall Street*
> An 80-year rivalry explained.
> By Timothy Noah
> Posted Monday, Sept. 22, 2008, at 3:47 PM ET
> ...



People respond to incentiveswithout fail , and the incentive to increase personal power and privilege is (aka Greed) is one of the most powerful of all. Democrats, following the "Progressive" formula, will also try and tap into the other powerhouse emotion: Envy of Wall Street, which drives the class warfare rhetoric.

WRT 401 accounts, there are powerful incentives for the government to seize them, regardless of who you link to. This is approx $2 trillion in wealth, which can fuel various government programs for the next 1-4 years. The Progressive movement truly believes that private savings are inferior to having the State provide [remember Beer and Popcorn?](and the other half of the coin is citizens with private savings _do not need _ the state, therefore will not have any reason to support increases in State power and influence). Making people dependants is the name of the game, only historically, the American people have never played along. There is even lots of political cover right now to do the deed: if investors are losing money in their 401's because they haven't diversified their holdings, the rational for the Social Security Administration to take the accounts is to "save" the investors....its for their own good... really.....

Instapundit gets mail. this may actually work out in the long run (as the law of unintended consequences kicks in yet again):

http://pajamasmedia.com/instapundit/ (Nov 25 2008)



> UPDATE: A cheerful reader emails:
> 
> 
> There are three scenarios for what comes after the bailout spasm:
> ...


----------



## a_majoor (29 Nov 2008)

The future as a "political economy"?

http://www.washingtonpost.com/wp-dyn/content/article/2008/11/27/AR2008112702052.html



> *From Market Economy to Political Economy*
> 
> By Charles Krauthammer
> Friday, November 28, 2008; Page A29
> ...


[/quote]


----------



## a_majoor (10 Dec 2008)

Here is a true p[lan to reboot the US economy and thus unwind the global financial crisis. Anyone care to start a petition for the same thing in Canada?

http://www.humanevents.com/article.php?id=29733



> *Sign the 2-Month Tax Holiday Petition Today!*
> by  Human Events
> 12/02/2008
> 
> ...



And some economic analysis by a Keynsian (as a follower of Classical economics, I feel vindicated):

http://gregmankiw.blogspot.com/2008/12/fiscal-policy-puzzles.html



> *Fiscal Policy Puzzles*
> 
> As a student of Alan Blinder, Larry Summers, and Stanley Fischer, I was trained to view the short-run effects of fiscal policy through the lens of Keynesian macroeconomic theory. I am sure that many of the economists in the new Obama administration share that intellectual framework. After all, they are being drawn from my teachers (Larry Summers), my fellow students (Christina Romer), and my own students (Jason Furman).
> 
> ...


----------



## muskrat89 (12 Dec 2008)

New campaign from the Big 3


----------



## a_majoor (14 Dec 2008)

Well, since honest historians know how well the "New Deal" worked, we should start thinking about how to cope with this "New, New Deal"

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/11/AR2008121102951.html



> *The Real Obama*
> A Centrist? No. A Transformer
> 
> By Charles Krauthammer
> ...


----------



## Kirkhill (14 Dec 2008)

An interesting defenc(s)e of the US economy from James Moore in The Washington Post via Real Clear Politics



> [5 Myths About Our Sputtering Economy
> 
> By James P. Moore Jr.
> Sunday, December 14, 2008; Page B03
> ...


----------



## a_majoor (15 Dec 2008)

The US economy can thrive and prosper unless money and resources are diverted away from the market's solutions:





> *Crash in trash creates mountains of unwanted recyclables in US*
> American towns are being forced to abandon recycling their household waste after the global economic downturn has crashed the once profitable market for "trash".
> 
> 
> ...


----------



## tomahawk6 (16 Dec 2008)

I think converting trash to electricity would help to eliminate trash and provide green electricity. A waste to electricity plant can produce 520 kilowatts of electricity per ton.


----------



## a_majoor (17 Dec 2008)

Progressia comes home to roost. The most amazing thing to consider is the timeline; the "Great Society" programs which kicked off this destructive spiral were enacted starting in the mid 1960's, so the largest and most productive economy in history was backrupted in just 40 years:

http://www.dcexaminer.com/opinion/Who_Will_Bail_Out_Uncle_Sam_121608.html



> *Who Will Bail Out Uncle Sam?*
> 
> By EXAMINER EDITORIAL HOT ZONE
> - 12/16/08
> ...



And some possible consequences:

http://www.politico.com/news/stories/1208/16663.html



> *Four really, really bad scenarios*
> By: Eamon Javers
> December 17, 2008 09:10 AM EST
> 
> ...


----------



## a_majoor (18 Dec 2008)

Maybe watching those "zombie" movies wasn't a waste of time after all....

http://www.reason.com/news/show/130626.html



> *Return of the Living Dead*
> What the U.S. can learn from Japan's failed experiment with "zombie businesses"
> 
> Anthony Randazzo | December 17, 2008
> ...


----------



## muskrat89 (21 Dec 2008)

And this is why I don't like bailouts. Not for Wall Street, not for Detroit.

From this article found at Fox Online http://www.foxnews.com/politics/2008/12/21/study-banks-failed-executives-earned-b/



> Study: As Banks Failed, Top Executives Earned $1.6B
> 
> Nearly 600 executives earned benefits including cash bonuses, stock options, personal use of company jets and chauffeurs, home security, country club memberships and professional money management, an AP analysis found.
> 
> ...



Read the rest of the story at the above link....


----------



## a_majoor (23 Dec 2008)

Too bad more people don't know the real story of the financial crisis (or worse yet deny its true and run around like 9/11 Troofers). Here is a handy summary to tell your friends and grandchildren around the campfire:

http://pajamasmedia.com/rogerkimball/2008/12/22/who-caused-the-global-economic-crisis-hint-it-wasnt-george-w-bush/



> *Who caused the global economic crisis? (Hint: it wasn’t George W. Bush)*
> 
> Posted By Roger Kimball On December 22, 2008 @ 7:53 am In Uncategorized | 30 Comments
> 
> ...


----------



## Kirkhill (26 Dec 2008)

From John Stossel:




> Arrogant Conceit
> By John Stossel
> 
> Barack Obama wants to use the recession to remake the U.S. economy.
> ...



No further comment.


----------



## tomahawk6 (26 Dec 2008)

Rather than wasting money just give each taxpayer $500,000. ;D


----------



## Yrys (26 Dec 2008)

Falling interest rates are leading to a rush to get cheaper mortgages. Should you join in?, CNN Money

NEW YORK (CNNMoney.com) -- Falling interest rates are fueling a mortgage refinance frenzy 
as homeowners rush to reduce their housing payments.

The average rate for a 30-year, fixed mortgage dropped to 5.08% last week, according to the 
Mortgage Bankers Association, more than a full point lower than just a month ago. Mortgage 
applications were up a whopping 48% last week, according to the MBA and more than 80% 
were from homeowners looking to lower housing costs.

"It's snowing loans," said Steve Habetz, a Connecticut mortgage broker, "and they're all refis."

Among those were Elizabeth Mayer and Michael Keohane, who bought their Manhattan condo 
just a little over a year ago, financing $220,000 of the purchase price with a 30-year, fixed rate 
loan of 6.5%. That was affordable, with monthly payments of less than $1,400. But their new 
5.25% loan will lower their payment to about $1,215, saving about $175 a month.

"It was a nice holiday gift," said Mayer.

With savings like that, it's no wonder that homeowners are coming out of the woodwork. And 
mortgage brokers are beating the drums too, advising their clients to let the good times roll.

Mayer said her mortgage broker had kept her informed of interest rate declines ever since 
she originally purchased her home. "He's been encouraging whenever opportunities arose," 
she said. "We missed one opportunity last spring when we just weren't able to act on it."
The broker made sure they didn't miss this chance. "He e-mailed me [about it] from South 
Africa and called when he got back," said Mayer.

*Who should refi...*

Anyone with high adjustable-rate loans. Folks in this group should try to get into a low fixed 
rate if they can. Not only will they lower their payments immediately but it would also 
eliminate the possibility of future increases.

Those who would lower their rate by a percentage point or more. Borrowers who already 
have a reasonable fixed rate shouldn't jump into a new loan every time rates inch down, 
according to Orawin Velz, an economist for the Mortgage Bankers Association. "You should 
have at least a percentage point difference before you even think about it,"  Velz said. 
"If you have a 6.5% loan right now, it would be a great time to refi."

Waiting for a substantial rate decrease makes sense because getting a new mortgage incurs 
some expenses. There are the costs of a new appraisal and origination and application fees. 
Plus, a title search and title insurance are usually required.

All those costs, which can add up to $2,000 or $3,000 or more for a typical $200,000 loan, 
are often rolled back into the mortgage, increasing the principal upon which the interest rates 
are applied. If that goes up so much that it offsets the interest rate drop, it doesn't make sense 
to refi.

Those who are planning to stay in their homes for a while. The increased balances usually take 
a year or two to be wiped out by lower monthly payments, so anyone planning to sell the home 
during the next few years probably should not refinance, unless the difference in interest rates 
is very substantial.

The actual rate borrowers get depends, just as with purchase mortgages, on credit scores, 
income and assets and the value of the home. "If you have a high credit score and your 
equity is good, it's like a vanilla cream puff," said Velz. "You're going to get a great rate."

Borrowers with significant equity in their homes. Many homeowners have had much of their 
home values erased in the post-bubble bust, eliminating much or all of their home equity - 
the difference between the value of the home and the amount owed on the mortgage.

If a refi borrower's home equity has fallen below 20% of the total appraised home value, 
the borrower will likely have to purchase private mortgage insurance. The insurance adds 
a point or two to the monthly mortgage costs, which turns a 5% loan into a 6% or 7% loan, 
erasing any advantage of refinancing. "That's the biggest hurdle for refinancing right now," 
said Velz.

Borrowers who don't think rates will decline much further. Everyone considering refis has 
to decide whether to wait for interest rates to go even lower, which the Mortgage Bankers 
Association has been forecasting. That's only a prediction, though, not a certainty. Rates 
could turn higher instead.

Borrowers must weigh the advantages of gambling on rates turning around or locking in 
savings at the present very low rates.


----------



## a_majoor (27 Dec 2008)

*Every* deflationary opportunity must be watched for and pounced on, since the Obama Administration and the Democratic congress has promised to raise taxes, regulations and otherwise take taxpayer wealth and squander it on their political friends. The bailout of the Detroit automakers is actually a gift to the UAW, and likely the first of a dazzling array of payoffs to the politically connected.

Conserving wealth should be the watchword for the prudent over the next four years.

Jerry Pournelle on the real solution:

http://jerrypournelle.com/view/2008/Q4/view549.html#Friday



> *The way out of our economic problems is increased production*. It's a lot easier to divide up a big pie than a small pie. Socialism only works if there's very high production, enough so that the people willing to work hard are able to produce enough to keep those who want to consume hard without doing a lot of work if not satisfied -- my experience is that the non-productive consumers will always find leaders willing to demand more and more -- at least out of the streets.
> 
> *There are two keys to increased productivity: low energy prices, and a well educated work force imbued with a work ethic.* Eliminate either and you have a society either unable or unwilling to meet the demands of the non-productive (which includes both the deserving poor and the undeserving poor as well as those "employed" in "jobs" that consume but add nothing to the goods available for distribution). When energy prices and/or appropriate education are threatened, it's rather difficult to have a positive reaction.
> 
> ...


----------



## Yrys (27 Dec 2008)

Stop Being Stupid, NY Times

I’ve got a new year’s resolution and a new slogan for the country.

The resolution may be difficult, but it’s essential. Americans must resolve 
to be smarter going forward than we have been for the past several years.

Look around you. We have behaved in ways that were incredibly, astonishingly 
and embarrassingly stupid for much too long. We’ve wrecked the economy and 
mortgaged the future of generations yet unborn. We don’t even know if we’ll 
have an automobile industry in the coming years. It’s time to stop the 
self-destruction.

The slogan? “Invest in the U.S.” By that I mean we should stop squandering 
the nation’s wealth on unnecessary warfare overseas and mindless consumption 
here at home and start making sensible investments in the well-being of the 
American people and the long-term health of the economy.

The mind-boggling stupidity that we’ve indulged in was hammered home by a 
comment almost casually delivered by, of all people, Bernie Madoff, the 
mild-mannered creator of what appears to have been a nuclear-powered Ponzi 
scheme. Madoff summed up his activities with devastating simplicity. He is said 
to have told the F.B.I. that he “paid investors with money that wasn’t there.”

Somehow, over the past few decades, that has become the American way: 
to pay for things — from wars to Wall Street bonuses to flat-screen TVs to 
video games — with money that wasn’t there.

Something for nothing became the order of the day. You want to invade Iraq? 
Convince yourself that oil revenues out of Baghdad will pay for it. (Meanwhile, 
carve out another deficit channel in the federal budget.) You want to pump up 
profits in the financial sector? End the oversight and let the lunatics in the 
asylum run wild.

For those who wanted a bigger house in a nicer neighborhood, there were 
mortgages with absurdly easy terms. Credit-card offers came in the mail like 
confetti, and we used them like there was no tomorrow. For students stunned 
by the skyrocketing cost of tuition, there were college loans that could last a 
lifetime.

Money that wasn’t there.

Plenty of people managed their credit wisely. But much of the country, including 
many of the top government officials and financial titans who were supposed to 
be guarding the nation’s wealth, acted as if there would never be a day of reckoning, 
a day when — inevitably — the soaring markets would crash and the bubbles explode.

We were stupid in so many ways. We shipped American jobs overseas by the millions 
and came up with the fiction that this was a good deal for just about everybody. We 
could have and should have taken the time and made the effort to think globalization 
through, to be smarter about it and craft ways to cushion its more harmful effects and 
to share its benefits more equitably.

We bought into the dopey idea that you could radically cut taxes and still maintain critical 
government services — and fight two wars to boot!

We were living in a dream world. The general public, and to a great extent the press, 
closed its eyes to the increasingly complex and baffling machinations of the financial 
industry, which kept screaming that oversight would ruin everything.

We should have known better. It didn’t require a genius (or even an economics degree) 
to understand a crucial point that popped up some years ago in a front-page article in 
The Wall Street Journal: “Markets are a great way to organize economic activity, but 
they need adult supervision.”

Did Alan Greenspan not understand that? Bob Rubin? Larry Summers?

Now that the reality of a stunning economic downturn has so roughly intervened, we 
at least have the option of being smarter going forward. There is broad agreement 
that we have no choice but to go much more deeply into debt to jump-start the 
economy. But we have tremendous choices as to how we use that debt.

We should use it to invest in the U.S. — in a world-class infrastructure (in its broadest 
sense) to serve as the platform for a world-class, 21st-century economy, and in a 
system of education that actually prepares American youngsters to deal successfully 
with the real world they will be encountering.

We need to invest in a health care system that improves the quality of American lives, 
enhances productivity, puts large numbers of additional people to work and eases the
competitive burden of U.S. corporations.

We need to care for our environment (if long-term survival means anything to us) and 
get serious about weaning ourselves from foreign oil.

And, finally, we need to start living within our means and get past the nauseating idea 
that the essence of our culture and the be-all and end-all of the American economy is 
the limitless consumption of trashy consumer goods.

It’s time to stop being stupid.


----------



## a_majoor (28 Dec 2008)

From Instapundit; the idea that we could take things back into our own hands:

http://pajamasmedia.com/instapundit/ (Dec 27, 2008)



> Reader Donald Gately writes:
> 
> You say that A.N.S.W.E.R. would love to see Icelandic-type protests here. *But what if folks under 30 or 40 or 50 started staging large public protests about the Ponzi-scheme that is Social Security? What if taxpayers started staging massive protests about public pensions that let government employees (many of whom don’t have to participate in Social Security) retire at 50 with 90% pay - even while common taxpayers have to ratchet back their own retirement dates? What if financial and real-estate workers started staging protests about their jobs disappearing while the Democrats in congress do everything in their power to preserve cushy UAW deals? What if parents in neighborhoods with failing schools started actively protesting the stranglehold that the teachers unions have over their childrens’ education?*
> 
> ...



Freedom is a self help scheme


----------



## a_majoor (28 Dec 2008)

More on an effective "stimulus" package. Failing a major tax cut or tax holiday, the next best thing we can do as taxpayers and consumers is to take advantage of every sale or deflationary opportunity. IF enough wind is taken out of the economic sails by the productive economy it might be enough to counteract the politicians payoffs to their supporters (i.e the UAW/Big Three bailout) and reduce the threat of inflation.

http://www.weeklystandard.com/Content/Public/Articles/000/000/015/951hvyxc.asp



> *Not All Stimuli Are Created Equal*
> The best plan is a cut in the payroll tax.
> by Lawrence B. Lindsey
> 01/05/2009, Volume 014, Issue 16
> ...


----------



## a_majoor (30 Dec 2008)

Some common sense seems to be leaking back into the Congress:

http://voices.washingtonpost.com/the-trail/2008/12/29/mcconnell_puts_the_brakes_on_s.html



> *McConnell Puts the Brakes on Stimulus Plan*
> 
> By Paul Kane
> Senate Minority Leader Mitch McConnell (R-Ky.) voiced skepticism today about the emerging economic stimulus plan, applying a brake to Democratic plans to quickly pass up to $850 billion in spending and tax cuts soon after President-elect Barack Obama's Jan. 20 inauguration.
> ...


----------



## a_majoor (3 Jan 2009)

The political economy is set to shoulder out much of the market economy. How long will it take to recover from that?:

http://www.nytimes.com/2008/12/29/us/29bank.html?_r=1&hp=&pagewanted=all



> *Veterans of ’90s Bailout Hope for Profit in New One*
> 
> By ERIC LIPTON and DAVID D. KIRKPATRICK
> Published: December 28, 2008
> ...


----------



## a_majoor (4 Jan 2009)

Well, no one can say this was a surprise:

http://www.forbes.com/2008/12/31/housing-bubble-crash-oped-cx_bb_0102bartlett_print.html



> *Who Saw The Housing Bubble Coming?*
> Bruce Bartlett 01.02.09, 12:00 AM ET
> 
> The current economic crisis is raising many legitimate questions about the failure of economists and financial analysts to foresee the housing bubble and warn of its collapse.
> ...


----------



## a_majoor (5 Jan 2009)

The numbers keep growing. A $300 billion dollar tax cut will do wonders for the economy, but it will be canceled out by the tsunami of increased government spending and the huge inflationary pressures that government spending will bring. If there was a concurrent $3 - $400 billion dollar *spending cut* then we would really be making progress:

http://www.theglobeandmail.com/servlet/story/RTGAM.20090105.wobama0105/BNStory/International/home



> *Obama supports $300-billion tax-cut plan*
> 
> PHILIP ELLIOTT
> 
> ...


----------



## a_majoor (9 Jan 2009)

Ultimately, the United States will go this alone:

http://corner.nationalreview.com/post/?q=MjZjM2YyMTkxOTZiMDIyMzM4NWFiYTcxZjk2YTk5NzA=



> *Walker on the Deficit: "No one is going to bail out America"*   [Stephen Spruiell]
> 
> Former U.S. comptroller David Walker has long been a leading advocate of fiscal sanity, and I called him today to get his take on the latest CBO budget-deficit projections ($1.2 trillion for next year, trillion-plus deficits for years to come). "*If trillion-dollar deficit numbers for several years in a row don’t wake up Washington and America to the nature of our fiscal problems, then I don’t know what will*," he says.
> 
> ...


----------



## tomahawk6 (9 Jan 2009)

If we dont get buried by trillion dollar stimulus bills eventually the economy can dig itself out. Too many ifs though. The democrats are talking cap and trade that wont help the economy at all. They are talking $175 per milk cow as a "methane" tax. With this bunch of lefties in charge we will need a world war to turn it around.


----------



## a_majoor (9 Jan 2009)

Where have we seen this before?





> *'Atlas Shrugged': From Fiction to Fact in 52 Years*
> 
> By STEPHEN MOORE
> 
> ...


----------



## a_majoor (13 Jan 2009)

Remember how Bob Rae promised Ontario could "spend it's way out of recession?" Well apparently issuing sub prime loans and "jumbo" mortgages is really the way to fix America's problems:

http://www.rep-am.com/articles/2009/01/13/opinion/391140.txt



> *Jumbo lending: lessons unlearned*
> 
> Thanks to Sen. Christopher Dodd, Rep. Barney Frank and others, the lending industry spent years issuing mortgages to millions of Americans who had no hope of repaying. Sen. Dodd and Rep. Frank believe homeownership is a right unfettered by income or credit history, and over time, they were instrumental in forcing the industry to lend to some of the least creditworthy Americans.
> 
> ...


----------



## a_majoor (15 Jan 2009)

The fundamental problem isn't that the economy isn't being run correctly, the problem is some people seem to believe it can be run at all...

http://tcsdaily.com/article.aspx?id=011309A



> The Economy is Not a Machine
> 
> By Max Borders : BIO| 13 Jan 2009
> 
> ...


----------



## a_majoor (19 Jan 2009)

Relearning the lessons of history:

http://online.wsj.com/article/SB123215398370892313.html



> *Leave the New Deal in the History Books
> Cut corporate taxes to zero and create real jobs.
> *
> By MARK LEVEY
> ...


----------



## a_majoor (20 Jan 2009)

Is it even possible to recover now?

http://fabiusmaximus.wordpress.com/2009/01/20/milestone/



> *America passes a milestone!*
> Filed under: America — Tags: manufacturing, us government — Fabius Maximus @ 12:00 pm
> 
> We now have more poeple employed in government than manufacturing.
> ...


----------



## a_majoor (22 Jan 2009)

Structural changes such as the ones being postulated here will mean a structural weakening of American economic (and later military and political) power throughout the world. Will agressive Authoratarian states move in to exploit the global power vacuum? Even if the Obama Administration is only a one term administration, it will take some really bold moves by the new Administration and Congress to reverse course, and like the "New Deal" and "Great Society" programs, the Obama Administration programs will be social and bureaucratic monoliths that defy efforts to restrain or uproot them.

http://thehill.com/dick-morris/the-obama-presidency--here-comes-socialism-2009-01-20.html



> *The Obama presidency: Here comes socialism*
> By Dick Morris
> Posted: 01/20/09 06:12 PM [ET]
> 
> ...


----------



## a_majoor (23 Jan 2009)

More on the shift to a State managed economy:

http://www.dcexaminer.com/opinion/columns/TimothyCarney/The_question_Obama_doesnt_want_you_to_ask_012309.html



> *The question Obama doesn't want you to ask*
> 
> By Timothy P. Carney
> Examiner Columnist | 1/23/09 5:39 AM
> ...


----------



## a_majoor (25 Jan 2009)

From the DC Examiner (via Instapundit), a look at how tax and spend economics is affecting America's internal economy. Now expand that idea to the national level:

http://www.dcexaminer.com/opinion/When_state_taxes_rise_businesses_and_residents_flee_012509.html



> *When state taxes rise, businesses and residents flee.*
> 
> 
> Maryland used to be in the middle of the pack of states with business-friendly environments. No more. The Tax Foundation now ranks Maryland as the sixth worst state in the nation in which to do business. Only Rhode Island, Ohio, California, New York, and New Jersey are more hostile to job- and revenue-producing enterprises. Maryland’s “remarkable drop” - from 24th in 2008 to 45th place this year – is attributed to last year’s passage of the largest tax hike in state history, coupled with other major tax policy changes that also put the Free State dead last in the personal income tax category. . . . Decades of empirical research prove that economic growth in high-tax states consistently lags behind states with lower tax burdens. The 10 states with the lowest taxes also attracted almost 10 percent more new residents during the last decade than their high-tax counterparts. *Just last year, 144,000 people fled from California’s punishing taxes, the highest state-to-state migration in the U.S. The ramifications of losing revenue-producing businesses and highly-skilled workers to lower-tax states should by now be apparent even to big-spending governors like Maryland’s Martin O’Malley and California’s Arnold Schwarzenegger - long-term economic decline*.



Canada's response should be a massive tax cut to attract these revenue producing business and highly skilled workers to our new northern tax haven: Canada as the "Snow Leopard" of the worlds economy (vis the four Asiatic "Tiger" economies)


----------



## a_majoor (26 Jan 2009)

Following the timeline of the US "stimulus package" should provide clues to savvy investors to move in and out of economic sectors and when to go to hard assets to protect themselves from the surge in inflation. (A post Obama administration will probably have to administer a Reaganesque fiscal policy to crush inflation: another economic opportunity to buy high interest bearing investments forthe low interest environment to follow):

http://online.wsj.com/article/SB123292987008414041.html



> *The Stimulus Time Machine *
> That $355 billion in spending isn't about the economy.Article
> 
> The stimulus bill currently steaming through Congress looks like a legislative freight train, but given last week's analysis by the Congressional Budget Office, it is more accurate to think of it as a time machine. That may be the only way to explain how spending on public works in 2011 and beyond will help the economy today.
> ...


----------



## a_majoor (28 Jan 2009)

The ultimate problem. Until some sort of definitive arrangement is made that demonstrates to the world *how* the debt is going to be dealt with comes down, there will be a huge cloud of uncertainty around the global financial market. (As an incidental, even if the method is defaulting on the debt, at least the problem is _solved_ and markets can operate without the dead weight and uncertainty holding them back)





> *How do we pay back all this debt? *
> By TigerHawk at 12/17/2008 09:14:00 AM
> 
> My continuing and unshakeable faith in the American system notwithstanding, *it is painfully clear that the credit of the United States and therefore our standard of living will suffer if we do not both restart our economy and show a credible plan for paying back all the money that we are borrowing now.* The problem, of course, is not the current borrowing but *the massive unfunded liabilities for public pensions, healthcare, and now the personal indebtedness, through financial institutions, of tens of millions of Americans who borrowed more money than they could afford to pay back* (it matters not whether this happened because those debtors are idiots -- many of them are -- or because they were, in effect deceived by complex financial instruments that were inadequately explained, as many of them were).
> ...


----------



## tomahawk6 (29 Jan 2009)

China has recently stated that they would no longer be buying US government paper. This will take some of the wind out of the dem's sails unless they intend just to print more paper. The Loonie is looking like a good currency play right now.


----------



## a_majoor (31 Jan 2009)

I would not be so quick to rush into Loonies right now. With 82% of our exports going to the US, we will end up importing inflation. Worse, as the American economy contracts under the combined assault of higher taxes, higher regulation and the "John Galt" reaction of investors and skilled workers withdrawing from full participation in the economy, our own industy will be finding paying customers thin on the ground. A rapidly revaluing Loonie will also make our exports much less attractive.....

Mark Styen tells us what he thinks:

http://article.nationalreview.com/?q=ODljYzM3YTc0ODA4MmVmMjI2YzVmNGM3NWU3ODE2NWI=



> *Where Nations Go to Die*
> You say “stimulus,” I hear “syphilis.”
> 
> By Mark Steyn
> ...


----------



## muskrat89 (6 Feb 2009)

From this article by Krauthammer at the Washington Post  http://www.washingtonpost.com/wp-dyn/content/article/2009/02/05/AR2009020502766_pf.html:



> *The Fierce Urgency of Pork*
> 
> By Charles Krauthammer
> Friday, February 6, 2009; A17
> ...


----------



## Kirkhill (6 Feb 2009)

In keeping with the above and headlines like US Senate Struggling  and Flaherty wants more faster......

Is it just my little corner of the world where everything seems to be moving along pretty much as it was before.  People may have stopped buying but nobody is dying in the streets.  The reason people have stopped buying because they are being told that the guys in charge don't know what they are doing.  This is news?  Not so much.  Except that its some of those guys in charge that are admitting they don't know what they are doing.

If they would just sit down and stop fidgeting we might be able to figure out what the "natural' state of the economy is long enough for the great unwashed to get a sense of how things will be in a couple of months and starting risking some buying decisions again.  As long as this mob of headless chickens continues to run in circles, screaming and shouting, this ship will never steady up long enough to establish a course to correct.  (oooh, luvverly mixed metaphor).


----------



## a_majoor (7 Feb 2009)

Ah Kirkhill, if people were to know what a functioning free market economy looked like, then they would not demand State intervention in the economy:

http://jerrypournelle.com/view/2009/Q1/view556.html#Wednesday



> The bad news is that the "stimulus" bill, which is the largest appropriations bill in the history of the world, is still on track for passage. It nationalizes a lot of the economy, and once those steps are taken, the Iron Law of Bureaucracy will see to it that the institutions created by it will remain. Forever. I have a few more words on that over in mail.
> 
> *The tax cut provision of the "stimulus bill" seem aimed at solidifying party control: most of it is transfer payments to people who don't now pay taxes*. In the US 40% don't pay federal taxes. If any large number of those are given money as transfer payments they will learn to rely on them. At which point they will be motivated to vote. And community organizers will see that they do vote. Now understand: many of those who get negative income taxes do necessary work and they aren't very well paid. The question becomes, is that a federal problem, and should it be dealt with by transfer payments? Because once this is instituted, it's going to be pretty permanent. Those affected by it will be mobilized to defend it, and it will mean more to them than it does to those opposed. So it goes.
> 
> ...



Perhaps we need to host a tea party for our American friends........


----------



## a_majoor (7 Feb 2009)

Economics 102: "Stocks" (the underlying wealth) vs "Flows" (the movement of wealth). If the American people actually mobilize their efforts, they have the resources to wrestle the government and the Grasping hand of the State to the ground. Tea, anyone?

http://www.instapunk.com/archives/InstaPunkArchiveV2.php3?a=1648#IP1648



> *More Simple Arithmetic*
> 
> PREVIOUS LESSON. Nancy Pelosi's little gaffe yesterday about 500 million Americans losing their jobs every month that the "stimulus" package isn't passed should be a reminder that the numbers being tossed around in Washington, DC, these days have long since crossed over into the Land of Oz.
> 
> ...


----------



## a_majoor (8 Feb 2009)

Well the truth is out there and now in the open:

http://pajamasmedia.com/richardfernandez/2009/02/07/mighty_mouse/



> *Here I come to save the day*
> Support Pajamas Media; Visit Our Advertisers
> 
> Wikipedia defines political risk the effect of government actors on the outcome of a business decision.
> ...


----------



## GAP (9 Feb 2009)

I have no clue whether his or anyone else's plan/program is going to rapidly change the economy, but at least he is articulate......a vast improvement

 Obama says world waiting for U.S. to take action
Updated Mon. Feb. 9 2009 8:20 PM ET CTV.ca News Staff Article Link

U.S. President Barack Obama said "the citizens of our country and all countries" are waiting for America to take action on the economic crisis, in his first-ever primetime news conference.

"Last month, our economy lost 598,000 jobs, which is nearly the equivalent of losing every single job in the state of Maine," said Obama Monday evening

"If there's anyone out there who still doesn't believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside down because they don't know where their next paycheque is coming from."
More on link


----------



## a_majoor (10 Feb 2009)

Stuff like this makes you wonder how much of the "crisis" was engineered to shift the economy and State power for partisan political purposes. Add raw power grabs like trying to place the US Census under control of the White House combined with the intentional and unintentional effects of the Stimulus package make the crisis seem like more than just an accident:

http://www.newgeography.com/content/00579-stimulus-plan-caters-privileged-public-sector



> *Stimulus Plan Caters to the Privileged Public Sector*
> by Joel Kotkin 02/10/2009
> 
> Call it the Paulson Principle, Part Deux.
> ...


----------



## a_majoor (11 Feb 2009)

The model of how to fix things. For the United States, they have a first chance if the Republican party retakes the Congress in 2010 (and is led by a "Newt Gingrich" equivalent). If that happens, then part of the 2010 porkfest and all of the 2011 porkfest contained in the "stimulus package" can be cancelled. The incoming administration in 2012 will have a huge mess to clean up, but all the next President has to do is apply this model to the circumstances of the day:

http://online.wsj.com/article/SB123431484726570949.html



> *ganomics vs. Obamanomics*
> The current president wants higher taxes, more regulation, more spending and loose money.
> 
> By PETER FERRARA
> ...


----------



## a_majoor (12 Feb 2009)

There are lots of charts, follow the link to see them. Without further comment:

http://pajamasmedia.com/blog/our-recession-began-in-earnest-after-obamas-election/



> *Democrats Halted Recovery, Derailed Economy Last Summer*
> 
> Posted By Tom Blumer On February 12, 2009 @ 12:00 am In . Feature 01, . Positioning, Money, Politics, US News | 60 Comments
> 
> ...


----------



## a_majoor (13 Feb 2009)

Of course, when it dosn't work, everyone will act surprised:

http://www.mcclatchydc.com/227/story/62082.html



> *Will the stimulus actually stimulate? Economists say no*
> 
> By Kevin G. Hall | McClatchy Newspapers
> 
> ...


----------



## tomahawk6 (13 Feb 2009)

Unfortunately this legislation will not put people to work. The "tax cut" will average $13 a week but will only apply to people with jobs as the cut is a reduction in payroll tax. TARP II will be in the range of $2 trillion and is certain to devalue the dollar and ignite inflation. No one is buying T bills so the treasury will just print the money. I dont expect the economy to rebound in time for the 2010 elections,plenty of time for the dem's to dig themselves a big hole.


----------



## KingKikapu (13 Feb 2009)

I wonder how the 2010 games will fare with such an economic fracas happening all around us.


----------



## a_majoor (13 Feb 2009)

KingKikapu said:
			
		

> I wonder how the 2010 games will fare with such an economic fracas happening all around us.



Maybe they can ski jump over the money pit ;D ;D ;D


----------



## tomahawk6 (14 Feb 2009)

Cause and effect in action. The Clinton era Community Reinvestment Act set the stage for our current malaise by requiring banks to lend to people who were bad risks. Now Congress has decided that to pull us out of recession we will spend Trillions of dollars,essentially we are going to print money which will cause inlation on a grand scale. I remember the interest rates of the Jimmy Carter era upwards of 16% and I suspect we will begin to see those rates again in the next year or two. This is only the beginning for this spendthrift congress.

http://www.nytimes.com/2009/02/14/opinion/14ryan.html?_r=3&ref=opinion



> CONGRESS has made a terrible mistake. Amid a rhetorical debate centered on words like “crisis,” “emergency” and “catastrophe,” it acted too fast. While arguments were made about the stimulus bill’s specific components — taxpayer money for condoms, new green cars and golf carts for federal bureaucrats, another round of rebate checks — its more dangerous consequences were overlooked. And now the package threatens a return to the kind of stagflation last seen in the 1970s.
> 
> To get a sense of the pressures ahead, we must first assess our fiscal health. We started this year with a projected trillion-dollar budget deficit for the 2009 fiscal year. In 2008, we spent $451 billion just to pay the interest on our debt.
> 
> ...


----------



## Rifleman62 (14 Feb 2009)

tomahawk6, do you think that the "we won" Congress/Senate, Nasty Nancy, let alone the POUS, will allow mortgage rates  (and interest rates) to go that high again? If there is trouble now with mortgage foreclosures, wait until interest rates go up. I remember getting a new mortgage in Canada as a result of a move in 1981. It was 21 1/2 %

Ran into a young lady (3 young kids) in San Antonio who had gone back to work because their mortgage renewal increased by $900 per month. It was a big surprise to her and the husband!!! They did some big time negotiating and got the bank to renew for a increase of $500 per month vice the $900. That's just the increase. Interest rates are low now, so you can imagine a sub prime renewal at 16%.

I don't know how the US government will do it, but they will have to keep interest rates low. Nationalize the banks??


----------



## tomahawk6 (14 Feb 2009)

Socialism doesnt work just look at the UK,France,Germany et al. Nationalising the private sector is bad policy and doesnt work. Corporations are in the business to make money for their shareholders who is a beaucrat responsible to ? As for interest rates if a government wants to attract buyers for their paper they need to offer a good rate or the investor goes elsewhere.

If I offer you 6% for a $10,000 loan and the guy across the street offers you 10% who are you going to loan the money to ? We have seen an explosion in food prices because Congress mandated ethanol to be used. Unintended consequences. If oil prices surge like they did last summer that might be enough to push the US into depression. I hate to say it but if you are unemployed you arent going to make enough on unemployment to pay the mortgage as well as life's other necessities. A number of people should never have been given a mortgage and if they wont pay their mortgage how will they pay their property taxes ? I dont know about Canada but if you dont pay your property tax the locality takes your property and sell it  at auction.


----------



## Rifleman62 (14 Feb 2009)

Shareholders/investors in many, many businesses are in the hurt locker now. Corporations/CEO's have not done well. The gov't must balance a good rate with a rate that will not put it's citizen out (in) the streets. The question still stands: how will the US gov't keep interest rates low??

I think people in the US would be surprised as to what country holds the US debt.

Rep Barney Frank is another of my favs in the Congress. But, I should not cast stones looking at our MP's.


----------



## KingKikapu (14 Feb 2009)

maybe socialism hasn't made its mark, but unfettered capitalism has certainly made more than it's share of clusterf&@ks in the last few decades.


----------



## tomahawk6 (14 Feb 2009)

At least in the case of the US our problems have come from government interference in the market place.


----------



## KingKikapu (15 Feb 2009)

There is no such thing as a free market.  Ever.  The closest thing currently in practice is Ebay.  World markets don't even come close in comparison.


The US market, like every other international trade market, has quotas, fines, tarrifs, arbitration disputes, dumping and a myriad of other things holding it in check.  But that isn't the reason for this fracas.  In the case of the current crisis, it wasn't just government interference in the market place (such as the Clinton administration's decision to impose mandatory lending to low rated individuals), but also the decision of the government to highly deregulate the market under the eye of Greenspan.

Both the 80's stock market crash and the Asian Tiger crisis of the 90's were products of a combination of regulation, deregulation and improper safety checks and balances.  I don't see this new one as being much different.


----------



## a_majoor (15 Feb 2009)

KingKikapu said:
			
		

> maybe socialism hasn't made its mark, but unfettered capitalism has certainly made more than it's share of clusterf&@ks in the last few decades.



Actually all the clusterf***s are caused by regulatory failure; where the State interferes with the marketplace. Clever demagogues then try to blame the free market, which is only reacting to the signals and distortions of State interference.

WRT interest rates, if there is a mismatch between the supply of money and credit and the demand, then interest rates will rise. Even if notional interest rates are suppressed by government fiat, you will still be operating in a high interest rate environment. Based on recent historical evidence (the Carter Administration), the end result will be a moribund economy, high unemployment and high inflation. High real rates of interest in the early 1980's were imposed by the Fed under President Reagan's economic plan to crush inflation and have "high quality" money rather than devalued high quantity money.

A second BTW is an unintentionally hilarious piece in the Atlantic Monthly by Richard Florida, who suggests the suburbs and exurbs will fail while cities like Toronto will succeed in this environment. His record of predictions is pretty "impressive"; his "Creative cities" index fails to predict which cities will attract workers and jobs [in fact a high "Bohemian Index" is almost a negative indicator of attraction] while his second book "cooked the books" by including the suburbs and exurbs which explicitly reject his sort of "creative cities" approach in the economic statistics of "creative cities" in order to make it look like the program is working. I wonder how he will explain the string of Municipal bankruptcies in the US as they fall to high expense civic union pay and benefits packages coupled to declining tax bases cause by workers and investors fleeing the "creative cities" for the low tax and low regulatory environments of the "burbs"?

If there is a silver lining in this, the nonperforming mortgage assets and underfunded union pensions may destroy enough wealth to trigger a massive deflation when they implode; canceling out much of the Obama administration's inflationary damage.


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## Kirkhill (15 Feb 2009)

KingKikapu said:
			
		

> There is no such thing as a free market.  Ever.  The closest thing currently in practice is Ebay.  World markets don't even come close in comparison.
> 
> 
> The US market, like every other international trade market, has quotas, fines, tarrifs, arbitration disputes, dumping and a myriad of other things holding it in check.  But that isn't the reason for this fracas.  In the case of the current crisis, it wasn't just government interference in the market place (such as the Clinton administration's decision to impose mandatory lending to low rated individuals), but also the decision of the government to highly deregulate the market under the eye of Greenspan.
> ...



So what you are saying is that government created instability by constantly changing the rules of the game.......I believe you, tomahawk6 and Thucydides (and I) are in agreement.

Money flees uncertainty......mine certainly does.


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## KingKikapu (15 Feb 2009)

Kirkhill said:
			
		

> So what you are saying is that government created instability by constantly changing the rules of the game.......I believe you, tomahawk6 and Thucydides (and I) are in agreement.
> 
> Money flees uncertainty......mine certainly does.


Yeah I guess I am saying that, but with the added caveat that an open, fully free market runs counter to the mandate of any governmental body, plus it's completely unobtainable.  The primary purpose of a government is to provide for and protect its citizens, not the neighbours.  That obviously runs counter to what economics has taught us, but special interest groups, lobbyists, unions, and any other social division within nations will necessitate political parties all across the spectrum that mess that certain point up.  That is the catch of a society: we band together for our collective safety at the risk of internal discordance.

Even if someone figures out how to unify all of the nations of this Earth under one banner, that still won't change that certain subsets of society will require different needs than others, and they will also shift with age.  Some are older and more prone to illness; others are younger and require support via education.  How do we deal with the various conflicting needs of different religions?  What about the differences of individualistic and collectivist cultures?  Somebody will always have an agenda that is different to that of the fellow beside them.  We are not an ant colony, or a hive.   Even under a unilateral government, I still can't see how free trade will exist while the individuals of the population are so fundamentally different in views/needs/whatever.

So yeah, I agree that constant government intervention messes things up, but I also don't see that ever changing.  We are a product of both our personal wants, and our desire to band with others for protection.  All that ever changes is whether we head to more of a capitalist or a socialist bent.  I doubt we'll ever make it to either one of them fully.


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## Kirkhill (15 Feb 2009)

I am still much of the opinion that the market, free or otherwise, is much like the weather: everybody talks about it but nobody does anything about it.......with this difference, in the case of the market it isn't for lack of trying.

Although these days we seem to feel equally free to try to change the weather.  I don't expect any better luck with that than with the market.

Trying to corral the market is like trying to corral water, or the wind.  You can direct portions of the market to your benefit but you can't stop the market.  Equally you can't start the market.  Happily that is unnecessary as the market continues, world without end amen.  As long as people communicate they trade.  I needed my wife to make kids.  Likewise she needed me.......after that discussion all transactions are easy.   

The major flaw in the reasoning of communist and socialist governments is that they tried to stifle capitalism.   All they have ever succeeded in doing is causing their citizenry to revert to barter to gain those things they need by operating outside the monitored system:  free Ladas and ongoing loyalty in return for a postion in the bureaucracy and a season's pass to GUM's department store (and loyalty only guaranteed until a better offer is available).


You can't stop the sun. You can't stop the wind. You can't stop rivers. You can't stop the market.

You CAN perturb your neighbours by blocking their sun.  You can perturb the neighbours by channeling the wind across their deck.  You can greatly discomfit your  neighboursby diverting or damming his water, until the diversion or dam breaks. You can really upset them by denying them access to the market.

Politicians don't create markets.  They can change the shape of the market......and while some shapes are inherently stable and will survive in the absence of politicians, others are inherently unstable and can only survive with constant intervention.  Still others are so unstable as to not be able to survive no matter how much intervention occurs.

While I accept that some interventionist economies produce good outcomes for some of the people some of the time, the mere fact that they are propped up by people making decisions, decisons that inevitably will discomfit at least some of the people some of the time will result in a coalition of increasing size, of people discomfited by the people making decisions that are seen to be for the benefit of still other people. 

When the coalition of the discomfited becomes larger than the coalition of the adjudicators and the clients then the system becomes unsustainable and change happens....sometimes suddenly and violently, sometimes slowly and imperceptibly, and the rules change.

Far better, from my point, to intervene as little as possible, by preference not at all.  Government should not be greedy and attempt to divert or control the whole market, a sysiphian task unlikely to be successful, but simply be a good little parasite and establish a thief line that will continue to generate a revenue stream indefinitely.   With that thief line then they can exercise their desire to do good, and stay in power.

The Masai milk and bleed their cattle for sustenance.  They are careful not to bleed the cow over much.  It becomes a less than successful survival strategy if they do.


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## tomahawk6 (15 Feb 2009)

http://seattletimes.nwsource.com/html/nationworld/2008746731_apaschinausstimulus.html

China editorial slams 'Buy American' provision 
Measures in a $789 billion U.S. stimulus package that favor American goods are a "poison" that will hurt efforts solve the financial crisis, an editorial by China's official news agency said.

BEIJING — 
Measures in a $789 billion U.S. stimulus package that favor American goods are a "poison" that will hurt efforts solve the financial crisis, an editorial by China's official news agency said.

Provisions in the U.S. stimulus bill approved Friday favoring American steel, iron and manufactured goods for government projects are protectionist measures that could trigger trade disputes, said the editorial issued late Saturday by the Xinhua News Agency.

"History and economics have told us, facing a global financial crisis, trade protectionism is not a solution, but a poison to the solution," the editorial said.

U.S. labor groups that pushed hard for inclusion of the measures have argued that their main purpose is to ensure that U.S. Treasury dollars are used to the fullest extent to support domestic job creation.

China has promised to avoid "Buy China" protectionist measures in its own multibillion-dollar stimulus effort, and appealed to other governments to support free trade. Deputy Commerce Minister Jiang Zengwei said in early February that China would "treat domestic and foreign goods equally so long as we need them."

Protectionism was a key concern of weekend meetings of the Group of Seven industrialized nations in Rome. U.S. Treasury Secretary Timothy Geithner assured G-7 finance ministers on Saturday that the stimulus package would not violate the United States' commitment to free trade.

Xinhua's editorial said protectionist measures taken during the Great Depression of the 1930s caused trade wars, hurting international trade.

President Barack Obama is expected to sign the economic stimulus package on Tuesday in Denver, Colorado.

The package, aimed at combating the worst economic crisis since the Great Depression, was Obama's first major victory in Congress.

Requirements known as "Buy American" were softened as the bill progressed through Congress and after strong criticism from abroad. Senate and House negotiators agreed to a version that would require the government not to violate trade agreements when implementing the law.


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## a_majoor (16 Feb 2009)

The economy is like a complex ecosystem, and the *Free Market* is a pervasive influence like gravity that influences everything else. The various influences that KingKikapu cites are like dams being thrown up on a river. Gravity still influences the flow of water, and the local plants and animals react in various ways to the presence of the dam and new water features, but the dam itself does not change the underlying gravitational field nor the evolutionary responses of the flora and fauna.

Looking at the old Soviet Union or the economies of National Socialist Germany or Fascist Italy, you can see the forces of the Free Market operating, as various black markets, barter systems and other responses like internal migration take place as a reaction to State intervention. Blighted areas can exist in almost any economy, especially when the State freezes or malinvests assets for political purposes. The "projects" in American cities are a perfect example.

Whenever the Free Market is free of State intervention, the results are outstanding. History has multiple examples: the tiny Greek _polis_ outmatched the mighty Persian Empire, Democratic Athens was able to continue fighting Sparta and her Allies (backed by Persian money) for almost a decade after the Athenian army and fleet were decimated in Syracuse, the _Serenìsima Repùblica Vèneta_ could hold her own against the Ottoman Empire, Elizabethan England outmatched the Spanish Empire, and in modern times the Irish created the "Celtic Tiger" by reducing taxes and regulations, and the Asian "Little Tigers" are far freer than their counterparts in the region. 

Limited State intervention in the economy is desirable; the State should exist to protect free speech, property rights and support the Rule of Law; once we establish that, all else is superfluous and driven by rent seekers who want to loot their neighbours.

Thus endith the sermon!


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## a_majoor (16 Feb 2009)

Welfare devolution; the Achilles heel of the "progressives"?

http://www.slate.com/blogs/blogs/kausfiles/archive/2009/02/15/the-welfare-issue-is-alive-alive.aspx



> *The Welfare Issue is Alive, Alive!*
> 
> 1) A Times of London story highlights worries about the Thermidorian welfare reform backsliding in the stimulus bill. Sample:
> 
> ...


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## retiredgrunt45 (16 Feb 2009)

When the government(s) gave the big banks that blank (welfare) check, welfare reform flew out the window, never to be seen again, for a very long time. I think both the Dems and Repubs know that who ever tries to open this particular Pandora's box is in for a very harsh lesson in reality, because they themselves have created the largest (welfare state) on the planet and what do you say to millions of outstretched hands.. At this point it would be insteresting to watch what would happens if they said "No"...


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## Kirkhill (16 Feb 2009)

There is a really excellent article in this month's Walrus.   Unfortunately you have to buy the magazine for the complete article.



> What Would Smith Say?
> The financial meltdown, through the eyes of the father of capitalism
> 
> by Peter Foster
> ...



For me the money quote is here:



> .... The world has changed greatly since Smith's day, but *his principles remain intact because they are rooted in human nature, which has changed not a whit*, particularly when it comes to the urge to power.   Some suggest that Smith has been made redundant by stunning technological and institutional advances he could not possibly have foreseen.  But *complexity, if anything, bolsters his argument about the fundamental inability of governments to enhance the free economy*, except by protecting property rights and guarding their citizens from real, tangible threats........




People have been writing for at least 4500 years and their written record, of stories and fables and business transactions, have been  recording the unchanging nature of man and woman.

Governments and empires and city-states have come and gone but we're still here and we're still doing the same things the same ways.


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## retiredgrunt45 (16 Feb 2009)

> Governments and empires and city-states have come and gone but we're still here and we're still doing the same things the same ways.



So true, but you would think that we would have got a clue by now... Seems the human race is destined to bring upon its own demise over and over again. If your a history buff, almost every great civilization was brought down by two undeniable factors, "greed & corruption" and theres no exception to that rule today. As long as theres something to attach vallue to, humans will always strive to gain that value using these two factors. 

A prime example is the big banks. On the verge of bankruptsy they were handed hundreds of billions of tax dollars. What happended? They gave themselves a generous helping of that money in "bonuses". I don't think they could help themselves, its part of their Psyche. Years of greed has ingrained this type of thinking and they found absolutely nothing wrong with it, "It was business as usual" stated William R. "Bill" Rhodes, Senior Vice Chairman of Citigroup Inc when he was called to testify in front of congress. Greed is the dark side of capitalism and greed always cultivates corruption and were witnessing both in there purest forms here and now.

I think that if anything 4500 years has taught us one thing, humans are creatures of bad habits and we all know that bad habits are sometimes very hard to overcome, especially when theres a benefit attached to it.


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## tomahawk6 (16 Feb 2009)

Many of the banks were forced to take tax payer money. Now the government wants to run the banks. Hope they run them better than they have Freddie and Fannie.


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## retiredgrunt45 (16 Feb 2009)

> Many of the banks were forced to take tax payer money. Now the government wants to run the banks. Hope they run them better than they have Freddie and Fannie.



I guess you'll find out in about four to eight years... Couldn't be any worse than what the banks did to themselves.


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## Kirkhill (16 Feb 2009)

retiredgrunt45 said:
			
		

> So true, but you would think that we would have got a clue by now...



Grunt, have you ever noticed how every 16 year old figures that they are the first to discover sex?  It's not a matter of bad habits that can be corrected.  It's who we are.


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## tomahawk6 (17 Feb 2009)

The banks were required by law to lend to poor credit risks. Then last year with TARP I the top bank execs were summoned to Washington and told they would take TARP money and the government would take an equity position. This is how the government interfere's in the market. Another example is Congressional mandates for fuel economy which cost Detroit billions.


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## Rifleman62 (17 Feb 2009)

Opps! President Obama signs the billion-dollar economic stimulus bill in Mile High City. How apt!


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## a_majoor (18 Feb 2009)

People are starting to wake up. The porkulus bill has to be paid for somehow (massive inflation is the best bet), banks still have non performing mortgage assets on their books and the looming public service pensions tsunami is appearing on the horizon. When cities and eventually US States like California and New Jersey have to declare bankruptcy (or demand special bailouts, which amount to the same thing) because of unsustainable public service pay and benefit packages, then the $800 billopn will seem like small change.

Expect the Obama Administration and Democrat Congress to try and paper over these problems as much as possible, but the result will be like those old cartoons in the end; the pressure builds under the carpet until there is a terrific explosion.

Markets forecast the future:

http://michellemalkin.com/2009/02/17/president-obamas-2000-point-tumble/



> President Obama’s 2,000-point tumble
> By Michelle Malkin  •  February 17, 2009 10:37 AM
> 
> On Nov. 4, after Barack Obama clinched the White House, the market closed at 9,625.28.
> ...


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## KingKikapu (19 Feb 2009)

Gee, that quote is a little misleading.

I'm quite sure the DOW was going down long before Obama won the election.  Maybe not by 2,000 points, but to expect the man to fix things overnight is laughable.  This is so much bigger than one man (even if he happens to be the POTUS).


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## a_majoor (20 Feb 2009)

KingKikapu said:
			
		

> Gee, that quote is a little misleading.
> 
> I'm quite sure the DOW was going down long before Obama won the election.  Maybe not by 2,000 points, but to expect the man to fix things overnight is laughable.  This is so much bigger than one man (even if he happens to be the POTUS).



The markets reacted to the election victory:

http://www.powerlineblog.com/archives/2008/11/022010.php



> It's A Bit Late...
> November 5, 2008 Posted by John at 8:41 PM
> 
> ...for investors to notice that pretty much everything Barack Obama wants to do will hurt the economy. *Today, the stock market plummeted around five percent on Obama's election. At least, that's how it was being reported this morning as the collapse occurred.* Later in the day, accounts softened to downplay Obama's election as a cause of the market slide.
> ...



Why is he the darling of Wall Street? They have realized they can remain just as wealthy and influential living as political rent seekers. Your grandchildren will still be paying for this stimulus bill...


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## tomahawk6 (20 Feb 2009)

No way in this world that we can raise enough taxes to pay off this debt and we are going to see trillions more in wasteful "stimulus" before the democrats are through. My concern is that the uncertainty on Wall Street wont stimulate a recovery. Throw into the mix creative taxes to be raised to fight "global warming" and I think these amatures will push the economy into or close to depression. We are nowhere near the 30% unemployment that we saw in the Great Depression but I suspect we will see 12% by years end and if we do see a collapse due to high gas prices and a cap and trade system it will go much higher. Inflation is going to be in the double digits and that will hurt the poor particularly.


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## a_majoor (20 Feb 2009)

There is another historic example Americans can follow (perhaps as early as 2010):

http://reason.tv/video/show/696.html



> Perhaps the only people who don't like the hit movie Slumdog Millionaire are those who compete against it at awards shows. After all, it's already cleaned up at the Golden Globes, and the BAFTAs, and it's poised to repeat these feats at the Oscars.
> 
> The film follows an Indian orphan named Jamal who grows up and hits it big on the famous game show Who Wants to be a Millionaire? In important ways, Slumdog tells the story of India itself—a poverty-stricken underdog with its own rags-to-riches tales. British rule ended in 1947, and the economic woes America faces now are nothing compared to the widespread malnutrition and starvation India faced then.
> 
> ...


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## tomahawk6 (22 Feb 2009)

Obama is expected to announce cap and trade which I believe will be the final nail in the coffin of the economy.CBO estimates $300b in tax revenue from this scheme. Estimates are a loss of 4 million jobs. This should hit the transportation and energy sectors very hard.Look for prices that the consumer will pay sky rocket.A very bad idea even in the best of economies. Proof to me that these socialists dont have a clue what they are doing.
http://www.humanevents.com/article.php?id=26621

"If you’re not at the negotiating table, you’re on the menu"

If you think energy is expensive now, just wait until our next president, working with a Democratic-majority Congress, implements cap-and-trade rules tailored for the greatest possible gain for special interests and the highest possible costs to consumers and taxpayers.

On Friday, Richard Sandor, the CEO of the Chicago Climate Exchange gave an interview which was (unintentionally, I’m sure) a shocking look into the reality of carbon emissions trading and the “cap-and-trade” proposals which are aimed directly at the heart of the American economy.

The interviewer, Dylan Ratigan, asked Mr. Sandor who was already participating in carbon trading in anticipation of a politically-imposed “carbon cap”. Sandor’s answer was a who’s-who of American industry: “17% of the Dow Jones…IBM, Intel, DuPont, United Technologies. In addition to that, 11% of the Fortune top 100…Ford, International Paper, Safeway. 20% of the top power companies…AEP, Detroit Edison, Alliant, Reliant.”

Ratigan then asked the obvious question: “Why are they buying protection against a political cap that does not yet exist?” Sandor’s fascinating reply: “Some of them have a hidden asset. They’ve already made cuts. They can sell them on our exchange and make a lot of money…. Others are there because they want to gain a competitive lead…. Others want to be there for the political debate. We have an expression at the Chicago Climate Exchange: ‘If you’re not at the negotiating table, you’re on the menu.’” 

Picture the political cartoon: a table surround by wolves, labeled such things as “Energy Trader”, “Enormo Industries”, “Power Company”, “Radical Environmentalist”, and “Al Gore”, drooling while staring at a silver platter on which stand several small, cowering figures, labeled “Taxpayer”, “Consumer”, “Rational Scientist”, and “Small businessman”.

Regarding the size of the carbon market, Sandor said that “the carbon ‘crop’ in Europe (i.e. output of their vehicles and factories) is 2.2 billion (metric tons)…and trades at $40 (per metric ton). That’s over $80 billion (in total value), so the European emissions alone are bigger than the US corn and soybean crops combined. The US is going to be three times that size. We’re talking about something that is…humongous.” The risk to Americans is proportional to the size of the dollar signs in Sandor’s eyes and the efforts by early large participants to maneuver the system to their benefit.

When a corporation (or any capitalist) is given the opportunity to make money by (legally) taking advantage of a system, they will do so. One of the best ways to gain advantage is to be involved in the early moments of the system, guiding regulations in a way that benefits you. Having been involved in the development of a major exchange’s electronic trading platform, I saw first-hand how much effort certain market participants put into influencing trading rules in a way that would maximize their expected trading volume (and therefore expected profits) at the expense of smaller market participants…including public customers.

Combine that dynamic with Sandor’s description of the potential size of the carbon market and you get a sense of to what lengths companies will go to “game the system”. And who can blame them? The real problem is giving them a system to game, and the fault for that lies squarely at the feet of politicians who buy into the junk-science arguments of “global warming” alarmists without any consideration of the massive economic costs Americans will bear in a Quixotic quest to stop climate change. It reminds me of a club I once heard of: “The Stop Continental Drift Society”, and it makes as much sense.

Economist Wayne Winegarden, partner in the econometrics firm of Adruin, Laffer, and Moore, who wrote a paper on “The Adverse Impacts of Cap-and-Trade Regulations” with Arthur Laffer and testified before the Senate last year, offered some perspective in an interview for Human Events: “Cap-and-trade is an inferior policy to accomplish reduction in carbon output.” (Winegarden stays away from the issue of whether such a reduction is a valid goal, understanding that politics is moving that way in any case and that his expertise is not in climate science.) “However, if you’re going to try to reduce carbon output, it should be done as a carbon tax so that the costs are not hidden and politicians have to take responsibility. You can’t minimize the impacts of carbon if you’re trying to hide or lie about the effects of your carbon-reduction policies.” ”

Dr. Winegarden notes that “Cap-and-trade has been such a dramatic failure in Europe, including forcing even “green” factories to fire workers. When asked whether America could learn enough from Europe’s mistakes that we could implement a cap-and-trade system that made sense; Winegarden’s answer was a resounding “no”. “Cap-and-trade is the politically expedient solution – it has great political merit but no economic merit. We’ll be revisiting this because, like Sarbanes-Oxley, it will create more problems than it will solve”, not least of which will be dramatically increased volatility of energy prices.

The potential costs to America from cap-and-trade are enormous. The Department of Energy estimates that S. 2191, the Warner-Lieberman cap-and-trade proposal, will increase the cost of coal for power generation by between 161% and 413%. DOE estimates GDP losses (see chart) over the 21-year period they forecast, at between $444 billion and $1.308 trillion, with particular damage to the manufacturing sector. (This gives some hope that organized labor will, in a rare occurrence, oppose Democratic leaders on this issue.) Winegarden estimates that this bill could increase unemployment by 2.7% or about 4 million jobs. In fact, companies are already preparing to avoid increased level and volatility of American energy prices by setting up factories and partnerships in countries which won’t be subject to cap-and-trade restrictions…proving with real-world behavior of producers that no carbon-limiting regulation can succeed if it is not universal.

In the CNBC interview, Sandor noted that he “knows” we will be living in a “carbon-constrained world” because all three presidential candidates support “cap-and-trade”. Given support among Democrats for cap-and-trade, and recent history’s demonstration that a Republican president and Republican members of Congress are not interested in forcing any discipline on the other, it is all but certain that something like Warner-Lieberman would pass if John McCain were president. Maybe, just maybe, Republicans in the House and Senate would stand up against cap-and-trade if the president were a Democrat. Therefore, since these proposals represent the biggest threat to the American economy of any policy suggestion during my lifetime, John McCain’s position on cap-and-trade has cemented my intention not to vote for him in November.

As Americans are kept in the dark by gullible mainstream media, industry and special interests are ensuing that cap-and-trade, when it arrives, will either be as damaging as possible to consumers, will accomplish none of its stated goals, or, most likely, both. We taxpayers and consumers are “on the menu” indeed.



--------------------------------------------------------------------------------
Ross Kaminsky has been a professional derivatives trader for over 20 years. Ross is a fellow of the Heartland Institute and writes about political economy and current events at Rossputin.com. He also contributes to blogs for the Denver Post, the National Taxpayers Union and FreedomWorks among others.


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## a_majoor (23 Feb 2009)

The market is based on future expectations. People are not expecting good things:

http://directorblue.blogspot.com/2009/02/larwyns-link-kerplosion-depression.html


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## KingKikapu (24 Feb 2009)

Hitler explains why he should be bailed out by the government.  God is there anything this clip can't do.


http://www.youtube.com/watch?v=bNmcf4Y3lGM


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## Kirkhill (24 Feb 2009)

Thucydides said:
			
		

> The market is based on future expectations. People are not expecting good things:
> 
> http://directorblue.blogspot.com/2009/02/larwyns-link-kerplosion-depression.html



If the answer to everything is government why would you bet on the market?


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## a_majoor (25 Feb 2009)

More evidence (as if we needed it) of a larger campaign surrounding the economic crisis. Political rent seekers want to make this a permanent state of affairs. (It will be interesting to see how the rent seekers fare against the "Tea Party" movement):

http://pajamasmedia.com/eddriscoll/2009/02/24/new-silicon-graffiti-video-rendezvous-with-scarcity/



> *New Silicon Graffiti Video: “Rendezvous With Scarcity”*
> Support Pajamas Media; Visit Our Advertisers
> 
> Ronald Reagan began his political career as an FDR supporter. Beginning in the 1960s, he took to using FDR’s iconic “Rendezvous with Destiny” phrase in many of his most important speeches. But these days, it’s looking like the next few years—maybe even a big chunk of the next decade—could very well be a rendezvous with scarcity.
> ...


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## a_majoor (25 Feb 2009)

The attempt to manage the economy will come to grief. Here is why:

http://pajamasmedia.com/richardfernandez/2009/02/24/avoiding-the-end-of-the-world/



> *Avoiding the End of The World*
> 
> David Brooks hopes to find comfort in Barack Obama’s premise that “we cannot successfully address any of our problems without addressing all of them,” but can’t. The reason is that Brooks long ago learned to distrust people who thought they had all the answers. *“The political history of the 20th century is the history of social-engineering projects executed by well-intentioned people that began well and ended badly.”* And Obama sounds like he’s got a big project for us all.
> 
> ...


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## a_majoor (26 Feb 2009)

Historic data, and a future forecast:

http://business.theatlantic.com/2009/02/deficit_driven.php



> *Deficit driven*
> 
> Andrew calls George Bush "the most fiscally reckless president since FDR" and says we should name the tax increases needed to pay for the current deficits after him. George Bush was indeed fiscally reckless, but the honor of most fiscally reckless president since FDR goes not to him, but to Ronald Reagan, who ran 6% deficits without even the excuse of a war.
> 
> ...



Add the public service pension meltdown and we are looking at the tsunami scene from "Deep Impact"


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## a_majoor (27 Feb 2009)

Fabius Maximus has some good points:

http://fabiusmaximus.wordpress.com/2009/02/27/obama-7/



> *Obama makes his first major policy error*
> 
> Summary:  The Obama Administration is continuing the Bush team’s Wall Street friendly policies, probably because they believe, as do most economists, that the downturn will hit bottom in the 2nd half of this year, and slow growth will resume next year.  That’s bad.  As a result they are missing an opportunity to fix the financial system, clearing their desk for the next wave of problems.  That could be a catastrophic error.  As always when looking ahead in this crisis, these are just guesses.
> 
> ...


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## tomahawk6 (27 Feb 2009)

The Fed essentially nationalized CitiBank this morning. by taking a 50% equity position thereby diluting the shareholders value in half. Another down day on Wall Street.


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## a_majoor (27 Feb 2009)

What happens when the center's of liberal excellence go bankrupt? Remember the "Blue" states are the source of votes for the Administration and the current Congress. The Administration could become even more predatory in order to transfer more taxpayer wealth to the Democrat supporters and "base", which in turn will ignite the already smoldering "Tea Party" movement. (It is interesting to note that even in "Blue" states, counties outside the major metropolitan areas are often "Red", I doubt the hinterlands are interested in being plundered to support the metropolitan elites)

Edgelings.com - http://pajamasmedia.com/edgelings 



> *The Coming Blue State Collapse*
> 
> Posted By edgelings On February 26, 2009 @ 12:02 pm In Uncategorized | 46 Comments
> 
> ...


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## Kirkhill (27 Feb 2009)

Don't I remember, from one of your posts Thucydides, that in the 30's States quickly learned that the route to success was to rush to the bottom because the worse your situation was the more free money you got. And IIRC Illinois was at the bottom.


Your Blue States would seem to be playing to that form.


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## time expired (27 Feb 2009)

A question to the economics experts out there,when one prints
money to solve your present problems does that not cause inflation
somewhere down the line?,and as Pres O is printing huge amounts
of money does that not mean massive inflation somehere in the
near future.Or am I reading the wrong textbook?.
The second question,does anyone out there had any idea of the
value of the US gold reserves and what would be the effect on
the world economy if the US sold off a portion of this to pay off its
deficit?.
                        Regards


----------



## tomahawk6 (27 Feb 2009)

Yes all this spending will cause inflation like we havent seen in a long while. Too much money and too few goods. If the US sold gold it would be snapped up in a heart beat without affecting prices in the least. The sad part of not being on the gold standard is that there isnt any limit on just printing money as we are doing now. The Chinese have begun buying foreclosed properties in California seems like a good bet to me.


----------



## Brad Sallows (27 Feb 2009)

At the moment the problem is still potential deflation.  People are not eagerly spending money, let alone borrowing to spend.  Before price inflation can kick in, economic activity will have to pick up.

Monetary inflation is a risk if money is printed, but as it turns out the authority to print money doesn't rest directly with the executives of government in either the US or Canada.


----------



## a_majoor (27 Feb 2009)

We are in the unhappy situation where Kirkhill, T6 and Brad are all right.

1. Blue States and various Dem rent seekers will indeed race to the bottom to pillage the American taxpayer, indeed this might be the actual game plan. By implementing and prolonging the crisis, a skilled Demagogue like President Obama (and like FDR before him) can keep a fearful public focused on what the "government" can do for them.

2. The economy may well be entering a deflationary phase, as literally trillions of dollars of wealth evaporate (mostly from the paper capital gains from the real estate bubble and the various toxic and non-toxic non-performing loans and "zombie" companies across the globe).

3. As the various central banks frantically try to re inflate the credit bubble, more and more money will be chasing fewer and fewer goods (as the deflationary cycle shuts down production and excessive inventories are consumed), which will at some point re-ignite inflation on a massive scale. 

A cynical view is inflation is being deployed to save the bacon of the feckless looter class who borrowed to the hilt and now want to use inflation to reduce the value of their debts. Deflation would *help* the poor and middle class by increasing their purchasing power, but at the expense of the over-leveraged looters (generally politicians and political rent seekers).


----------



## a_majoor (1 Mar 2009)

Warren Buffet comments:

http://uk.reuters.com/article/businessNews/idUKTRE51R1Q720090228



> *Buffett says U.S. Treasury bubble one for the ages*
> Sat Feb 28, 2009 9:31pm GMT
> 
> By Jonathan Stempel
> ...


----------



## tomahawk6 (1 Mar 2009)

Buffet has supported Obama every step of the way. I wonder if he is having second thoughts ?


----------



## a_majoor (2 Mar 2009)

Who is John Galt?:

http://abcnews.go.com/print?id=6975547



> *Upper-Income Taxpayers Look for Ways to Sidestep Obama Tax-Hike Plan*
> President Would Slap More Taxes on Those Who Make Over $250K to Fund Health Care
> By EMILY FRIEDMAN
> 
> ...


----------



## a_majoor (3 Mar 2009)

The never ending recession:

http://www.reuters.com/article/ousiv/idUSTRE52168Y20090302?pageNumber=2&virtualBrandChannel=0



> *U.S. rescue efforts may risk double-dip recession*
> Mon Mar 2, 2009 4:47pm EST
> By Emily Kaiser - Analysis
> 
> ...



Of course political rent seekers will never *willingly* get off the government teat.........


----------



## a_majoor (3 Mar 2009)

Without comment:

http://online.wsj.com/article/SB123604419092515347.html#



> *The Obama Economy*
> As the Dow keeps dropping, the President is running out of people to blame.Article
> 
> 
> ...


----------



## KingKikapu (4 Mar 2009)

Poppycock and you know it.


The media and the pundits want an economic calamity years in the making to resolve itself in the first 45 days of the new American administration. By that standard, should Franklin Roosevelt be considered one of the great American presidents, as he commonly is today? As to the issue of the vagueness of certain President Obama's pronouncements, it may reasonably be argued that the uniqueness of present circumstances precludes specificity in all things and at all times. Was FDR any more specific in his first 100 days?  Didn't think so.


----------



## a_majoor (5 Mar 2009)

KingKikapu said:
			
		

> Poppycock and you know it.



President Reagan was very specific throughout his time in office, and the results were quite clear:



> Tracing the pre-Reagan "stagflation" produced by Nixon's price controls, Ford's WIN campaign and Carter's "voluntary" price guidelines, the author tracks how 1980s tax cuts and deregulation, combined with Federal Reserve chief Paul Volcker's inflation-curbing money controls, unleashed American enterprise and *boosted national production 30% with a 20% rise in per capita income.*



The irony is the book "The Seven Fat Years" recapping of the 1970's (culminating in Stagflation under President Carter) could apply quite handily now, and the massive growth that President Obama seems to be counting on _is_ achievable; he *only* has to ditch the stimulus package, his budget proposals and his entire stated program (such as it is) of increasing State intervention in health care, energy, the auto sector and other areas of the economy and embrace massive tax cuts, deregulation of the economy as opposed to the malregulation that ruined the financial sector, and eliminate huge amounts of government spending, particularly porkulus and earmarks for the benefit of political rent seekers. 

Given the historical examples, the program for the new administration in 2012 (or the Congress starting in 2010) is quite clear.

As for FDR, his reputation is secure as America's wartime President. Modern historiography is increasingly critical of how he handled the Great Depression (and indeed suggests the "New Deal" made the depression much longer and deeper than it might have been. The depth of the Depression was 1937, a figure which should cause a pause for thought since the Crash was in October 1929). Once again, history shows how FDR manipulated the public with effective demagoguery to deflect blame from his policies and make the public believe the efforts of the government were the only means to end the depression.


----------



## a_majoor (5 Mar 2009)

Plan ahead:

http://pajamasmedia.com/rogerlsimon/2009/03/05/what-are-your-plans-for-the-new-depression/



> *What are your plans for the new Depression?*
> 
> I don’t know about you, but I’m thinking about laying in provisions for the coming Depression. (Selling my stock has already become irrelevant and, unlike others, I’m not planning to go John Galt. I’m just too instinctively entrepreneurial… too many years in Hollywood… for that. ).
> 
> ...


----------



## tomahawk6 (5 Mar 2009)

At the very least stockpile food,batteries,candles,ect. Seed companies are doing a booming business as people realize they cant eat flowers. There are $10 seed packs that will return over $600 in fresh food. I dont think there is a danger of a meltdown in Canada but in the US things could go pear shaped quickly. We lost over 700,000 jobs last month alone and that could snowball. Those of us on a fixed income are at risk as inflation or stagflation ignites. What is alarming to me is the evident lack of concern by the administration to the deteriorating economy its almost like they want to see a totsl meltdown to enact their socialist agenda at a rapid pace. Some democrats are starting to become concerned and may be able to put the brakes to Obama's plans. I wont hold my breath.


----------



## CougarKing (6 Mar 2009)

Perhaps Citi could learn from Brazil's Itaú?




> *Brazilians had something extra to celebrate at carnival this year — the relative health of the country’s financial system. *
> 
> While investors have fled emerging markets, Brazilian banks have held up nicely compared with rivals in the United States and Europe. They might even be able to lend a hand, Breakingviews says.
> 
> ...



http://dealbook.blogs.nytimes.com/2009/03/05/citi-should-talk-to-brazils-itau/


----------



## a_majoor (7 Mar 2009)

Check out this post to see the sorry start of this entire 

affair:http://directorblue.blogspot.com/2009/03/meltdown.html


----------



## mariomike (8 Mar 2009)

The Chicago Tribune reported the median price of a home sold in Detroit in December was $7,500.
Regarding the homicide rate, Detroit mayoral candidate Stanley Christmas told the Detroit News recently, ""I don't mean to be sarcastic, but there just isn't anyone left to kill."
http://www.businessinsider.com/median-home-price-in-detroit-7500-2009-3


----------



## a_majoor (9 Mar 2009)

Fabius Maximus on the housing crisis. After reading one of the points in his analysis, it occured to me that a great and low cost way to resolve a lot of the interconnected problems would be to hire the unemployed to demolish foreclosed houses. The market would be cleared of a glut of houses, the banks would clear non performing assets from the balance sheet and there would be short term employment for people to ride out the recession. There must be enough empty housing units to keep people busy until 2010 or even 2012:

http://fabiusmaximus.wordpress.com/2009/03/09/housing-3/



> *The housing crisis allows America to look in the mirror. What do we see?*
> Filed under: Post-WWII era, end of — Tags: defaults, federal housing administration, financial crisis, housing crisis, mortgages, ooda loop, rent — Fabius Maximus @ 12:01 am
> 
> One of the most fascinating narrative threads on this site has been about the oversupply of homes (technically “housing units”).  This over-building of units is the key to the housing crisis, as has been evident for at least 2 or 3 years.  A surplus of anything leads to falling prices until the surplus disappears, one of the iron laws of economics.
> ...


----------



## tomahawk6 (9 Mar 2009)

Ya you could start by bulldozing Detroit's housing areas.


----------



## a_majoor (9 Mar 2009)

tomahawk6 said:
			
		

> Ya you could start by bulldozing Detroit's housing areas.



Or the entire US economy:

http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_hassett&sid=amhpOT5rlR1Y



> *‘Manchurian Candidate’ Starts War on Business:*
> 
> Commentary by Kevin Hassett
> 
> ...


----------



## tomahawk6 (10 Mar 2009)

Manchurian candidate ? Say it aint so.  ;D

http://www.chicagotribune.com/news/nationworld/chi-detroit-housingjan29,0,5435392.story

DETROIT — It may be tough to get financing for a new car these days, but in Detroit you can buy a house with a credit card.

The median price of a home sold in Detroit in December was $7,500, according to Realcomp, a listing service.

Not $75,000. Remove a zero—it's seven thousand five hundred dollars, substantially less than the lowest-price car on the new-car market.

Among the many dispiriting numbers that bleakly depict the decrepitude of this onetime industrial behemoth, the steep slide of housing values helps define the daunting challenge to anyone who wants to lead this shrinking, poverty-pocked city of about 800,000 people. 



"We're always fighting ourselves out of a hole," said Wayne County Sheriff Warren Evans. 

Despite the depth of the hole, Evans is running for mayor. In fact, he is one of 15 people who have raised their hands to be mayor of Detroit and fill the remaining months in office of the former mayor who now wears a green jumpsuit and resides in Evans' spartan house of justice, the Wayne County Jail.

Detroit has long been the snide remark and punch line to derogatory urban humor, and the conviction last fall of two-term Mayor Kwame Kilpatrick for lying about an extramarital affair with his chief of staff reinforced suspicions that Detroit is beyond help, let alone self-governance. But as the domestic auto industry, the city's principal private-sector employer and founding corporate father, seeks a financial bailout from Washington, formerly whispered remarks about the prospect of the nation's 11th-largest city being the first major American city to go bankrupt are now publicly discussed. 

If the Obama administration is looking for a city to test new ideas for chronic urban problems, it can look to Detroit, a northern New Orleans without the French Quarter. While bedrock poverty in the Crescent City was violently laid bare by Hurricane Katrina in 2005, Detroit has been quietly slipping into social and economic crisis for 40 years. One-third of the population lives in poverty, and almost 50 percent of children are in poverty, according to data from the Detroit-Area Community Indicators System. Median household income has dropped 24 percent since 2000, according to the Census Bureau.

New York bond-rating houses this month lowered the city's bond rating to junk status, a lowly assessment shared by New Orleans and few others.

On a positive note, Detroit's homicide rate dropped 14 percent last year. That prompted mayoral candidate Stanley Christmas to tell the Detroit News recently, "I don't mean to be sarcastic, but there just isn't anyone left to kill."

Detroit voters will choose two candidates in a Feb. 24 primary who will face off in May. In the meantime, the city faces a projected budget deficit of at least $300 million, with no clear view on how to erase it. "If we don't get it right, we could be headed for a state takeover or receivership," warned Dave Bing, a mayoral candidate best known for draining jump shots for the Detroit Pistons back in the 1960s and '70s. At 64, Bing, a successful businessman, is running as the candidate of integrity in a city that, under Kilpatrick, had little.

Mayor Ken Cockrel Jr., who assumed the mayor's office by virtue of his being president of the City Council, promised he is "not going to let [receivership] happen."

Detroit, which has lost half its population in the past 50 years, is deceptively large, covering 139 square miles. Manhattan, San Francisco and Boston could, as a group, fit inside the city's boundaries. There is no major grocery chain in the city, and only two movie theaters. Much of the neighborhood economy revolves around rib joints, hot dog stands and liquor stores. The candidates travel around this sprawling city, some invoking the nostalgic era of Big Three dominance and vowing that Detroit can be great again.

Groups of them attend nearly unworkable faux debate forums about how they will solve the city's troubles, with responses to last no more than 60 seconds. Given the complexity of problems that defy sound-bite answers, their proposed solutions range from the predictable to the wacky:

More cops on the street. 

Make high school graduation mandatory.

Grow your own food.

Bulldoze large stretches of the city and turn them into wind farms.

Procreate like there's no tomorrow.

Kilpatrick's election in 2001 lured Henry Hassan back to Detroit from Minnesota. Hassan, who opened a restaurant on the city's northwest side, said he was quickly disillusioned.

"You remember the riots in '67?" Hassan said, referring to the cataclysmic five days that left 43 dead and more than 2,000 buildings burned down. "It's a little worse than that right now. ... We need somebody to come in and care for the city more than they care for themselves."

The problem is more than a $300 million budget shortfall, said John Mogk, a professor at Wayne State University Law School. 

"A thousand people are leaving the city every month," Mogk said, "and the city does not have the financial resources and the economic base to solve its own problems."

To be sure, progress has been made downtown: two new sports stadiums, a reinvigorated neighborhood around Wayne State and new lofts and casinos. But unlike Pittsburgh, which successfully reinvented itself after the decline of Big Steel, Detroit displays only islands of prosperity amid a dismal landscape. Neighborhoods have suffered, and foreclosures have aggravated the long-festering ill of abandoned homes.

"A lack of vision has held us back," said Nicholas Hood III, another mayoral candidate. "The auto industry was so dominant—too dominant—and we never prodded ourselves and the business community to a more expansive vision."

To the surprise of many in this overwhelmingly black city (82 percent), only 53 percent of registered voters turned out for November's presidential election, which featured the first African-American nominee. It wasn't long ago that a Democrat couldn't carry Michigan without a big turnout in Detroit. As it turned out, Detroit's votes didn't matter in the election.

"Detroit will never be the great industrial center again," said Kevin Boyle, a Detroit native and author of "Arc of Justice: A Saga of Race, Civil Rights and Murder in the Jazz Age."

"What will it look like?" Boyle said. "I don't know."

tmjones@tribune.com



E


----------



## a_majoor (10 Mar 2009)

More on the pension time bomb. Look at the financial planning skills of these fund managers. The prediction of massive inflation to diminish the value of the pensions looks spot on, only a legislature with steel will would refund the pensioner's contributions from the existing assets and reform as defined contribution plans:

http://www.chrismartenson.com/blog/looming-pension-disaster/14565



> *The Looming Pension Disaster*
> Saturday, March 7, 2009, 11:35 am, by cmartenson
> 
> As I’ve been writing about in the Martenson Reports over time, including the last one, one of the next shoes to drop is going to be a pension disaster. This too will be more easily measured in trillions than billions.
> ...


----------



## KingKikapu (10 Mar 2009)

From the Economist.
http://www.economist.com/finance/displayStory.cfm?story_id=13240730&source=hptextfeature


> Slash and burn
> 
> Mar 5th 2009
> From The Economist print edition
> ...


----------



## a_majoor (11 Mar 2009)

More political malregulation:





> *"An Unaccountable Secretive National Hedge Fund"*
> 
> Share Post   PrintMarch 10, 2009 Posted by John at 7:11 PM
> A reader sent in this provocative observation by mathematician and economist Eric Weinstein:
> ...



We're all in this together does not mean we have to be shackled together too.....


----------



## CougarKing (13 Mar 2009)

An  interesting role-reversal?



> *China warns US against reckless spending*
> 03/13/2009 | 09:44 PM
> 
> BEIJING - China's premier didn't say it in so many words, but the implied warning to Washington was blunt: Don't devalue the dollar through reckless spending.
> ...


----------



## a_majoor (13 Mar 2009)

"Dear President Obama

As the holders of $1 trillion dollars of US Treasury bills, we have become somewhat concerned about the continued viability and value of our portfolio of assets. Your pronouncements and examination of your Stimulus package and Omnibus Spending bill does not inspire investors such as ourselves with confidence, and the continuing decline of the US stock market since the election results of last November seem to indicate a great many other investors think so as well.

Rather than waste time with recriminations or blame, we would prefer an asset swap instead. The Government of China will exchange your Treasury bills for ownership free and clear of the Bakken deposit and the oil contained within.

We believe this is a fair deal, given your stated opposition to fossil fuels and determination to impose a "cap and trade" carbon tax on Americans. As we have a desire to raise our living standards and are not burdened with such ideological drags on the use of energy in our economy, this would seem to be a win win situation for both our nations.

Please tell Secretary Clinton there is no need to bring clever "gag gifts" when she brings the deeds and title to the Bakken formation. Vladimir and Dmitriy were not very amused with their gift, and we would spare Secretary Clinton further embarrassment in favor of settling this matter in an efficient and business like fashion

Sincerely

Wen Jiabao"


----------



## Yrys (14 Mar 2009)

Madoff Had Accomplices: His Victims, NY Times, March 13, 2009

Standing in the security line Thursday morning, waiting to get into the federal courthouse in 
Manhattan, I started chatting with the man behind me. He looked to be in his early 60s, and 
though he was well dressed, he looked a little haggard. I asked him if he was a victim of 
Bernard L. Madoff, who would soon be pleading guilty to masterminding the greatest Ponzi 
scheme in history. He said he was.

Did he want to talk about it? He wasn’t sure, he said. I asked his name. “I’m not going to 
give my name unless there is some benefit for me,” he said dourly. “I haven’t had too many 
benefits lately.” How much had he lost? I asked. He grimaced. “I don’t really want to say,” 
he replied, but conceded that it was a lot.

What was he hoping for today? He shrugged.

As we passed through security, I asked him what role he thought the government should be 
playing. It was as if I had flipped a switch. Suddenly, his reticence fell away.

“The S.E.C.,” he said, referring to the Securities and Exchange Commission, which muffed 
multiple opportunities to catch Mr. Madoff, “they played a big role in this. They have a lot 
to answer for.” He said that the tax code should be changed so that Madoff victims can recoup 
taxes they paid on profits that turned out to be illusory — no matter how far in the past those 
taxes were paid. He thought the Securities Investor Protection Corporation, which tries to put 
at least a little money in the hands of investors whose firms have gone under, should give 
victims more than the current $500,000 maximum.

“I think there should be some legislation,” he said finally. What kind of legislation? What he 
was hoping for, he said, was that the government would set up a fund for Madoff victims — 
maybe give them 60 percent of their losses, he suggested.

We turned a corner, and saw a long line of people waiting for a spot in the courtroom — far 
more people, it was obvious, than could ever fit in the chambers. (There was a large overflow 
room, where I watched the proceedings.) Most of them were holding notebooks; this was clearly 
the media line. “Is there a line for the victims?” the man asked the marshal.

“Are you a victim?” said the marshal. As the man nodded yes, the marshal said, “Come with me.” 
He took the man to the elevator and whisked him upstairs and directly into the courtroom.


Rest of article on link


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## a_majoor (18 Mar 2009)

Putting AIG into perspective. As a bonus note, the AIG performance bonus payouts were _specifically_ allowed for in the Stimulus package (I guess you really _should_ read political bills before you vote on them):

http://directorblue.blogspot.com/2009/03/aig-execs-demand-senators-resign-or.html



> *AIG execs demand Senators "resign or commit suicide"*
> 
> After reading this story, I fell asleep and had the following dream...
> 
> ...



and in case anyone thinks AIG did something wrong:

http://campaignspot.nationalreview.com/post/?q=MjM0YTg5ZWVhZTk1NTFmMjI4NGFmZTMzMTEwMTk5MzM



> *The Stimulus Bill Explicitly Guarantees Contractual Bonuses Executed Before February 11*
> 
> Senator Chris Dodd's challenger, Rob Simmons, was just given a golden, golden issue to run on.
> 
> ...


----------



## tomahawk6 (18 Mar 2009)

The bonus issue is intended to deflect attention away from AIG's channeling $58b of TARP money to foreign banks.


----------



## a_majoor (19 Mar 2009)

There are lots of reasons for the faux outrage, including the fact AIG contributed lots of money to these people...Now it is starting to unravel.

http://www.commentarymagazine.com/blogs/index.php/rubin/59141



> *Dodd Spills The Beans*
> Jennifer Rubin - 03.18.2009 - 7:34 PM
> 
> Sam Stein at the Huffington Post has been digging around, trying to find out exactly what happened to the amendment to the stimulus bill offered by Sens. Wyden and Snowe which would have nixed the AIG bonuses. Fingers were pointed at Senate Banking Chair Chris Dodd. But yesterday on CNN, Dodd was part of this exchange:
> ...


----------



## tomahawk6 (19 Mar 2009)

Treasury has begun buying T bills the goal is $300b- 700b. Gold responds by shooting up. Shades of Zimbabwe.


----------



## Fiver (19 Mar 2009)

tomahawk6 said:
			
		

> The bonus issue is intended to deflect attention away from AIG's channeling $58b of TARP money to foreign banks.



Pretty much.
I'd like to share a reddit.com comment made by aGorilla about the present situation with AIG
http://www.reddit.com/r/business/comments/85nk2/spitzer_the_aig_bonuses_are_a_smokescreen/



> About the current CEO:
> 
> * He's being paid 1 dollar a year.
> * He gets no bonuses, either way.
> ...


----------



## tomahawk6 (19 Mar 2009)

The dollar tanked. The UN wants a basket of currencies to replace the dollar as the world reserve currency.



> In a surprise move today, the Bernanke Fed launched another shock-and-awe stimulus plan that will expand the Fed’s balance sheet another $1.2 trillion through the purchase of $300 billion in long-dated Treasuries, $750 billion in mortgage-backed securities (Fan/Fred), and another $100 billion in U.S. agency debt. The Fed also is launching its Term Asset-Backed Securities Loan Facility (TALF), which could go as high as $1 trillion when it’s all said and done.


----------



## SeaKingTacco (19 Mar 2009)

The fun is just beginning....


----------



## Edward Campbell (19 Mar 2009)

tomahawk6 said:
			
		

> The dollar tanked. The UN wants a basket of currencies to replace the dollar as the world reserve currency.




The dollar is tanking because the US is trying to devalue it in order to protect US manufacturing - classic protectionism by the same gang who brought you the bailout of Chrysler and GM, the bonuses for AIG execs and so on. Smoot-Hawley was not _sui generis_; the US Congress is capable of all manner of stupidity in every generation.


----------



## tomahawk6 (19 Mar 2009)

AIG bonus' is a strawman. Bonus' are common throughout industry. Congress naturally is ignorning the Fannie/Freddie bonus' its exec's got. What the Fed is doing by buying T bills is dangerous and has never been done successfully. The result if the Fed gets this wrong is hyperinflation and depression. If the US slides into depression the world goes into depression.


----------



## Fiver (20 Mar 2009)

E.R. Campbell said:
			
		

> the bonuses for AIG execs


Stop with the bonuses already, its what made the recipients stay with the company through the shit and reduce AIG`s financial derivatives from 2.7 trillions to 1.6 trillion.
I think most people think they are performance bonuses, while they are not.


----------



## KingKikapu (20 Mar 2009)

Alright, lets cut just a bit of the bullshit being thrown around here.

*The Republicans abstained from voting for political positioning ONLY.*  Don't come in here saying they saw this a mile away because they didn't.  They merely wanted to stiff the Decomcrats with all of the blame should things go terribly wrong.

Have the Democrats muddied things up?  Absolutely.  No question!  They are no saints!

Neither are the Republicans.


----------



## tomahawk6 (20 Mar 2009)

Bonfire of the Trivialities
By Charles Krauthammer
Friday, March 20, 2009; Page A19 

A $14 trillion economy hangs by a thread composed of (a) a comically cynical, pitchfork-wielding Congress, (b) a hopelessly understaffed, stumbling Obama administration, and (c) $165 million. 

That's $165 million in bonus money handed out to AIG debt manipulators who may be the only ones who know how to defuse the bomb they themselves built. Now, in the scheme of things, $165 million is a rounding error. It amounts to less than 1/18,500 of the $3.1 trillion federal budget. It's less than one-tenth of 1 percent of the bailout money given to AIG alone. If Bill Gates were to pay these AIG bonuses every year for the next 100 years, he'd still be left with more than half his personal fortune. 

For this we are going to poison the well for any further financial rescues, face the prospect of letting AIG go under (which would make the Lehman Brothers collapse look trivial) and risk a run on the entire world financial system? 

And there is such a thing as law. The way to break a contract legally is Chapter 11. Short of that, a contract is a contract. The AIG bonuses were agreed to before the government takeover and are perfectly legal. Is the rule now that when public anger is kindled, Congress will summarily cancel contracts? 

Even worse are the clever schemes being cooked up in Congress to retrieve the money by means of some retroactive confiscatory tax. The common law is pretty clear about the impermissibility of ex post facto legislation and bills of attainder. They also happen to be specifically prohibited by the Constitution. We're going to overturn that for $165 million? 

Nor has the president behaved much better. He, too, has been out there trying to lead the mob. But it's a losing game. His own congressional Democrats will out-demagogue him and heap the blame on the hapless Timothy Geithner. 

Geithner has been particularly maladroit in handling this issue. But the reason he didn't give the bonuses much attention is because he's got far better things to do -- namely, work out a rescue plan for a dysfunctional credit system that is holding back any chance of recovery. 

It is time for the president to state the obvious: This recession is not caused by excessive executive compensation in government-controlled companies. The economy has been sinking because of a lack of credit, stemming from a general lack of confidence, stemming from the lack of a plan to detoxify the major lending institutions, mainly the banks, which, to paraphrase Willie Sutton, is where the money used to be. 

Obama has been strangely passive about this single greatest threat to the country. In his address to Congress and his budget, he's been far more interested in his grand program for reshaping the American social contract in health care, energy and education. 

Obama delegates to Geithner plans for a bailout -- and Geithner (thus far) delivers nothing. Obama delegates to Nancy Pelosi and her congressional grandees the writing of all things fiscal -- and gets a $787 billion stimulus package that is a wish list of liberal social spending, followed by a $410 billion omnibus spending bill festooned with pork and political paybacks. 

That bill, we now discover, contains, among other depth charges, a Teamster-supported provision inserted by Sen. Byron Dorgan that terminates a Bush-era demonstration project to allow some Mexican trucks onto American highways, as required under NAFTA. 

If you thought the AIG hysteria was a display of populist cynicism directed at a relative triviality, consider this: There are more than 6.5 million trucks in the United States. The program Congress terminated allowed 97 Mexican trucks to roam among them. Ninety-seven! Shutting them out not only undermines NAFTA. It caused Mexico to retaliate with tariffs on 90 goods affecting $2.4 billion in U.S. trade coming out of 40 states. 

The very last thing we need now is American protectionism. It is guaranteed to start a world trade war. A deeply wounded world economy needs two things to recover: (1) vigorous U.S. government action to loosen credit by detoxifying the zombie banks and insolvent insurers, and (2) avoidance of a trade war. 

Free trade is the one area where the world indisputably turns to Washington for leadership. What does it see? Grandstanding, parochialism, petty payoffs to truckers and a rush to mindless populism. Over what? Over 97 Mexican trucks -- and bonus money that comes to what the Yankees are paying for CC Sabathia's left arm. 

letters@charleskrauthammer.com 

http://www.washingtonpost.com/...AR2009031903041.html


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## Edward Campbell (21 Mar 2009)

Here are two columns – opinion pieces, both reproduced under the Fair Dealing provisions (§29) of the Copyright Act, the first is from today’s _Globe and Mail_ and the second is from the _National Post_.

The first revisits, for context, something about which I complained a couple of years ago: _unearned_ compensation in business and the second looks a devaluing the US dollar.

-------------------------
http://www.theglobeandmail.com/servlet/story/RTGAM.20090321.wcoessay21/BNStory/specialComment/home
* GLOBE ESSAY*
When wealth became a character flaw
*The greedy bankers are ugly symptoms of an age of inequality. Remind yourself of that when prosperity returns.*

KONRAD YAKABUSKI

From Saturday's Globe and Mail
March 21, 2009 at 1:00 AM EDT

As we examine the entrails of Wall Street's still rotting corpse, it doesn't take the gifts of an augur to foretell our postcrash future. It will, at least temporarily, be one of asceticism. Conspicuous consumption is the new smoking. Wealth, and the desire for it, have become character flaws.

The bankers we want to see pilloried, imprisoned or disembowelled — a sentiment whose intensity, judging from the tabloids, appears to be inversely related to our incomes — have outdone themselves in their ability to make us hate them. And they just keep on outdoing themselves, as demonstrated by the $165-million (U.S.) that American International Group Inc., now a ward of the state, just paid out in retention bonuses to many of the same top executives who drove the insurance giant, and the rest of financial system, into the ground.

Even the most measured among us nod at headlines such as: "Not So Fast You Greedy Bastards." This outrage, like this financial crisis, is global. In Britain, it has found its whipping boy in Sir Fred Goodwin, who "retired" at 50 as the head of the Royal Bank of Scotland in November, claiming a full pension worth more than £700,000 a year. This is the same Sir Fred whose disastrous deal-making drove the bank to a £24-billion loss in 2008 — the biggest in British corporate history — forcing Gordon Brown's government to put up billions in bailout money. "Off with his Fred," The Mirror blared.

In Canada, where our banks' legendary lethargy has turned out to be their saving grace, the chief executives at the Big Six had the good sense to voluntarily forgo bonuses for 2008 lest they get us hankering for the return of capital punishment. Perhaps sensing the mob's appetite for blood, they also agreed — not all of them willingly, mind you — to submit executive compensation to non-binding shareholder votes. Giving investors a "say on pay" is, by the standards of Canadian banking, a revolution in itself.

*A PRETEXT TO SOAK THE RICH*

If U.S. President Barack Obama needed a pretext to soak the rich, the AIG executives and their ilk have certainly given him one. It hardly seems coincidental that such a progressive politician as Mr. Obama was elected on the heels of the most protracted rise in income inequality in the United States since the one that began with the Gilded Age in the late 19th century. That boom ended with the Depression, a cataclysm brought on in part by the same kind of financial speculation that created the current mess. Those who are still wondering why they didn't see this crash coming were probably just not looking at the right data. Instead of wondering whether stocks were overvalued, derivatives were ticking time bombs, or housing was in a bubble, they should have just looked at how skewed income distribution had become.

Just as the New Deal would likely not have been possible without the Depression as its catalyst, Mr. Obama's attack on income inequality would face a much tougher row to hoe were it not for AIG and all it represents. The era that spanned from Franklin Roosevelt to Lyndon Johnson was one of rising real wages that culminated in the most equal distribution of wealth in U.S. history. Is that history about to repeat itself?

"There's nothing wrong with making money, but there is something wrong when we allow the playing field to be tilted so far in the favour of so few," states Mr. Obama's proposed budget, tabled last month. "We need to remember that throughout our history, the United States has grown and prospered when all Americans have shared in the opportunities created by our economy … The past eight years have discredited once and for all the philosophy of trickle-down economics — that tax breaks, income gains and wealth creation among the wealthy will eventually work their way down to the middle class. In its place, we need economic opportunity to trickle up."

Mr. Obama proposes to raise the top two marginal rates on personal income, now 33 per cent and 35 per cent, to 36 per cent and 39.6 per cent, respectively, starting in 2011. The new rates would kick in at a household income of $250,000. The "rich" would also lose their ability to deduct interest on their mortgages. Dividends and capital gains would be taxed at 20 per cent instead of 15 per cent. Mr. Obama would keep the estate tax that the previous Republican administration had proposed to eliminate next year. The Wall Street weekly Barron's called the budget "bad news for investors and affluent individuals." Given the times, it will probably only make Mr. Obama more popular.

Mr. Obama's budget paints an ugly picture of what Ronald Reagan started and George W. Bush finished. Between 1980 and 2004, the portion of national income earned by the top 1 per cent of U. S. households doubled from 10 to 22 per cent. The combined net worth of the top 1 per cent was higher than the total for the bottom 90 per cent. In constant dollars, the average income of the top 400 U.S. taxpayers quadrupled between 1992 and 2004. The middle class in particular lost ground.

Canadians should save their indignation for their own governments. Income inequality, on both a pre- and after-tax basis, actually rose faster in Canada than in the United States in the decade between 1995 and 2005, according to an Organization for Economic Co-operation and Development study released in October. The growth differential was considerable in the latter part of the decade, a period characterized by large income-tax cuts by Ottawa and most provinces, declining real welfare benefits and tighter eligibility rules for employment insurance payments.
Still, overall, Canada has a somewhat more equal distribution of income, with a Gini coefficient (a statistical measure of income inequality) of 0.32 compared to 0.38 in the United States. We're not exactly Denmark, which registers a 0.23 on the Gini index. But we have proportionately fewer of the obscenely rich, and outside Alberta, a more progressive tax system.

If the Reagan-Bush tax cuts entrenched income inequality in the United States, how did the rich accumulate so much more pretax income in the first place? Two words: Wall Street. Much of the focus of activist shareholders' and anti-poverty advocates' wrath has been on CEO pay — noting that the average big boss now earns more than 350 times the salary of the average worker, up from 45 times three decades ago. But the real drivers of wealth accumulation in recent years have been the massive bonuses earned in the financial industry, according to a study by two University of Chicago professors, Steven Kaplan and Joshua Rauh.

Forget bank CEOs. Most of them were making whole lot less than the underlings who traded all those newfangled financial instruments. But even they were paupers compared to private-equity and hedge-fund managers, the top 50 of whom earned an average $588-million in 2007, according to the Institute for Policy Studies, a left-leaning U.S. think tank.

The bankers who underwrote subprime mortgages, packaged and peddled asset-backed securities and bought and sold credit default swaps might just be the modern-day incarnation of what the 19th- and early 20th-century economic essayist Thorstein Veblen called the "leisure class." Their "work" consisted of shifting around wealth, rather than creating it, much like the original leveraged buyout barbarians of the 1980s.

Barbarians don't produce anything. They just take things away from others. Then they show off their booty. That makes others envious. So, they try to emulate the barbarians, or at least try to look as rich as they are.

Veblen also reminds us of why any return of the pendulum, characterized by Mr. Obama's redistributive mission, is likely to be just that. Pendulums are always moving. Once the excesses are purged, and the United States feels sufficiently cleansed, the pursuit of happiness — a euphemism for property ownership — will resume. Conspicuous consumption, a term coined by Veblen, is not dead. It's just taking a breather.

"Ownership began and grew into a human institution on grounds unrelated to the subsistence minimum," he wrote. "The dominant incentive was from the outset the invidious distinction attaching to wealth, and, save temporarily and by exception, no other motive has usurped the primacy at any later stage of development."

*OUR PREDATORY INSTINCTS*

Our urge to keep up with the Joneses is almost primal. "The motive that lies at the root of ownership is emulation," Veblen asserted. "Property set out with being booty held as trophies of a successful raid. … As industrial activity displaced predatory activity, accumulated property more and more replaces trophies of predatory exploit as the conventional exponent of prepotence and success."

We can try to tame our predatory instincts, as Mr. Obama no doubt will do with his tax changes, but it will always be a bit like tilting at windmills. Veblen, who wrote during the Gilded Age, observed that the urge to redistribute wealth is not particularly a human trait. Or, at the very least, it is not a strong enough one to overcome "the desire of every one to excel every one else in the accumulation of goods."

Not me, you say?

Ask yourself that the next time, likely in 2010 or so, that you splurge on a new-generation wafer-thin organic light-emitting diode television, whose million-to-one contrast is wholly undetectable to the human eye. Ask yourself that the next time you salivate over that Miele W2839 washing machine. It's not because it will make your clothes any cleaner.

Mad at the bankers? Don't be. They are us.

-------------------------

Obama is half right: there is nothing wrong with making money; indeed there’s nothing wrong with executive salaries that are 350 times those of the average worker *IF* the executive has produced something like 400% better return on investment for the owners (shareholders) that did his predecessor who earned, say, a quite reasonable 87.5 times the average wage of the “line” workers in that industry.

But that’s not the real issue for Obama and the US Congress; income redistribution is their goal. Income redistribution is different from wealth redistribution – which is usually done through estate and/or inheritance taxes, as many countries (and several US states) do. (Some would argue that wealth redistribution is also done by municipalities through property taxes which may be quite onerous for a pensioner living on a small fixed income in a valuable family home.) Income redistribution – usually called _progressive_ taxation – says that the more you earn (which means, generally, the more _productive_ you have been in the past year) the more you must pay to support those who have been less productive or less fortunate or, maybe, just stupid and lazy.

There’s nothing inherently wrong with providing for those who cannot provide for themselves or who are victims of misfortune – it is a noble human instinct to help those in need. People as diverse as William Blake, Karl Marx, William Morris and Sidney and Beatrice Webb were driven to their socialist philosophies by the images (and occasional realities) of the “dark Satanic mills” of 19th century Britain. Their philosophising was married to Bismarcks’ social engineering and begat the modern nanny state.

There’s not even anything inherently wrong with the “welfare state” – in many areas the state is more efficient and effective than private charity. Public education, police and fire protection and public health are good examples. (Public health involves clean water, sewage, garbage collection/disposal – it is, mainly, an engineering function having little to do with doctors and social workers.) There’s nothing wrong until one attempts to provide social services using someone else’s money. Which brings me to the second column:

  -------------------------

http://www.nationalpost.com/opinion/columnists/story.html?id=cde736a6-8ea9-49b1-bdc7-bc3ea82d2bde

 Worry about the Americans

Diane Francis, Financial Post

Published: Saturday, March 21, 2009

The Chinese are starting to switch from investing in U. S. Treasury bills to buying hard assets for stockpiling or acquiring corporations at bargain-basement prices. Others are buying gold.

This week, Washington surprised markets by mopping up 5% of its own treasuries, a form of printing money to finance deficits the rest of the world no longer wants to -- or cannot --finance.

It's inflationary, which is why the U. S. dollar tumbled about 3.5% on Thursday. But there are many more T-bill cannibalizations to come because deficits are going to reach the stratosphere until this bottoms.

Whatever the reason, we should be worried about the Americans. The new regime looks a lot like the old regime, only newer with the same old faces. Concern should be that United States' system of government may have reached its best-before date because, like its financial sector, Washington appears paralyzed and unable to deal with this crisis.

The problem now is the problem solvers, both financial and political.

The world as we know it ended because Wall Street, AIG and banks made bets to protect trillions in bond values -- bets they could not pay out if they were wrong. Massive fees blinded judgment, and a regulatory vacuum permitted recklessness.

Lacking anyone to mind the proverbial financial store any more, the board of directors is the executive and legislative branches in Washington.

It's a system of paralysis, through checks and balances and lobbyist corruption, that has been made worse by a two-year primary tangle for the presidency, partisan battles over the crisis and a succession of treasury secretaries and Federal Reserve officials, appointed by both parties, who don't get it or have conflicts of interest.

For instance, Republican appointee Alan Greenspan printed too much money for years. In 2007, the tipping point was reached and the response to the credit meltdown was when Henry Paulson, a Republican Treasury Secretary, rescued his old Wall Street firm, Goldman Sachs, plus AIG and others, but left some to go bust, such as his former rival, Lehman Bros.

Now we have Timothy Geithner, a Democratic Treasury Secretary, who has a conflict because he didn't see the trouble coming either when he was at the Fed with Greenspan.
Lots of opinions are out there, but here are a few of the more thoughtful ideas as to what the future holds:

- Gold is the safety play as the U. S. dollar slides. Some estimate gold may reach as high as US$1,500 an ounce in 2009.
- AIG and the others should be, and will be, put into a de facto, strict bankruptcy workout.
- China is concerned about the fact it holds US$1-trillion of the U.S. debt and is diversifying its portfolio as well as not buying more U. S. treasuries. Neither will the Saudis. In all, foreigners represent US$2-trillion of the total US$11-trillion in U. S. federal debt, but it is hot money that can flee in a click.
- Obama will -- certainly should -- replace Geithner, preferably with a European or Canadian or Asian team who get it and haven't got conflicts of interest on Wall Street.
- The U. S., and most of the world's, banking system may eventually have to be nationalized in order to systemically and fairly recalibrate the financial economy. This will also allow the Americans to write off 25% of all mortgages, subprime and others, to kick start the real economy again.
- Canada and everyone else will be dragged through this process, which will take as long as it takes for the Americans to admit they have to reinvent their systems.

dfrancis@nationalpost.com
-------------------------

What Francis calls the “new regime” isn’t new at all in the sense that it is the same old US Congress and it is vital for Canadians to remember that, in legislative terms, the US President is a weakling compared to a Canadian PM with a majority government or even a very strong minority. An American president, even the most fiscally responsible sort of US president *cannot* legislate in the face of a congress that is hell bent on having its way with e.g. rules to allow, indeed *require* subprime mortgages or protectionism or that _*require*_ that “stimulus” be applied, _willy nilly_ on “bridges to nowhere.”

But it isn’t just the congress. The Federal Reserve is, by buying up its own T-bills, doing itself what the US accuses China of doing: manipulating its currency – devaluing it – and, thereby, asking the US’ trading partners – Canada and China included – to pay for the sort of welfare state that the US cannot afford on its own. _De facto_ Washington is doing what we (mostly) suspect Beijing does: use a mix of infrastructure projects (all those wonderfully spectacular buildings in Beijing and Shanghai), monetary policy and direct subsidies (trade protectionism) to “buy” social peace.

Pot: this is Kettle; over.

Subprime mortgages, _per se_, were not the problem. The US, indeed any country, could, as the US congress did, require its banks to make poor quality loans. The government (and its independent agencies like the Federal Reserve Bank) could have, as it is doing, create a “bad bank” to hold mortgages that went sour. The end effect of the subprime fiasco is that millions of Americans who would not, otherwise, have been able to buy a home did so and the vast majority of them will pay their mortgages, mostly on time, thus moving millions of Americans from the lower to the middle class at relatively little “cost” to the economy. It, forcing subprime loans, wasn’t very good fiscal policy but it has proven to be very _just_ and, measurably, _effective_ social policy. The *real* problem was with the way that the subprime mortgages – poor quality investments – were sliced and diced and repackaged and sold as something with value. There was no “real” value in them, just as there is no, or not enough, value in most of the derivatives that are out there being traded, still. The _notional value_ “derived” in all those products now equals several times the “real” value of the global economy. All that false value has to be written down or even written off – much of it through your pension plans and mutual funds.

The fact that subprime loans could be repackaged and disguised as reasonable financial instruments indicates a major failure in the US financial and business regulatory regime going back, say, 35+ years – more than a whole generation and including the Carter, Reagan, Bush, Clinton, Bush and now Obama presidencies and the Republican and Democrat congresses that governed with them.

I do not believe that we see any  _better_ sense of responsibility in the US administration and congress today that we have since the 1970s.


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## Kirkhill (22 Mar 2009)

> Our urge to keep up with the Joneses is almost primal. "The motive that lies at the root of ownership is emulation," Veblen asserted. "Property set out with being booty held as trophies of a successful raid. … As industrial activity displaced predatory activity, accumulated property more and more replaces trophies of predatory exploit as the conventional exponent of prepotence and success."



Good to see you hitting your stride again.

If there is anything that causes me concern it is  to see the Globe and Mail, once the paper of what passed for the elite in Canada, sliding away from Kames and heading towards Proudhon.

Kames - "A relation is formed betwixt every man and the fruits of his own labour, the very thing we call property, which he himself is sensible of, and of which every other is equally sensible. Yours and mine are terms in all languages, familiar among savages, and understood even by children. This is a fact, which every human creature can testify.  "

Proudhon - "Property is theft".

In the current climate I fear that Proudhon has more friends than Henry Home.


On the US news this evening I saw a Really chilling site.  The names of the AIG execs that received bonuses had been publicized by none other than the Attorney General of Connecticut(??).

Shortly there after bus tours of "activists" and "community organizers" were organized to visit the homes of the named and shamed and then stage a photo-op demonstration on the lawn of a family home.

What is one to do when the "Organizer-in-Chief" is also "Commander-in-Chief"?  How do you handle "Ex-Parte" citizens, with a history of subsuming themselves in mobs to the whims of others, when the mobs are acting in support of the Boss?

John Stuart Mills' lone voice can get lost pretty quick.


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## tomahawk6 (22 Mar 2009)

So much for the Privacy Act. :


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## a_majoor (22 Mar 2009)

Mark Steyn:

http://www.ocregister.com/articles/president-outraged-aig-2341488-don-bonuses



> *Mark Steyn: AIG execs the new 'enemy combatants'*
> The first two months of the Age of the Hopeychange have been unexpectedly inept.
> Mark Steyn
> 
> ...


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## tomahawk6 (23 Mar 2009)

If anyone cares to listen Mark is guest host for Rush Monday. ;D


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## a_majoor (23 Mar 2009)

Given the vastly increasing reach the US government seeks for itself, (including unconstitutional "Bills of Attender"), we will see much more of this in North America:

http://online.wsj.com/article/SB123698646833925567.html



> *The Rise of the Underground Article*
> By PATRICK BARTA
> 
> Economists have long thought the underground economy -- the vast, unregulated market encompassing everything from street vendors to unlicensed cab drivers -- was bad news for the world economy. Now it's taking on a new role as one of the last safe havens in a darkening financial climate, forcing analysts to rethink their views.
> ...


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## geo (23 Mar 2009)

Somehow.... I think India might be able to show us a thing or two.
However, the rules and regulations laid down by 1st world governments makes an informal economy a lot more difficult to promote and sustain.


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## a_majoor (24 Mar 2009)

Looking down the road, how the potentially hyperinflationary US economy can be rapidly fixed post 2012 (Note, regular inflation or stagflation can be fixed with a tight monetary policy and massive tax cuts. Politicians will also need to have matching spending cuts; the one piece of the puzzle that President Reagan, Prime Minister Thatcher or Premier Harris could not or would not do):

http://business.theglobeandmail.com/servlet/story/RTGAM.20090323.wrzimbabwe23/BNStory/Business/home



> How Zimbabwe slew the dragon of hyperinflation
> GEOFFREY YORK
> 
> From Monday's Globe and Mail
> ...


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## geo (24 Mar 2009)

You have to consider that by switching to foreign currency, Mr Mugabe is no longer capable of controling his own economy.... which is a good thing.


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## Kirkhill (24 Mar 2009)

So what foreign currency are you anticipating US citizens will employ?  And what will be the impact on a global economy predicated on the US dollar as a replacement for the gold standard?

The Zimbabwe solution has worked for many small economies in the past (and some big ones).

But the US is in a different league.....It is the league.



Now there is the prospect that we might be forced back on to a fixed standard, like gold........or silver.......or oil.........or CARBON.


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## Fiver (24 Mar 2009)

Amero?


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## geo (24 Mar 2009)

Kirkhill,
I don't think that the US has any need to devalue or freeze their currency.
Their economy is large enough that it will "bounce back" at some point in time.
If there is a little bit of inflation, the only thing that will do is depreceate the real value of foreign owned US debt.  From the US Gov't point of view, this is probably a good thing.


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## Kirkhill (24 Mar 2009)

On the other hand the Chinese seem to be of a similar opinion : See this?



> China calls for new global currency
> Article  Comments (38)  JOE MCDONALD
> 
> The Associated Press
> ...



More on link.

And no, I didn't read the article before I posted above.   

Hmm.......

IMF mediated Carbon economy......Not impossible.

"A Conservative Sceptic's Defence of Carbon Credits"

And some potential for unintended consequences


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## a_majoor (25 Mar 2009)

geo said:
			
		

> Kirkhill,
> I don't think that the US has any need to devalue or freeze their currency.
> Their economy is large enough that it will "bounce back" at some point in time.
> If there is a little bit of inflation, the only thing that will do is depreceate the real value of foreign owned US debt.  From the US Gov't point of view, this is probably a good thing.



The US is explicitly devaluing it's currency through the inflationary TARP, Stimulus package and Omnibus spending bill, as well as the various actions the Treasury is taking with the sale of US Treasuries. The Chinese, as owners of a trillion dollars of Treasuries is taking action to discourage the devaluation of their assets. You can also look at the administrations stated priorities and think of how these programs have affected wealth creation and the economies of other nations to imagine how the US economy will "bounce back". 

Given the Obama administration has massively increased the deficit in just 60 days (and is promising to double that again), is sitting on a $12 trillion dollar debt and rapidly escalating unfunded liabilities in the form of Social Security and Medicare/Medicaid, they can either inflate their way out of the problem or go nuclear and default. 

Since either option will effectively collapse the global economy through hyperinflation or massive deflation (destroying @ 23% of the book value of the stock of wealth of the United States [est $52 trillion dollars]) some sort of "third option" is needed. The 2012 administration will have to look at a lot of different options (yes, even the Amero, revaluing the USD, going back to the Gold standard, or the Carbon standard, "free banking" or something no one has even thought of yet).


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## CougarKing (25 Mar 2009)

In spite of the usual naysaying about the current POTUS, and the usual reluctance to believe the MSM, do any of you think that this is a sign that the economy is picking back up sooner than expected?  

http://news.yahoo.com/s/ap/20090325/ap_on_bi_go_ec_fi/economy



> *Durable goods orders rise unexpectedly in February*
> 
> By MARTIN CRUTSINGER, AP Economics Writer Martin Crutsinger, Ap Economics Writer – 39 mins ago
> WASHINGTON – Orders to U.S. factories for big-ticket manufactured goods unexpectedly rose in February after a record six straight declines, but economists said the gains were unlikely to last as the recession persists.
> ...


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## a_majoor (25 Mar 2009)

Several possible interpretations:

1. One of the key items was an 32% increase in orders for military parts and aircraft. The government is directly spending (this is also the argument for "infrastructure" spending), but the effects only last so long as the purchases continue. If the USAF were to get another 500 F-22 Raptors by Congressional fiat, that sort of purchase would have more prolonged effects due to the complex nature of the aircraft and wide spread of the economy that would be targetted (F-22 components come from @ 44 US states) but even that would end when the last plane rolled off the assembly line.

2. Consumers are buying durables because they expect very bad economic times ahead. Rather than try to service an old piece of kit, get something that will last until the economic downturn ends. Many dealers and service depots may be closed.

3. Anti inflationary stockpiling. Get it now while it is still affordable. In hyper inflationary environments, this is also a survival mechanism since you can barter valuable real goods vs worthless paper script. (Note, only early adopters will be thinking seriously along these lines yet).


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## tomahawk6 (25 Mar 2009)

If left alone the economy can recover - a big if. More likely we could see a double dip recession. It all depends on the other extreme policies Obama gets enacted. Cap and trade would be a killer. Indications are they may hold off on this and focus on universal health care. What is worrisome is that there are 17 top level jobs at Treasury that havent been filled and Obama is in no hurry to fill them. Makes me wonder why ?


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## a_majoor (25 Mar 2009)

First China, now the EU weigh in against the US economic plans:





> *EU presidency: US economic plans 'a road to hell'*
> Czech premier, currently European Union president, calls US economic measures 'a road to hell'
> Raf Casert, Associated Press Writer
> Wednesday March 25, 2009, 11:13 am EDT
> ...


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## Kirkhill (25 Mar 2009)

tomahawk6 said:
			
		

> I..... there are 17 top level jobs at Treasury that havent been filled and Obama is in no hurry to fill them. Makes me wonder why ?



He's got all the answers?

Or:

His primary economic advisers are giving him advice for free so that they can dodge the limelight.


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## a_majoor (27 Mar 2009)

Right and wrong. Tax relief will spark the recovery, but the "tax relief" that the administration is selling isn't tax relief at all, but rather welfare payments (since many of the recipients pay no tax at all).

The tax relief the Republicans champion are an extension of the current tax regime, and if the Administration and Congress were to scroll back on government spending to accomodate the actual productivity of the American people, then the underlying problem (outragious debt/equity ratios) can be addressed.

http://www.rasmussenreports.com/public_content/business/taxes/more_voters_than_ever_say_tax_cuts_help_the_economy



> More Voters Than Ever Say Tax Cuts Help the Economy
> Thursday, March 26, 2009 Email to a FriendAdvertisement
> Democrats in the Senate are talking of cutting back President Obama's pledge of tax cuts for most Americans in the face of record deficits. But 63% of U.S. voters now say tax cuts would help the economy, according to a new Rasmussen Reports national telephone survey.
> 
> ...


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## tomahawk6 (27 Mar 2009)

http://www.washingtonexaminer.com/politics/On-Spending-and-the-Deficit-McCain-Was-Right-41936467.html

Barack Obama used to get very upset about federal budget deficits. Denouncing an "orgy of spending and enormous deficits," he turned to John McCain during their presidential debates last fall and said, "We have had, over the last eight years, the biggest increases in deficit spending and national debt in our history…Now we have a half-trillion deficit annually…and Sen. McCain voted for four out of five of those George Bush budgets." 
That was then. Now, President Obama is asking lawmakers to vote for a budget with a deficit three times the size of the one that so disturbed candidate Obama just a few months ago. And Obama foresees, for years to come, deficits that dwarf those he felt so passionately about way, way back in 2008.

Everywhere you go on Capitol Hill, you hear echoes of the last campaign's spending debate. So on Thursday morning, as the budget fight raged, I asked McCain about the president's seemingly forgotten concern about deficits. McCain doesn't like to rehash the campaign -- "The one thing Americans don't like is a sore loser," he told me -- but when I read him Obama's quote from the debate, he said, "Well, there are a number of statements that were made by then-candidate Obama which have not translated into his policies."

That's an understatement. The deficit issue could be one of the most, if not the most, consequential of Obama's unkept campaign promises. Just how consequential was made clear last week in a little-noticed conference call featuring Budget Director Peter Orszag. Orszag was trying to explain to reporters how the Obama administration calculated its rather rosy forecasts for economic growth. Near the end of the call, he was asked whether deficits along the lines of those predicted by the Congressional Budget Office are sustainable."

Orszag at first dodged the question, saying he was sure the final Obama budget will "reflect a fiscally sustainable path." But the questioner persisted: Are those deficits sustainable? Relenting, Orszag said such deficits, in the range of five percent of the Gross Domestic Product, "would lead to rising debt-to-GDP ratios in a manner that would ultimately not be sustainable."

The simple version of that is: If the Congressional Budget Office projections are correct, we're headed for hell in a handbasket.

I asked McCain what might happen if Obama and Orszag get their way. First, the U.S. could have to print a lot of new money, "running the huge risk of inflation and returning to the situation of the 1970s, only far worse," McCain said. The second option is to raise taxes.

Just this week, former Clinton budget director Alice Rivlin conceded that Obama's budget could present a "scary scenario" that would "raise deficits to unsustainable levels well after the economy recovers." The solution, she wrote, is higher taxes, and not just for the richest of the rich.

Of course, that's what McCain said during the campaign. And it's what the much-maligned Joe the Plumber said, too. Remember when he took so much flak for objecting to Obama's plan to raise taxes only on those Americans making more than $250,000 a year? Joe didn't make anything near that, the critics said, so why was he worrying?

The point was not that Joe made that much, or that anybody at McCain's rallies made that much -- the vast majority didn't. The point was that Obama was promising so many things that to pay for them he would eventually have to raise taxes on people making far less than $250,000. Look out, McCain warned -- someday he'll come after you.

And now that's where we appear to be headed. At some point, Obama will likely have to bow to those in his party who say he must raise taxes if he wants to pay for health care and other expensive initiatives.

Some skeptics believe that was the plan all along. McCain wouldn't go that far, but when I brought up the idea, he did sound a bit suspicious. "Well, you set up a situation that puts spending at an unprecedented amount of GDP, and then you turn around and say, 'Of course we're going to have to raise taxes to pay for this,'" McCain told me. "I'm not saying it was their plan, but it certainly was inevitable."


----------



## KingKikapu (27 Mar 2009)

http://www.youtube.com/watch?v=b-tIY99QFFk&feature=channel

An interesting clip on mixed capitalism vs. free capitalism, complete with bits from the Colbert Report.  Since this seems to be a recurring theme on the postings here (economic efficieincy vs. social safety nets), I thought it would be interesting to get your thoughts on it.


----------



## a_majoor (27 Mar 2009)

The US is loosing the moral high ground as this Congress and administration goes off the rails:

http://www.washingtonpost.com/wp-dyn/content/article/2009/03/25/AR2009032502226.html?referrer=emailarticle



> OUTLOOK PREVIEW
> *Re-emerging As an Emerging Market*
> 
> By Desmond Lachman
> ...


----------



## tomahawk6 (29 Mar 2009)

Obama fires GM CEO. Obama's government is like the mafia. He buys into a business then takes it over.

http://www.politico.com/news/stories/0309/20625.html

The Obama administration asked Rick Wagoner, the chairman and CEO of General Motors, to step down and he agreed, a White House official said.

On Monday, President Barack Obama is to unveil his plans for the auto industry, including a response to a request for additional funds by GM and Chrysler. The plan is based on recommendations from the Presidential Task Force on the Auto Industry, headed by the Treasury Department.

The White House confirmed Wagoner was leaving at the government's behest after The Associated Press reported his immediate departure, without giving a reason.

General Motors issued a vague statement Sunday night that did not officially confirm Wagoner's departure. 

"We are anticipating an announcement soon from the Administration regarding the restructuring of the U.S. auto industry. We continue to work closely with members of the Task Force and it would not be appropriate for us to speculate on the content of any announcement," the company said.

The surprise announcement about the classically iconic American corporation is perhaps the most vivid sign yet of the tectonic change in the relationship between business and government in this era of subsidies and bailouts.

Wagoner has been CEO for 8 years and at GM for more than 30. It is not yet clear who would replace him, or what role the administration would play in that process. 

Industry sources had said the White House planned very tough medicine in Monday's announcement, which turned out to be an understatement. And it went to the very top. The measures to be imposed by the government will have a dramatic effect on workers, unions, suppliers, bondholders, shareholders, retirees and the communities where plants are located, the sources said.

GM and Chrysler first requested billions in federal aid in November, warning that they could run out of cash in a matter of months if they didn't receive it. In December, President Bush agreed to loan $9.4 billion to GM and $4 billion to Chrysler.

Last month, GM asked for $16.6 billion more and Chrysler requested an additional $5 billion.

Earlier this month, Obama agreed to loan $5 billion to American auto parts manufacturers to help them weather the steep drop in new vehicle orders and the financial uncertainty at the Big Three.

Obama and his aides may have honed in on Wagoner for two reasons. First, his company is asking for the most in total federal aid: $26 billion, a figure administration officials fear could grow even larger. Second, the GM chief was tied more directly to the ill-fated decisions that that brought much of the American auto industry to the brink of collapse. Wagoner joined GM in 1977, has had a senior role in GM management since 1992, and became CEO of the company in 2000. He is considered responsible for increasing GM's focus on trucks and SUVs—at the expense of the hybrids and fuel efficient cars that have become more popular in the last couple of years.

By contrast, Chrysler CEO Robert Nardelli, whose resignation does not seem to have been demanded as a price of further federal aid, was a newcomer to the auto industry when he was lured to that company to help turn it around. Nardelli had previously headed Home Depot.

Government officials have little reason to tilt at Ford CEO Alan Mulally since his firm has not actually taken bailout funds from the government. Ford asked for a $9 billion line of credit from the feds, but the firm has said it has no plans to tap the credit facility.

Obama's move against Wagoner hearkens back to September 2008 when President Bush's Treasury Secretary, Hank Paulson, insisted that AIG CEO Robert Willumstad step down as part of an $85 billion bailout of the insurance giant. Paulson installed in his place Edward Liddy, a former Allstate executive. The AIG bailout has since grown to about $170 billion and Liddy has faced calls for his resignation in the wake of reports about hundreds of millions of dollars-worth of bonuses the firm agreed to pay to employees.

Obama said Friday in an interview with CBS’s “Face the Nation,” broadcast Sunday, that the carmakers were going to have to do more.

“There's been some serious efforts to deal with a combination of long-standing problems in the auto industry,” the president told host Bob Schieffer. “What we're trying to let them know is that we want to have a successful auto industry, U.S. auto industry. We think we can have a successful U.S. auto industry. But it's got to be one that's realistically designed to weather this storm and to emerge at the other end much more lean, mean and competitive than it currently is.

“And that's gonna mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody's gonna have to come to the table and say it's important for us to take serious restructuring steps now in order to preserve a brighter future down the road."

Schieffer followed up: “But they're not there yet.”

Obama added: “They're not there yet.”

The Obama administration calls its task force “a cabinet-level group that includes the secretaries of Transportation, Commerce, Labor and Energy. It will also include the chairman of the President’s Council of Economic Advisers, the director of the Office of Management and Budget, the EPA administrator, and the director of the White House Office of Energy and Climate Change. The Task Force will be led by Treasury Secretary [Tim] Geithner and [National Economic Council] Director Larry Summers.”

The panel’s chief adviser is Steven Rattner, a well-known investment banker and former New York Times reporter.


----------



## Kirkhill (30 Mar 2009)

So THAT's the problem.

Obama got into the wrong line-up.

He thought he was applying for the job of President of GM.


----------



## tomahawk6 (30 Mar 2009)

Obama is taking the government into the auto warranty biz as GM goes into bankruptcy.



> Obama will make two other announcements Monday.
> One, the president will announce a new government-backed warranty program for all new GM and Chrysler vehicles purchased during this restructuring period. A fund will be set up equal to 125 percent of the total cost to pay for warranty service.  The auto makers will contribute 15 percent while the government will provide 110 percent, with the money coming from the economic stabilization funds, the gift that keeps on giving. A separate company will hold the funds and pay the claims even if one of the auto manufacturers goes into bankruptcy or out of business.
> 
> The president will also name a Director of Recovery for Auto Workers and Communities. Edward Montgomery, labor economist and former Deputy Secretary of Labor, will serve in the role, helping autoworkers, communities, and regions adversely impacted by the failure of the automakers find new jobs, businesses, and industries.


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## retiredgrunt45 (31 Mar 2009)

I hear and read allot of conjecture, animosity and back yard economists barking about how this would do that and that would cause this and how the sky is ready to fall on our heads. Who here has lived through an economic crisis of this magnitude who is under 79? Haven't found no one yet. 

If you lived through the last big financial meltdown, your either dead or to old to care about this one. The blips of the 70's, 80,s and 90's don't count and where no more than pimples on a horses rearend in comparison.

My point is no one knows how to fix this, but please if you do have a crystal ball or magic wand, please get it out of storage and send it to the white house so Obama can find the answer, wave the magic wand and we all wake up tomorrow like none of this would have happened. 

Pandora's box has been opened and what came out is big, mean and ugly and no one has the slightest clue how to put "big, mean and ugly" back in the box again. 



> American economists have failed their country as badly as have the Republican and Democratic parties. The sad fact is that there is no leader in sight capable of reversing the rapid decline of the United States of America.



http://vdare.com/roberts/060507_economy.htm


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## tomahawk6 (31 Mar 2009)

Both parties share the blame for this meltdown. But what should be quite clear is that the democrats are exploiting the crisis to accomplish long cherished goals- namely the destruction of the capitalist system and replacing it with a government run economy. I dont know about Canada but I am hard pressed to think of any successfully run government programs in the US. Now Obama's marxist team is using trillions of dollars to nationalize entire industries. This is not conjecture but reality.


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## TimBit (31 Mar 2009)

tomahawk6 said:
			
		

> Both parties share the blame for this meltdown. But what should be quite clear is that the democrats are exploiting the crisis to accomplish long cherished goals- namely the destruction of the capitalist system and replacing it with a government run economy. I dont know about Canada but I am hard pressed to think of any successfully run government programs in the US. Now Obama's marxist team is using trillions of dollars to nationalize entire industries. This is not conjecture but reality.



OK! Scary words such as "marxist" being used without ANY knowledge of what they mean here, as usual...

So you would say that the military or national security are not being run successfully in the US? Plus how do you define success in government programs? Please enlighten us as you seem to know so much.

Finally, I do believe that under the AIG bailout a number of american firms found themselves under partial govt ownership, all under the republican's command. Now look at those scary texan commies... >


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## tomahawk6 (31 Mar 2009)

Both the Chairman of the Fed and Treasury Sec under Bush are/were democrats. Naturally I know what a marxist is. Destruction of capitalism is the goal of marxism and thats what we are seeing in the US today under the guise of stimulus. There is legislation now in the democrat run Congress that will regulate the pay of all employee's of companies that have received TARP money. Another bill will allow the Treasury Sec to take over any business in the country, powers that are massive in scope. Yesterday the President told the CEO of a private company to resign. 

As for US government programs/entities that are inefficient are the US Postal Service,Freddie and Fannie Mae,Veterans Affairs ,the Congress [their private dining room loses money]. Two trillion of the tax payers dollars were spent by Treasury and so far they cant say how it was spent.


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## TimBit (31 Mar 2009)

tomahawk6 said:
			
		

> As for US government programs/entities that are inefficient are the US Postal Service,Freddie and Fannie Mae,Veterans Affairs ,the Congress [their private dining room loses money]. Two trillion of the tax payers dollars were spent by Treasury and so far they cant say how it was spent.



Adam Smith himself thought that postal services should be under government care as it was hard to make money with this endeavour.

Fannie Mae and Freddie Mac are indeed GSE's; but the involvement of govt is minimal, and they don't seem to perform worse or better than AIG or most banks in the US right now for that matter.

Can't say anything for Vet Affairs, but I really can't get your point about the efficiency of Congress. How on earth is a Parliament supposed to be "efficient"?

That brings me to my last point, what is a criteria of success in government? Having studied public policy for three years, I think that it is much harder to define success for a pûblic corporation than for a private corp. Let's see, you are tasked with eradicating poverty or increasing literacy (public), versus increasing your sales or widening our markets (private). Much easier to define your mission in number 2... no corporation would ever be interested in taking on a policy or social endeavour. It is too complicated, not profitable, too risky, too emotional for any private business.

Anyway...


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## Rifleman62 (31 Mar 2009)

On Monday the POTUS fired the CEO of a private US company (probably justified based on past performance, but GM had supposedly turned a corner), told another private US company that it must be sold to a foreign company (Fiat), and tax payers money will be used for that sale.


----------



## a_majoor (31 Mar 2009)

For efficiency of government services, there are many metrics to choose from. For the most part, look for a comperable private industry and see how the two stack up. The Postal service is woefully expensive, slow and inefficient compared to courier services (and in Canada, you can get door to door services from a courier).

If your metric is the acheivement of policy goals, then how many goals are accomplished? The actual answer is "none", since the perverese incentive of government service is to keep your job and expand your bureaucracy; neither which is possible if you "solve" the problem the government agency is supposed to deal with. Poverty statistics are illuminating, they have remained more or less constant over decades despite the trillions of dollars spent to "fight" poverty, but when you *pay* people to be poor (via welfare and bogus "tax reduction") and have a vested interest in having many poor people to "help".....

As for schools, you can examine the outcomes in various ways, even non rigerous observation of children schooled in private schools like Montessouri vs children educated in Public schools at the same level and in the same cities reveals the private school cadre has far superior outcomes in literacy, numeracy,public and private decorum etc. Charter schools in Alberta have similar comparisons vs Public schools.

WRT private industry taking on public policy; this was indeed the case in America post Civil war to @ 1920; many private business ran night schools to teach their immigrant work forces English and American "civics", indeed Boeing persisted in having its own in-house program to train apprentices and engineers until the late 1950's at least (a sort of corporate University which had enough meat to graduate Boeing engineers with true accreditation equivalent to any American College or University). The growth of State education and credentialism (along with a perverse side effect of civil rights; a non Boeing engineer could claim to be discriminated against if rejected in favour of a trained in house engineer) eventually killed this DIY public policy. Jerry Pournelle experienced this system during his time in the aerospace industry and has written about it.


----------



## TimBit (31 Mar 2009)

Thucydides said:
			
		

> For efficiency of government services, there are many metrics to choose from. For the most part, look for a comperable private industry and see how the two stack up. The Postal service is woefully expensive, slow and inefficient compared to courier services (and in Canada, you can get door to door services from a courier).
> 
> If your metric is the acheivement of policy goals, then how many goals are accomplished? The actual answer is "none", since the perverese incentive of government service is to keep your job and expand your bureaucracy; neither which is possible if you "solve" the problem the government agency is supposed to deal with. Poverty statistics are illuminating, they have remained more or less constant over decades despite the trillions of dollars spent to "fight" poverty, but when you *pay* people to be poor (via welfare and bogus "tax reduction") and have a vested interest in having many poor people to "help".....
> 
> ...



This assessment is quite simplistic.

Quite often, there are no considerable private industries, at least not in the domains of defense, health policy, environmental policy, industry promotion, foreign affairs, etc. 

The Postal service here in Canada is pretty good, so can't compare... but yes I did hear that USPS sucks.

If the metric is achievement of policy goals, then sorry but many many goals are accomplished, depending on the policy: selective hiring has increased target groups representation, subsidies for computers have increased technological literacy, employement development and social housing have brought inter-racial tensions down from what they were in the 70's (remember Black Panthers), difference in crime statistics in Canada would suggest that different correctional policies in different provinces have different impact on reinsertion, and so on, the list is endless.

For schools, I would suggest that the bang you get for the bucks often cannot be justified in the private (i.e. private schooling in BC at 30K a year... what kind of crazy person can afford that?), i.e. the marginal improvement of your results per dollar spent is decreasing from a 2000$ position to a 20000$ position.

Finally, none of the examples you list are policy-making. RAND would be one, granted. What I'm talking about is, say, environmental protection policies, health policies, drug policies, air policy, aboriginals policy, all of which cannot and should not be considered under the bottom line of $$$.

If all that is not convincing, I would suggest taking a look at mixed socialist democracies like Denmark and seeing how they fare right now compared to the US. To each its woes.

Oh, and I'm not a socialist...just open.


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## Kirkhill (31 Mar 2009)

TimBit,

What makes you think that Denmark is "mixed socialist"?  It has never been more than "right wing" socialist and under Rasmussen has moved farther right - to the relief of my Danish buddies.  Likewise for Sweden and Holland.

As for Adam Smith on monopolies:

If there is a market (a demand) then there is profit then there is an interest in making that profit.  Hence the rise of couriers to compete with the government mail monopoly.

Likewise with railways.  If there is money to be made someone will make it.  Someone else will compete for it.

If there is an ESSENTIAL service that cannot support competition then yes, the government may need to REGULATE that single supplier.  The government does not need to BECOME the single supplier.  It is probably better if it doesn't as it ends up regulating itself - and self-discipline is not a strong suit of government.

As well, by keeping the service in the private sector it allows for other private individuals to continue looking for alternative methods of supplying the service in a manner that a) separates existing customers from the existing supplier (better, cheaper) while  b) making the supplier a useful profit.

Adam Smith was not averse to regulation.  He just thought it was best to minimize it.

Obama - a community organizer with a sense of style and desire for bling - has got no clue when it comes to life, the universe or anything.  He has never run anything and has always danced to the tune of whoever is paying him.  In a word, he is feckless.


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## TimBit (31 Mar 2009)

Kirkhill said:
			
		

> TimBit,
> 
> What makes you think that Denmark is "mixed socialist"?  It has never been more than "right wing" socialist and under Rasmussen has moved farther right - to the relief of my Danish buddies.  Likewise for Sweden and Holland.



Well... considering that


Denmark had the highest taxes in the world in 2005 and 2006
free healthcare and a strong welfare net
free schooling up to university
38% of the workforce in public sector jobs

I would say it is pretty "mixed socialist"...


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## Rifleman62 (31 Mar 2009)

President Obama: Yes, I Can

President Obama will become the next Great Communicator. In the US, he seems to be on TV (and radio) every single day. An announcement the day before he is to speak, i.e. at 1100 am tomorrow morning, is met with groans. He spends a heck of a lot of time behind a teleprompter. He must hold his Cabinet meetings at night. I do not get it. Holding a "press conference" during prime time, opening with a lengthy statement followed by thirteen questions (and the long-winded political "answers"). What purpose?

Can you imagine if PM Harper appeared evan once a week and demanded network time? Yes, he is not the leader of the free world etc. Remember how he was criticised for using a teleprompter, his PAO lining up who will ask questions? Don't see much criticism of President Obama in Cdn media do you.

I am with tomahawk6. It is unsettling what is going on, and as the USA goes, so does Canada.

My 2 cents.

P.S. I predict that GM will produce a “Peoples’ Car”. The shape will be rounded so that it will have a slippery wind coefficient. The Peoples’ Car will be produced in two colours:
 * Obama Blue - mandatory colour for the populous of red states; and
 * Sheep White for everyone else.

A special enforcement unit, enlisted from non-resident aliens, will ensure compliance.


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## a_majoor (31 Mar 2009)

The "program" might not get passed after all thanks to the wisdom of the "Founding Fathers" in decentralizing powers:

http://www.rasmussenreports.com/public_content/political_commentary/commentary_by_michael_barone/not_yet_ready_for_a_welfare_state



> *Not Yet Ready for a Welfare State*
> A Commentary By Michael Barone
> 
> Saturday, March 28, 2009
> ...


----------



## CougarKing (2 Apr 2009)

Another sign that things are starting to get better? 

http://news.yahoo.com/s/ap/20090402/ap_on_bi_st_ma_re/wall_street



> * Dow jumps above 8,000 for first time in 2 months*
> 
> ^DJI  8,068.17 +306.57
> ^GSPC  844.10 +33.02
> ...


----------



## tomahawk6 (2 Apr 2009)

US House approves budget plan in line with Obama's 02 Apr 2009 23:11:01 GMT 
Source: Reuters
 WASHINGTON, April 2 (Reuters) - The U.S. House of Representatives on Thursday approved a $3.45 trillion budget blueprint largely in line with President Barack Obama's proposal after defeating a Republican alternative that slashed spending and taxes.

The Senate is working on its own budget for the fiscal year that begins Oct. 1 and any differences will have to be worked out. The budget legislation is nonbinding but sets guidelines for spending and tax measures that will be considered later this year.

The House Democrats budget would also allow legislation to overhaul the $2.5 trillion U.S. healthcare system to be considered in a speedier manner. (Reporting by Jeremy Pelofsky and Richard Cowan, editing by Stacey Joyce)


----------



## CougarKing (9 Apr 2009)

Continuing to post good news and improving economic news to the chagrin of the usual naysayer.   

Good news is underlined and in blue. Bad news is in red.

http://news.yahoo.com/s/ap/20090409/ap_on_bi_st_ma_re/wall_street



> *Stocks surge as profits at Wells Fargo jump*
> 
> By STEPHEN BERNARD and TIM PARADIS, AP Business Writers Stephen Bernard And Tim Paradis, Ap Business Writers – 57 mins ago
> NEW YORK – *Stocks bounded higher early Thursday after banking giant Wells Fargo & Co. issued a surprise profit announcement that was far above analysts' estimates.*
> ...


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## a_majoor (9 Apr 2009)

As the usual suspect, I might point out that there are vast problems moving along like the 90% of the iceberg you never see. The Medicare/Medicaid and Social Security Ponzi schemes are unsustainable in the mid term, the Obama administration can potentially double the debt if it goes two terms and the pension issue seems to be almost at the tipping point now.





> *San Jose pension costs soar as stock market withers*
> By John Woolfolk
> 
> 
> ...



And of course public service unions have huge entitlement mentalities, and will defend their benefits to the last taxpayer. In practical terms I expect panicy calls to Washington to start bailing out municipalities, and adding billions more to the already gargantuan deficits, with predictable results on the rest of the economy.


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## a_majoor (11 Apr 2009)

Maybe the bankers will become tired of being the whipping boys for demogouges and stand aside for the crowds with pitchforks.....

http://pajamasmedia.com/blog/just-who-is-protecting-whom-from-the-pitchforks/



> *Just Who Is Protecting Whom from the Pitchforks?
> *
> Posted By Eric Florack On April 10, 2009 @ 7:12 am In . Column1 02, Money, Politics, US News | 22 Comments
> 
> ...


----------



## Kirkhill (11 Apr 2009)

I have to admit, between much more involvement at work these days (a good thing - interesting project) and the train-wreck that is the new administration south of the border, I have given up on following the news closely.  

I missed that comment about bankers and pitchforks.

Nasty bankers.  Stealing your money.
Nasty Kulaks .   Stealing your food.
Nasty Jews.  Stealing your  ???  Oh Yeah!!!   They're the bankers.

I've read this book before.

Let me know if it turns out different this time.


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## GAP (15 Apr 2009)

Fiat to Chrysler: Cut costs or we walk
ERIC REGULY AND GREG KEENAN,  From Wednesday's Globe and Mail
Article Link

ROME and TORONTO — Fiat SpA will abandon Chrysler LLC, leaving it to fend for itself in bankruptcy court, unless Chrysler's Canadian and American unions agree to substantial labour-cost reductions by the end of the month, Fiat CEO Sergio Marchionne says.

For Chrysler, which is subsisting on cash borrowed from the U.S. and Canadian governments, the deal with Fiat is the last chance to avoid a bankruptcy filing and possible liquidation. 

But Fiat is prepared to scrap the deal and look elsewhere for an international partner if the unions do not agree to match the lower labour costs of Japanese and German plants in the United States and Canada, Mr. Marchionne said in an exclusive interview with The Globe and Mail at the Italian auto maker's headquarters in Turin.

“Absolutely we are prepared to walk. There is no doubt in my mind,” he said. “We cannot commit to this organization unless we see light at the end of the tunnel.”

Mr. Marchionne, 56, said Chrysler workers on both sides of the border have to end their sense of entitlement if the wrecked auto maker is to have any chance of repairing itself. 

“The minute you talk to me about historical entitlement in an organization that is technically bankrupt, it's a nonsensical discussion,” he said. 

“There is no wealth to be distributed.”

The administration of U.S. President Barack Obama has given Fiat and Chrysler until the end of the month to negotiate partnership terms.

If the deal is done, the U.S. and Canadian governments would prop up Chrysler with about $7-billion(U.S.) in loans to sustain its operations while Fiat overhauls the company and fills its dealerships with Fiat-derived models.

Because of the lack of progress on labour negotiations, especially on the Canadian side, there is only a 50-50 chance the partnership will be formed, Mr. Marchionne said.

“From what I can tell from a distance, the CAW may have taken more rigid positions,” he said. 

“The dialogue is out of sync. I think they need to see what state the industry is in. Canada and the U.S. are coming in as the lender of last resort.

“No one else would put a dollar in. This is the worst condemnation of the viability of this business.

“We are not anti organized labour. No one wants to remove the UAW or the CAW from the table. But it will happen if a bankruptcy process drags on. …The UAW and the CAW have a unique opportunity here to change the framework of the discussion.”

Hourly labour costs vary among the plants operated by Japanese and German auto makers in the United States – mainly in such southern states as Kentucky, Alabama, Georgia and Tennessee.

At a mature plant such as the Toyota Motor Corp. assembly operation in Georgetown, Ky., hourly labour costs are in the high $40 (U.S.) range, Toyota spokesman Mike Goss said yesterday.

Costs at Honda Motor Co. Ltd. and Nissan Motor Co. Ltd. plants in the United States are estimated to be about $40 an hour.

Chrysler has already demanded that the CAW trim hourly labour costs by $19 (Canadian) to $55 to match what it pays UAW workers at its U.S. plants.

The CAW has refused to go that far, offering Chrysler the same $7 to $7.25 an hour it has already given General Motors of Canada Ltd. in overall cost cuts, plus agreeing to reduce break times at Chrysler plants in Brampton, Ont., and Windsor, Ont., which would reduce hourly costs by what the union says is several more dollars an hour. 

Fiat, with the backing of the White House, has proposed taking a 20-per-cent stake in Chrysler, which is currently 80-per-cent owned by Cerberus Capital Management LP and 20-per-cent by Daimler AG of Germany, owner of Mercedes-Benz.

Upon reaching certain milestones, such as the rollout of Chrysler vehicles based on Fiat platforms, Fiat's ownership would rise in stages by 5-per-cent increments to 49 per cent.

Fiat could raise its stake above 49 per cent only if Chrysler repays its bailout loans to the U.S. Treasury.

At the end of March, the U.S. auto task force gave Chrysler 30 days to complete an alliance with Fiat or face a cut-off of its government funding that could force its liquidation.

Yesterday, Mr. Obama said it is his “fervent hope that in the coming weeks, Chrysler will find a viable business partner.”

Mr. Marchionne, who was educated in Canada, started his career here and holds dual Italian-Canadian citizenship, has vowed to put no Fiat money into Chrysler and plans to save the company through technology transfers and a corporate overhaul modelled on the one that rescued Fiat from oblivion in the middle part of this decade.

Short of injecting funds into Chrysler, Mr. Marchionne said Fiat will do whatever it takes to revive Chrysler, including offering himself up as CEO. “Fundamentally, that's possible, but the title isn't important,” he said. “What's important is that they hear me. It's possible that I will have to divide my time between running Fiat and running Chrysler.”
More on link


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## a_majoor (16 Apr 2009)

The administration's opponents are coming at them from every angle: the open "T.E.A. party protesters" are the visible face (and despite every effort of the MSM to pretent they did not happen, millions of Americans rallied in large and small cities on April 15) but the "John Galt" strike is becoming much more effective:

http://pajamasmedia.com/blog/tax-receipts-plummet-as-americans-go-galt/



> *Tax Receipts Plummet as Americans ‘Go Galt’*
> 
> Posted By Tom Blumer On April 15, 2009 @ 12:00 am In Money, Politics, US News | 91 Comments
> 
> ...


----------



## mediocre1 (16 Apr 2009)

Kirkhill said:
			
		

> TimBit,
> 
> What makes you think that Denmark is "mixed socialist"?  It has never been more than "right wing" socialist and under Rasmussen has moved farther right - to the relief of my Danish buddies.  Likewise for Sweden and Holland.
> 
> ...



That is good opinion, kirkhill. Moreover, Canada is the only welfare state among European welfare state countries that is riddled with debt. The NDPs and the Liberals willl never learn. The reason why Sweden, Norway, Finland, Denmark got rid of their debts is because they steered their economies to the Right but still maintained the social safety net. I hate to say this but McGuinty is so stubborn....


----------



## KingKikapu (16 Apr 2009)

mediocre1 said:
			
		

> Moreover, Canada is the only welfare state among European welfare state countries that is riddled with debt.



Logic fail.


----------



## mediocre1 (16 Apr 2009)

KingKikapu said:
			
		

> Logic fail.



800 billion dollars. But a Conservative government under Harper was able to reach a 12 billion dollar surplus excluding the payment of the principal and the interest for the years


----------



## KingKikapu (16 Apr 2009)

> Moreover, Canada is the only welfare state among European welfare state countries that is riddled with debt.



Logic fail.



			
				mediocre1 said:
			
		

> 800 billion dollars. But a Conservative government under Harper was able to reach a 12 billion dollar surplus excluding the payment of the principal and the interest for the years



I think you missed what I was getting at.  Canada is not among any European state, regardless of any qualifiers you add to flush out your point.  The emphasis can't be placed instead on "welfare state" either because your qualifier of European nations within welfare states again precludes Canada.  It is logically unsound.

You may be right about the money though.  The European welfare states are mostly the Scandinavian countries right?  If that's true, I have a feeling that comparing them to Canada won't be as straightforward as you might imagine.


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## Kirkhill (16 Apr 2009)

Occasionally I find myself on line with KingKikapu....

This is one such time.  It is hard to compare the Scandinavian countries - Sweden in particular.  I can't speak to the details just now but in its "Socialist" hey-day back in the '70s one of its defining characteristics was a rotating board of directors.  Essentially all of the "name-brand" Swedish companies (Bofors, Saab, Electrolux, Alfa-Laval, ABB.....) had a common pool of directors, one of which was always a member of the Royal Family, if not the King himself.  The net effect was that means of production were held not by the many but by the few, an oligarchy of sorts, with more than a hint of Corporatism rather than Socialism.

The good news was it resulted in a well-ordered society that met the needs of its people.  A modern example of a benevolent government....but as to whether it was Democratic...


----------



## a_majoor (16 Apr 2009)

Kirkhill is right about the corporatist nature of Sweden and the other Scandinavian "welfare states". Jerry Pournelle has noted that one possible reason for the sustained success of that model since the 1940's was the relatively uniform nature of the society and the underlying Protestant work ethic underpinning the culture. With the large scale immigration starting in the 1980's and the maturation of new generations of Scandanavians no longer steeped in that particular cultural matrix, the welfare state model is rapidly unraveling (Denmark, after all, was the place where the "Mohammed" cartoon protests started).

The "rotating board of directors" with a member of the royal family aboard is fairly similar in conception (although different in practice) with Fascist Italy, the American "New Deal", Japanese kigyō shūdan or Chinese "State Enterprise", not to mention the plans of the Obama administration for the American economy.

One only has to substitute people with different motives to see different outcomes; greedy, power hungry or malevolent characters would most certainly warp the outcomes of these sorts of corporatist boards (what if Kim Jong-il was the King of Sweden, for example?).

Market capitalism reduces the concentration of power and spreads it broadly and deeply across the economy. A dysfunctional corporate board of directors can only crash the company and affect their local customers and suppliers. A dysfunctional government agency can crash an entire industry; and the forced disbursement of TARP funds to banks that do not want or need the funds seems to be the first step to nationalizing the banks and thus the US financial industry, with results that will make Fannie Mae and Freddie Mac seem to be small potatoes.


----------



## a_majoor (17 Apr 2009)

Alternative means to ride out the ongoing meltdown (if joining T.E.A. parties or the John Galt strike isn't enough):

http://www.usatoday.com/news/offbeat/2009-04-14-survivalistsinside14_N.htm



> *Economic survivalists take root*
> Updated 1d 22h ago | Comment  | Recommend  E-mail | Save | Print | Reprints & Permissions |
> 
> By Judy Keen, USA TODAY
> ...


----------



## a_majoor (19 Apr 2009)

Hmmm. Is the John Galt strike slowing down the economy faster than the Obama administration and the Congress can re-inflate it?  

http://www.guardian.co.uk/business/2009/apr/15/us-economy-deflation-recession



> *US economy goes back to 1955 as deflation returns*
> 
> 'The notion that inflation will pick up in the near-term is completely out of the picture,' said one analyst
> 
> ...


----------



## a_majoor (20 Apr 2009)

The Obama administration does some belt tightening.....yeah:


----------



## a_majoor (23 Apr 2009)

Let history be our guide:

http://pajamasmedia.com/edgelings/2009/04/22/scared-ceos-hamper-economic-recovery/



> *Scared CEOs Hamper Economic Recovery*
> 
> By Rich Karlgaard
> 
> ...



And the reaction to an arbitrary and capricious environmrnt is to avoid it. This is another manifestation of the "John Galt" strike.


----------



## a_majoor (23 Apr 2009)

More on the administration's assaults on the free market. In one way this may be to the long term benefit of everyone, as VC's contract, new wealth is not created and tax revenues fall further. This will trigger some sort of response, either a tax revolt as people refuse to pay for the ever increasing size of the Administration's project or a true financial collapse if/when government debt gets repudiated (as the obligations can no longer be covered).

A tax revolt will buy time, but as the example of California shows, this is only a temporary measure. Proposition 13 forced tax and spending cuts, but they were not permanent, now California is perhaps the first US State that will have to declare bankruptcy.

Repudiation will also destroy much of the foundation of the Welfare State, and sweep away most or all of the institutions that underpin it, so it is actually the "prefered" solution.

http://proteinwisdom.com/?p=14758



> *“Why Is Venture Capital Under Assault?”*
> 
> From Scott Powell, vice president of ELP Capital and a visiting fellow at the Hoover Institution, writing in IBD:
> 
> ...


----------



## tomahawk6 (23 Apr 2009)

The democrats run Michigan and California [legislature]. What is happening in those two states is what the rest of the country will look like on a national scale.


----------



## a_majoor (26 Apr 2009)

The face of Obamanomics.....

http://www.slate.com/blogs/blogs/kausfiles/archive/2009/04/24/the-hole-in-tnr-s-big-obama-theory.aspx



> *The Hole in TNR's Big Obama Theory*
> 
> Plot Holes: In their New Republic cover story divining Obama's "new theory of the state"--which turns out to be "Nudge-o-cracy," or having the state "monkey around with the choices people face, seeking to influence decision-making rather than mandate decisions"--Franklin Foer and Noam Scheiber declare that:
> 
> ...


----------



## tomahawk6 (26 Apr 2009)

What our friends on the left dont grasp is when you reduce the maximum wage that a person can make that reduces the amount of taxes the government will see. Raise prices on gasoline,electricity ect and people will conserve also reducing taxes to the government. This is why socialism fails.


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## a_majoor (27 Apr 2009)

Big labour doing it's part for Obamanomics:

http://www.slate.com/blogs/blogs/kausfiles/archive/2009/04/27/big-labor-s-big-box-strategy.aspx



> *Big Labor's Big Box Strategy*
> 
> One of Robert Reich's answers to The Economist makes the strategy behind the proposed card check ("Employee Free Choice") bill clearer in a way I hadn't completely understood before (though I should have):
> 
> ...


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## a_majoor (5 May 2009)

One housing crisis wasn't enough, apparently:

http://www.foundingbloggers.com/wordpress/2009/05/democrats-setting-up-another-sub-prime-mortgage-bust/



> *Democrats Setting Up Another Sub-Prime Mortgage Bust*
> May 4, 2009 |
> The Wall Street Journal is running an editorial that examines how the current Congress is setting us up for our newest housing bust and bailout.
> 
> ...


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## a_majoor (8 May 2009)

Reality intrudes on the land of "Hope and Change"

http://www.google.com/hostednews/ap/article/ALeqM5jmT59dgLTTziX4p9X9MRBRpWZGdQD981KVDG4



> *Weak Treasury auction sends stocks lower*
> 
> By TIM PARADIS and SARA LEPRO – 6 hours ago
> 
> ...


----------



## a_majoor (10 May 2009)

Heh


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## a_majoor (10 May 2009)

Oh look, the root causetm. Cue the chirping crickets for the American and Canadian MSM:





> Media Still Covering Up The $400 Billion Fannie And Freddie Scandal (FNM, FRE)
> Joe Weisenthal|May. 8, 2009, 3:39 PM|comment29
> 
> This morning, Fannie Mae (FNM) announced that it had lost another $23 billion in the quarter, and would have to call down $19 billion more in taxpayer support. It also said that it would face losses as far as the eye can see.
> ...


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## a_majoor (13 May 2009)

Trouble down the road? Trouble _right now_

http://meganmcardle.theatlantic.com/archives/2009/05/the_risk_of_debt.php



> *The Risk of Debt*
> 12 May 2009 07:55 am
> 
> So why should we worry about the ability of the government to borrow?  For the past decade, at least, the American government has been able to borrow pretty much all the money it wanted without seeming to pay much of a price in terms of higher interest rates.  Bush's deficits were worrying in a number of ways, but they certainly didn't crowd out private investments, and we got a good deal on the money.
> ...


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## tomahawk6 (13 May 2009)

I hope no one buys Treasuries. It would be insane with the Obama budget deficit of $1.8 trillion to buy any US debt and the economy as it comes under government control will not be creating much wealth. Bad news in the long run.


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## a_majoor (14 May 2009)

Joining the John Galt strike (from the comments section):

http://insidetheasylum.blogsome.com/2009/05/13/wisdom-that-confucius-taught-part-2/



> Your government is taking the tax dollars you are paying and giving them to GM. It is also laundering your tax dollars through AIG to send billion-dollar checks to millionaire foreign bankers in Germany and Switzerland. This is not sustainable.
> 
> Going Galt isn’t easy, but you can make a contribution in small, unexpected ways:
> 
> ...


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## a_majoor (20 May 2009)

The day of recconing may be much closer than we all think:

http://meganmcardle.theatlantic.com/archives/2009/05/is_california_too_big_to_fail.php



> *Is California Too Big to Fail?*
> 19 May 2009 05:48 pm
> 
> So what about California?  A reader asks.  Ummm, that's a tough one.  No, wait, it's not:  California is completely, totally, irreparably hosed.  And not a little garden hose.  More like this.  Their outflow is bigger than their inflow.  You can blame Republicans who won't pass a budget, or Democrats who spend every single cent of tax money that comes in during the booms, borrow some more, and then act all surprised when revenues, in a totally unprecedented, inexplicable, and unforeseaable chain of events, fall during a recession.  You can blame the initiative process, and the uneducated voters who try to vote themselves rich by picking their own pockets.  Whoever is to blame, the state was bound to go broke one day, and hey, today's that day!
> ...



And New York (State) si prety close to the edge as well. Several other States are also in serious trouble, but as one comment points out these are all politically controlled by the Democratic Party, which indicates the Admininstration *will* commit to bailing them out with superinflationary new spending to maintain control of the Congress and White House.



> The magic question is how many states can the Feds bail out? - NY, IL, MA, NJ, RI, MI are all on the edge and most likely going to fail. Funny how every one of them is virtually 100% democratically controlled. There is also the massive sucking sound as the wealthy flee these high tax states for low tax states, bringing businesses and job creation with them. Funny how when you target the rich they move. The second magic question is how long till they flee the USA?



Canada _could_ capitalize on this by dramatically lowering taxes (rather than spending more on ill conceived "Stimulus") and attracting these people. The *John Galt* effect of productive people leaving will force the collapse anyway, let's be in a position to ride it out in style and recover quickly using the pool of skilled and talented Americans we have attracted.


----------



## a_majoor (23 May 2009)

Negative interest rates to combat deflation?

http://american.com/archive/2009/may-2009/why-not-negative-interest-rates



> *Why Not Negative Interest Rates?*
> 
> By Alex J. Pollock Thursday, May 21, 2009
> 
> ...


----------



## a_majoor (25 May 2009)

Mark Styen on the shape of the "new economy":

http://article.nationalreview.com/print/?q=MWUyM2QwYzhkMTc5MmQ3M2QyZGMzYjZhZWM0ZTMzOWE=



> *What Are We Stimulating?*
> The stimulus will do nothing for the economy, but it will advance the cause of statism.
> 
> By Mark Steyn
> ...


----------



## a_majoor (26 May 2009)

Obamanomics meets the real world:

http://online.wsj.com/article/SB124329282377252471.html#



> *Millionaires Go Missing*
> Maryland's fleeced taxpayers fight back.
> 
> Here's a two-minute drill in soak-the-rich economics:
> ...


----------



## a_majoor (28 May 2009)

The window for widespread economic disruption is probably a bit wider than a decade. Social Security and Medicare will become insolvent by 2016/2017, but in the mean time we have this admininstrations epic deficits, plus the financial instability of "Blue" states and the trillion dollar underfunded public service pensions debt bombs lurking in the background. Economic recovery is being retarded by the flood of debt absorbing potential investment resources, so paying this down does not seem to be a realistic option anymore (if it ever was the plan....)

The market has another card to play in terms of applying fiscal dicipline to the political class, however. It remains to be seen how well it can work:





> *The Bond Vigilantes*
> The disciplanarians of U.S. policy makers return.
> 
> They're back. We refer to the global investors once known as the bond vigilantes, who demanded higher Treasury bond yields from the late 1970s through the 1990s whenever inflation fears popped up, and as a result disciplined U.S. policy makers. The vigilantes vanished earlier this decade amid the credit mania, but they appear to be returning with a vengeance now that Congress and the Federal Reserve have flooded the world with dollars to beat the recession.
> ...


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## a_majoor (8 Jun 2009)

Here is a good "out" for the Federal Finance Minister to cancel our "Stimulus" package. Since the Canadian economy is now apparently recovering, the second (and perhaps more politically expedient) "out" also exists; stimulus doesn't work and it isn't needed:

http://www.thepolitic.com/archives/2009/06/08/suprise-suprise-the-us-fiscal-stimulus-is-a-failure/



> *Suprise Suprise, the US Fiscal Stimulus is a Failure*
> June 8, 2009 · By Greg Farries
> 
> Dick Morris points out a sobering truth about the failure of “stimulus” economics:
> ...


----------



## Edward Campbell (13 Jun 2009)

_Globe and Mail_ columnist Jeffrey Simpson is captive to a 1950s and ‘60s (Keynesian) view of economics – one which overvalues unionized _metal bending_ jobs and, seriously, misunderstands both the _ideas_ of a service economy and of _supply side_ economics. But, that being said, his views are, pretty much, in the mainstream – as defined by our national political and _opinion_ leaders, Simpson being one of the latter. Here is his latest, reproduced under the Fair Dealing provisions (§29) of the Copyright Act, from today’s _Globe and Mail_:

(Ignore most of the 2nd through 7th paragraphs; they are the usual inane rantings of the Toronto _intelligentsia_ and Simpson is incapable of not barking them, à la Pavlov’s dogs, to guarantee his place in the Parthenon of the stupid.)

http://www.theglobeandmail.com/news/opinions/on-the-economy-americas-choices-arent-pretty/article1180752/


> On the economy, America's choices aren't pretty
> *Barack Obama has no more important obligation than a serious discussion of how and when*
> 
> Jeffrey Simpson
> ...




There is, of course, an intuitively obvious choice for Obama that Simpson fails to mention: cut spending.

No, not on social security and not on medical _system_ reform, either: both are, actually, “good” expenditures and, certainly, not on R&D and education, both of which are amongst the “best” expenditures.

Where is money *wasted*?

Security and defence, for a start: I would wager that _homeland security_ would *improve* if the whole department was dismantled and the budgets of the bits and pieces that survived were cut by, say, ⅓. A 15% cut to the pentagon’s budget might, finally, introduce some fiscal and planning discipline where none has been evident since the end of the 1950s. Related to security: immigration; the border with Mexico should be sealed, quickly and thoroughly then all 10-15 million illegal (but highly productive) _gastarbeiters_ should be (very) fast-tracked to full, taxpaying citizenship. A huge saving, but probably, political suicide would be found by stopping the illegal improper subsidies to various special interests, starting with agriculture and extending through forestry and other _sunset_ industries – like _metal bending_.

But, Simpson has hit on *the* main point: Americans and America  are living beyond their means. The _culture of entitlement_ is not unique to Canada or Europe. It is immensely strong in America where there exists a wholly unfounded belief in America’s _special providence_.* 

Historian Niall Ferguson talks about _Chimerica_ which he describes in terms of a marriage in which one partner – perhaps a bit old and ugly – works and saves while the other – young and sexy – spends and spends and spends. The marriage will work so long as both are getting what they want. But it will start to fail when one partner decides that the other is not giving what is wanted or, worse, begins to understand that wants ≠ needs and that needs must dominate. Right now China, amongst others, is underwriting America’s debt. But what happens when any one of the major _underwriters_ decides that America no longer meets its (the underwriter’s) _needs_?

Tax increases, even major tax increases, alone will not suffice. Taxing and spending doesn’t work (are you listening _Iggy_?); Keynes was wrong. When one is too far into debt one must, as Jean Chrétien and Paul Martin did, raise revenue (mostly by raising taxes) and cut spending (Chrétien and Martin cut some spending, especially military spending, but the big cuts came in _social transfers_ to three provinces: AB, BC and ON). 


____________________
* _Special providence_ is, essentially, a religious idea that got transmogrified into a sort of political creed in America – twice: back _circa_ 1895 and again around 1945 as Americans sought to understand their successes. They overlooked such obvious explanations as good geography, good people, good institutions and bloody hard work. Instead many, many Americans came to believe that some god(s) or (an)other(s) decided to, specially, “bless” America. It ain’t so, but ...


----------



## Kirkhill (13 Jun 2009)

> The President understands this challenge, because he has spoken about it. But in the midst of the worst economic downturn since the 1930s, his discourse about the imbalances has been sotto voce. Soon, however, it must become one of his most urgent narrative lines.



I admit I am at risk of ODS (Obama Derangement Syndrome). That said, the inanity "The President understands this challenge, because he has spoken about it."  really pushes the limit.  Does Tom Cruise understand F-14s because he acted the part in Top Gun?  Just because the village idiot apes the town cryer that doesn't imply that either the idiot or the cryer understand the text.

Yes, the Americans are living beyond their means.   And a lot of other people assisted them in getting there - people demanding financial aid from a pauper for example.

The great fear of the international community, it seems to me, is that the American's start living within their means - economic isolation.
The Americans don't need the outside world for much of anything.  They have made decisions (many of them silly) that accomodate the outside world.

For example: 

Buying energy when they have plenty of usable energy available to them at home;
Buying foreign cars, tvs, fridges ...... computers when they could make them themselves;
Providing forces to maintain order on lines of communications to facilitate trade - trade that is secondary to its own survival needs;

Yes, it benefits the US to trade but trade is not the sine qua non that it is for resource poor countries like Hong Kong, Singapore, China or Germany and France.

The great fear is that the US will retrench on trade and start "living within its means".


----------



## Redeye (13 Jun 2009)

Kirkhill said:
			
		

> The great fear is that the US will retrench on trade and start "living within its means".



The thing is that that would be devastating all around, including for the United States.  The fact is that they are dependent on others, at least in short run.   They are dependent on oil that they cannot efficiently produce themselves.  They import things like TVs from foreign countries because it is more efficient to produce them where labour is cheaper.  Impeding free trade creates dead weight losses in economic terms.  One only needs to look at the impact of the Smoot-Hawley tariffs on prolonging economic misery during the Great Depression.  So there will be American producing TVs again - but the trade off will be that price is higher and so fewer people will have them.

The effects of the Buy American nonsense are already being felt in a number of places, including Canadian businesses that are losing business as a result - and are, in some cases, looking to move their operations to the US because their biggest customers are there.  Recently on Radio One a manufacturer of equipment which is specifically used in water treatment plants based in Halton Hills, ON was explaining that he was exploring moving his production operations to Bradford, PA because of Buy American rules preventing him from selling product to Americans.  Since infrastructure spending is a large part of the US stimulus effort, he was missing the chance to capture a huge market opportunity.

The cost would be a number of jobs in Halton Hills, and a hit to their tax base as a result.

It's true people fear the idea of America going protectionist, but the reality is that's as bad for America as it is everywhere else.


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## a_majoor (14 Jun 2009)

Moving from the "Macro" living within our means arguments to more "micro" efforts:

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5516536/US-cities-may-have-to-be-bulldozed-in-order-to-survive.html



> *US cities may have to be bulldozed in order to survive*
> 
> Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.
> 
> ...



The big potential problem is that the city could (will) begin picking and choosing "winers and losers", expropriating properties that border on areas slated for demolition etc. The end results could be very ugly (and what sort of waste-land will be left after demolishing a neighbourhood?)


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## Kirkhill (14 Jun 2009)

So low cost housing will be bulldozed to inflate the value of the stuff that's left and the homeless will remain homeless. Or will the inflated taxes paid with inflated dollars on inflated properties be used to build houses for people that couldn't afford the low cost housing that is going to be bulldozed?

Used to was that you built a house.  You lived in it.  If you sold it, it was "Caveat Emptor".  Then the bureaucrats said you couldn't live in a house that satisfied you.  You had to live in a house that satisfied them, produced by a licensed supplier at an elevated price....thereby ensuring that some portion of the population would not be able to buy a roof over their head and would not be allowed to put one up themselves.


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## a_majoor (16 Jun 2009)

Too true. I noticed that the one solution (disincorporating all or part of the city) and shrinking the civic government to reflect the new realities does no seem to be part of anyone's vocabulary. Realistically, a town of Flint surrounded by several villages created by the remmnants of subdivisions with sufficient population to remain viable seems to be the true viable end state, once the imperial government of the "City of Flint" is factored out.


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## time expired (18 Jun 2009)

I think I am beginning to understand whats going on,the fiscal incompetent
and irresponsible,individual and cor perate, are going to be bailed out by the
government.That means the people who live in a house they can afford,pay
their credit card bills at the end of the month,and generally avoid dept are
going to foot the bill through their taxes and their children's taxes and more
than likely their grandchildrens taxes.Please tell me that I am wrong.
                                Regards


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## Edward Campbell (18 Jun 2009)

time expired said:
			
		

> I think I am beginning to understand whats going on,the fiscal incompetent
> and irresponsible,individual and cor perate, are going to be bailed out by the
> government.That means the people who live in a house they can afford,pay
> their credit card bills at the end of the month,and generally avoid dept are
> ...



Nope! Sadly, you are dead right. That is precisely what is happening.

Additionally, by debasing his own currency, President Obama wants to get the rest of the world to underwrite the exercise.


----------



## a_majoor (30 Jun 2009)

I'm not sure the rest of the world is ready for this type of "Hope and Change". Fiscal collapse of this magnitude will drag everyone down, and we are like a small lifeboat tied to the stern of the Titanic.....

Raising taxes is not an option, since many people are already practicing tax avoidance strategies, and everyone going "Galt" will simply make the problem strike home that much sooner. Reducing spending is the *only* way, and for Americans it realisticly means cutting Medicare, Medicaid and Social Security (the biggest and fastest growing portions of the "entitlements" that eat tax dollars), as well as cutting all the various subsidies to business, labour, agriculture, education...

Either they reduce spending in a controlled fashion, or all these programs will end rather abruptly in an uncontrolled fiscal crash.

http://reason.com/blog/show/134436.html



> *Debt and Taxes: The CBO's Dire Projections*
> Peter Suderman | June 29, 2009, 4:23pm
> 
> How bad is the CBO's latest report on the country's budgetary future? The Washington Post calls the office's numbers "dire." U.S. News says they're "off the wall." And in a post about the report on his blog, the CBO's director, Douglas Elmendorf, writes that "under current law, the federal budget is on an unsustainable path."
> ...


----------



## Xiang (30 Jun 2009)

Interestingly enough, China, India, Russia and Brazil are meeting to form an economic alliance to counter the failing US dollar, and move away from trading commodities in that currency.

The group has coined the nickname BRIC.  If/when it is finally set into motion, it could spell the end of the US Dollar as we know it.


----------



## Edward Campbell (30 Jun 2009)

Xiang said:
			
		

> Interestingly enough, China, India, Russia and Brazil are meeting to form an economic alliance to counter the failing US dollar, and move away from trading commodities in that currency.
> 
> The group has coined the nickname BRIC.  If/when it is finally set into motion, it could spell the end of the US Dollar as we know it.




BRIC is a term coined, in 2003, by _Goldman Sachs_ in a report that speculated that, by 2050, Brazil, Russia, India and China would be wealthier that today’s economic superpowers. 

Certainly China and India can be economic superpowers, in their own right, before 2050 – if they can manage their internal affairs well enough for the next generation.

Brazil is a big, rich country with a very, very spotty record of accomplishment. There are some long standing, _structural_ socio-economic and *cultural* (there’s that word again!) problems which have, in the past, crippled Brazil. Brazil has a larger population (190+ Million) than Japan (125+ Million); the question is: can all those people be sufficiently productive to “grow” their economy from $1.5 Trillion (about the same as Canada’s) to $5+ Trillion (where Japan’s will be, easily) by 2015 and then to $10 Trillion, which is where Japan’s will be by 2030, and so on to $25 Trillion by 2050?

Russia has long standing and structural problems like Brazil’s and it is also sitting on a demographic time bomb.

The principle *cultural* problems facing Brazil and Russia is that they are deeply _*illiberal*_ societies and those sorts of societies have, pretty consistently, failed while liberal and conservative societies have prospered.

By the way, how “good” is Goldman Sachs? How much faith should we put in the BRIC?

China is proposing that Special Drawing Rights (SDRs) - an IMF generated _reserve asset_ - should be used as an alternate reserve currency. Possibly not a bad idea, given that President Obama plans to debase the US currency so that others will pay for his _recovery_ schemes.


----------



## a_majoor (13 Jul 2009)

VDH on the real program:

http://pajamasmedia.com/victordavishanson/the-war-against-the-producers/



> *The War Against the Producers*
> Posted By Victor Davis Hanson On July 11, 2009 @ 10:27 am In Uncategorized | 133 Comments
> 
> Stimulus, stimulus and not a drop…
> ...


----------



## a_majoor (16 Jul 2009)

Say, wasn't the _first_ American revolution about unjust taxation......?

http://pajamasmedia.com/rogerkimball -



> *Are We There Yet? Preparing for the Coming Tax-Revolt*
> Posted By Roger Kimball On July 16, 2009 @ 6:41 am In Uncategorized | 52 Comments
> 
> Megan McCardle [1] expressed surprise at “just how little money you can raise by slapping a 5.4% surtax on incomes above a million.” She shouldn’t be surprised. After its orgy of irresponsible spending, the Obama administration is certainly going to have to find some way to raise money, especially since its economy crushing initiatives have [2] drastically reduced tax receipts, a trend that most observers predict will continue.
> ...


_

_


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## a_majoor (18 Jul 2009)

More on unjust taxation. I suspect the next great social/political movement in the United States is beginning (with the political blogosphere, John Galt strike and T.E.A. parties laying the groundwork); the productive citizenry vs political rent seekers:

http://cjunk.blogspot.com/2009/07/taxation-without-representation.html



> *Taxation Without Representation*
> 
> What a scam ... ensure power by setting it up that those who vote you in, don't have to pay tax. The only thing is, that the 50% who vote you in are too stupid to realize that in almost all cases taxes run down hill ... that is, small businesses and corporations pass on tax debt to their customers. If they can't, they simply leave town to more hospitable places. That's why Texas is booming as tax exhausted individuals and companies flee the "progressive" economies in other states:
> 
> It’s worth recalling that when the Founding Fathers led the American colonists in revolt against British oppression, they weren’t rebelling against torture on the rack or being chained in galleys or having to let aristocrats deflower their daughters. They were rebelling against taxes. *To them, having to pay duties they hadn’t voted for themselves was a tyrannical taking of property—theft—and, in true Lockean fashion, they concluded that since government exists to protect life, liberty, and property, a regime that does the opposite renders itself illegitimate.* What would they make, then, of today’s New York City, where 1.2 percent of the taxpayers—40,000 households—pay 50 percent of the income taxes, and half the households pay no income tax at all? If the tax code ensures that those who pay the bulk of the taxes are always a minority of those who vote for the legislature that imposes the taxes, isn’t that taxation without representation? Isn’t it also the tyranny of the majority that the Founders tried to prevent?



The rent seekers have spent gnerations enlisting the "uninformed masses" and corrupting language and institutions so most people seem to believe that Government programs are "free". It is now the turn of the productive class to change the terms and conditions of the political landscape or face the consequences.


----------



## a_majoor (25 Jul 2009)

A very interesting article, which shows how the "Blue State" model is disintigrating before our eyes. Since this is the model of governence the Obama administration seems determined to follow, it is a must read. Economics, demographics and technological change are all intertwined with these arguments. Note, the article is very long, so I exerpted the first part; read the rest at link:

http://www.american.com/archive/2009/july/the-blue-state-meltdown-and-the-collapse-of-the-chicago-model



> *The Blue-State Meltdown and the Collapse of the Chicago Model*
> By Joel Kotkin
> Wednesday, July 22, 2009
> 
> ...


----------



## Yrys (4 Aug 2009)

Keeping Their Eggs in Their Backyard Nests

As Americans struggle through a dismal recession, many are trying 
to safeguard themselves from what they fear will be even worse 
times ahead. They eat out less often. They take vacations closer to 
home.They put off buying new cars.

And some raise chickens. Lloyd Romriell, a married father of four in 
Annis, Idaho, recently received seven grown chickens and a coop from 
a relative. The hens lay a total of about two dozen eggs a week.

“It’s because times are tough. You never know what’s going to happen,” 
Mr. Romriell said. Although he manages a feed store, he had not kept 
chickens since he was a child. “If you lose your job tomorrow, you’ve 
still got food.”

As a backyard chicken trend sweeps the country, hatcheries that supply 
baby chicks say they can barely keep up with demand. Do-it-yourself 
coops have popped up in places as disparate as Brooklyn, suburban 
Chicago and the rural West.

In some cities, the chicken craze has met with resistance, as neighbors 
demand that local officials enforce no-poultry laws. In others, including 
Fort Collins, Colo., enthusiasts have worked to change laws to allow 
small flocks (without noisy roosters).

rest of article on link


----------



## tomahawk6 (6 Aug 2009)

Ran across this pdf by Eric Sprott outlining why he thinks the US is in the early stage of a depression. Sprott has credibility because he predicted the meltdown last summer. I feel the economy is at a tipping point. If healthcare and cap'n trade are enacted then we will see a depression. If they arent enacted we have a shot at a jobless recovery.

http://www.sprott.com/Docs/MarketsataGlance/July_2009.pdf


----------



## a_majoor (9 Aug 2009)

Certainly the government is getting deeper into trouble as tax revenues continue to fall. Who is John Galt?





> Tax Revenues Fall 18%, Biggest Drop Since Depression
> 
> From the Associated Press:
> Tax receipts are on pace to drop 18% this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion. Other figures in an Associated Press analysis underscore the recession's impact:
> ...


----------



## a_majoor (10 Aug 2009)

I doubt the low expectations required for the presumptive re election will be met, but the MSM might be able to spin even a very weak set of numbers into a _recovery_. I await the economic and politcal reporting leading up to the 2010 midterms (and comparing that to what is seen out the window). The writer also seems to forget that stagflation is a positive feedback loop, and I expect the numbers of unemployed and inflation to be higher than predicted.

http://pajamasmedia.com/blog/economic-forecast-calls-for-slow-job-growth-and-inflation



> *Economic Forecast: Slow Job Growth and Inflation*
> 
> Posted By Arnold Kling On August 9, 2009 @ 12:00 am In . Column2 04, Media, Money, Politics, US News | 26 Comments
> 
> ...


----------



## a_majoor (11 Aug 2009)

The state issued "IOU's" are repudiated by the very government that issues them! Now consider how many other "Blue" states are close to budgetary implosions, followed by "Blue" civic governments that have huge unfunded pension and benefit liabilities? They will discover that issuing "special warrants", selling state or municipal bonds and debentures or other revenue raising schemes will be rejected by the public (who now see these will not be repaid or honoured), while raising taxes will result in greater tax avoidance activities, up to and including outmigration.

Fiscal armegeddon might be coming to the United States faster than anyone thinks, driven from the bottom rather than by the Administration at the top (although the Administration has no room to move anymore either)

http://www.courthousenews.com/2009/08/04/California_Won_t_Accept_Its_Own_IOUs.htm



> *California Won't Accept Its Own IOUs*
> By MARIA DINZEO
> ShareThis
> SAN FRANCISCO (CN) - Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors' federal class action claims the state is trying to balance its budget on their backs.
> ...


----------



## a_majoor (12 Aug 2009)

Cap and Trade, by the numbers:

http://www.powerlineblog.com/archives/2009/08/024249.php



> *Cap and Trade: Measuring the Disaster*
> 
> The Heritage Foundation has released a new economic analysis of Waxman-Markey, the cap and trade bill that is dead--we hope--at least for this year. The results aren't pretty. Heritage finds that Waxman Markey would, by 2035:
> 
> ...


----------



## a_majoor (19 Aug 2009)

The stateof the economy explained in iconography!


----------



## a_majoor (22 Aug 2009)

Mark Steyn:

http://www.ocregister.com/articles/obama-percent-sign-2536772-president-government



> *Mark Steyn: Stimulus hits a pothole*
> 
> And Obamacare can't be rationalized on economic or medical grounds because it's not about that. It's about moving America left.
> 
> ...


----------



## tomahawk6 (22 Aug 2009)

Its looking like Obamacare is DOA. Most of the country doesnt want it. Provisions in the bill are just too extreme for most americans. If enacted each american would be required to link their personal bank account with their health insurance so the government could directly debit their account for services renedered. The bigger issue is that mandating participation by all is unconstitutional. Of course that hasnt been an impediment to the President yet,but that day is fast approaching.


----------



## a_majoor (24 Aug 2009)

Something is fast approaching anyway. The light at the end of this administration's tunnel is the train's headlight.....

http://gregmankiw.blogspot.com/2009/08/preview-of-midsession-review.html



> *Preview of the Midsession Review*
> 
> Before you read this story, here is one number you need to know: the U.S. federal government's debt is now about $7.4 trillion. That is the accumulation from past budget deficits.
> 
> ...


----------



## a_majoor (29 Aug 2009)

Interesting. What is really going on behind the scenes I wonder?

http://pajamasmedia.com/instapundit/



> IS THE STOCK MARKET RALLY TOPPING OUT? My answer is, as usual, who knows? But this bit interested me:
> 
> However, traders have been concerned that on several days in the past week, *market volume was dominated by heavy trading in low quality financial names*, like Fannie Mae [FNM 2.04 0.12 (+6.25%) ], Citigroup [C 5.23 0.18 (+3.56%) ], AIG [AIG 50.23 2.39 (+5%) ] and Freddie Mac [FRE 2.40 0.16 (+7.14%) ]. “If you took the top traded stocks and gave them normal volumes, overall volume would be down 30 percent,” said Hogan.
> 
> So much of the “rally” is in junk-financial stocks for companies that are, basically, controlled by the government? I’m not sure exactly what that means, but it’s hard to see it as anything promising.


----------



## tomahawk6 (29 Aug 2009)

The experts think the stock market boom will be short lived as we are heading into a double recession if not a depression. The real unemployment numbers are said to be around 16-18%,meaning folks who have given up looking for a job and with no unemploylement benfits left arent counted in the official numbers. Sort of like the healthcare debate US deaths compared to Europe include combat deaths which skew the numbers a bit.


----------



## Edward Campbell (1 Sep 2009)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, probably says all we need to know about how the “smart money” views the state of the US financial sector:

http://www.theglobeandmail.com/report-on-business/caution-rules-in-bankers-us-forays/article1271437/


> Caution rules in bankers' U.S. forays
> *TD's relatively low offer for BankUnited shows how carefully Canada's banks tread with U.S. expansion plays*
> 
> TARA PERKINS
> ...



A proper “recovery” will not, indeed cannot happen, in the USA, until the US financial/banking sector is “sound.” A full Canadian recovery will not/cannot happen without a US recovery.


----------



## GAP (1 Sep 2009)

If the FDIC is looking to pick up most of the risk that's probably another Trillion in Obama's plate. From the little I have gleened, most small bank(s) are rife with toxic assets.


----------



## tomahawk6 (1 Sep 2009)

The original purpose of TARP was to buy the toxic assets from the banks,instead TARP was used as a vehicle by the government to control the financial sector. As a result we have not resolved the underlying problem. As the economy worsens more banks will fail.


----------



## a_majoor (2 Sep 2009)

Japan's recession dragged on for a decade+ since the government allowed (and even covered for) Japanese banks to continue to carry dead assets on the books after their bubble popped rather than simply write off the losses.

China also has billions of dollars worth of "zombie" assets in the form of forced loans to non performing state enterprises; this has been partially covered up by stating GDP differently than most Western economists (see the Chinese superthread for details), and some of the truth is leaking out (Chinese growth is now propped up by massive government intervention in the economy to the tune of "investing" $10 for every $1 of growth...)

Rather than continuing the charade, it is best from a political and economic view to tell the banks to write off their trillion dollars in non performing assets. Given the Obama administration's goal isn't saving the financial sector, this may have to wait until 2012 (while a massive sea change might happen in the Congress in 2010, that would be a "best case" scenario).

Until then, look for declining growth and reduced prospects for the Canadian economy, since much of our economic prosperity is tied to what happens in the United States.


----------



## a_majoor (4 Sep 2009)

Two possibilities (since the government seems determined to prevent market clearing deflation, which is the third possibility):

Power Line Blog: John Hinderaker, Scott Johnson, Paul Mirengoff
http://www.powerlineblog.com



> *What's In Store, Inflation or Default?*
> 
> September 3, 2009 Posted by John at 7:34 PM
> 
> ...


----------



## Kirkhill (6 Sep 2009)

> What will ultimately kill the welfare State is that its centerpiece, government-provided social insurance, is simultaneously above reproach and beyond salvation. Fully-funded systems could have survived, but politicians had little incentive to enact them, and much less incentive to impose the huge costs of converting from pay-as-you-go. Whether this inevitable collapse of social democracies will ultimately be a good or bad thing depends on what replaces them.(Interpolation; History suggests that what replaces social democracies is far, far worse....)



Unless everybody comports themselves like the Swedes and makes a cold, hard decision to accept the demise of Nanny, or at least the reduction in her capabilities and decide that they need to put a little more effort in to maintaining themselves.  The Swedes have accepted downsizing and privatizing of government services.  

It seems that they operate their economy much like the way they drive their Volvos.  A little bit of gas, a little bit of brake and an occasional pressure on the wheel to keep their society between the lines.  No sudden irrational urges to chuck out the Volvo and buy a Peugeot or Fiat.    Occasionally they do change chauffeurs.


----------



## a_majoor (7 Sep 2009)

The Swedes are not the only people thinking about fiscal discipline these days, this piece is from the Governor of Indiana:





> *The Coming Reset in State Government*
> My fellow governors and I are likely facing a permanent reduction in tax revenues.
> 
> By MITCH DANIELS
> ...


----------



## Edward Campbell (13 Sep 2009)

E.R. Campbell said:
			
		

> BRIC is a term coined, in 2003, by _Goldman Sachs_ in a report that speculated that, by 2050, Brazil, Russia, India and China would be wealthier that today’s economic superpowers.
> 
> Certainly China and India can be economic superpowers, in their own right, before 2050 – if they can manage their internal affairs well enough for the next generation.
> 
> ...




More on the BRIC below, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from yesterday’s _Globe and Mail_:

http://www.theglobeandmail.com/report-on-business/crash-and-recovery/emerging-economies-pace-recovery/article1285020/


> Emerging economies pace recovery
> *Brazil blasts out of recession with 7.8 per cent growth, while China and India keep up strong momentum*
> 
> Shawn McCarthy
> ...




A few points:

•	Peter Hall, chief economist with Export Development Canada, is right when he says, _“We're not going to get a global recovery until we see Western consumers spending again;”_

•	Russia’s _outlier_ status is not surprising. Its economic _fundamentals_ and productivity do not put it anywhere near the same league as China and India; and

•	I remain convinced that Brazil can and will find a way to reverse its progress. It may be a Latin American _thing_.


----------



## Edward Campbell (14 Sep 2009)

E.R. Campbell said:
			
		

> This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, probably says all we need to know about how the “smart money” views the state of the US financial sector:
> 
> http://www.theglobeandmail.com/report-on-business/caution-rules-in-bankers-us-forays/article1271437/
> 
> ...




Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Financial Post_ is an interesting commentary:

http://www.financialpost.com/news-sectors/story.html?id=1991684


> Stiglitz says banking system is in worse shape
> 
> Mark Deen and David Tweed, Bloomberg News
> 
> ...





It is important to note that Stiglitz is a harsh critic of the “free market fundamentalists” (Hayek, Schumpeter, Friedman and the _Chicago School_) but his views on the state of the US banking/financial system bear consideration by all because he’s been so right so often.

His question - _”who is going to finance the U.S. government?”_ - is very pertinent because the Chinese are showing signs of reluctance.

Canadian bankers' caution about investing in the US appears justified.


----------



## a_majoor (23 Sep 2009)

You can almost hear the shark music from "Jaws" in the background. Click on link to get the charts:

http://hotair.com/archives/2009/09/22/exclusive-cbo-predicts-social-security-cash-deficits-in-2010-11/



> Exclusive: CBO predicts Social Security cash deficits in 2010-11; Update: Too much sunny optimism at CBO?posted at 8:48 am on September 22, 2009 by Ed Morrissey
> Share on Facebook | printer-friendly Four years ago, George W. Bush attempted to reform the entitlement program Social Security, warning that the system was accelerating into collapse and would soon run deficits.  Democrats scoffed and claimed the Social Security system was solid and wouldn’t have problems for at least 50 years, as Harry Reid told PBS’ Jim Lehrer in June 2005.  Just last year, the CBO — under the direction of Peter Orszag, now budget director in the Obama administration — claimed that the first cash deficits in Social Security would not come until 2019.
> Now, however, the CBO has determined that Social Security will run cash deficits next year and in 2011, and by 2016 will be more or less in permanent deficit mode.  Hot Air has exclusively obtained the summer 2009 CBO report sent to legislators on Capitol Hill but not yet made public, which shows that outgo will exceed income for the first time since the 1983 fix on an annual basis in 2010:
> OASDI Summer 2009 projections: click to enlarge in new window
> ...


----------



## a_majoor (28 Sep 2009)

The long term prognosis is very bad, and it will take a radical change by a future administration to reverse the effects predicted here (huge tax and spending cuts, elimination of many "entitlement" programs and a release of many areas of life from science to labour to education by the Federal government):

http://www.nypost.com/f/print/news/business/the_dead_end_kids_AnwaWNOGqsXMuIlGONNX1K



> *The dead end kids*
> By RICHARD WILNER
> 
> Last Updated: 4:45 AM, September 27, 2009
> ...


----------



## tomahawk6 (28 Sep 2009)

The real unemployment numbers are in the high teens. The numbers dont reflect people who no longer get unemployment benefits.Large numbers of out of work older people are opting to take social security at age 61,which will put a strain on the budget as social security wont have the money to cover these people,so the treasury will have to pickup the tab. Obama's policies are not intended to put people to work. Next year there will be more stimulus spending primarily because its an election year. The voters are mad as hell now just wait until next summer when increased taxes and food prices register on the electorate.The Republicans need 40 seats to retake the House,they may get all of that and more. If the Senate can also be swung to the Republicans then the damage can be undone as long as there is a veto proof majority. A tall order to be sure but given the growing unease of the voters it could happen just as it did to the Republicans in 06 and 08.


----------



## Kirkhill (29 Sep 2009)

Tomahawk:

What is the end result if the country comes to the conclusion that there are no good choices - there are only two bad choices? The punditry talk about the electorate having a short memory but swinging from unitary left to unitary right and back again every two years might test that theory really hard.


----------



## tomahawk6 (29 Sep 2009)

Bush was actually a moderate Republican but when the opposition party is so far left he looked to them like the devil incarnate. After this flirtation with socialism it will be very difficult for anyone but a conservative to get elected. People are scared and we arent even at the one year mark of Obama's presidency. Just wait until next year if cap and trade passes along with national healthcare plus stiff tax increases and higher food/energy costs people will be voting their pocket books.


----------



## a_majoor (29 Sep 2009)

Is there any realistic possibility that another politcal movement can rise in the United States in the near future?

The Whig party rapidly collapsed and was replaced by the Republican party, so historical precident exists, and the T.E.A. party movement is currently non partisan in the sense they seem to blame both parties equally for the current mess, but is this being translated into any real action?


----------



## Edward Campbell (29 Sep 2009)

The last political _movement_ to "spring up" was Ross Perot's _circa_ 1990, it culminated in a 1992 presidential campaign.

I think you need three things to create such a _movement_:

1. A _charismatic_ and credible LEADER - this is the (digital-electronic) "information age," charisma matters;

2. An "enduring" ISSUE - economic issues, even the current one, tend to be too short term; and

3. MONEY.


----------



## tomahawk6 (29 Sep 2009)

The US is a two party country and that is unlikely to change. Third party's rarely win but do tend to throw the election to one of the two party's. Perot siphoned off enough votes from the Republicans that allowed Clinton to win. A Palin third party for example would assure Obama of a second term. The other issue is a real third party must have a presence in the House and Senate. A lucky third party candidate that got elected would have no legislative help unless he or she was able to craft a coalition and you see how that works in Canada. The socialists were able to takeover the Democrat party and the Republicans need a conservative takeover of theirs. The Democrats have been able to conceal their true agenda from the public which culminated in Obama's victory. Obama repeated the sloagn "Hope and Change" but never outlined what he meant. Now we do and alot of people dont like it - including people that voted for him. It truely is buyers remorse.


----------



## Kirkhill (29 Sep 2009)

tomahawk6 said:
			
		

> Obama repeated the sloagn "Hope and Change" but never outlined what he meant.



I take your point on Bush..... I guess, in sum, I was thinking more of the Gingrich House vs the Pelosi House.  I know a decade separates them but I do believe that the counter to Pelosi will be somebody like Gingrich who may well be countered by another Pelosi.  If that pendulum starts swinging really fast (on a 2 year period for example) then I wonder if:

a) the system overbalances
b) the system splits along party lines
c) the system tears itself away from its popular underpinnings.

In a - the system just becomes unworkable and the government can't govern effectively
In b - the two parties fail to maintain a sufficient reserve of goodwill to permit the peaceful transition of power (a recurring thought of mine is that if Obama's Democrats may well react adversely if the lose in 2010 and/or 2012).
In c - the populace just completely ignores the government and reinstitutes a whisky economy.  (Thucydides' Gulch of Galt....)

As to the Hope and Change thing .... the complete mantra is  "Fear, Hope and Change".  You can't sell Hope unless you can convince people that Change is necessary.  You can't sell Change unless you can convince people there is something to Fear.

Obama's buddies excelled at Fear mongering while GW was in power.  They sharpened their claws on George Herbert - when the slogan was "Its the Economy Stupid".

Iggy's problem up here is that our government had no interest in creating an image of panic.  Obama's did - so long as he could blame it on his predecessor.


----------



## tomahawk6 (30 Sep 2009)

Some pundits think that no one would intentionally cause the US economy to tank unless one wanted to sow the seeds of chaos where the central government could impose martial law and suspend the constitution. I want to think that its sheer incompetence rather than intentional,but time will tell.


----------



## a_majoor (30 Sep 2009)

> Some pundits think that no one would intentionally cause the US economy to tank unless one wanted to sow the seeds of chaos where the central government could impose martial law and suspend the constitution. I want to think that its sheer incompetence rather than intentional,but time will tell.



Among many Internet pundits, the name "George Soros" comes up again and again, and I am not talking about the tinfoil hat brigade either....As for history, Soros made his fortune by "intentionally causing the [UK] economy to tank", so with decades of experience, Soros funded organizations and a whole host of "useful idiots" to help out, the idea is certainly in the realm of plausibility.


----------



## a_majoor (6 Oct 2009)

Some say tomato, some say tomahto...

Conventional wisdom is massive inflation is around the corner to the vast influx of dollars into the US and global economy. This article suggests deflation is the true threat, and makes some very compelling points. If true, then a Japanese like "lost decade" looms ahead:

http://reason.com/blog/2009/10/06/dare-to-deflate



> *Dare to Deflate*
> Tim Cavanaugh | October 6, 2009
> 
> However you choose to define it -- falling commodity prices, contraction of money supply and credit marked to market, decline in the velocity of money, a $2 gallon of milk -- Mish Shedlock of Mish's Global Economic Trend Analysis and Botanica says the debate is over: Deflation is here, and it's awesome:
> ...


----------



## a_majoor (10 Oct 2009)

A long article with some very scary implications:

http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession-anchored-just-east-Singapore.html

Summary: Over 500 merchant ships of all sorts are anchored off the coast near Singapore, representing @ 12 % of the global shipping fleet standing idle. It is suspected that the deepening recession might increase the numbers up to 25% of the global fleet.

This is made worse because a huge surplus of ships is coming on line now, having been ordered 3-5 years ago. This can only make the problem worse, increasing overcapacity.

Deleveraging will have lots of bad consequences.


----------



## chanman (11 Oct 2009)

Thucydides said:
			
		

> A long article with some very scary implications:
> 
> http://www.dailymail.co.uk/home/moslive/article-1212013/Revealed-The-ghost-fleet-recession-anchored-just-east-Singapore.html
> 
> ...



At least targets for live ASM testing are now cheaper than ever?


----------



## Edward Campbell (14 Oct 2009)

This report, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s _Globe and Mail_, suggests that the declining US dollar, while a short term problem for Canadian manufacturers, is good for the global economy:

http://www.theglobeandmail.com/report-on-business/why-the-us-dollars-decline-means-a-rise-in-global-fortunes/article1322552/


> Why the U.S. dollar's decline means a rise in global fortunes
> *In the search for post-crisis economic stability, a weaker greenback is widely thought to be a key component*
> 
> Kevin Carmichael
> ...




Canada’s _recovery_ and its short and medium term economic success depends upon a US recovery; the US is our only important market.

Canada will have to learn how to _produce_ goods and services more efficiently and effectively for export into a more protected US market and without the advantage of a _weak_ Canadian dollar. But Canada remains, at root, a *resource* economy, not a major industrial economy, and we have the opportunity, now, to move to diversify our exports. Manufacturing is easy to move to the biggest market, or to the lowest labour market or to the lowest transport cost market, but resources are “in the ground” and they have to be extracted, here, by local people and – to some degree, to the greatest degree possible – processed here by local people and moved, by local people, to Canadian seaports and then loaded, by local people, on to ships. Global _demand_ for our resources is growing; we should be ready and able to satisfy it.

A "new," devalued US dollar and concomitant weaker us _demand_ makes the process of developing new exports markets more urgent.


----------



## a_majoor (15 Oct 2009)

We also have to be alert against media/Obama weasles and understand the true state o0f the economy:

http://www.zerohedge.com/article/dow-10000-oh-wait-make-7537



> *DOW 10,000!!!! Oh Wait, Make That 7,537*
> By Tyler Durden
> Created 10/14/2009 - 13:21
> 
> ...



edit to add link


----------



## tomahawk6 (16 Oct 2009)

Couldnt agree with you more. With the media operating as an extension of the White House truth is lost in the classic Big Lie where the opposite may be true. Where the lie is told often enough its believed. Classic example was this week's lies about Rush Limbaugh. None of it was true and in the face of pending legal action the lefty blogs and press are backtracking as fast as they can. It doesnt help Rush though because the damage is done. The lies were traced to a NY law firm that may have had a client who was also trying to get the Rams or it was just another hit piece that they have perprtrated. In any case their chickens are coming home to roost. I hardly recognize my country as it is rapidly heading towards civil unrest.


----------



## tomahawk6 (20 Oct 2009)

I dont know why Obama lets Joe Biden leave the VP's mansion. Everytime he does he creates a stir with some gaff or other. TSunday he declared the US was in a depression - not quite on message. 

http://www.youtube.com/watch?v=Ct7TGWGWYzk&feature


----------



## a_majoor (21 Oct 2009)

Heh:


----------



## old medic (26 Oct 2009)

For those keeping track of things spun off from the old GM.
The bold is mine. 

http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20091025.wcapmark1025/business/Business
/businessBN/ctv-business?ctvBeta=yes

Capmark Financial files for bankruptcy

Reuters



> New York — Commercial real estate company Capmark Financial filed for bankruptcy protection Sunday, undone by declines in the sector and a heavy debt load related to its leveraged buyout.
> 
> *The company was created out of the commercial real estate assets of General Motors' finance arm GMAC in March of 2006*. According to the bankruptcy filing, GMAC owned 21.3 per cent of the company's stock while an investor group, which includes Kohlberg Kravis Roberts & Co., Goldman Sachs Group's Goldman Sachs Capital Partners and Five Mile Capital, owned 75.4 per cent.


----------



## a_majoor (27 Oct 2009)

The war against the US economy:

http://pajamasmedia.com/eddriscoll/2009/10/25/war-is-over-if-you-want-it/



> *War Is Over, If You Want It*
> 
> At Big Government, Peter Schweizer writes, “Okay, it’s time to finally admit it:  Barack Obama hates businessmen.  Not just certain businessmen, mind you, but the entire profession:”
> 
> ...


----------



## old medic (1 Nov 2009)

CIT has filed for chapter 11

http://www.latimes.com/business/la-fiw-cit-bankruptcy2-2009nov02,0,6238765.story

CIT files for Chapter 11 bankruptcy protection
From the Associated Press
November 1, 2009



> Lender CIT Group has filed for Chapter 11 bankruptcy protection, in an effort to restructure its debt while trying to keep loans flowing to the thousands of mid-sized and small businesses.
> 
> CIT made the filing in New York bankruptcy court today, after a debt-exchange offer to bondholders failed. CIT said in a statement that its bondholders have overwhelmingly approved a prepackaged reorganization plan which will reduce total debt by $10 billion while allowing the company to continue to do business.
> 
> ...


----------



## a_majoor (1 Nov 2009)

Now get ready for the bailouts of insolvent States and cities:

http://www.latimes.com/news/opinion/la-oe-voegli1-2009nov01,0,825554.story



> THE CALIFORNIA FIX
> *The Golden State isn't worth i*t
> Our high-benefit/high-tax model no longer works, especially compared with low-tax states like Texas.
> 
> ...


----------



## a_majoor (8 Nov 2009)

Jerry Pournell:

http://jerrypournelle.com/view/2009/Q4/view595.html#Saturday



> *Health Care Bill Day*
> 
> Unemployment is over 10%. It wasn't supposed to get that high. TARP was supposed to fix that.
> 
> ...


----------



## observor 69 (9 Nov 2009)

New York Times

ARTICLE LINK

November 9, 2009
Op-Ed Columnist
Paranoia Strikes Deep 
By PAUL KRUGMAN

Last Thursday there was a rally outside the U.S. Capitol to protest pending health care legislation, featuring the kinds of things we’ve grown accustomed to, including large signs showing piles of bodies at Dachau with the caption “National Socialist Healthcare.” It was grotesque — and it was also ominous. For what we may be seeing is America starting to be Californiafied. 

The key thing to understand about that rally is that it wasn’t a fringe event. It was sponsored by the House Republican leadership — in fact, it was officially billed as a G.O.P. press conference. Senior lawmakers were in attendance, and apparently had no problem with the tone of the proceedings.

True, Eric Cantor, the second-ranking House Republican, offered some mild criticism after the fact. But the operative word is “mild.” The signs were “inappropriate,” said his spokesman, and the use of Hitler comparisons by such people as Rush Limbaugh, said Mr. Cantor, “conjures up images that frankly are not, I think, very helpful.” 

What all this shows is that the G.O.P. has been taken over by the people it used to exploit. 

The state of mind visible at recent right-wing demonstrations is nothing new. Back in 1964 the historian Richard Hofstadter published an essay titled, “The Paranoid Style in American Politics,” which reads as if it were based on today’s headlines: Americans on the far right, he wrote, feel that “America has been largely taken away from them and their kind, though they are determined to try to repossess it and to prevent the final destructive act of subversion.” Sound familiar?

But while the paranoid style isn’t new, its role within the G.O.P. is. 

When Hofstadter wrote, the right wing felt dispossessed because it was rejected by both major parties. That changed with the rise of Ronald Reagan: Republican politicians began to win elections in part by catering to the passions of the angry right.

Until recently, however, that catering mostly took the form of empty symbolism. Once elections were won, the issues that fired up the base almost always took a back seat to the economic concerns of the elite. Thus in 2004 George W. Bush ran on antiterrorism and “values,” only to announce, as soon as the election was behind him, that his first priority was changing Social Security.

But something snapped last year. Conservatives had long believed that history was on their side, so the G.O.P. establishment could, in effect, urge hard-right activists to wait just a little longer: once the party consolidated its hold on power, they’d get what they wanted. After the Democratic sweep, however, extremists could no longer be fobbed off with promises of future glory.

Furthermore, the loss of both Congress and the White House left a power vacuum in a party accustomed to top-down management. At this point Newt Gingrich is what passes for a sober, reasonable elder statesman of the G.O.P. And he has no authority: Republican voters ignored his call to support a relatively moderate, electable candidate in New York’s special Congressional election.

Real power in the party rests, instead, with the likes of Rush Limbaugh, Glenn Beck and Sarah Palin (who at this point is more a media figure than a conventional politician). Because these people aren’t interested in actually governing, they feed the base’s frenzy instead of trying to curb or channel it. So all the old restraints are gone. 

In the short run, this may help Democrats, as it did in that New York race. But maybe not: elections aren’t necessarily won by the candidate with the most rational argument. They’re often determined, instead, by events and economic conditions.

In fact, the party of Limbaugh and Beck could well make major gains in the midterm elections. The Obama administration’s job-creation efforts have fallen short, so that unemployment is likely to stay disastrously high through next year and beyond. The banker-friendly bailout of Wall Street has angered voters, and might even let Republicans claim the mantle of economic populism. Conservatives may not have better ideas, but voters might support them out of sheer frustration.

And if Tea Party Republicans do win big next year, what has already happened in California could happen at the national level. In California, the G.O.P. has essentially shrunk down to a rump party with no interest in actually governing — but that rump remains big enough to prevent anyone else from dealing with the state’s fiscal crisis. If this happens to America as a whole, as it all too easily could, the country could become effectively ungovernable in the midst of an ongoing economic disaster.

The point is that the takeover of the Republican Party by the irrational right is no laughing matter. Something unprecedented is happening here — and it’s very bad for America.


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## tomahawk6 (9 Nov 2009)

> The point is that the takeover of the Republican Party by the irrational right is no laughing matter. Something unprecedented is happening here — and it’s very bad for America.



What a crock of crap. A conservative takeover is exactly what is needed to stop the unconstitutional power grab now going on in Washington.



> The Obama administration’s job-creation efforts have fallen short..



It boggles my mind that you can spend almost a trillion bucks and have zero job creation. Due to all the Federal spending we get a 3.2% bump in GNP,that wont last. The democrats know that voters vote their pocket book because thats how they got elected last year.The economy isnt any better and with real unemployment around 18% and with democrat job killing bills on the horizon 2010 will see big GOP gains in the House and Senate.


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## a_majoor (10 Nov 2009)

Cut spending by trillions of dollars, inflate debt away or default.....

http://www.newsweek.com/id/221563



> *Up Against a Wall of Debt, Part II*
> Are the United States, Japan, Great Britain, and other first-world nations in danger of defaulting on their debt?
> 
> By Robert J. Samuelson | Newsweek Web Exclusive
> ...


----------



## Kirkhill (10 Nov 2009)

There is, I believe, a fourth alternative:  Radically redefine the measuring stick - replace the current system of fiat moneys which have a loose association with the gold standard by, for example, carbon tax credits.

First of all, with respect to the fiat/gold relationship:  Government economists have been wishing that relationship away for decades now but unfortunately the market refuses to play along.  All market values of all goods and services always go up and down relative to each other but, it seems to me, some of the most volatile commodities in trade are fiat moneys issued by governments.  The price of oil relative to the price of gold has been much more stable.  

I am a firm believer that there is merit to a firm, unchanging metric that allows performance to be accurately gauged.  The gold standard provided that.  The fiat market failed to provide that.  Perhaps a carbon market http://forums.army.ca/forums/threads/83087/post-800696.html#msg800696  can supply it again.

Call it a political "bait and switch" - There will be massive disruptions in the economy with some really big losers with some even bigger winners (Gore amongst them) but it will all be justified on the twin pillars of environmental and fiscal necessity...... 

And all those old debts -  an accounting fiction washed away in a sea of green.


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## a_majoor (13 Nov 2009)

I suspect the "accounting fictions" are a lot more real than most people want to admit. After all, the Japanese didn't take nonperforming assets off the books when their economy imploded at the end of the 1980's, and an entire decade was lost.

Of course, we are also reminded there are much simpler solutions that are also much easier to impliment:

http://dodocanspell.blogspot.com/2009/11/obama-asked-palin-answered.html



> *Obama asked ........Palin answered*
> Great advice from the woman lamebrains love to hate.
> 
> I commend the president for acknowledging today that “there are limits to what government can and should do” to ease our 10.2% unemployment rate – the highest it’s been since 1983. I also applaud his call for suggestions and expression of openness to considering “any demonstrably good idea.” Taking him at his word, I’d like to suggest this one: *let’s learn from history and follow the example of the man who occupied the White House in 1983 and was able to transform an even worse recession than the one we’re currently experiencing into the largest peacetime economic expansion in American history*,
> ...


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## a_majoor (15 Nov 2009)

More bad news:

http://blogs.dailymail.com/donsurber/archives/3784



> *Obamanomics does the impossible*
> 
> The upside of a falling dollar is that it makes our exports cheaper to foreigners — so we sell more stuff — and a falling dollar makes their products more expensive, so we buy less stuff.
> 
> ...



And from comments:



> Anil Petra says:
> November 15, 2009 at 10:26 AM
> 
> It’s all about expectations.
> ...


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## a_majoor (17 Nov 2009)

We "only" had a billion dollar boondoggle, totally ineffective 2 billion dollar gun registry and ADSCAM. This American administration does things in a big way:

http://www.washingtontimes.com/weblogs/back-story/2009/nov/17/recoverygov-shows-money-flowing-to-nonexistent-di/



> *Recovery.gov shows money flowing to nonexistent districts*
> 
> By Amanda Carpenter on Nov. 17, 2009 into The Back Story
> 
> ...



Edit to add another link with more details and an interactive map!:

http://www.washingtonexaminer.com/maps/Bogus-jobs-created-or-saved-by-the-Stimulus.html


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## Kirkhill (17 Nov 2009)

Lessee Now:

Allow them 800,000 jobs created or "saved".  If they allow me 800,000,000,000 dollars spent.  

That means 800,000,000,000 dollars divided  by 800,000 bodies resulting in 1 and 6 zeroes.......1,000,000 per body.  I wonder how many lawyers and community organizers got a chunk of those dollars in supplying the money.  I'm sure the recipients the benefits of the project would have much preferred just to receive the 1,000,000 per, directly.


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## mariomike (19 Nov 2009)

"New tale of Detroit’s woe: Pontiac Silverdome sold for $583,000: Pontiac, Mich., sold the 80,300-seat Silverdome for $583,000 Wednesday. The former home of the Detroit Lions cost $55.7 million to build in 1975.":
http://features.csmonitor.com/economyrebuild/2009/11/18/new-tale-of-detroits-woe-silverdome-sold-for-583000/


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## a_majoor (22 Nov 2009)

Not much longer now....

http://online.wsj.com/article/SB10001424052748704888404574547492725871998.html



> *The Coming Deficit Disaster*
> 
> The president says he understands the urgency of our fiscal crisis, but his policies are the equivalent of steering the economy toward an iceberg.
> 
> ...


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## tomahawk6 (24 Nov 2009)

With 17m unemployed or under employed recovery is a pipedream of only the true believers. I have long felt that Obama is intentionally destroying the economy to hasten his socialist workers paradise. I also think that any follow administration will be putting Obama and his admistration on trial for corruption.


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## a_majoor (24 Nov 2009)

More "good news" on the economy as reality leaks out:

http://theblogprof.blogspot.com/2009/11/ap-economys-rebound-not-as-strong-as.html

*AP: Economy's rebound not as strong as first thought. 3.5% Q3 GDP revised down to 2.8%*

That "robust" 3.5% GDP growth rate in Q3 that the AP heralded as the end of the recession sans actual jobs? That just got reduced. A lot. As in down to 2.8% now. Even that is deceiving as consumer spending, which comprises 70% of the economy, declined 0.5% during the same period (Positive GDP Fraud! Consumer Spending DOWN 0.5%. GDP Up Because Of MASSIVE DEBT!). So how is it that the GDP increased in the 3rd quarter after consumer spending decreased? Well, that's got everything to do with the 'G' in the GDP - gross. That includes consumer spending, government spending, in fact all spending. So if the consumer spending is down, one way to artificially inflate the GDP number is to increase government spending with money that the government doesn't, by the way, have. In essence, the GDP number is positive due to increased debt! It's purchased on a government card that has no credit limit. Yet, the MSM has trumpeted the end of the recession after 4 straight quarters of negative GDP:And that bump in GDP came at the expense of this:And there is much more pain to come. This is unsustainable to the nth degree. From the AP via The Detroit News: Economy's rebound not as strong as first thought.

The economy grew at a 2.8 percent pace last quarter, as the recovery got off to a slower start than first thought.

The Commerce Department's new reading on gross domestic product wasn't as energetic as the 3.5 percent growth rate for the July-September period estimated just a month ago.

The main factors behind the downgrade: consumers didn't spend as much, commercial construction was weaker and the nation's trade deficit was more of a drag on growth. Businesses also trimmed more of their stockpiles, another restraining factor. 

The new reading on GDP, which measures the value of all goods and services produced in the United States -- from machinery to manicures -- was a tad weaker than the 2.9 percent growth rate economists surveyed by Thomson Reuters had expected.

Still, the good news is that the economy finally started to grow again, after a record four straight losing quarters. The bad news is that the rebound, now and in the months ahead, probably will be lethargic. 

Buried at the end of the piece is this:

Some economists believe the jobless rate could climb as high as 11 percent by the middle of next year before making a slow descent. It could take at least four years for the unemployment rate to drop back down to more normal levels.

It is, after all, all about that 3-letter word:




Today's news has no silver lining. Here is what has been happening with Biden's 3-letter word this year:

January US jobs lost: 598,000 jobs
February US jobs lost: 706,000 jobs
March US jobs lost: 742,000 jobs
April US jobs lost: 545,000 jobs
May US jobs lost: 345,000 jobs
June US jobs lost: 467,000 jobs
July US jobs lost: 247,000 jobs
August US jobs lost: 216,000 jobs
September US jobs lost: 263,000 jobs
October US jobs lost: 190,000 jobs

Total US jobs lost under Obama: 4,319,000 jobs
[/quote]

Remember that the stimulus package was supposed to stop the unemployment rate at 8%! A crisis could become a calamity? Remember that? Here's how that looks (via Moe Lane):



Note that the blue lines are the numbers that Obama's team came up with. So the actual unemployment rate is not only worse that what would happen with porkulus, but even worse than was predicted without it. And yet, with all the above news, Obama and Democrats continue to push for huge taxes via Obamacare and cap-and-trade. Yo Obama! You're going the wrong way!



UPDATE: Linked by Instapundit! Thank you Professor Reynolds! Glenn comments:

Has someone been hiding the decline?

Should have seen that one coming, especially since I've been reading and posting on the CRU email scandal for a few days now:

Leaked CRU computer program proves global warming scientific fraud 
AP ignores CRU emails, instead says global warming accelerating! Quotes people in CRU emails! 
Video: Climate Historian Dr. Tim Ball on the CRU email scandal 
Searchable database of hacked CRU emails proving global warming fraud by scientists 
CRU emails prove global warming fraud: GW scientists do "science" 
CRU emails prove global warming fraud: GW scientists collude to manipulate data 
GW scientists colluded to circumvent FOI requests of data 
GW scientists discuss how to destroy journals that publish skeptics 
GW scientists can't find actual global warming 
GW scientists colluding to delete data  
'Hockey stick' authors hiding/manipulating data 
CRU emails prove global warming fraud: GW scientists fantasize about physical violence against skeptics 
But, that's why Glenn runs one of the biggest blogs on the planet... 
[/quote]


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## a_majoor (6 Dec 2009)

As Glen Reynolds (Instapundit) says: 





> Nonstarter. No opportunity for graft



http://www.redstate.com/kevin_holtsberry/2009/12/04/rob-portman-calls-for-payroll-tax-holiday/



> *Rob Portman calls for payroll tax holiday *
> 
> Posted by Kevin Holtsberry (Profile)
> 
> ...


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## a_majoor (7 Dec 2009)

More on effective ways to reboot the economy. Many of these ideas have practical applications in Canada as well (or indeed anywhere: Japan could certainly use this). But stepping out of the way makes it difficult to engage in graft:

http://jerrypournelle.com/view/2009/Q4/view599.html#Saturday



> I am preparing the column today.
> 
> _From the Obama Jobs Summit:
> 
> ...


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## tomahawk6 (8 Dec 2009)

Forget a recovery. The EPA ruled today that CO2 is dangerous and needs to be regulated. CO2 is what we exhale and what tree's inhale. If this stands up this will kill any recovery as it will make energy,goods and food alot more expensive.



> The Environmental Protection Agency has concluded greenhouse gases are endangering people’s health and must be regulated, signaling that the Obama administration is prepared to contain global warming without congressional action if necessary. …
> Under a Supreme Court ruling, the so-called endangerment finding is needed before the EPA can regulate carbon dioxide and five other greenhouse gases released from power plants, factories and automobiles under the federal Clean Air Act.
> The EPA signaled last April that it was inclined to view heat-trapping pollution as a threat to public health and welfare and began to take public comments under a formal rulemaking. The action marked a reversal from the Bush administration, which had declined to aggressively pursue the issue.
> Business groups have strongly argued against tackling global warming through the regulatory process of the Clean Air Act. Any such regulations are likely to spawn lawsuits and lengthy legal fights.


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## a_majoor (12 Dec 2009)

Economic recovery? We should be paying off as much personal and business debt as possible and battening the hatches for inflation spillover from the United States. Debt charges will overtake most other government spending within a decade....

http://www.washingtonexaminer.com/opinion/columns/OpEd-Contributor/Interest-increases-central-to-looming-debt-crisis-8648650-79004147.html



> *Ralph Benko: Interest increases central to looming debt crisis*
> By: Ralph Benko
> Op-Ed Contributor
> 
> ...


----------



## a_majoor (15 Dec 2009)

Well this might go some way to fixing the deficit problem:

http://www.wtop.com/?nid=428&sid=1838232



> *Feds owe Uncle Sam $3B in unpaid taxes*
> December 14, 2009 - 10:43am
> 
> Mark Segraves, wtop.com
> ...


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## sm1lodon (16 Dec 2009)

My economic recovery plan: This is partly humorous, so if your face busts if you attempt a smile because you had your sense of humor removed at birth, sorry to hear that!

A) Drill for oil wherever it's found in North America. Become energy self-sufficient, thus dropping the price of oil, which deprives terror-worshiping nations of a lot of disposable income to waste on terrorism.

B) Line up the EPA and shoot them all Remove all regulation regarding C02

C) Get all inmates of all prisons in the North America to perform factory and other work that is presently fleeing offshore with all possible haste. That puts 1 person in 133 in the USA back to work, AND keeps capital in the USA instead of it all rushing over the land of our beloved friends and allies, the Chinese. It also gives prisoners something to do other than beat, sodomize, and kill each other.

D) Build a sturdy wall across the entire Southern border to make immigration controllable and predictable. It will cost money, but nowhere NEAR the cost of having Mexico slowly annexing California.

E) Start a continent-wide crackdown on drugs. Start at the bottom. Get the user to tell who sold it to him. Don't do much to the users. Severely punish the traffickers. Then go on up the chain until you hit the kingpins; execute, publicly, on national television, anyone who has moved more than 10 kg (or 1 g of LSD) of any kind of drugs over their entire life. There will be a decline, over time, of people being useless drug thugs and drug whores. They may fall back on alcohol, but alcohol does not turn people into monsters the way some drugs do. There are many alcoholics who are very productive citizens. There aren't many meth users who are.

F) Make it easier, through tax relief, to start and maintain a small business.

G) Make wind power generation an individual-owned proposition by offering government loans so people can own their own generators on their own land and sell to the utilities. Better, to me, than having big conglomerates owning it all.

H) Make it FAR cheaper to patent and defend inventions. Innovation is quashed because many innovators are just too poor to go though all the red tape to get inventions to market, so innovation just languishes. As it stands, if you invent something, you have to have, what, five million dollars in lawyers' fees ready to defend it if some big company just steals it?

I) This is a big one, return to family values. The VAST majority of the crime in the USA is by men who had no father anywhere in sight as a boy. If men quit fertilizing the Queen Termites willy-nilly then running away to spread their seed and STDs everywhere possible, we wouldn't have a lot of the crime that is rampant today. Not all kids who come from one-parent families turn out to be criminals, but most criminals are from single-parent (no dad known to still exist) families. Single moms who make the best of crummy situation are laudable. Men who don't risk creating single-mom situations are laudable also.

AIDS, unwanted pregnancy, and the resultant crime epidemic all have one sure-fire cure: a firmly shut zipper.

J) Moral reconstruction of society. Make it so people are actually taught that lying, cheating, and stealing are NOT cool things that big shot politicians, celebrities, and sports figures get to to do because they be so down, yo. Exalt character over talent. Doing what's right over doing whatever brings in the coin and to heck with every and anyone else. Our society has slid very far down. It can slide right back up. Uganda went from one of the worst places in Africa, therefore the world, with AIDS at 30+% to a place where AIDS is now around 3 percent or so. It may not be a paradise, especially for homosexual pedophiles (death penalty) but it is far better off than it used to be. If they can do it, we can do it, anyone can do it.


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## a_majoor (17 Dec 2009)

If you read VDH, he says many of the same things, with one caveat:

Moral reconstitution has to come first.

If we live in a society where it seems acceptable to lie, cheat and no moral or legal sanctions are brought to bear (or moral and legal sanctions seem to be based on rule of whim rather than rule of law; which is why HRC's are such an alarming force in Canadian society, showing us what might be in the very near future), then there is no reason for good people to stick to the straight and narrow; indeed, that becomes a sort of trap since they will be forced to pay for the debauchery of the others.

People follow incentives always, and when the incentives to lie and cheat become greater than the incentives to live the good life, then the end of civilized society and descent to barbarism begin. VDH shows this in his studies of Classical Greece, the story of the decline of the _Res Publica Roma_ and then the Empire are the same, and most other declining civilizations share similar stories when the citizens essentially walk away from their duties as citizens either due to the4 corruption of their "elites" or because they themselves become corrupt...


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## a_majoor (23 Dec 2009)

Reality comes into focus:





> *Q3 GDP revised sharply downward — again*
> posted at 9:30 am on December 22, 2009 by Ed Morrissey
> Share on Facebook | printer-friendly
> 
> ...


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## a_majoor (24 Dec 2009)

Thrifty families accused of prolonging the recession - only if you believe in Keynsian economics. Since excessive debt is the _actual_ cause of the economic crisis, then thrifty families are the ultimate solution to the crisis...

http://www.samizdata.net/blog/archives/2009/12/dumb_headline_o.html



> *Dumb headline of the day*
> Johnathan Pearce (London)  Globalization/economics • UK affairs
> 
> This headline and lead paragraph in the Times (of London) deserves a sort of award:
> ...


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## muskrat89 (25 Dec 2009)

For those interested in what is happening at a state level, here is the AZ Governor's speech from the other day: 

http://sonoranweeklyreview.com/?p=1710



> That’s why you’ve been invited here today. EVERYONE in this room needs to hear the details of the crisis so you can come face to face with the reality that my Administration and I have been living and fighting to change for the past 10 months.
> 
> I want you to understand all of it:
> 
> ...



That's a snippet. Most of the highway rest areas have closed. There is a pretty good chance most of the state parks will close. They are talking a 5% pay cut for all state employees (not on the high end of pay scales to begin with) in addition to the layoffs and furloughs that have already occurred. So much for the federal "stimulus". lol


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## a_majoor (27 Dec 2009)

Here's a great idea; punish people on fixed incomes as well. Further destruction of taxpayer wealth, (including stocks, as seniors turn to reverse mortgaging their homes to survive):

http://www.nytimes.com/2009/12/26/your-money/26rates.html?_r=1&partner=rss&emc=rss



> *At Tiny Rates, Saving Money Costs Investors*
> 
> By STEPHANIE STROM
> Published: December 25, 2009
> ...


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## a_majoor (30 Dec 2009)

Manipulation of the economy to pay off supporters:

http://www.marginalrevolution.com/marginalrevolution/2009/12/why-hasnt-the-fed-been-targeting-two-or-three-percent-inflation.html



> *Why hasn't the Fed been targeting two or three percent inflation?*
> 
> I've been thinking about this question more and I've come up with a speculative possibility.  Right now banks are earning their way back into profitability by playing the spread.  They're paying close to zero on deposits and earning fair sums on long-term loans.  Perhaps this term structure is sustainable because people are expecting little inflation in the short run but moderate inflation in the longer run, plus there is some risk on the loans.  (These inflationary expectations may be changing; if you wish pretend I am writing this six months or a year ago.)
> 
> ...



and from comments:



> To me the Fed`s attempt to paper over the problems with the banking system (mortgages, commercial real estate and development loans) is just one element of a much larger problem.
> 
> The current economic downturn has accelerated the failure of all of the major public `guarantee` programs, retirement, health, deposit and unemployment insurance, and mortgage gurantees. Trying to paper over the problems in these systems leads to the massive deficit and debt problems at all levels of government, Federal, state,
> and local.
> ...



Failed guarantee programs is really a failure of the welfare state, and the only practical way to deal with this is to unwind these programs and bring them to an end. Given they are designed to have large constituencies (both people receiving benefits and the public service which administers these programs), you can expect a vicious fight to the last taxpayer to preserve these programs instead...


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## a_majoor (31 Dec 2009)

Cause and effect:

http://www.powerlineblog.com/archives/2009/12/025274.php



> *Government-Caused Disaster*
> 
> December 30, 2009 Posted by John at 7:50 PM
> 
> ...


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## a_majoor (1 Jan 2010)

2010 isn't shaping up to be a good year. The tottering US economy could end up dragging us all down with it:

http://pajamasmedia.com/blog/economic-rebound-what-economic-rebound/



> *Economic Rebound? What Economic Rebound?*
> 
> Posted By Tom Blumer On December 31, 2009 @ 12:00 am In . Column1 03, . Positioning, Media, Money, US News | 34 Comments
> 
> ...


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## a_majoor (4 Jan 2010)

Well _*someone*_ is getting stimulated:

http://newmexico.watchdog.org/2010/01/03/federal-stimulus-funds-reportedly-spent-in-nonexistent-zip-codes/



> *Stimulus Funds Went to Nonexistent Zip Code Areas [Updated]*
> By Jim Scarantino on January 3, 2010
> Print This Post Print This Post
> 
> ...


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## a_majoor (8 Jan 2010)

A populist response to government bailouts of major banking institutions. What makes this so screamingly funny isnt the idea itself (which is actually quite sound), but the source; not the T.E.A. party movement but.... (wait for it):

http://pajamasmedia.com/eddriscoll/2009/12/31/strange-2010-omens



> The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster. In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks — JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo — all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.
> 
> Meanwhile, America’s Main Street community banks — the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of — are struggling. Many of them have closed down (or been taken over by the FDIC) over the last 12 months. The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.
> 
> ...


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## a_majoor (15 Jan 2010)

Well if you are running a 1.5 trillion dollar deficit, you can cover the hole for a while by _stealing_ 2 trillion from retirement accounts. One can only wonder how voters will react:

http://pajamasmedia.com/blog/coming-soon-substituting-government-annuities-for-your-401k/



> *Coming Soon: Substituting Government Annuities for Your 401(k)?*
> 
> Posted By Will Collier On January 15, 2010 @ 12:02 am In . Column2 03, Money, Politics, US News | 54 Comments
> 
> ...


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## a_majoor (18 Jan 2010)

The ominous truth. US unemployment is _*far*_ greater and deeper than the official numbers. The current administration's taxation policies reduce the amount of investment money available to turn this around and their political manipulation of the economy for their preferred classes of rent seekers eliminates a lot of incentive to invest. This is the critical issue for the United States, and by extension, all of her allies and trade partners:

http://www.telegraph.co.uk/news/worldnews/northamerica/usa/barackobama/7005943/Can-Barack-Obama-turn-things-around.html



> It is possible that by the time Obama runs for a second term, the public will have grown to swallow Dr Obama's medicine with a smile. By far the most menacing issue to his prospects is unemployment. It's fair criticism that jobs, not health, should have been his first priority. The stimulus bill, written by a deeply unpopular Congress, had too much pork, too little for infrastructure projects, and anyway only a fraction of it has been spent. Since the great recession began, some 8.5 million jobs have been lost.
> 
> The official rate of 10 per cent understates the gravity. A detailed study by MB Zuckerman suggests that the real unemployment rate is a staggering 22 per cent. The official figure does not include the million men and women who have given up, it does not describe the demoralisation of the six million who have been out of work for 28 weeks or more, nor the millions who get by with odd jobs; what the Daily Beast website has called "the gig economy".


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## Antoine (23 Jan 2010)

Herein some news that could influence the US Economy as view by the geek community, count me as an active member  ;D

Congressional Outlook For 2010, _Chemical & Engineering News_, January 18, 2010, Volume 88, Number 3, pp. 10 - 15 :

As the second session of the 111th Congress gets under way this week, the Democrats continue to control majorities in the Senate and the House of Representatives, as well as the White House. This situation typically translates into lots of congressional action, but during this election year, activity will be tempered.

Topics familiar from the first session will continue to dominate congressional activity. That means health care, Wall Street financial reform, and economic-stimulus-related legislation all will again compete for congressional attention. Being added to the agenda this year is the reauthorization of the USA Patriot Act, congressional staff point out.

Such priorities will leave little time for members of Congress to dig into other big Administration priorities such as climate-change legislation. The just-reached Copenhagen Accord adds pressure on Congress to complete its work on a bill defining U.S. policy in this area.

Other important science and technology issues that were on the 2009 agenda will be vying for Congress’ attention again this year. For example, Congress will continue its debate on legislation setting permanent chemical plant security regulations, improving food and drug safety policies, and reforming the decades-old chemical regulation law.

The following is C&EN’s annual analysis of what to expect from Congress in the coming months.

More at www.pubs.acs.org/cen/coverstory/88/8803cover.html


----------



## Antoine (27 Jan 2010)

We are going to see more and more of the following, and probably more and more North American/Europeen "brain drain" to The Middle Kingdom.

Rebecca Trager, US science lead slips, _Chemistry World_, 25 January 2010

rsc.org/chemistryworld/News/2010/January/25011002.asp



> The US appears to be losing its global lead in science and technology according to data released by the US National Science Foundation (NSF).  The 2010 Science and Engineering Indicators report, produced every two years by NSF, was released on 18 January, and suggests that emerging economies are upping their game when it comes to science and technology. In 2007, global R&D expenditures totaled more than $1.1 trillion (£700 billion). The US is responsible for about one third of this total, broadly equal to the expenditures of the next four countries combined (Japan, China, Germany and France). However, it is China that 'continues to exhibit the most dramatic growth pattern,' and threaten the US's dominance, the indicators warn.
> China's R&D growth over the past decade has averaged nearly 20 per cent annually, dwarfing that of the US and EU at about 5 per cent.
> 
> 'The world's S&T [science and technology] capabilities have expanded quite considerably and have shifted towards developing Asia,' confirms Rolf Lehming, NSF's programme director for the indicators. 'In most S&T aspects, the United States maintains its leadership role, but with a gradual erosion in many specific areas,' he says. Patrick Clemins, the American Association for the Advancement of Science's (AAAS) director for R&D budget and policy, agrees that the US lead is at risk. 'East Asia is really ramping up,' he tells Chemistry World.  'The threat does not seem to be immediate, but the data indicate that we could be losing our edge that we have enjoyed for decades.'
> ...


----------



## a_majoor (27 Jan 2010)

Fiscal bad news just keeps piling up:

http://taxprof.typepad.com/taxprof_blog/2010/01/pete-dupont-the.html



> *Pete DuPont: Coming Tax Hikes Will Cause Greater Economic Collapse Than 2008-09*
> 
> Wall Street Journal op-ed, An Economic Time Bomb: Even If Congress Does Nothing, Tax Hikes Will Hit Hard a Year From Now, by Pete DuPont (Chairman of the Board, National Center for Policy Analysis):
> 
> ...


----------



## Edward Campbell (27 Jan 2010)

For the first timer ever (10 years) the US has slipped below 80 in the Heritage Foundation's Index of Economic Freedom. It is in 8th place, with a score of 78.0, one place behind Canada with a score of 80.4.

The Heritage foundation describes economic freedom as:  _"the fundamental right of every human to control his or her own labor and property. In an economically free society, individuals are free to work, produce, consume, and invest in any way they please, with that freedom both protected by the state and unconstrained by the state. In economically free societies, governments allow labor, capital and goods to move freely, and refrain from coercion or constraint of liberty beyond the extent necessary to protect and maintain liberty itself."_ The foundation measures ten "freedoms:" Business Freedom; Trade Freedom; Fiscal Freedom; Government Spending; Monetary Freedom; Investment Freedom; Financial Freedom; Property rights; Freedom from Corruption; Labor Freedom.

Not surprisingly Hong Kong and Singapore top the list while Cuba, Zimbabwe and North Korea bring up the rear of a list of 179 countries that were measured. A few, including Afghanistan, were not assessed.

The report is on line


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## a_majoor (29 Jan 2010)

Reading GDP figures is bscoming an exercise in reading tea leaves (or is that T.E.A. leaves?). It only _seems_ like good news until you look deeper:

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/28/AR2010012804107_pf.html



> *Big jump in GDP may veil weakness in economy*
> 
> By Steven Mufson
> Washington Post Staff Writer
> ...


----------



## a_majoor (31 Jan 2010)

Forecasting just go *so* much easier [/sarcasm]:

http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Obamas-2011-budget-will-include-phantom-cap-and-trade-revenue-83075057.html



> *Obama's 2011 budget will include phantom cap-and-trade revenue*
> By: Mark Tapscott
> Editorial Page Editor
> 01/29/10 6:29 PM EST
> ...


----------



## a_majoor (2 Feb 2010)

And more phantom money. I remember a movie ("Dave") where a character says: "If any businessman did his books like the government, they'd be in jail"

http://legalinsurrection.blogspot.com/2010/02/1-trillion-obama-will-never-see.html



> *$1 Trillion Obama Will Never See *
> 
> Raising tax rates on high income earners is the key to the Obama way, both during the campaign and in his latest budget and tax proposals. Taxing the wealthy, or rather, taxing those making over $250k a year, is the gospel according to Obama.
> 
> ...


----------



## a_majoor (6 Feb 2010)

Looking at the winners and losers in the Stimulus game:

http://pajamasmedia.com/blog/honey-they-shrunk-the-private-sector/



> *Honey, They Shrunk the Private Sector*
> 
> Posted By Tom Blumer On February 5, 2010 @ 12:00 am In . Positioning, Column 2, Money, Politics, US News | 22 Comments
> 
> ...


----------



## a_majoor (11 Feb 2010)

A real plan which could staunch the economic bleeding. American readers feel free to pass this on to your elected representatives (Canadians have a huge stake in preventing an economic meltdown in the United States!). The deficit has exploded from @ $100 billion/year on average during the Bush Administration to $90 billion/month under the Obama administration.

A similar plan can be enacted for Canada as well, eliminating transfers to other governments, subsidies and crown corporations would reduce government spending on the order of $80+ billion dollars, enough to pay off the entire national debt in only six years (and if continued would cover the currently unfunded liabilities [CPP, government pensions etc.] after 12 years). This does not take into account any virtuous circle effects of reducing government operations costs or eliminating the $30 billion/year carrying costs of the debt; major tax cuts can be funded out of those savings:

http://biggovernment.com/tcampbell/2010/02/10/we-can-do-much-more-to-reduce-the-federal-deficit/



> *We Can Do Much More to Reduce the Federal Deficit*
> by Tom Campbell
> 
> The White House has just announced its proposed budget for fiscal year 2011, with a projected deficit of a staggering $1.27 trillion.  Last year’s budget estimated a $1.17 trillion deficit, but the actual number now appears to be $1.60 trillion. Applying that same likely growth from projection to actual deficit, we are looking at a federal budget deficit closer to $1.74 trillion this year.
> ...


----------



## a_majoor (14 Feb 2010)

Well the "new economy" is good for _some_ people. Please note this is also the sort of culture that brought the Japanese economy down in the 1990's and threatens the Chinese economy:

http://www.washingtonexaminer.com/politics/Under-Obama_-crony-capitalism-again-rules-the-day-84271222.html



> *Under Obama, crony capitalism again rules the day*
> By: Michael Barone
> Senior Political Analyst
> February 14, 2010
> ...


----------



## a_majoor (17 Feb 2010)

A sign of things to come? Unionized public service employees in the United States have the ability to bring down municipal and State governments through massive unfunded pension and benefit liabilities (and as noted in the article, far beyond what private sector employees can hope to get). This isn't unique to the United States either. Just this summer I read a newspaper article in Gagetown which pointed out Fredericton was $20 million in the hole this year alone for public service pensions and benefits, and the situation was forecast to escalate.

http://www.businessinsider.com/henry-blodget-unionized-rhode-island-teachers-refuse-to-work-25-minutes-more-per-day-so-town-fires-all-of-them-2010-2



> *Unionized Rhode Island Teachers Refuse To Work 25 Minutes More Per Day, So Town Fires All Of Them*
> 
> A school superintendent in Rhode Island is trying to fix an abysmally bad school system.
> 
> ...


----------



## GAP (17 Feb 2010)

Maybe with that example, more school divisions/city/town governments will start getting a backbone......

ps: remember how unions tiptoed around for years after Regan fired all the Air Traffic Controlers....


----------



## a_majoor (17 Feb 2010)

Even some members of the Fed are becoming nervous:

http://www.ft.com/cms/s/0/c918b8dc-1b37-11df-953f-00144feab49a.html?nclick_check=1



> *Lone voice warns of debt threat to Fed*
> 
> By Alan Rappeport in Washington
> 
> ...


----------



## Redeye (18 Feb 2010)

I fail to see how it would be possible to simply stop funding transfer payments to the provinces.  It sounds great on paper, except for the fact that those payments fund a myriad of public works and services that are vital.  The idea that we could somehow see tax cuts as a result is ridiculous - because whatever we might see in savings in federal taxes would be immediately offset by the tremendous rise in provincial taxes that would be needed to continue to manage services.  It would be a classic case of robbing Peter to pay Paul - fine examples of which can be seen in recent Canadian history, like Ontario during the Mike Harris years.  How do you balance the budget and fund tax cuts?  Sell assets and download the costs to other levels of government.  So what happens?  Either services get slashed, or those lower levels of government raise their own taxes to fund the liabilities they've inherited.  Net result?  Nothing!  (well, in Ontario, not nothing.  A lot of out-of-date and convoluted maps from highways being re-numbered, and a hidden deficit that was passed on to the next government).





			
				Thucydides said:
			
		

> A real plan which could staunch the economic bleeding. American readers feel free to pass this on to your elected representatives (Canadians have a huge stake in preventing an economic meltdown in the United States!). The deficit has exploded from @ $100 billion/year on average during the Bush Administration to $90 billion/month under the Obama administration.
> 
> A similar plan can be enacted for Canada as well, eliminating transfers to other governments, subsidies and crown corporations would reduce government spending on the order of $80+ billion dollars, enough to pay off the entire national debt in only six years (and if continued would cover the currently unfunded liabilities [CPP, government pensions etc.] after 12 years). This does not take into account any virtuous circle effects of reducing government operations costs or eliminating the $30 billion/year carrying costs of the debt; major tax cuts can be funded out of those savings:
> 
> http://biggovernment.com/tcampbell/2010/02/10/we-can-do-much-more-to-reduce-the-federal-deficit/


----------



## a_majoor (18 Feb 2010)

Several points being missed here:

1. If the Federal Liberals had not been downloading their spending onto Ontario, the Harris revolution would have had far greater impact. As it is, anyone can Google relevant figures like tax receipts, economic growth and job creation figures from that period to see the positive effect of tax cuts. The only real fault of the Harris government was not to reduce spending while times were flush (and as noted this was due to extra costs pushed onto them).

2. A great deal of "services" is political rent seeking and only serves those who are claiming our tax dollars. Check the health care thread in the Canadian politics section of Army.ca and you will see that the massive increases in Canadian health care spending have *not* resulted in real improvements in actual health care, waiting times etc. If provinces and municipalities were forced to budget out of their own resources, massive savings would have to be achieved out of sheer necessity, at the expense of the rent seekers.

3. Re services. Many of these so called services are "entertainment", and often in competition with the private sector. London, to name one example, has several municipal golf courses (among other things) even though there are literally a dozen in or in close proximity to the city. 

4. Since labour and capital are mobile now, no province or municipality could massively increase taxes without suffering an instant outflux of investment followed by people. The United States provides evidence, the net outflow of people and investment from high tax "Blue" states to low tax "Red" states is ongoing. The collapse of investment in Michigan or California is now matched by the outflux of people to name two easily Googled examples.

5. Tax savings in the outline are to come from reduction in Federal government operations spending as programs are closed, and reduction in the carrying costs of the debt (about $5 billion/year for the debt alone). Further savings are possible as the economy shakes off the distortions caused by transfer payments, subsidies etc. and investment and job creation take off. This also reduces the size of the $61 billion in transfers to individuals as people are no longer dependant on federal transfers, increasing the virtuous circle. The potential $84 billion in spending cuts due to the ending of transfer payments goes to debt repayment, and becomes available to the productive economy six (if only the debt is paid off) or twelve years (if all unpaid liabilities like pensions are paid off as well) after the program begins.


----------



## a_majoor (20 Feb 2010)

Mixed signals in the economy. Since the TARP and stimulus packages didn't work, a _*lot*_ of cash is floating around, but wealth destruction is continuing apace. I still would lean towards escalating inflation being the greater threat (especially as more money has fewer goods to chase, bidding up the prices), but we are in an unstable equilibrium and economics is a chaotic, non-linear system, and could change in unexpected ways:

http://www.ft.com/cms/s/0/46edaf82-1d5f-11df-b12e-00144feab49a.html?nclick_check=1



> *US consumer prices rise just 0.2%*
> 
> By Alan Rappeport in Washington
> 
> ...


----------



## Redeye (20 Feb 2010)

By what measure did TARP not work?  It brought the TED spread down rapidly, stabilized most of the US banking system, and has already started to be paid back.  While credit markets in the US are still somewhat tight the plan has very cleary been successful.



			
				Thucydides said:
			
		

> Mixed signals in the economy. Since the TARP and stimulus packages didn't work, a _*lot*_ of cash is floating around, but wealth destruction is continuing apace. I still would lean towards escalating inflation being the greater threat (especially as more money has fewer goods to chase, bidding up the prices), but we are in an unstable equilibrium and economics is a chaotic, non-linear system, and could change in unexpected ways:
> 
> http://www.ft.com/cms/s/0/46edaf82-1d5f-11df-b12e-00144feab49a.html?nclick_check=1


----------



## a_majoor (20 Feb 2010)

Redeye said:
			
		

> By what measure did TARP not work?



By the simplest measure possible; the "toxic assets" are still in circulation. Just to add an aggravating factor, Freddie and Fannie have received massive new bailouts and are still continuing to underwrite the sorts of mortgages that started the cycle in the first place (and the CRA hasn't been repealed either).

This sort of crony capitalism did in Japan from the early 1990's to today, so it is instructive to look at what happened there to see if there are some lessons to be learned here.


----------



## Old Sweat (20 Feb 2010)

My wife and I were driving across the Florida panhandle a few days ago. I heard a commercial telling the public that they could own a home with no money down and no credit history. As this just registered in my consciousness partways through the commercial, I have no idea of the lending institution. However it scared the crap out of me.


----------



## a_majoor (24 Feb 2010)

Kind of like riding the brakes while driving....

http://online.wsj.com/article/SB10001424052748704188104575083520811873704.html?mod=djemEditorialPage_h



> *Obama's New Investment Tax*
> A sneaky Medicare levy on dividends and capital gains.
> 
> The White House's new health-care proposal promises the "largest middle class tax cut for health care in history," which is a creative way of describing a vast taxpayer-subsidized insurance entitlement. Naturally, the fine print goes on to describe one of the largest tax increases for health care in history, too.
> ...


----------



## Edward Campbell (24 Feb 2010)

part 1 of 2

Here, reproduced in two parts under the Fair Dealing provisions (§29) of the Copyright Act from _Reuters_ via the _Globe and Mail_ web site, is a thought provoking article on the US dollar:

http://www.theglobeandmail.com/report-on-business/economy/why-the-us-dollar-may-be-heading-for-a-slow-fall/article1478413/


> Why the U.S. dollar may be heading for a slow fall
> *Investors seen choosing the ‘least ugly' contestant among currencies for now*
> 
> 
> ...


----------



## Edward Campbell (24 Feb 2010)

Part 2 of 2


> _*“The bottom line is that we can't keep borrowing at this pace forever”*_
> 
> There are, however, some early signs that buyers may be growing sated. Treasury plans to issue another $1.5-trillion to $2-trillion this year - a record $126-billion this week alone. Yet auctions for $41-billion in long-dated debt earlier this month attracted only modest interest. The yield demanded by buyers of fresh 30-year debt was the highest in more than two years.
> 
> ...




Like it or not, our economic future is tied, closely, some argue too closely (but they fail to offer realistic alternatives) to the US and to the fate of the US dollar.

We, the whole world, were accustomed to a _bipolar_ world, in strategic military terms, from the ’50s through to the end of the ‘80s but this is the first time in a very, very long time that we have experienced anything but a unipolar _monetary_ world – for 500 years we have depended upon silver or gold backed currencies, most lately the pound and, now, the dollar. We may have to get used to a world in which there is no single, national, _reserve currency_ with all the economic leverage that provides.


----------



## a_majoor (5 Mar 2010)

An 8.8% reduction in spending is a "nightmare scenario"? Considering the deficits are running in the _ trillion dollar_range, I would suggest these "austerity program" cuts are only 1/3 of what is actually needed (to reach a balanced budget so no new interest charges are accrued), and since the writer uses the "cut the musical ride" approach but does not look at exploding entitlements very closely, even this proposed program would have only a limited impact.

The writer also has a very implicit Keynesian bias towards the idea that only government spending can create employment, and makes no attempt to see if tax cuts or the elimination of economic distortions caused by these programs would provide investment to create new jobs:

http://www.businessinsider.com/this-is-what-the-us-government-austerity-budget-could-look-like-2010-2



> *The Nightmare Scenario: How The U.S. Government Would Look Under An Austerity Budget*
> 
> As lending to sovereigns dries up, the world is talking about austerity budgets.
> 
> ...


----------



## observor 69 (5 Mar 2010)

To me this article is just stating the obvious, to others not so much.  

NEW YORK TIMES

March 5, 2010
Op-Ed Columnist
Senator Bunning’s Universe 
By PAUL KRUGMAN
So the Bunning blockade is over. For days, Senator Jim Bunning of Kentucky exploited Senate rules to block a one-month extension of unemployment benefits. In the end, he gave in, although not soon enough to prevent an interruption of payments to around 100,000 workers.

But while the blockade is over, its lessons remain. Some of those lessons involve the spectacular dysfunctionality of the Senate. What I want to focus on right now, however, is the incredible gap that has opened up between the parties. Today, Democrats and Republicans live in different universes, both intellectually and morally.

Take the question of helping the unemployed in the middle of a deep slump. What Democrats believe is what textbook economics says: that when the economy is deeply depressed, extending unemployment benefits not only helps those in need, it also reduces unemployment. That’s because the economy’s problem right now is lack of sufficient demand, and cash-strapped unemployed workers are likely to spend their benefits. In fact, the Congressional Budget Office says that aid to the unemployed is one of the most effective forms of economic stimulus, as measured by jobs created per dollar of outlay.

But that’s not how Republicans see it. Here’s what Senator Jon Kyl of Arizona, the second-ranking Republican in the Senate, had to say when defending Mr. Bunning’s position (although not joining his blockade): unemployment relief “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

In Mr. Kyl’s view, then, what we really need to worry about right now — with more than five unemployed workers for every job opening, and long-term unemployment at its highest level since the Great Depression — is whether we’re reducing the incentive of the unemployed to find jobs. To me, that’s a bizarre point of view — but then, I don’t live in Mr. Kyl’s universe.

And the difference between the two universes isn’t just intellectual, it’s also moral.

Bill Clinton famously told a suffering constituent, “I feel your pain.” But the thing is, he did and does — while many other politicians clearly don’t. Or perhaps it would be fairer to say that the parties feel the pain of different people.

During the debate over unemployment benefits, Senator Jeff Merkley, a Democrat of Oregon, made a plea for action on behalf of those in need. In response, Mr. Bunning blurted out an expletive. That was undignified — but not that different, in substance, from the position of leading Republicans.

Consider, in particular, the position that Mr. Kyl has taken on a proposed bill that would extend unemployment benefits and health insurance subsidies for the jobless for the rest of the year. Republicans will block that bill, said Mr. Kyl, unless they get a “path forward fairly soon” on the estate tax. 

Now, the House has already passed a bill that, by exempting the assets of couples up to $7 million, would leave 99.75 percent of estates tax-free. But that doesn’t seem to be enough for Mr. Kyl; he’s willing to hold up desperately needed aid to the unemployed on behalf of the remaining 0.25 percent. That’s a very clear statement of priorities.

So, as I said, the parties now live in different universes, both intellectually and morally. We can ask how that happened; there, too, the parties live in different worlds. Republicans would say that it’s because Democrats have moved sharply left: a Republican National Committee fund-raising plan acquired by Politico suggests motivating donors by promising to “save the country from trending toward socialism.” I’d say that it’s because Republicans have moved hard to the right, furiously rejecting ideas they used to support. Indeed, the Obama health care plan strongly resembles past G.O.P. plans. But again, I don’t live in their universe. 

More important, however, what are the implications of this total divergence in views?

The answer, of course, is that bipartisanship is now a foolish dream. How can the parties agree on policy when they have utterly different visions of how the economy works, when one party feels for the unemployed, while the other weeps over affluent victims of the “death tax”?

Which brings us to the central political issue right now: health care reform. If Congress enacts reform in the next few weeks — and the odds are growing that it will — it will do so without any Republican votes. Some people will decry this, insisting that President Obama should have tried harder to gain bipartisan support. But that isn’t going to happen, on health care or anything else, for years to come.

Someday, somehow, we as a nation will once again find ourselves living on the same planet. But for now, we aren’t. And that’s just the way it is. 



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----------



## Edward Campbell (5 Mar 2010)

Paul Krugman is "stating the obvious" for those who know that the currency can be debased, over and over and over again, for purely partisan, political gain.

Sen. Bunning is also "stating the obvious:" chickens come home to roost; bills must be paid; inflation - fueled by zealous, _devil take the hindmost_ overspending - is the real enemy of the poor because it lowers the value of what little they have.


----------



## a_majoor (14 Mar 2010)

Who is that John Galt guy anyway?

http://www.denverpost.com/harsanyi/ci_14658950



> *Harsanyi: Beware the Amazon*
> 
> By David Harsanyi
> Posted: 03/12/2010 01:00:00 AM MST
> ...


----------



## a_majoor (5 Apr 2010)

You can either take a look at the facts or:

http://www.smalldeadanimals.com/archives/013716.html



> *Blame Bush*
> 
> There are a few little-regarded truths that have been buried under the relentlessly spewed pile of lies that were used to demonize George W. Bush and the Republican Congress from the day Al Gore failed to carry his own home State in the 2000 Election until… well… it’s still pretty much a leftist pastime.
> 
> ...


----------



## a_majoor (6 Apr 2010)

More dominoes stacked up in a row:

http://www.city-journal.org/2010/20_2_strategic-mortgage-default.html



> *Luigi Zingales*
> The Menace of Strategic Default
> Homeowners who walk away from their mortgages undermine our financial system.
> Spring 2010
> ...


----------



## a_majoor (9 Apr 2010)

Don't expect a gradual decline:

http://www.theatlantic.com/business/archive/2010/04/going-greek/38668/



> *Going Greek*
> 
> Apr 8 2010, 3:19 PM ET
> Greece's fiscal problems are turning into one of those endless sagas, the kind we watch unfold at Thanksgiving every year.  Aunt Daphne is going to leave Uncle John!  No, they're in counseling! Wait, now Aunt Daphne is breaking up with the counselor, too!  The rumors are starting to take on a toxic life of their own, driving up the yields demanded on Greek debt--which in turn, makes it less likely that they'll be able to finesse the crisis with a moderate infusion of outside cash.
> ...


----------



## a_majoor (14 Apr 2010)

An interesting "twofer". How these conditions can take place *at the same time* defies belief, but this is an unstable equilibrium we are living in today...

http://www.cnbc.com/id/36421625



> *A V-Shaped Boom Is Coming*
> Published: Monday, 12 Apr 2010 | 11:01 AM ET
> 
> By: Larry Kudlow
> ...



Or:

http://taxprof.typepad.com/taxprof_blog/2010/04/per-capita-income-.html



> *Per Capita Income Has Fallen 3.2% Since Obama's Inauguration; 47 of 50 States See Decline in Income*
> 
> Washington Times, Income Falls 3.2% During Obama's Term:
> 
> ...


----------



## a_majoor (15 Apr 2010)

And more sweeping news under the carpet:

http://wcollier.blogspot.com/2010/04/paging-emily-litella.html



> *Waxman Subpoenas Emily Litella*
> 
> From the Washington Examiner:
> 
> ...


----------



## a_majoor (16 Apr 2010)

More overhanging debt threatens the economy. Since teachers unions are powerfully connected with the political process, expect to see a massive effort to soak the taxpayers for the $300 billion to one trillion dollar shortfall....

http://www.manhattan-institute.org/html/cr_61.htm



> Civic Report
> 
> No. 61 April 2010
> 
> ...


----------



## a_majoor (26 Apr 2010)

Interesting trend lines. If we aggressively reduce taxes and spending, we can capitalize on the exodus of US capital and entrepreneurs:

http://www.nypost.com/f/print/news/opinion/opedcolumnists/eurobama_6fLHQRfsBJUMrOPsybryvM



> *EurObama*
> 
> By MATT WELCH
> 
> ...


----------



## a_majoor (30 Apr 2010)

Instapundit provides another look at the "figures" coming out from Washington:

http://pajamasmedia.com/instapundit/



> GDP GROWTH DROPS — UNEXPECTEDLY: “In January, Barack Obama and Democrats insisted that the 5.7% annual growth rate in the fourth quarter of 2009 showed that their stimulus plan had set the American economy back on track for rapid growth and job creation. The administration needed a big number for 2010 to allay fears that unemployment would stagnate at the current high levels for the long term. Unfortunately, they didn’t get it, with the 3.2% annualized GDP rate for the first quarter of 2010 falling below analyst expectations.”
> 
> Plus this: “Capital will not flow back into the market under the conditions set by the Obama administration and the Democratic Congress over the last fifteen months. Instead, it will most likely flow overseas, in markets more friendly to capital investment, where the nation’s executive doesn’t offer off-the-cuff remarks about people making too much money.”


----------



## a_majoor (30 Apr 2010)

Chain reaction failures in the cards?

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=531813&p=3



> *Beware Of The Muni Bond Bubble: States And Cities Can Fail As Well*
> 
> By NICOLE GELINAS
> Posted 04/29/2010 06:15 PM ET
> ...


----------



## a_majoor (8 May 2010)

Look at the official unemployment figures:

http://www.nationalreview.com/campaign-spot/47199/9-9-percent-unemployment-99-vulnerable-house-democrats-i-see-connection



> *9.9 Percent Unemployment, 99 Vulnerable House Democrats — I See a Connection!*
> May 07, 2010 3:05 PM
> By Jim Geraghty
> 
> ...


----------



## a_majoor (10 May 2010)

As desperation takes hold, will the US government resort to this at the risk of a total backlash across multiple areas (the market, civil disobedience, political activism, global economic uncertainty?). Given the tone deaf attitude of a large portion of the political class and their enablers in the bureaucracy, academy, media and public service unions, I'm leaning towards "yes they will".

As a student of history, I should war them that the class war they seem willing to ignite isn't the one they are thinking of or expecting. People who have something to lose will fight hardest, and the French Revolution was the first of the modern revolutions because it was the middle class fighting the aristocracy for their hard won rights and wealth rather than a peasant uprising simply looking to short term survival. (The real Russian Revolution(s) were also characterized by this mentality; the Bolsheviks were able to move in and topple a destabilized State through good timing with their coup; no revolution here comrade!)

http://www.powerlineblog.com/archives/2010/05/026260.php



> *Are the Feds Trying to Nationalize Your Retirement Savings?*
> 
> May 9, 2010 Posted by John at 7:15 PM
> 
> ...


----------



## Edward Campbell (20 Jun 2010)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_, is an _exposé_, about that is *really wrong* with America’s economy – not big banks, not derivatives, not big business, not even Obama or Bush: it is America’s *culture* which, exactly mirroring Canada’s, wants more and more and more, for *free*:

http://www.theglobeandmail.com/report-on-business/economy/california-on-verge-of-system-failure/article1609891/


> California on 'verge of system failure’
> *Golden State, like many others, is nearly bankrupt and desperately needs a bailout*
> 
> Barrie McKenna
> ...




The graphic (and the text around it) says it all: _sovereign debt_ crises – 48 of them, 30+ ‘serious’ ones, the PIIGS disease that rocked Europe and the world, are the norm in the USA. Gov. Schwarzenegger is adopting the right course – not because he really wants to: cutting expenditures even when they deeply hurt real, vulnerable people. US states – *and Canadian provinces* – have to get a grip on spending; they have to set priorities and the top priority might involve not mollycoddling people. *Personal* tax rates (income and consumption tax rates) in the USA might not be high enough but spending must be controlled first, before taxes can be raised.


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## GAP (20 Jun 2010)

California has always been a state of conspicuous consumption.....now they are paying the price. 

Off the top of my head, I can't remember some of the more outlandish spending (and they have been the poster child for ridiculous programs), but it has been literally decades of living high off the hog, and now the hog is dying....

I can't see the Federal government bailing them out....they are in no better position, for the same reason...


----------



## Edward Campbell (20 Jun 2010)

GAP said:
			
		

> California has always been a state of conspicuous consumption.....now they are paying the price.
> 
> Off the top of my head, I can't remember some of the more outlandish spending (and they have been the poster child for ridiculous programs), but it has been literally decades of living high off the hog, and now the hog is dying....
> 
> I can't see the Federal government bailing them out....they are in no better position, for the same reason...


[move][/move]



But this is *sovereign debt * (US debt) just as the Greek debt is _sovereign debt_, belonging to the Greek state. The EU is bailing our Greece. Who, besides the US national government, should, can or will bail out California and 20+ other states?

China?

Maybe, but the political implications are interesting.


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## GAP (20 Jun 2010)

I agree, but that does not make NOT stupid spending....

There is so much garbage spending based on "would likes", that the core spending commitments can't be met...

Even core spending commitments are rife with piles of addendum's that just inflate the cost of delivery....it's time to go back to basics, but not until the people know what's it's like to crash and burn under the present agenda...until then, the voter will just be swayed by the lies of someone else wanting to get in to dip their fingers in the honeypot of cash....


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## Edward Campbell (20 Jun 2010)

It is very rare that I agree with the _Good Grey Globe’s_ Doug Saunders but, like a stooped watch, he has to get it right now and again, and he does, here, in this column which is reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/news/opinions/no-culture-of-poverty-here/article1609873/


> No 'culture of poverty' here
> *Favela residents aren’t resigned – they are making plans to escape*
> 
> Doug Saunders
> ...




I have been _‘fortunate’_ to have lived, worked and/or travelled in some of the poorest places in the world and I agree 100% with Janice Perlman, *“What has often been seen pejoratively as a ‘culture of poverty’ is not a culture at all but a pragmatic response to coping with a harsh reality. If the urban poor had the opportunity to use their energy and skills to earn a decent living … their purported self-defeating beliefs and behaviours would disappear.”* There is no “culture of poverty,” poor people, left to their own devices, work hard to become less and less poor. *But* there is, in the rich, industrialized West, a _*culture of entitlement*_ which leads many to infantilize the poor, in Rio and Regina, and _de facto_, *institutionalize* poverty and misfortune because it allows us to assuage our unfocused guilt.

Much of the misspending that goes on in California - and Ohio and Ontario and Alabama and Alberta, too - is well intentioned but *destructive* social spending that destroys real family values (not the pseudo-intellectual garbage spewed by the _Christian right_, but the real family values that make parents care for children and, later, adults care for parents and so on) and creates dependency.

When, not if, the big, bloody cuts come they will, of necessity, disproportionately impact the poor but the consequence *may* be to “liberate” the poor from the shackles of mismanaged social programmes.


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## BHC1 (20 Jun 2010)

I find myself strangely compelled by Saunders observations, and further your analysis. The potential for entrepreneurship and innovation found in our planets slums is quite astonishing.


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## a_majoor (20 Jun 2010)

For further reading on how poor people realy live and work, try Hernando De Soto. The Mystery of Capital and The Other Path provide interesting answers to these questions.

Of course reading economists like Friedrich von Hayek and Ludwig von Mises would also provide real ideas on how to combat poverty and corruption as well...


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## Brad Sallows (22 Jun 2010)

I believe there are too many governments pursuing deficit financing at levels too high to be sustained by the productive economic activity of the world at large.  At this point, only one option remains: governments which control their own money supplies will inflate away their deficits and debts.  The lower levels will benefit as the cost of their public pension commitments in nominal dollars diminishes rapidly.

The solution has a certain justice: a period of high inflation is bearable by those who are currently employed, or who have investment funds that can be shifted to avoid the worst impacts (ie. RRSPs, defined contribution pension plans).  Even people on income assistance may do OK if governments scale up the benefits.  The people who will get it in the neck are those who are retired in defined benefit plans without indexation to match absolute inflation - and they are same people who are stubbornly forcing governments into a corner from which the only way out is to pay out the pensions in a much weaker currency.


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## a_majoor (23 Jul 2010)

Stagflation, followed by what?

http://www.nationalreview.com/exchequer/231236/government-borrowing-corporations-are-saving-coincidence



> *Government Is Borrowing, Corporations Are Saving: Coincidence?*
> 
> July 20, 2010 5:49 PM By Kevin D. Williamson
> Tags: Barack Obama, deficits, financial Armageddon, sovereign debt, Stimulus
> ...


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## a_majoor (1 Aug 2010)

Increasing personal savings is a start, and will act as the soil and fertilizer for renewed economic growth in the future. The only fly in the ointment is desperate cash strapped governments may go to astounding lengths to seize that wealth. The $2 trillion dollar unfunded liability cost in municipal, State and Federal pensions alone will spur action, as a very powerful constituency (unionized public service workers) will be demanding payment:

http://hotair.com/archives/2010/07/31/underneath-the-gdp-report/



> *Underneath the GDP report*
> 
> posted at 8:00 am on July 31, 2010 by King Banaian
> 
> ...


----------



## a_majoor (8 Aug 2010)

More reasons to batte4n down the hatches in your own personal economies (and work like hell to convince Canadian politicians of all stripes and all levels to do the same with the municipal, provincial and federal economies...)

http://pajamasmedia.com/instapundit/   08 Aug 10



> *ON THE ECONOMIC FRONT, a coming “panic attack?”*
> UPDATE: A reader who requests anonymity writes:
> 
> 
> ...


----------



## a_majoor (11 Aug 2010)

A simple and elegant solution (and a must in Canada as well, where the situation is very similar [last summer Fredricton had to borrow over $20 million to meet unfunded pansion and benefit liabilities]), but the civil service unions will fight to the last taxpayer to keep their perques and privilages. Note these figures are for the Federal government, comperable freezes and cuts at the state and municipal level (and corresponding actions in Canadian provinces and municipalities) would compound the savings further:

http://www.washingtonexaminer.com/politics/Cut-deficit-without-cutting-services_-Start-here-1008723-100306764.html



> *Cut deficit without cutting services? Start here*
> By: Byron York
> Chief Political Correspondent
> August 10, 2010
> ...


----------



## Jed (11 Aug 2010)

OMG Thuy..., Your spelling is atrocious! lol


----------



## a_majoor (12 Aug 2010)

Jed said:
			
		

> OMG Thuy..., Your spelling is atrocious! lol



I got tired of waiting for the spell check; system is very slow today.....


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## a_majoor (17 Aug 2010)

Another point of failure. So much money is being sucked out of the productive economy, and so many claims are being made for what is left that soon there will be nothing left for investment or even maintaining what currently exists:

http://yidwithlid.blogspot.com/2010/08/hey-taxpayers-get-ready-to-pay-for.html



> *Hey Taxpayers, Get Ready To Pay For the Union Pension Failure Tsunami*
> 
> Congress is coming after your wallets again, this time they will be bailing out multi-employer pension plans, retirement programs for union workers funded by employers and run by unions.
> 
> ...


----------



## a_majoor (25 Aug 2010)

When will we reach the tipping point. This paper (10 page PDF) suggests the timeframe is uncomfortably close: 2015 to 2035

http://mercatus.org/sites/default/files/publication/Guessing%20the%20Trigger%20Point%20for%20a%20US%20Debt%20Crisis%208.24.10.pdf



> *Guessing the Trigger Point for a U.S. Debt Crisis*
> by Arnold Kling1
> 
> Leading authorities in the United States, including the Congressional Budget Office, use the term
> ...


----------



## Edward Campbell (25 Aug 2010)

Thucydides said:
			
		

> When will we reach the tipping point. This paper (10 page PDF) suggests the timeframe is uncomfortably close: 2015 to 2035
> 
> http://mercatus.org/sites/default/files/publication/Guessing%20the%20Trigger%20Point%20for%20a%20US%20Debt%20Crisis%208.24.10.pdf




That's a pretty scary analysis from a pretty respectable analyst. It's no wonder China is reducing it _exposure_ in America.


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## a_majoor (27 Aug 2010)

What the end game may look like (part 1):

http://www.zerohedge.com/article/guest-post-hyperinflation-part-ii-what-it-will-look



> *Hyperinflation, Part II: What It Will Look Like*
> Submitted by Gonzalo Lira
> 
> I usually don’t do follow-up pieces to any of my posts. But my recent longish piece, describing how hyperinflation might happen in the United States, clearly struck a nerve.
> ...


----------



## a_majoor (27 Aug 2010)

Part 2:

http://www.zerohedge.com/article/guest-post-hyperinflation-part-ii-what-it-will-look



> Now let’s return to the possibility of hyperinflation in the United States:
> 
> If there were a sudden collapse in the Treasury bond market, I argued that sellers would take their cash and put them into commodities. My reasoning was, they would seek a sure store of value. If Treasury bonds ceased to be that store of value, then people would invest in the next best thing, which would be commodities, especially precious and industrial metals, as well as oil—in other words, non-perishable commodities.
> 
> ...


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## a_majoor (4 Sep 2010)

The real numbers get even worse:

http://www.commentarymagazine.com/blogs/index.php/wehner/353456



> *Defining Recovery Down*
> Peter Wehner - 09.03.2010 - 12:44 PM
> 
> What are we to make of the most recent jobs report, which shows that (a) unemployment increased from 9.5 percent to 9.6 percent and (b) nonfarm payrolls fell by 54,000 last month? If you’re White House press secretary Robert Gibbs, you tweet, “Don’t be fooled — the economy added 67,000 private sector jobs, 8th straight month of added private sector jobs, job loss came in Census work.” Picking up on this, David Mark, Politico’s senior editor, writes this:
> ...


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## tomahawk6 (4 Sep 2010)

This administration is so bad that it makes the Carter years look good.


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## Edward Campbell (4 Sep 2010)

This reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_ is both interesting and germane:

http://www.theglobeandmail.com/report-on-business/economy/us-jobless-rate-hints-at-permanent-shift/article1696060/


> U.S. jobless rate hints at permanent shift
> *Structural change in labour market may be behind lack government intervention’s lack of success*
> 
> KEVIN CARMICHAEL
> ...




One might want to argue that the reason that stimulus spending worked (or appeared to work) in Canada is that we have a less sophisticated, less _productive_ economy than does the USA. They have already made the transition from hewing wood, drawing water and bending metal and have become innovative and service oriented; we have not – hence our lower standard of living. It’s not that our workers are stupid or lazy or even overpaid: it’s just that Canadian management is, by and large, fat, dumb and happy behind a wall of government support programmes.

The same problem is already beginning to confront China. Manufacturing jobs are already leaving the rich East coast centres for lower wage areas in Indonesia and the Philippines – because Central and Western China are not, yet, ready to take them. The Chinese government and the plutocrats are, already taking a licking for poor planning in the media, even in the English language media.


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## a_majoor (6 Sep 2010)

Dealing with the pension tsunami:

http://www.newgeography.com/content/001751-a-tsunami-approaches-the-beginning-great-deconstruction



> *A Tsunami Approaches: The Beginning of the Great Deconstruction*
> by Robert J. Cristiano 09/05/2010
> 
> In the distant horizon, a giant wave is building. There are some who recognized the swell and raised the alarm. There are others who deny the possibility of such a wave. Most remain blissfully unaware. The wave is building and when it reaches our shores, it will hit with the force of a tsunami.
> ...


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## a_majoor (7 Sep 2010)

The same sequence of events will probably take place in Canada as well. Either we start a controlled drawdown of spending today or an uncontrolled cession of programs will be forced on us with the negative consequences noted:

http://divasforgeeks.blogspot.com/2010/09/dear-public-pensioners.html



> *Dear Public Pensioners...*
> 
> I bear you no ill will.  As a matter of fact, as a fellow citizen I am pretty sympathetic to your plight as regards our governments' ongoing economic melt downs.
> 
> ...


----------



## Edward Campbell (11 Sep 2010)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_ are a pair of point and counterpoint articles reflecting on the future of the US economy.

First the _point_ – the US’ traditional propensity for _creative destruction_ and risk taking has died, a victim of the ‘great recession:’

http://www.theglobeandmail.com/news/world/americas/the-day-risk-died/article1703386/?cmpid=rss1&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+TheGlobeAndMail-Front+(The+Globe+and+Mail+-+Latest+News)


> The day risk died
> *For many, the day the Lehman Brothers collapsed was the day risk-taking died. But what’s the US without its appetite for rolling the dice?*
> 
> Joanna Slater
> ...



Now the counterpoint – never count America out:

http://www.theglobeandmail.com/news/world/americas/dont-worry-about-the-usa-there-will-always-be-another-gordon-gekko/article1703492/?cmpid=rss1


> Don't worry about the USA – there will always be another Gordon Gekko
> *Rather than fear failure, Americans embrace it as a cost of doing business*
> 
> Kevin Carmichael
> ...



On balance, I side with Carmichael; America remains the most _creative_ and productive society on earth – perhaps the *only* really _creative_ society on earth – and it is the kind of _creativity_ that creates wealth.

But, while not as big a “sissy” as Ron Munn, a 69-year-old retiree from Green Valley, AZ (the fellow mentioned in the *Liquidate or perish* section of the first article) my portfolio has been carefully rebalanced: it has fewer stocks and more bonds – returns/yields are down but so, by a big factor, is risk. Equally, I am undertaking some major home renovations: I will get a tax break by selling some “losers” and I will enhance the value of my real property. I’m the same age as Mr. Munn and I have the same concerns; perhaps I’m a bit more optimistic.

I would _advise_ (it’s free advice and it’s worth what you are paying for it) young people to heed the words of Scott Kays, a financial adviser in Atlanta (in the *A lost generation* section of the first article) and treat your investments as a “very calculated risk” with the emphasis on _calculated_ and _risk_. His mother was right: if you cannot afford to lose it all then do not enter the stock market – buy bonds. But bonds will not give you the returns that young people need to prepare for their futures – you can and should take risks while you are young but make sure that you study and take good advice so that the risks you do take are well calculated.


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## Rifleman62 (11 Sep 2010)

You should post the previous in "Soldiers squander disability payouts" and sent the articles to VAC, because it just proves the point.


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## a_majoor (18 Sep 2010)

Busting the greatest bubble of all:

http://www.nationalreview.com/exchequer/246709/entitlement-bubble-bust-going-be-nightmare



> *The Entitlement Bubble: The Bust Is Going to Be a Nightmare*
> September 16, 2010 4:00 A.M.
> By Kevin D. Williamson
> 
> ...


----------



## a_majoor (23 Sep 2010)

Toxic debt continues to plague the economies of the world, the US is simply the largest. Failing to purge this load of non performing debt is what crippled the Japanese economy at the end of the 1980's, they have had a deflationary 20 years because of that (remember when Japan was set to become the largest economy in the world and overtake the United States/Rule the Universe?)

The amount of private debt is pretty impressive (although nowhere near the monster unfunded liabilities problems of Civil Service union pensions, Medicare/Medicaid and Social Security, or the new debt monster of Obamacare), and will take a long time to digest at the current rate. A short sharp shock of defaults will probably be very painful in the short run, but free up a lot of unproductive capital assets and lead to a reinvigorated economy:

http://www.lesjones.com/2010/09/22/scariest-economic-fact-ive-seen-lately/



> *Scariest Economic Fact I’ve Seen Lately*
> Wednesday, September 22nd, 2010 | Economics | ShareThis
> When the economic downturn began, consumer debt started declining. The conventional explanation was that consumers were tightening their belts. Taking on less debt. Repaying what they owed. Here’s a typical positive take on that news from December, 2009:
> 
> ...


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## a_majoor (10 Oct 2010)

Finally, some out of the box thinking. How well this plan will work in the US is an open question, but a similar plan in Canada might work very well given the much smaller size of our debt in both relative and absolute terms:

http://pajamasmedia.com/blog/can-we-privatize-the-national-debt/?singlepage=true



> *Can We Privatize the National Debt?*
> South Carolina's Jim Pratt, running against James Clyburn, is proposing such a plan.
> October 10, 2010 - by Adakin Valorem
> Share |
> ...


----------



## Edward Campbell (11 Oct 2010)

I have alluded to this before, but this, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_, is a rather disturbing look the the insidious growth of corruption in the USA:

http://www.theglobeandmail.com/report-on-business/commentary/barrie-mckenna/corrupt-canada-were-small-time-compared-with-us/article1751953/


> Corrupt Canada? We’re small-time compared with U.S.
> 
> BARRIE MCKENNA
> 
> ...




Why does it matter?

First: These is substantial, clear evidence that there is a direct relationship between honesty in government (_transparency_ more or less requires or, at least induces honesty) and prosperity. Look at the top ten. There isn’t a poor country in the lot. Iceland is in the midst of pulling itself out of a financial mess but, unlike, say, Portugal, Italy, Greece and Spain, it didn’t lie to its own people about the problem: thus there is considerable public support for the kinds of efforts the Icelanders will have to make to ensure their own recovery.

Second: There is equally substantial and equally clear evidence that corruption (lack of _transparency_) constrains economic growth: consider China and India. If China ever gets an open, honest administration (local, provincial and national) it will, likely and quickly, become the globe's sole _hyperpower_ – easily displacing the USA and EU combined in every important measure of *power*.

But there are two points in McKenna’s column that matter:

1.	Canada, although cleaner than the USA, has no room for complacency; and

2.	Knee-jerk regulation is not the best or, usually, even a good way to address some of the systemic issues that bedevil the USA. The problem, for the USA, China and Canada – all of which already have plenty of laws on the books – is enforcement and enforcement is, in large measure, an attitudinal problem with the national _elites_. So long as the most influential Americans, Chinese and Canadians tolerate or, worse, benefit from corruption there will be too little pressure to enforce the (largely adequate) laws all, including China, by the way, have on the books.


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## a_majoor (25 Oct 2010)

Politics infuences economies (but we knew this already, didn't we...):

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102202786.html



> *Think this economy is bad? Wait for 2012.*
> By Greg Ip
> Sunday, October 24, 2010; B03
> 
> ...


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## a_majoor (28 Oct 2010)

Fundimentals. If the United States (or anyone else for that matter) can either ramp up energy production massively or make huge gains in efficiency then GDP will also grow massively:

http://nextbigfuture.com/2010/10/approximate-per-capita-wealth-of.html#more



> U.S. energy consumption in 2004 was estimated at 99.74 quadrillion Btus (1.05 × 10^11 GJ) (referred to as 'quads') from all sources (US DoE). Total GDP was estimated at $11.75 trillion in 2004 and US GDP per capita was estimated at roughly $40,100 in 2004 (CIA Factbook). Using a population of 290,809,777 (as per US Census Bureau). This would produce an Energy Intensity of 8,553 Btus (9 MJ) consumed to produce a single dollar of GDP (about 9,023 kJ/$).
> 
> The USA cut energy intensity in half over 55 years (1949-2004) from 1.55 to 0.7.


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## a_majoor (5 Nov 2010)

Economic news does not look good. This should be of concern to everyone, and the political repercussions will be intense as everyone tries to blame everyone else. I doubt anyone will be able to take effective action in this climate, unless we look to out of the box solutions like "State Compacts" or privatizing the debt. (Selling off large chunks of property owned by State and the Federal government would also have an effect; read The Mystery of Capital and contemplate the effect of releasing all that "dead" capital back into the productive economy...

http://blogs.forbes.com/investor/2010/11/05/look-at-the-real-numbers-the-recession-never-ended/



> *Look At The Real Numbers, The Recession Never Ended*
> Nov. 5 2010 - 11:13 am | 1,094 views | 0 recommendations | 4 comments
> Posted by John Mauldin
> 
> ...


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## jhk87 (8 Nov 2010)

Thucydides said:
			
		

> Fundimentals. If the United States (or anyone else for that matter) can either ramp up energy production massively or make huge gains in efficiency then GDP will also grow massively:
> 
> http://nextbigfuture.com/2010/10/approximate-per-capita-wealth-of.html#more



It's also no surprise that the US hit domestic peak oil production in the 1970s, around the same time they went off the gold standard, began exporting much of their domestic manufacturing, and hit many of the problems they have now.

It's rather unfortunate that the bailout has essentially financed consumption and been obsessively tied to rebuilding a bloated housing market instead of focusing on some major structural problems which is dragging the US economy along and slowing the recovery. Canadians, for their part, have had the very mediocre EAP which seems to be more about putting up signs and less about developing new infrastructure.

And yes, of course politics and economics are linked - we've known this since the term "political economy" was coined. Economics in the classical sense is based off of rather faulty Enlightenment-era assumptions about social science and the essentially rational essence of human nature, which has proven to be false. People are not necessarily rational, especially in terms of long-term problem solving and especially in large groups, and this makes economics as a completely independent field very difficult to keep in its old paradigm.

Unfortunately, the west is having a very difficult time doign what it needs to do, which is to curtail retail spending and an emphasis on soft goods to rebuild the rotten heavy industrial core of the economy on a 21st-century model. Until this happens, we're going ot have to keep financing retail purchases - a very flimsy base for economic progress!


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## Edward Campbell (8 Nov 2010)

Elsewhere I posted a long article by Joseph Nye which cautioned us not to count America out of the global power game but which also raised a red flag about the US economy.

Here, reproduced, in three parts, under the Fair Dealing provisions (§29) of the Copyright Act from _Foreign Affairs_ is another long article, also by some people who merit our attention, on that threat:

*Part 1*

http://www.foreignaffairs.com/articles/66778/roger-c-altman-and-richard-n-haass/american-profligacy-and-american-power 


> American Profligacy and American Power
> *The Consequences of Fiscal Irresponsibility*
> 
> By Roger C. Altman and Richard N. Haass
> ...



End of Part 1


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## Edward Campbell (8 Nov 2010)

*Part 2*



> *THE BIGGEST BORROWER*
> 
> It is important to understand the impact of all this debt. As it grows, interest rates inevitably rise. As they do, the U.S. government's annual interest expense -- the cost of borrowing money -- will rise from one percent of GDP to four percent or more. At that point, interest expense would rival defense expenditures. And it would exceed all domestic discretionary spending, a category that includes spending on infrastructure, education, energy, and agriculture -- in effect, anything other than entitlements and national security. The U.S. Treasury would need to borrow a staggering $5 trillion every single year, both to finance deficits and to refinance maturing debt.
> 
> ...



End of Part 2


----------



## Edward Campbell (8 Nov 2010)

*Part 3*



> *THE WAY AHEAD*
> 
> How can the United States avoid a type of rejection by global financial markets that would cause a truly sharp decline in its global role? The answer is conceptually simple but, in domestic political terms, acutely difficult to implement.
> 
> ...




In discussing the evident need to restrict military budgets and, consequently, military operations, Altman and Haass are following along a trail broken by Michael Mandelbaum about which I and Thomas Friedman have alluded in these fora.

But the big problem, which Altman and Haass also discuss, is the division in American politics. In the past 20 years or so the divide between _left_ leaning Democrats and _right_ wing Republicans has hardened. The Republicans want to stop spending on a few trivial thing but want to keep increasing the the military budget and they oppose all tax increases; the Democrats want to increase social spending and they, too, oppose most tax increases. Thus, there is no support for any meaningful spending cuts and, equally, no support for taxes. America's leaders want to spend more and _earn_ less – which means borrowing.


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## a_majoor (15 Nov 2010)

US deficit calculator here: http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html

I solved the deficit with a plan based on 85% spending cuts and 15% tax increases (although I chose the tax reform route as much as possible.)

Funny, if _I_ can solve the deficit in about 15 min....


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## jhk87 (15 Nov 2010)

Thucydides said:
			
		

> US deficit calculator here: http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html
> 
> I solved the deficit with a plan based on 85% spending cuts and 15% tax increases (although I chose the tax reform route as much as possible.)
> 
> Funny, if _I_ can solve the deficit in about 15 min....



Pretty funny, unless you consider that the US economy would probably spiral out of control with 85% spending cuts.


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## Edward Campbell (15 Nov 2010)

Without knowing Thucydides' methodology, the task isn't daunting.

US government spending is _approximately_ $3.5 Trillion; receipts are _about_ $2.4 Trillion leaving a deficit of _something like_ $1.1 Trillion. He needed to find _around_ $900 Billion in spending cuts and $200 Billion in tax increases to balance the budget. A simple 7% cut in *discretionary* spending, i.e. no cuts at all to payments on the interest on the national debt, social security, medicaid and medicare, will get you more than $900 Billion and I'm pretty sure the US, even DoD, could survive it.

Now the national debt is another problem and those 7% cuts cannot be _repealed_ in the next budget; in fact, year after year, new cuts must be made and those *mandatory* programmes, all except interest payments on the debt, need to be 'reformed,' to make them affordable, too.


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## a_majoor (15 Nov 2010)

My methodology: http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-graphic.html?choices=zx6ph018


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## a_majoor (15 Nov 2010)

An alternative methodology here.

The blogger and many coments note this calculator is very restrictive in the number of choices available, but even with these limitations, it is still possible to zero out the deficit without making drastic cuts to defense or rsdical tax increases (which would slow down the economy and make the problem far worse in the long run).

Since the sponsor is the NYT, we can assume the choices offered are reflective of what people of the Liberal Demcrat demographic they court are willing to put on the table, so there is lots of starting room here.


----------



## a_majoor (18 Nov 2010)

Uh oh:

http://pajamasmedia.com/blog/the-2011-tax-tsunami/?singlepage=true



> The 2011 Tax Tsunami
> What exactly will change should the Bush tax cuts expire?
> November 18, 2010 - by Gary Wickert
> Share |
> ...



The 2012 elections will probably revolve around taxes and economic growth. Look for reprises of Ronald Reagan's speeches among all the candidates.


----------



## a_majoor (20 Nov 2010)

Taxation is not the only issue:

http://www.washingtonpost.com/wp-dyn/content/article/2010/11/18/AR2010111806073.html



> *Strangling innovation with red tape*
> 
> By Morris Panner
> Friday, November 19, 2010
> ...


----------



## Kirkhill (21 Nov 2010)

And thus the reason for the failure of Obama's attempt to implement FDR's public works strategy (a strategy at least as old as the Pharaohs - beer, bread and a roof in exchange for pyramids to nowhere).

FDR didn't have to contend with his well-meaning successors attempts to create Utopia by instituting Environmental Review Committees.  He just built highways and dams, and clear cut forests, by presidential fiat.   The shovel was always ready.


----------



## a_majoor (29 Nov 2010)

For people who think the TEA party movement is frightening, this is even worse:

http://gonzalolira.blogspot.com/2010/10/coming-middle-class-anarchy.html



> *The Coming Middle-Class Anarchy*
> 
> Update I, below. Update II, below. Update III: The denouement of Brian and Ilsa’s story can be found here.
> 
> ...


----------



## tomahawk6 (29 Nov 2010)

The Tea Party isnt anything to fear."The people should never fear their government, the government should fear its people".
If anyone ever bothered to read the history of how the Bolsheviks and Nazi's came to power we see them today in the US.

“Make the lie big, make it simple, keep saying it, and eventually they will believe it”

Adolf Hitler


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## jhk87 (30 Nov 2010)

And......Godwin!


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## Kirkhill (30 Nov 2010)

I'm pretty sure that McCarthy trumps Hitler thereby nullifying Godwin.

Back to your corners gentlemen and lets keep it a nice clean fight.


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## a_majoor (2 Dec 2010)

More regulatory failure, and the root causes:

http://pajamasmedia.com/ronradosh/2010/11/30/how-obamacare-and-an-old-red-union-betrayed-its-poorest-workers/?singlepage=true



> *How ObamaCare and an Old Red Union Betrayed Its Poorest Workers*
> November 30, 2010 - by Ron Radosh
> Share |
> 
> ...



Poor working people with few resources might be forced out of the labour market in order to get some sort of coverage, or various other work arounds might be attempted as the market works to match supply to demand. Black markets and the underground economy are examples of markets achieving equilibrium by exiting the control of the State. The undesirable consequences of underground economies are really part and parcel of relinquishing the State in order to meet your demand [or supply an unmet demand if you are on that side of the market]. No State also means property rights, rule of law and neutral arbitration of disputes are no longer available as well.


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## Nemo888 (2 Dec 2010)

American house prices are falling again.
http://www.economist.com/blogs/dailychart/2010/12/house_prices?fsrc=scn/fb/wl/dc/doubledip


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## a_majoor (3 Dec 2010)

Attempts to keep the housing bubble have failed (the invisible hand has wrestled the grasping hand of government to the ground), several sources seem to agree the US housing market is overpriced by @ 20%. 

Once again, we have a choice; short sharp shock as the market is allowed to clear non performing assets, or (best case) a lost decade as the financial system has to drag these non performing assets around. I suspect the debt crisis and unfunded liability crisis will force everyone's hands; when people and governments start dumping real estate assets in a desperate attempt to raise cash, the market will rapidly reach equiibrium.


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## jhk87 (4 Dec 2010)

Perhaps when the US economy stops being bloated and distorted by truly idiotic levels of military spending (often used as a form of transfer payments,) the competitive spirit will return once again.


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## Edward Campbell (5 Dec 2010)

jhk87 said:
			
		

> Perhaps when the US economy stops being bloated and distorted by truly idiotic levels of military spending (often used as a form of transfer payments,) the competitive spirit will return once again.




A very valid point, and it (chopping some expenditures) is one of the things Secretary of Defence Robert Gates has been trying to do for years (including during the Bush administration) but too many useless, wasteful, indeed harmful programmes have too much political support. It is an _system_ of alliances of some admirals and generals and some legislators and some industry leaders that support (or oppose) some projects. Eisenhower was, indeed, prescient: there *is* a "military industrial complex" and its _influence_, based on applied self interest, is massive.

My guess is that, eventually, but probably later rather than sooner, DoD will pay it's share of the costs of economic sanity.


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## a_majoor (10 Dec 2010)

We had better start preparing:

http://biggovernment.com/prahe/2010/12/10/economic-storm-clouds-on-the-horizon/



> *Economic Storm Clouds on the Horizon*
> by Paul A. Rahe
> 
> The experts charged with determining when recessions begin and end tell us that the latest of these unpleasant events ended a while ago. Technically, they are no doubt right. But that does not mean that the economic crisis we have been facing is over. I suspect that we have thus far only seen its first act. The drama to come may be far, far worse. To see why, one must recognize that economic downturns come in two different forms.
> ...


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## a_majoor (11 Dec 2010)

US economy by the numbers:

http://www.americanthinker.com/2010/12/the_economic_legacy_of_the_fou.html



> *The Economic Legacy of the Four-Year Democratic Congress (American Thinker)*
> 
> By Yossi Gestetner
> From early 2007 through the end of 2010, the Democrats had strong Majorities in -- and control of -- the US House of Representatives and also the U.S. Senate. Both are chambers where laws and policies that affect the economy are created and shaped.
> ...


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## Nemo888 (13 Dec 2010)

Labour market efficiencies and globalization have worked their magic. Many years ago I went to community college and took a job from a guy in Dallas on graduation. I felt lucky to get such a good job. Then two years later a very good engineer from one of India's most prestigious universities took my job after I trained him. I worked for less than the dude in Dallas. The much brighter and better educated engineer from India thought the 24,000$ USD salary he was receiving was excellent. That's when I joined the Army. At least that could not be outsourced. (Blackwater and Armour Group, lol. I was wrong about that too.)

I see one way of getting America working again. Real unemployment is hitting 22%. Devalue the dollar by massive quantitative easing  or whatever method is the least obvious. When the 46K US$ salary declines in value to that of the 1 million Rupee salary of the Indian engineer(24K USD currently) the jobs will inevitably come back.  When we return to the global labour rate we will be competitive again.  This is what globalization was supposed to do. Level the playing field.


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## a_majoor (21 Dec 2010)

Worth readng: http://mercatus.org/sites/default/files/publication/Truth%20and%20Consequences.Polski.Nutter.12.20.10.pdf


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## a_majoor (22 Dec 2010)

The fact that the economic recession was caused by regulatory failure isn't a surprise to anyone who pays attention, but here are the various factors laid out in one place (lots of diagrams at the link):

http://www.american.com/archive/2010/december/how-government-failure-caused-the-great-recession



> *How Government Failure Caused the Great Recession*
> By Mark J. Perry and Robert Dell
> Wednesday, December 22, 2010
> Filed under: Government & Politics, Economic Policy
> ...


----------



## jhk87 (24 Dec 2010)

Thucydides said:
			
		

> The fact that the economic recession was caused by regulatory failure isn't a surprise to anyone who pays attention, but here are the various factors laid out in one place (lots of diagrams at the link):
> 
> http://www.american.com/archive/2010/december/how-government-failure-caused-the-great-recession



Straight from the mouth of the American Enterprise Institute, which received millions in funding from major multinationals, and who have the most to lose from increased regulation.


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## a_majoor (24 Dec 2010)

Try again:



> The banking crisis that began in August 2007 shocked markets and precipitated the Great Recession. To fully explain the banking crisis, one must account for its timing, severity, and global impact. One must also confront a startling historical contrast. If we define “banking crisis” to mean bank failures and system losses exceeding 1 percent of a country’s gross domestic product (GDP), we find that in the period 1875-1913, a period of marked expansion in international trade and capital flows comparable to the last three decades, there were only four banking crises worldwide.1 By contrast, in the period 1978-2009, a period of much more extensive bank regulation, central bank intervention, government protection of depositors and other bank creditors, and government control of mortgage markets, about 140 banking crises occurred worldwide. Of these, 20 were more severe than any crisis from the earlier period of 1875-1913, in terms of total bank losses as a percent of GDP.



Historical facts don't change because of who is pointing it out. Unless you have historical proof that the financial crisis during the "free banking" period were actually more frequent or worse than what has happened in the post regulatory period, or can describe a convincing mechanism besides regulatory failure providing perverse incentives to explain the multiplicity of faiures, then the only people who have the most to lose from increased regulation is the taxpayers, who will be forced to fund more and more frequent bailouts.


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## Edward Campbell (24 Dec 2010)

Thucydides said:
			
		

> Try again:
> 
> Historical facts don't change because of who is pointing it out. Unless you have historical proof that the financial crisis during the "free banking" period were actually more frequent or worse than what has happened in the post regulatory period, or can describe a convincing mechanism besides regulatory failure providing perverse incentives to explain the multiplicity of faiures, then the only people who have the most to lose from increased regulation is the taxpayers, who will be forced to fund more and more frequent bailouts.




There is a problem with the data: banks and banking (including all _financial_ institutions) in the late 19th and early to mid 20th century were nowhere near as large, relative to the population and money supply and, and, and, as they are today. The AEI comparison is not apt.


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## jhk87 (25 Dec 2010)

Thucydides said:
			
		

> Try again:
> 
> Historical facts don't change because of who is pointing it out. Unless you have historical proof that the financial crisis during the "free banking" period were actually more frequent or worse than what has happened in the post regulatory period, or can describe a convincing mechanism besides regulatory failure providing perverse incentives to explain the multiplicity of faiures, then the only people who have the most to lose from increased regulation is the taxpayers, who will be forced to fund more and more frequent bailouts.



Context is everything, as many an historian might tell you. The period you highlight also saw a world dominated by a few colonial powers with guaranteed access to cheap commodities and a highly stable, gold-backed pound. No free-thinking, wildly ambitious banker had thought of complex derivative products yet. Today's world is far more fluid, complex and dynamic.

I could point out that massive borrowing on  stock and commodity speculation led to Black Thursday in 1929 or that the economies that had deregulated their financial sectors most profoundly have been hit the worst - Canada was heavily regulated and did much better than either the Brits or the Americans.


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## ModlrMike (25 Dec 2010)

jhk87 said:
			
		

> Canada was heavily regulated and did much better than either the Brits or the Americans.




...and appears to be doing so again.


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## a_majoor (26 Dec 2010)

Regulatory failure yet again. More unfunded liabilities. The gap grows ever wider:

http://www.washingtonpost.com/wp-dyn/content/article/2010/12/23/AR2010122304421.html



> *A remedy for beggar states*
> 
> By George F. Will
> Sunday, December 26, 2010
> ...


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## Kirkhill (28 Dec 2010)

E.R. Campbell said:
			
		

> There is a problem with the data: banks and banking (including all _financial_ institutions) in the late 19th and early to mid 20th century were nowhere near as large, relative to the population and money supply and, and, and, as they are today. The AEI comparison is not apt.



Surely the real difference is that the earlier economy was in large part a barter economy with one of the most common commodities bartered being gold.  Gold was regulated at a fixed rate by those Huguenot inheritors at the Bank of England.  Banks were not as big and the sums involved were not as big because beer cost a penny a pint, there were 240 pennies to the pound and there were 4 pounds, 5 shillings (or 17 Crowns) to the ounce of gold.  You didn't involve your bank when you went to your local pub.  Nowadays you do.....how many pay for their rounds with their Debit card?

In a world of imperfections where you always only get 2 out of every 3 things you want the gold standard still doesn't look like a bad bet.


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## Redeye (29 Dec 2010)

Kirkhill said:
			
		

> In a world of imperfections where you always only get 2 out of every 3 things you want the gold standard still doesn't look like a bad bet.



A gold standard will fail for exactly the same reason it failed last time - eventually someone will need to unhook from it like Nixon did.  Placing an artificial constraint on money suppy growth potentially crimps growth.  And at the end of the day, I don't really even understand why gold is viewed to have such "intrinsic" value.  It's shiny.  Great.  So are lots of things.  It's still as arbitrary a store of value as everything else including paper money.


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## Kirkhill (29 Dec 2010)

Gold has little "real" value.  However it has an "accepted" value.  It doesn't require that the entire world community accept that gold has a given value, or even any value at all.  It is sufficient that much of the world accepts that gold does have value and will pay over the odds for a peculiar inert and malleable metal.  Consequently it has value.

The same can not be said about the Dollar or the Euro or the Pound or any of the other currencies.  They retain value only so long as the market retains faith in the issuing Government (and we can disregard the fiction of the autonomous Central Bank - both Government and Bank reflect the nation and the bureaucracy which the both serve and master).

You say that gold imposes a discipline. I agree.

You say that Nixon walked away from that discipline. I agree.

You say that others would be inclined to follow Nixon.  Perhaps.

When Nixon walked away from gold the price of oil did not spike.  The value of the dollar crashed.  The relative prices of gold an oil remained similar. Only the purchasing power of the US Dollar, and all those paper currencies tied to it by Bretton Woods, declined.....and hyper inflation resulted.

The gold standard didn't fail.  Governments may choose not to operate using gold but that doesn't stop the market from using it.  A gold ring will still put food on the table and gas in the car anyplace in the world.


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## GR66 (29 Dec 2010)

Redeye said:
			
		

> And at the end of the day, I don't really even understand why gold is viewed to have such "intrinsic" value.  It's shiny.  Great.  So are lots of things.  It's still as arbitrary a store of value as everything else including paper money.



You're right that our collective selection of Gold as a store of value is arbitrary, but there are some intrinsic characteristics beyond being "shiny" that make it maintain a relative value over time.  There is a finite amount of Gold available and it cannot be created in such a way as to deflate its value.  It is also not typically consumed in such a way as to become unavailable for future use (unlike other "valuables" such as fossil fuels, etc.).  So while our species COULD have picked something different in which to view as having near universal value it would still likely have ended up being something with similar characteristics.

A Fiat currency however is the ultimate arbitrary store of value since there is literally NO instrinsic value to it.  I'm not saying that we should necessarily re-link our currencies to a Gold Standard (or any other standard) however many of our financial problems are a result of the lack of any type of forced constraint on our ability to spend and/or deflate our way out of natural financial constraints.


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## Kirkhill (29 Dec 2010)

GR66 said:
			
		

> You're right that our collective selection of Gold as a store of value is arbitrary, but there are some intrinsic characteristics beyond being "shiny" that make it maintain a relative value over time.  There is a finite amount of Gold available and it cannot be created in such a way as to deflate its value.  It is also not typically consumed in such a way as to become unavailable for future use (unlike other "valuables" such as fossil fuels, etc.).  ...



Good points GR66.

The fact that gold is inert means that it is not affected by the environment.  It doesn't react with oxygen or water and thus is "incorruptible" in the old words.  It is unchanging and eternal and can be handed down from generation to generation. Solomon's gold is still in circulation as is Midas's and Croesus's.


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## a_majoor (29 Dec 2010)

Oddly enough, Gold was a relatively recent addition to the financial arsenal. For much of history, it was Silver that was the store of value, but massive discoveries of Silver in the 1500's destabilized the then global economy. Spain, as the source of most of the Silver, experienced monetary inflation with such odd effects as to make it too expensive to man galleys with trained sailors, causing a wholesale replacement of oarsmen with criminals and slaves...

Of course it took several hundred years for most of the world to change over to Gold, and the work of only a few decades to go to fiat money (FDR banned the private ownership of gold in the 1930's, Governments were working on ways to get out from under the discipline of the Gold standard for a long time).


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## Flip (30 Dec 2010)

jhk87 said:
			
		

> Unfortunately, the west is having a very difficult time doing what it needs to do, which is to curtail retail spending and an emphasis on soft goods to rebuild the rotten heavy industrial core of the economy on a 21st-century model. Until this happens, we're going ot have to keep financing retail purchases - a very flimsy base for economic progress!



I have a biased opinion, but I think jhk87 is exactly right.
Balancing the US budget is important, but spending cuts and tax increases are only an "until next time" solution.
What's very clear to me ( because I run a small industrial business ) is that, in the west, we use phrases like"post industrial economy" as a social value.  Many people actually think industrial productivity is something to evolve beyond.

We have an astonishing number of people in the west actively seeking to shrink the industrial economy as if there would be no negative consequences.  This boggles my mind but have you paid any attention to what goes on in California theses days?  New regulation on industry has been an unrelenting trend for nearly a generation, and the results speak for themselves.

My perspective anyway, not academic at all, but there it is........


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## Edward Campbell (30 Dec 2010)

Flip said:
			
		

> I have a biased opinion, but I think jhk87 is exactly right.
> Balancing the US budget is important, but spending cuts and tax increases are only an "until next time" solution.
> What's very clear to me ( because I run a small industrial business ) is that, in the west, we use phrases like"post industrial economy" as a social value.  Many people actually think industrial productivity is something to evolve beyond.
> 
> ...




You are quite correct: the *most valuable* jobs - the ones all countries try hardest to get and keep - are (relatively) low skilled, highly paid and, above all, _durable_ industrial/production jobs in factories, shipyards and the like. Why do you think the Chinese try so hard to hold on to their existing productivity advantages? Those "good," industrial jobs are the key to social harmony. There are, we read, huge battles going on in China between the government and those who want to "modernize" - which involves cutting or outsourcing (to e.g. lower wage Indonesia) those manual labour, _metal bending_, industrial jobs. Look, indeed, at California and Japan and Canada. It is not labour costs, themselves, that make some economies more or less productive - the most productive economies often have fairly high wage rates.


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## GR66 (30 Dec 2010)

E.R. Campbell said:
			
		

> You are quite correct: the *most valuable* jobs - the ones all countries try hardest to get and keep - are (relatively) low skilled, highly paid and, above all, _durable_ industrial/production jobs in factories, shipyards and the like. Why do you think the Chinese try so hard to hold on to their existing productivity advantages? Those "good," industrial jobs are the key to social harmony. There are, we read, huge battles going on in China between the government and those who want to "modernize" - which involves cutting or outsourcing (to e.g. lower wage Indonesia) those manual labour, _metal bending_, industrial jobs. Look, indeed, at California and Japan and Canada. It is not labour costs, themselves, that make some economies more or less productive - the most productive economies often have fairly high wage rates.



I don't think that those "(relatively) low skilled, highly paid" jobs really ARE the *most valuable* jobs for developed nations, even though they ARE the ones most countries try hardest to get and keep.  The reason is that those relatively low skills can be provided WITHOUT being as highly paid elsewhere.  Unless you are combining those production jobs with HIGHLY skilled elements (advanced designs, technologies and/or services) you're just not going to get high employment levels in the manufacturing/production sector.  

Even if you DO focus on the high-end "niche" and specialty product markets (as well as items that are simply too expensive to import), the manufacturing employment levels are not likely to be very high compared to historical levels.  This is because education, technology and capital are MUCH more fluid than in the past and industries can much more easily be moved or recreated in other areas in order to remain competitive.  

What capturing the high-end manufacturing market  does do though is inject more cash overall into the domestic economy which can then go toward paying for those services and industries that support this type of manufacturing (everything from marketing companies, lower-end manufacturers like packaging, financial services, construction, retail sales, etc).


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## Edward Campbell (30 Dec 2010)

GR66 said:
			
		

> I don't think that those "(relatively) low skilled, highly paid" jobs really ARE the *most valuable* jobs for developed nations, even though they ARE the ones most countries try hardest to get and keep.  The reason is that those relatively low skills can be provided WITHOUT being as highly paid elsewhere.  Unless you are combining those production jobs with HIGHLY skilled elements (advanced designs, technologies and/or services) you're just not going to get high employment levels in the manufacturing/production sector.
> 
> Even if you DO focus on the high-end "niche" and specialty product markets (as well as items that are simply too expensive to import), the manufacturing employment levels are not likely to be very high compared to historical levels.  This is because education, technology and capital are MUCH more fluid than in the past and industries can much more easily be moved or recreated in other areas in order to remain competitive.
> 
> What capturing the high-end manufacturing market  does do though is inject more cash overall into the domestic economy which can then go toward paying for those services and industries that support this type of manufacturing (everything from marketing companies, lower-end manufacturers like packaging, financial services, construction, retail sales, etc).




You are correct: I should have said *"socio-politically most valuable"*. In economic/productivity terms they are, indeed, expendable.


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## Kirkhill (30 Dec 2010)

Flip,

I will cheerfully invest in your company rather than buying a new entertainment center.  What will you offer me in return?  The entertainment center will occupy, inform and pleasure me and my family.  It has value. Does your company compete on those terms?

Remember, it's not about "benevolence" but "self-interest".


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## Flip (30 Dec 2010)

E.R. Campbell said:
			
		

> It is not labour costs, themselves, that make some economies more or less productive - the most productive economies often have fairly high wage rates.



I'll agree with that!

Costs of compliance wrt. environmental regulation, paper burden and taxes and chain of supply costs have a huge net effect.

And the "cash capture" model is not nearly complete in my opinion. There is more to value than cash!

What was Marx's phrase......"means of production? Add to that the concept of intellectual property and technology has a vertically integrating effect within an economy.  If you offshore chunks of that equation, you have off-shored profit, wages, taxes etc.

Kirkhill, my products are almost exclusively for industry.  My products help industrial enterprises remain in business and the employees therein to stay employed. But over the course of a generation I have watched major segments of the high tech industrial sector get subcontracted to Asia.  I can now buy, what used to be our major product, for less than it costs to buy the raw materials in North America.  Part of that shift is due to a fundamental change.  The "Military Industrial Complex" used to be a major driver of new technology. We now have a "Santa's Workshop" driven focus.  The major driver of new technology is new toys in million lot ( with tiny profit margins)  for the masses.


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## Rifleman62 (15 Jan 2011)

This article explains the situation clearly, and how it happened.

http://seekingalpha.com/article/246578-foreclosure-situation-to-worsen-in-2011-how-we-got-here
*
Foreclosure Situation to Worsen in 2011; How We Got Here*

Richard Suttmeier

According to RealtyTrac, home repossessions will rise in 2011 from the* record one million homes that were repossessed in 2010*. There are *five million homeowners who are at least two months behind on their mortgages*, primarily due to job losses and declining home prices, which pushes more borrowers underwater.

*One in 45 households received a foreclosure filing in 2010, for a record high 2.9 million homes.* *RealtyTrac projects three million foreclosures in 2011, with 1.2 million repossessions. This hidden inventory is on top of the 700,000 homes on the books of banks within the $53.2 billion in Other Real Estate Owned (OREO)*. It will likely take three years to clean up these unwanted homes and some banks are abandoning OREO properties. This environment will reduce property appraisals, which will eventually filter through to lower home prices.
*
Foreclosure Players: The Home Owner, The Bank, The Investor*

When a homeowner buys a home and takes out a mortgage, he is usually unaware of whether or not the bank holds the mortgage as an investment or has the mortgage pooled into a mortgage-backed security that is sold to an investor. Before the housing crisis began, many mortgages were sliced and diced into mortgage derivative structures sold in the private market, as well as to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). Since Fannie and Freddie became government-owned through conservatorship, these GSEs have securitized roughly 90% of mortgage securities, as the private market fell off the map.

This tangled web is one of the major problems in trying to unravel how to help homeowners stay in their homes, and to accurately perform a foreclosure procedure when there is no hope of their doing so.
*
The Home Owner* – May have bought a home he could not afford with a mortgage that he could not understand. As home values plunged, owners owed more than what the home was worth. Defaults resulted when mortgage payments increased because of higher mortgage rate adjustments, or because the homeowner lost his job, or felt screwed by the bank.

*The Bank *– May have exaggerated how easy it would be for the homeowner to afford adjustable mortgages. Most mortgages were packaged by the bank, entered into the securitization process, and were sold by Wall Street to investors around the world, who thought the mortgage securities were “AAA” rated -- and, in the case of Fannie and Freddie, were backed by the U.S. government, which was not true.
*
The Investor* – The main reason to securitize and sell mortgage structures to investors is to spread the risk of default to a broader group. The problem was the false ratings and assumed U.S. backing of Fannie- and Freddie-backed securities. As a result, instead of investors taking a hit, tax payers have, through the conservatorship and guarantee assumption of Fannie and Freddie, which cost about $150 billion through 2010.

Now state attorneys general are meeting with mortgage securities investors, who want to shield themselves from losses that may result in settlements relative to the foreclosure dilemma. The so-called “too big to fail” banks are in the middle of this, as they risk having to buy back the mortgage securities they sold to investors. I see no problem with this as long as it’s done at a current market price, not at the original price. That’s what makes a market. The investor bought betting on gains, but market conditions have changed due to default and foreclosures, so the investor should simply sell the bonds back to the bank at a current market price, where the investor takes the loss. That’s the free-market solution.

At the end of 2007, the mortgage market totaled about $15 trillion, by some estimates. Of these, FDIC data shows only $2.25 billion were held as investments on the books of our nation’s banks at the end of 2007. At the end of Q3 2010, this asset class was down $364.9 billion or 16.3%. It’s hard to evaluate why mortgages had this huge decline, other than defaults and foreclosures, or packaging loans to Fannie Mae or Freddie Mac. They all did not go into OREO, which rose 338.2% to a record $53.2 billion. This stress in the banking system is a factor in making the foreclosure process even more difficult for the bank.

The bigger problem is how many mortgages are sliced and diced into Notional Amount of Derivatives, which grew 43.5% to $236.4 trillion at the end of Q3 2010. You can’t put Humpty Dumpty mortgages back together again as investors fight over whether they own the front door or even the kitchen sink of the underlying collateral known as the home.

I do not have a solution, and neither does our government, the legal folks sorting through the mess, or the financial market place.


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## a_majoor (25 Jan 2011)

Blue States like California or New York might be going down in flames:

http://thehill.com/homenews/house/139739-cantor-warns-no-bailout-of-the-states



> *Rep. Eric Cantor: 'No bailout of the states'*
> By Russell Berman	 - 01/24/11 08:24 PM ET
> House Majority Leader Eric Cantor (R-Va.) issued a new threat against a federal bailout for ailing state governments Monday as GOP leaders girded for a confrontation with President Obama over spending.
> 
> ...


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## Redeye (25 Jan 2011)

It's a sad irony given that Blue States like California, through the federal tax system, essentially prop up Red States.  And sadder still that it's a populist ballot initiative in the case of California, the infamous Proposition 13 is what has financially hobbled the state.



			
				Thucydides said:
			
		

> Blue States like California or New York might be going down in flames:
> 
> http://thehill.com/homenews/house/139739-cantor-warns-no-bailout-of-the-states


----------



## a_majoor (25 Jan 2011)

What has financially hobbled the bankrupt states is spending more than they receive in tax revenues. Proposition 13 was the voters telling California pols they were not willing to be taxed at a higher and higher rates. California's bankruptcy is the Politicians and their various clients (public service unions, political rent seekers) flipping the taxpayer the finger.

Charles Dickens summed it up best:



> *"Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."*


----------



## Redeye (25 Jan 2011)

Except that Prop 13 capped rates at levels unsustainable given the services Californians reasonably expect from their government, sto that they cannot adjust their tax rates appropriately, to deliver those services.

It's become a politically untouchable thing, adding to the misery.  While there are many cases of waste and inefficiency in the state, those aren't the reason for the problem.



			
				Thucydides said:
			
		

> What has financially hobbled the bankrupt states is spending more than they receive in tax revenues. Proposition 13 was the voters telling California pols they were not willing to be taxed at a higher and higher rates. California's bankruptcy is the Politicians and their various clients (public service unions, political rent seekers) flipping the taxpayer the finger.
> 
> Charles Dickens summed it up best:


----------



## Edward Campbell (25 Jan 2011)

Redeye said:
			
		

> Except that Prop 13 capped rates at levels unsustainable given the services Californians reasonably expect from their government, sto that they cannot adjust their tax rates appropriately, to deliver those services.
> 
> It's become a politically untouchable thing, adding to the misery.  While there are many cases of waste and inefficiency in the state, those aren't the reason for the problem.




But, the sovereign people of California made an _informed_ choice - there were HUGE pro and con advertising campaigns - and then the government continued to offer unaffordable services.

The morally correct but politically suicidal course for California politicians was to cancel programmes, causing great hardship and even loss of life, often to the poorest and weakest, to fire public employees, including the police officers who protect Californians, and so on. Then, and only then, would populism work properly: the people would have decided and then they would have borne the consequences of those decisions - perhaps by being mugged on the street by desperate poor people who no longer fear an ineffectual police force.


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## Brad Sallows (25 Jan 2011)

>It's a sad irony given that Blue States like California, through the federal tax system, essentially prop up Red States. 

Proof?  For all the times I see this (either in the Blue vs Red, or Urban vs Rural context), no-one has yet demonstrated that the money spent in the Red/Rural areas isn't mainly for the benefit of the Blue/Urban areas.  For example, subsidies and investments to promote the development and extraction of foodstuffs and resources and the infrastructure to transport them from the "receiver" to the "giver" are really for the "giver's" benefit.


----------



## Brad Sallows (25 Jan 2011)

>Except that Prop 13 capped rates at levels unsustainable given the services Californians reasonably expect from their government

Remove the invalid assumption "reasonably" and the statement will be correct.  But then, it lays bare the simplest of economic problems which the state in all its progressive glory doesn't want to admit: the desire to spend more than one has.


----------



## Rifleman62 (29 Jan 2011)

http://www.nationalreview.com/corner/258363/cartoon-day-kathryn-jean-lopez


----------



## a_majoor (4 Feb 2011)

$76 billion in cuts to a $3 trillion dollar budget is _*draconian*_? What will they say when plans like the "roadmap" proposing $500 billion or more in cuts start appearing on the floor of the Congress?:

http://dailycaller.com/2011/02/03/senate-dems-reject-gop-budget-proposal-warn-against-government-shutdown/



> *Senate Dems reject GOP budget proposal, warn against government shutdown*
> By Chris Moody - The Daily Caller | Published: 3:43 PM 02/03/2011	 | Updated: 5:30 PM 02/03/2011
> 
> Setting the stage for another showdown over government spending, top Senate Democrats rejected the House Republicans’ new budget proposal Thursday, but said they were ruling out a government shutdown.
> ...



Or for some _*serious*_ budget cutting:

http://pajamasmedia.com/instapundit/     03 Feb 11



> SO I MENTIONED BOB CORKER’S NEW BUDGET CUTTING BILL EARLIER, and I just spent about a half an hour on the phone with him talking about it. Quite a few InstaPundit readers had emailed with questions or comments, so I raised some of those with him. Here are some of the things he said:
> 
> Teeth: Some InstaPundit readers thought the bill needed more teeth, but Corker points out that it requires sequestration of funds above the GDP-percentage cap, and that it affects not only discretionary spending but entitlements. Everything is put on-budget. And it takes a 2/3 vote, not a 60% vote, to escape the caps, making it tougher to opt out of than Gramm-Rudman. My suggestion: Add a citizen-suit provision, like environmental statutes have.
> 
> ...


http://corker.senate.gov/public/?a=Files.Serve&File_id=af2cc42b-7f97-4ce0-9e42-e036263123e7


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## a_majoor (6 Feb 2011)

Currency risks:

http://sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/02/03/bloomberg1376-LG1CAH1A1I4I01-48KGBQ2RG1TRIVSC9G6N4HR7BR.DTL




> *Roach Says U.S. Faces Dollar Decline as China Becomes Importer*
> Thursday, February 3, 2011
> 
> Feb. 3 (Bloomberg) -- China will curb its reliance on exports sooner than the U.S. can cut its budget and external deficits, removing a support from the dollar that will unsettle currency markets, Morgan Stanley's Stephen Roach said.
> ...


----------



## tomahawk6 (6 Feb 2011)

There are a couple of ways to go about reducing the Federal budget. Freeze non-defense spending at say 2008 spending levels. The TARP/stimulus  money is largely unspent,why not return that money to the treasury ? Obama's energy policy is a disaster coupled with Mideeast chaos is only going to see fuel prices skyrocketing which will only make any recovery nearly impossible.


----------



## a_majoor (11 Feb 2011)

TEA Party movement congress is starting to make the right sounds (proposed $100 billion in cuts, now this):

http://www.nationalreview.com/corner/259524/duffy-use-unspent-stimulus-reduce-deficit-katrina-trinko



> *Duffy: Use Unspent Stimulus to Reduce Deficit*
> February 10, 2011 5:56 P.M.
> By Katrina Trinko
> 
> ...


----------



## a_majoor (11 Feb 2011)

Talk about shorting:

http://pajamasmedia.com/tatler/2011/02/11/arianna-huffington-prepared-to-sell-the-huffpo-for-a-year-and-a-half/



> *Arianna Huffington prepared to sell the HuffPo for a year and a half?*
> 
> Look, we all know that it can take a while to sell any kind of property in Obama’s economy, but if what the Tatler has learned is true, Arianna Huffington started making the moves to sell the Huffington Post much earlier than her loyal lefty following realizes. Shortly after the AOL-Huffington Post deal went public, the Tatler has learned that there was a conference call between AOL bigs, Arianna Huffington, and some of the bloggers involved with Patch.com. Patch.com is the AOL-owned web site that drills down to very local coverage of restaurants, entertainment and news. According to what we’ve heard about this conference call, one or more of the Patch bloggers expressed concern about Huffington’s obvious far left political leanings and biases, and how Huffington’s left wing advocacy might impact the nonpartisan Patch.com. Press reports have said that in her new role as part of the AOL deal, Huffington becomes editor in chief of a slew of AOL-owned sites including Patch.com, and Huffington has been quoted saying that Patch.com is a key part of her strategy for generating deep and local coverage of the 2012 elections. According to our source, Arianna Huffington responded to the political question by saying that she herself had been concerned about how her politics might impact the sale of the HuffPo, so she has worked to moderate the HuffPo‘s voice for the past 18 months to boost its appeal.
> 
> ...


----------



## a_majoor (22 Feb 2011)

The sale of State owned assets could cover the hole (so long as the time is used to make deep and permanent cuts to spending, and lowering the tax and regulatory environments to promote economic growth):

http://www.newsweek.com/2011/02/20/sale-of-the-century.print.html



> *Sale of the Century*
> 
> The deficit debate remains fixed on tax hikes and spending cuts, but there is another option.
> by Niall FergusonFebruary 20, 2011
> ...


----------



## Redeye (22 Feb 2011)

Thucydides said:
			
		

> The sale of State owned assets could cover the hole (so long as the time is used to make deep and permanent cuts to spending, and lowering the tax and regulatory environments to promote economic growth):
> 
> http://www.newsweek.com/2011/02/20/sale-of-the-century.print.html



The author of this piece should see how flogging Crown assets worked out for Ontario.  It's a great short-term plug, but not a long term solution for anything really.


----------



## Edward Campbell (22 Feb 2011)

Redeye said:
			
		

> The author of this piece should see how flogging Crown assets worked out for Ontario.  It's a great short-term plug, but not a long term solution for anything really.




I think that is a gross oversimplification. There are many, many (possibly even most) economists who would disagree and who will provide lots and lots of math to show that *private property* usually outperforms *public* property - which is to say that it (private property) provides a greater net benefit to the _commonwealth_ (domestic tax base, etc) than do public assets. It is a wee bit counter-intuitive but I also think the economics is on Thucydides' side.


----------



## Redeye (22 Feb 2011)

I look for example at the sale of Highway 407 and of Ontario Hydro and wonder where the benefits are to the taxpayer for these moved - other than a one-time infusion of cash.  Similiarly, when one looks at the experience of the UK in privatization of all sorts of things, it seems like the benefits are in fact nowhere near what are claimed.  Privatization of British Rail, for example, has been an almost totally unmitigated disaster.

The even worse cousin, though, following UK politics (and Nova Scotia's, as they've been big on them lately) are "private finance initiatives" or "public-private partnerships".  Interestingly these seem to be gaining steam in Canada when the evidence from the UK suggests they are in fact not a good deal for the taxpayer at all.  Interestingly, some of the best coverage of much of the mess in the UK is a satire magazine, Private Eye - they tend to reveal the sordid details long before the mainstream press does (and thus, they have a column every issue showing how long it takes before their stories break.  They have been lately covering the impact of privatization on the MoD in the UK, in particular the creation of QinetiQ, which a UK National Audits Office report found was an atrociously bad deal for the UK taxpayer.

In many - if not most cases - economics suggests that provision of most goods and services is best left to the private sector.  However, there are many cases where the market fails, which is why governments exist in large part - to ensure that services are in place - infrastructure being a major example.  What seems to happen when the decision is made to sell off such assets is that the terms are generally most favourable to the private sector investors but when things fall apart it's the market - and the taxpayer - left holding the bag.



			
				E.R. Campbell said:
			
		

> I think that is a gross oversimplification. There are many, many (possibly even most) economists who would disagree and who will provide lots and lots of math to show that *private property* usually outperforms *public* property - which is to say that it (private property) provides a greater net benefit to the _commonwealth_ (domestic tax base, etc) than do public assets. It is a wee bit counter-intuitive but I also think the economics is on Thucydides' side.


----------



## Edward Campbell (22 Feb 2011)

Redeye said:
			
		

> ...
> In many - if not most cases - economics suggests that provision of most goods and services is best left to the private sector.  However, there are many cases where the market fails, which is why governments exist in large part - to ensure that services are in place - infrastructure being a major example.  What seems to happen when the decision is made to sell off such assets is that the terms are generally most favourable to the private sector investors but when things fall apart it's the market - and the taxpayer - left holding the bag.




With respect, the "economics" suggests no such thing. The "economics" suggests that a competitive private sector always outperforms the public sector because, _inter alia_, it is better able to control costs. With regard to "infrastructure" I offer, just as one example, the Japanese transit systems - mostly private and all better than what we have here in North America.

I agree the popular (read uninformed) *public perception* is that "something" was lost and little, is anything, was gained when public assets are privatized, but the public perception is often (usually?) wrong - especially when it deals with economics.

The reason there are so many "sweetheart" deals made in disposing of public services is that public management has, usually, been so poor that they, the assets, are nearly worthless. Once again: would you buy any Canadian public transit system,? No, not if you are sane and have more than a third grade education. Would you accept a Canadian public transit system as a gift? No, again. You would start going broke the instant you assumed ownership of such inefficient, mismanaged assets.

But Jim Laxer _et al_ would agree with you ... of course no respectable, adult economist would agree with Jim Laxer, so ...


----------



## Redeye (22 Feb 2011)

E.R. Campbell said:
			
		

> With respect, the "economics" suggests no such thing. The "economics" suggests that a competitive private sector always outperforms the public sector because, _inter alia_, it is better able to control costs. With regard to "infrastructure" I offer, just as one example, the Japanese transit systems - mostly private and all better than what we have here in North America.



Respectfully, this claim is nonsense.  Japan's railway system began to be privatized in 1987, and the privatization only happened because the Government of Japan absorbed all of the debt - and held most of the shares until about 2006.  I can't seem to find much information on the profitability of the successors, but given that they basically got a massive subsidy by being relieved of their debts I don't see what real difference it would make.



			
				E.R. Campbell said:
			
		

> I agree the popular (read uninformed) *public perception* is that "something" was lost and little, is anything, was gained when public assets are privatized, but the public perception is often (usually?) wrong - especially when it deals with economics.



I'm not talking about public perception, though, which I agree is often wrong.  What did taxpayers in Ontario gain from privatization of Ontario Hydro?  What would they gain long term from, say, the privatization of the LCBO?



			
				E.R. Campbell said:
			
		

> The reason there are so many "sweetheart" deals made in disposing of public services is that public management has, usually, been so poor that they, the assets, are nearly worthless. Once again: would you buy any Canadian public transit system,? No, not if you are sane and have more than a third grade education. Would you accept a Canadian public transit system as a gift? No, again. You would start going broke the instant you assumed ownership of such inefficient, mismanaged assets.



See above re privatization of JNR.  Running things like passenger rail service - or any form of mass transit system is very, very difficult to do profitably, because it's hard to generate revenue sufficient to meet expenses.  Why do we have mass transit, then?  Because we've decided it's socially optimal for whatever reason (less traffic, better air quality, whatever), and therefore we subsidize it.  That's the way things are for most utilities and infrastructure - they have to be built out of tax revenues because the private sector won't efficiently deliver them ex nihilo particularly well.

The British experience with their rail system, for example, shows privatization didn't pan out as expected.  The service requires massive subsidies still, service quality seems to have deteriorated, and while some fares have fallen (for commuter service on multiple trip passes for example), other costs have soared, and there's been little reinvestment in maintenance, rolling stock, etc.

I'll try to dig into this a little more in detail with more sources, haven't enough time at the moment.


----------



## Edward Campbell (22 Feb 2011)

I was thinking of e.g. local transit in Japan, like the private subway systems in many cities. It's been a few years since I was there but I recall that Kyoto, for example, has an efficient network composed on numerous private subway lines - all interconnected and, though the agency of a (private) coordinating service inter-scheduled.

Any service that *requires* subsidization is, by definition, improperly priced. Transportation subsidies are a classic example of bribery. No one likes to pay the full cost of an essential service so people band together and force the government to make someone else, e.g. me, pay for something I do not use - like, for example, local public transit for you. Now, there are benefits, to me, when you use public transit - less congested streets and less pollution, for example, but it is not clear that those benefits are worth the transfer of wealth from me to you. We need to do that cost benefit analysis for ALL public services - even defence, by the way - in order to understand what we are doing with out own money.

I would argue that less than 1/100th of 1% of Canadians, including most with PhDs, have ANY idea about the costs and benefits of ANY public "service." The level of ignorance is especially acute amongst the political and chattering classes.


----------



## Redeye (22 Feb 2011)

E.R. Campbell said:
			
		

> I was thinking of e.g. local transit in Japan, like the private subway systems in many cities. It's been a few years since I was there but I recall that Kyoto, for example, has an efficient network composed on numerous private subway lines - all interconnected and, though the agency of a (private) coordinating service inter-scheduled.



Actually, according to Wikipedia, that's not really the case - Kyoto's subway lines are run by a municipal agency.  A private corporation does operate them, but I can't find much information on how they were built - it's the massive capital outlay to built such a system that makes it very difficult for such systems to arise absent some form of government assistance.  Recall that when, for example, the railways were built in North America, even though there was a lot of private investment, it was still crucial that government be involved to get the lines built.



			
				E.R. Campbell said:
			
		

> Any service that *requires* subsidization is, by definition, improperly priced. Transportation subsidies are a classic example of bribery. No one likes to pay the full cost of an essential service so people band together and force the government to make someone else, e.g. me, pay for something I do not use - like, for example, local public transit for you. Now, there are benefits, to me, when you use public transit - less congested streets and less pollution, for example, but it is not clear that those benefits are worth the transfer of wealth from me to you. We need to do that cost benefit analysis for ALL public services - even defence, by the way - in order to understand what we are doing with out own money.



You're right about subsidization - this is where economic models break down because price-based models alone do not reflect the cost/benefit to society of such systems - thus the need for public discourse about them.  Similarly, externalities of all sorts play into a lot of regulatory regimes.  The cost, for example, of the pollution generated by production,  consumption, and disposal of any particular good generally is not reflected in pricing.  An argument has been made that incorporating such costs (though there's no easy way to do it I'd say) might shift consumption decisions.  Making shoppers pay for plastic bags, for example, drops demand for them and shifts consumer preferences to reusable bags, which ultimately reduces those otherwise externalized costs.

You've also hit on something particularly relevant to discussing the US economy - defence - its costs.  It seems like defence is a sacred  cow in US politics, and there's really almost no point in a fiscal responsibility discussion without it.  Some elements of the GOP, for example, jumped all over President Obama for negotiating the New START - though I would think that cutting the US nuclear arsenal (and the cuts are modest to say the least) will likely trigger some savings.  There's been stories of procurement projects buying things the military doesn't want (like the DD-X/DDG-1000 project) which I can't imagine the cost of.  Obviously, defence is an important thing on which money must be spent and on which there's probably little return on investment to the public, but the general tone in the US in particular seems to be that no one wants to have a really frank discussion.  It seems, by contrast, that in Canada the F-35 debate is providing that sort of discussion, but we've never seen the CF as the sort of sacred cow the US military is.



			
				E.R. Campbell said:
			
		

> I would argue that less than 1/100th of 1% of Canadians, including most with PhDs, have ANY idea about the costs and benefits of ANY public "service." The level of ignorance is especially acute amongst the political and chattering classes.



I'd agree, for the most part.  One need only initiate a conversation about healthcare with the average Canadian to see this.


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## observor 69 (22 Feb 2011)

In a number of examples, airline routes, rail systems where the money making parts subsidizes the less profitable part, public versus private ownership is necessary.


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## GAP (22 Feb 2011)

What about the bridge over to PEI...that was built privately, on a 30 year contract then it reverts to public ownership....


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## observor 69 (22 Feb 2011)

GAP said:
			
		

> What about the bridge over to PEI...that was built privately, on a 30 year contract then it reverts to public ownership....



Where is the unprofitable part?


----------



## Redeye (22 Feb 2011)

Confederation Bridge's private owners get a subsidy of about $44 million/year from the Federal Government (based on the subsidies the ferry service got), and it doesn't sound like they make much money at all from what I've read.


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## observor 69 (22 Feb 2011)

Looks like everyone is happy.


The Confederation Bridge project was awarded the Gold Award for Leadership in Public-Private Partnerships at the 12th Annual National Canadian Council for Public-Private Partnerships Awards Dinner in Toronto on December 3, 2009.  Andrew Lin, Senior Vice President of Borealis Infrastructure and Michel Doiron, Regional Director General for Transport Canada accepted the award on behalf of the private and public sector partners.

The Gold Award is the most prestigious award granted by the Canadian Council for Public-Private Partnerships. Each year, the Council celebrates successful public-private partnerships through its National Awards Program held concurrently with the annual conference. Awards are presented to public institutions/governments and their private sector partners for outstanding achievement in Canadian public-private partnerships.

Strait Crossing Development Inc. (SCDI) is the private partner in the Confederation Bridge Project and is owned by BPC Maritime Inc. (Borealis), VINCI Concessions Canada Inc. and Strait Crossing Inc. “The Confederation Bridge has been open for business for over 12 years now and not only is the bridge an engineering success, it has also proven to be the new operational and maintenance standard for infrastructure across Canada. We acknowledge and thank Transport Canada for their continuous support in all aspects of this undertaking” said Andrew Lin on behalf of SCDI.

Speaking on behalf of Transport Canada, Michel Doiron said “the team is to be commended for a job well done.” He added, “the positive and professional working relationship that has developed between our team, SCDI and the other project partners has contributed to the success of this project as recognized by this award. It represents an excellent example of a successful public-private partnership”.

The Confederation Bridge satisfies Canada’s constitutional obligation to provide a transportation link to Prince Edward Island. By way of agreements signed with the federal government in October 1993, SCDI designed, financed and built the Confederation Bridge and agreed to operate and maintain the facility for 35 years. After this period, the bridge will revert to the government to operate for the remainder of the 100-year design life.

http://www.confederationbridge.com/en/corporate_information.php

http://www.pppcouncil.ca/


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## Redeye (22 Feb 2011)

Baden  Guy said:
			
		

> Looks like everyone is happy.



I'm not so sure about that:

From: http://www.cbc.ca/news/canada/prince-edward-island/story/2007/05/31/bridge-business.html

"The group generally doesn't release financial information, but it is known that at the end of 2003 the owners got a dividend payment of $2.6 million, not very much on a billion-dollar bridge."

Most of the toll revenue goes to the bondholders who financed the construction... however, a big chunk of those bonds are held by the same people who own the bridge (OMERS, for example), so it's not totally clear how good the deal is I suppsoe.


----------



## Edward Campbell (22 Feb 2011)

Redeye said:
			
		

> ...
> Most of the toll revenue goes to the bondholders who financed the construction... however, a big chunk of those bonds are held by the same people who own the bridge (OMERS, for example), so it's not totally clear how good the deal is I suppsoe.




"I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
James Carville, political advisor to U.S. President Bill Clinton, Source: Bloomberg


----------



## Bruce Monkhouse (22 Feb 2011)

E.R. Campbell said:
			
		

> The "economics" suggests that a competitive private sector always outperforms the public sector because, _inter alia_, it is better able to control costs.



Well in my [in total] 33 years of leaching of the Govt. teat I have yet to see one instance of this.......


----------



## a_majoor (22 Feb 2011)

The biggest problem with historical examples is that everyone, including Reagan, Thatcher and Mike Harris did not *cut spending*. The gains to the treasury from the sale of assets was swiftly consumed, and all that really happened was the day of reckoning was pushed back from then to now. 

Selling Crown or State assets might work today in the sense that the author was discussing (raising revenues to pay down debt without raising taxes to unsustainable levels) because there really is no more room to wiggle out of the debt trap. Canada's $500 billion+ of Federal debt and @$500 billion in unfunded liabilities would consume the entire GDP, and we would still be in the hole for hundreds of billions in Provincial and Municipal debt and unfunded liabilities, so the first argument for privatizing assets is clear; there is no other practical way to pay it down in the short run. (Any poster who argues for hiking taxes is invited to research the results of the various "millionaire tax" laws implemented in several US States, look at the behaviour of companies like Amazon who were suddenly subjected to special levies, or contemplate why the one place in the United States which is still creating jobs is also one which has some of the lowest taxes and regulations [Texas]).

Argument two; the relative efficiency of private market vs public service is answered in theory by the fact that a private entity has every incentive to increase profits (which includes providing better service, lowering internal costs and so on), while public service entities have a perverse incentive to maximize their share of the budget, since relative and absolute power inside the bureaucracy is measured by how much of the budget you can get. The inverse is also true, workers in collectives have no incentive to work hard or produce good products since their "share" of the profit is divorced from their actual output. The low levels of agricultural and non military output in the former USSR (despite having a massive resource base to work from) is proof of that. The real world has many factors and degrees of freedom which make one to one comparisons difficult (including measuring outcomes; often people arguing for a particular point are cherry picking which outcome they wish to highlight). Other factors like "crony capitalism" or the addition of other metrics besides financial profit in Public/Private partnerships cloud the picture.

However, there are a few clear one to one comparisons, private garbage collection is cheaper than public collection, and private city bus lines run at a profit (no cost to the taxpayer) while public transit requires large subsidies (30% in the case of London's LTC). Since a large portion of the bill is covered, the LTC has little incentive to adjust routes or otherwise provide the high level of service nearby Kitchener's private bus system does.

If the Highway 407 did not provide a fast, efficient means of bypassing Toronto, then no one would take it, and indeed no one is forced to take the 407, so once again the owners have every incentive to keep the highway well maintained and patrolled.

A final checksum that military readers understand is the mess. They are subsidized by dues which members pay out of after tax dollars. Many messes across Canada which I have personally seen run at minimal capacity, have highly limited hours, service etc. and only remain open due to their life support. None of the bars or other establishments outside the base have this degree of subsidization, soldiers go there because they provide a service they are willing to pay for. Establishments that don't provide the service or entertainment customers expect close quickly.

I expect this argument to be mooted fairly soon anyway. Forward thinking governments will start selling assets in order to cover obligations and pay down debt in a controlled manner, while the spendthrifts will end up having a fire sale of assets as their economic positions collapse (i.e. their bonds either do not sell on the bond market or the risk premiums become unsustainable).


----------



## Redeye (23 Feb 2011)

Thucydides said:
			
		

> The biggest problem with historical examples is that everyone, including Reagan, Thatcher and Mike Harris did not *cut spending*. The gains to the treasury from the sale of assets was swiftly consumed, and all that really happened was the day of reckoning was pushed back from then to now.
> 
> Selling Crown or State assets might work today in the sense that the author was discussing (raising revenues to pay down debt without raising taxes to unsustainable levels) because there really is no more room to wiggle out of the debt trap. Canada's $500 billion+ of Federal debt and @$500 billion in unfunded liabilities would consume the entire GDP, and we would still be in the hole for hundreds of billions in Provincial and Municipal debt and unfunded liabilities, so the first argument for privatizing assets is clear; there is no other practical way to pay it down in the short run. (Any poster who argues for hiking taxes is invited to research the results of the various "millionaire tax" laws implemented in several US States, look at the behaviour of companies like Amazon who were suddenly subjected to special levies, or contemplate why the one place in the United States which is still creating jobs is also one which has some of the lowest taxes and regulations [Texas]).



Agreed on the first para.  Many will claim that they did, but the reality is of course that that didn't actually happen.  In many cases, there's just a shell game of shifting costs - Martin downloaded costs to the provinces in some cases, Harris downloaded them to municipalities for example.  I always point to Ontario's disjointed highway system as the best evidence of this - shifting provincial highways to municipal roads makes all those old maps obsolete.

As for tax increases, I don't buy into the claim that tax increases are bad, period.  The trick, of course, is that where revenues must be raised  any tax hikes must be done in a way so that avoidance doesn't defeat the purpose.  Whenever businesses are looking to locate they tend to try to bargain for tax deals.  This can lead to perverse consequences.  For example, a call centre company, Convergys, set up several centres in Nova Scotia, primarily lured by some sort of tax credit mechanism.  As soon as those credits expired, however, they shut down the operations immediately.  Essentially, Nova Scotia taxpayers subsidized the creation of short-term, low paying jobs.  With their facilities simply leased, Convergys had absolutely no incentive to stay here, and simply relocated the jobs as soon as the deals expired.  Provinces or states can very easily get trapped into a race to the bottom on these jobs.



			
				Thucydides said:
			
		

> Argument two; the relative efficiency of private market vs public service is answered in theory by the fact that a private entity has every incentive to increase profits (which includes providing better service, lowering internal costs and so on), while public service entities have a perverse incentive to maximize their share of the budget, since relative and absolute power inside the bureaucracy is measured by how much of the budget you can get. The inverse is also true, workers in collectives have no incentive to work hard or produce good products since their "share" of the profit is divorced from their actual output. The low levels of agricultural and non military output in the former USSR (despite having a massive resource base to work from) is proof of that. The real world has many factors and degrees of freedom which make one to one comparisons difficult (including measuring outcomes; often people arguing for a particular point are cherry picking which outcome they wish to highlight). Other factors like "crony capitalism" or the addition of other metrics besides financial profit in Public/Private partnerships cloud the picture.



Workers in for-profit businesses often are similarly divorced from the profits of the business, unless they participate in some sort of profit-sharing scheme.  Those, however, are fairly common and are increasingly part of the benefits packages of many employers.  One of Wal-Mart's successes in keeping the unions out of their operations is their profit-sharing/stock purchase plan, which they've made no secret of the fact it would disappear were unionization to take hold.  Collectives (ie the Soviet Union's system) have an even more perverse outcome - "managers" had every incentive to over-report production, so while the USSR reported good wheat harvests for example, they'd still be importing from us.



			
				Thucydides said:
			
		

> However, there are a few clear one to one comparisons, private garbage collection is cheaper than public collection, and private city bus lines run at a profit (no cost to the taxpayer) while public transit requires large subsidies (30% in the case of London's LTC). Since a large portion of the bill is covered, the LTC has little incentive to adjust routes or otherwise provide the high level of service nearby Kitchener's private bus system does.



I'll have to look into this at some point.  I wasn't aware that Kitchener's service was privatized.  I'm going to admit I'd be quite amazed if a transit system runs without subsidies in some form.



			
				Thucydides said:
			
		

> If the Highway 407 did not provide a fast, efficient means of bypassing Toronto, then no one would take it, and indeed no one is forced to take the 407, so once again the owners have every incentive to keep the highway well maintained and patrolled.



The question is, are they making money at it - they've jacked up the prices quite substantially and as I recall that's been a source of major debate in Ontario.  It's not a particularly efficient bypass method, either, because it ends in the middle of nowhere on the eastern terminus, forcing you onto a secondary road (Brock Road) which has a lot of traffic lights.  It is, however, of benefit to people who live along it, but again, at substantial cost to its users.



			
				Thucydides said:
			
		

> A final checksum that military readers understand is the mess. They are subsidized by dues which members pay out of after tax dollars. Many messes across Canada which I have personally seen run at minimal capacity, have highly limited hours, service etc. and only remain open due to their life support. None of the bars or other establishments outside the base have this degree of subsidization, soldiers go there because they provide a service they are willing to pay for. Establishments that don't provide the service or entertainment customers expect close quickly.



Having been PMC of a mess (although it was just a reserve unit mess), there's more to this - restrictions on how we could operate made it very difficult for us to seek opportunities to increase revenue.  For example, we weren't allowed to advertise for rental business so as not to compete with the private sector, and we had such a staff process to hold "special events" that we couldn't really run in a way that was anything beyond breakeven.  It was not for lack of trying.



			
				Thucydides said:
			
		

> I expect this argument to be mooted fairly soon anyway. Forward thinking governments will start selling assets in order to cover obligations and pay down debt in a controlled manner, while the spendthrifts will end up having a fire sale of assets as their economic positions collapse (i.e. their bonds either do not sell on the bond market or the risk premiums become unsustainable).



You are correct here - but my difference of opinion stems from my belief that asset sales alone simply will not solve the problem - a combination of prudent cuts and prudent tax increases are necessary... particularly in the USA - people need to learn and understand that they have not paid their own way in some time, and they have to pay more if they want the services they have.


----------



## observor 69 (23 Feb 2011)

Couple of thoughts:

In the GTA there are reports that a mix of public private garbage collection provides the best service and economy.
"The blended system helps keep both services honest and on top of their game at all times,” said Councillor Russ Powers, chair of Hamilton's public works committee."
http://www.thestar.com/news/article/935380--cities-thrive-with-public-private-garbage-systems

Regards the 407, does a driver have any other choice to get home? All the main arterial roads are at 110% capacity. Who ever owns it has an assured customer base. Was it smart of Mike Harris to sell it?

Again private bus lines, do they serve the parts of the city that are unprofitable but serve a public need,
same applies to rail lines and airplane routes. Hence the private operation is essentially cherry picking.
I recently had a hernia operation at the privately owned Shouldice Hospital. They have a near 100% success rate with there operations. They also will refuse to operate on anyone who does not fit their profile of good health and weight within the normal BMI range, again a case of private cherry picking. Those not fitting within their profile have to go to a public hospital.


----------



## Redeye (23 Feb 2011)

Baden  Guy said:
			
		

> Again private bus lines, do they serve the parts of the city that are unprofitable but serve a public need,
> same applies to rail lines and airplane routes. Hence the private operation is essentially cherry picking.
> I recently had a hernia operation at the privately owned Shouldice Hospital. They have a near 100% success rate with there operations. They also will refuse to operate on anyone who does not fit their profile of good health and weight within the normal BMI range, again a case of private cherry picking. Those not fitting within their profile have to go to a public hospital.



When you had your surgery there, though, it was paid for by OHIP, was it not?  They are a private provider of services, just a doctor's office, etc.  It's interesting (though not really related to the topic at hand directly) to note that most healthcare in Canada is still delivered by private sector actors - doctors' clinics and so on.  A lot of people don't seem to be able to wrap their head around that.


----------



## observor 69 (23 Feb 2011)

Redeye said:
			
		

> When you had your surgery there, though, it was paid for by OHIP, was it not?  They are a private provider of services, just a doctor's office, etc.  It's interesting (though not really related to the topic at hand directly) to note that most healthcare in Canada is still delivered by private sector actors - doctors' clinics and so on.  A lot of people don't seem to be able to wrap their head around that.



Yes OHIP paid for the surgery in the private facility, and my Public Service health plan paid for the three days of meals and room.
But again the parallel I was drawing is that the public hospital caters to all hence must bare a greater expense as it's patient base will not result in optimal outcomes, equaling longer patient stays, complications etc.
On a not related note if you need your hernia repaired Schouldice is the place to go.


----------



## a_majoor (23 Feb 2011)

Found some notes, it turns out that 26 of Ontario's transit systems are private. That would be about 1/3 of all municipal transit systems in Ontario. Even here where the LTC is subsidized, I now see Abouttown buses making runs to the local University. Not sure who the contract is with (UWO? one of the Colleges?), but considering all University and Fanshawe College students *must* pay for a bus pass as part of their student fee, it makes you wonder why the LTC is unable or unwilling to deliver service to that captive market...

WRT the mess, I understand there are many restrictions, just like my friends in the restaurant and hospitality industry must work under multiple layers of regulation as well. The difference is the mess has guaranteed income in the form of dues while a bar or restaurant does not.

Externalities always complicate these discussions; any private owner of a highway like the 407 would never end it abruptly like the 407; but the Government essentially set the route and many of the other factors behind the highway (public private partnerships often are used to achieve some sort of political goal the government cannot finance on its own). The counter argument is without the P3 arrangement, the 407 would never have been built, period. Drivers still have the choice the use the 407 or not, regardless of the conditions of the other highways.


----------



## a_majoor (23 Feb 2011)

And back to the United States:

http://pajamasmedia.com/blog/saving-our-nation-from-debt-an-open-letter-from-rep-jim-jordan/?print=1



> *Saving Our Nation from Debt: An Open Letter from Rep. Jim Jordan*
> 
> Posted By Jim Jordan On February 22, 2011 @ 7:21 pm In Money,Politics,US News,economy | 19 Comments
> 
> ...


----------



## Redeye (24 Feb 2011)

Two observations.

First, without discussing military spending, I assign zero credibility to any discussion, from any party, about fiscal responsibility. Pointing at Social Security as a boogeyman is a bit silly when it is self-funded (and borrowed from heavily).  That said, the reality is that the US has to have a serious national discussion about reforming entitlement programs to move forward.  I find myself scratching my head when I realize I have to agree with the likes of Rand Paul on that, but it's reality.

Second point: events in Wisconsin have revealed that there's more of an agenda about breaking unions than fiscal issues.  Not only have WI public sector unions already made concessions, they have very clearly signalled that they are willing to have constructive discussions on further concessions.  They are not willing to concede their collective bargaining rights, that's really their only firm stand.  That Governor Walker ignores this shows what the real issue is, and as if that wasn't enough, the brilliant prank call he fell for, where he played a perfect sycophant for a man he believed to be David Koch, laid bare what he's really about.   On top of that, while crying poor, he's already signed off on a number of bills which will add $3.8bn to WI's debt, mostly for the benefit of the wealthiest residents of the state, with claims that it will grow revenue dubious at best.  That undermines his poor cries in my view.

Here's an interesting op ed on the situation, not an unreasonable assessment- that the dramatic moves needed must "make everybody hurt": http://www.nytimes.com/2011/02/22/opinion/22brooks.html



			
				Thucydides said:
			
		

> And back to the United States:
> 
> http://pajamasmedia.com/blog/saving-our-nation-from-debt-an-open-letter-from-rep-jim-jordan/?print=1


----------



## observor 69 (25 Feb 2011)

Redeye said:
			
		

> Second point: events in Wisconsin have revealed that there's more of an agenda about breaking unions than fiscal issues.  Not only have WI public sector unions already made concessions, they have very clearly signalled that they are willing to have constructive discussions on further concessions.  They are not willing to concede their collective bargaining rights, that's really their only firm stand.  That Governor Walker ignores this shows what the real issue is, and as if that wasn't enough, the brilliant prank call he fell for, where he played a perfect sycophant for a man he believed to be David Koch, laid bare what he's really about.   On top of that, while crying poor, he's already signed off on a number of bills which will add $3.8bn to WI's debt, mostly for the benefit of the wealthiest residents of the state, with claims that it will grow revenue dubious at best.  That undermines his poor cries in my view.
> 
> Here's an interesting op ed on the situation, not an unreasonable assessment- that the dramatic moves needed must "make everybody hurt": http://www.nytimes.com/2011/02/22/opinion/22brooks.html



And more on Wisconsin and the Governor :

Shock Doctrine, U.S.A.
By PAUL KRUGMAN
Published: February 24, 2011 
Here’s a thought: maybe Madison, Wis., isn’t Cairo after all. Maybe it’s Baghdad — specifically, Baghdad in 2003, when the Bush administration put Iraq under the rule of officials chosen for loyalty and political reliability rather than experience and competence.

More at LINK


----------



## Haletown (25 Feb 2011)

Charles summarizes the situation quite nicely . . . I'm guessing the days of public sector union largesse are numbered.  The liberal concept of being entitled to their entitlements is losing lustre

"The magnificent turmoil now gripping statehouses in Wisconsin, Ohio, Indiana and soon others marks an epic political moment. The nation faces a fiscal crisis of historic proportions and, remarkably, our muddled, gridlocked, allegedly broken politics have yielded singular clarity.

At the federal level, President Obama’s budget makes clear that Democrats are determined to do nothing about the debt crisis, while House Republicans have announced that beyond their proposed cuts in discretionary spending, their April budget will actually propose real entitlement reform. Simultaneously, in Wisconsin and other states, Republican governors are taking on unsustainable, fiscally ruinous pension and health care obligations, while Democrats are full-throated in support of the public-employee unions crying, “Hell no.”"

http://fullcomment.nationalpost.com/2011/02/25/charles-krauthammer-magnificent-turmoil-threatens-union-power/


----------



## Redeye (25 Feb 2011)

Haletown said:
			
		

> At the federal level, President Obama’s budget makes clear that Democrats are determined to do nothing about the debt crisis, while House Republicans have announced that beyond their proposed cuts in discretionary spending, their April budget will actually propose real entitlement reform. Simultaneously, in Wisconsin and other states, Republican governors are taking on unsustainable, fiscally ruinous pension and health care obligations, while Democrats are full-throated in support of the public-employee unions crying, “Hell no.”"



President Obama's budget makes clear the reality that the cuts that have to be undertaken are indeed political kryptonite, which is what's paralyzing getting anything done.

Frankly, anything House Republicans announce is probably overstated.  Since taking the House, when they claimed they were going to focus on "The People's Business" with specific attention to the economy, what have they done?  Well, they passed their repeal of the ACA, which was completely pointless.  They passed HR 3 defunding Planned Parenthood, saving enough money annually to fight the war in Afghanistan for about 3 hours while probably actually increasing demand for abortions by reducing access to contraception and sexual health information AND adding to medical costs including those borne by the public by reducing access to things like cancer screening.  I understand there are some legal issues that might get that foolhardy decision stopped dead in its tracks, but we'll see.

They have a bill in committee that appears to be some kind of limited tort reform that may slightly curtail healthcare inflation, but most studies suggest it's putting a finger in a dyke.  And another that changes a provision about reporting under ACA (wait, didn't they repeal that?!  Oh, right!).  That's really all I can see that substantively deals with the economy and job creation.  So I understand why my American friends are calling & faxing Mr. Boehner's office constantly asking "where are the jobs?"  The GOP has wasted no time in doing absolutely nothing House to further economic recovery.

I understand why people might be optimistic that they plan some sort of huge reform in April.  However, given their track record and the realities of the ground, I am not expecting anything.


----------



## a_majoor (26 Feb 2011)

Just wonderful [/sarcasm]...

http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2479-the-social-security-trust-fund-may-be-worth-less-than-zero



> *The Social Security Trust Fund May Be Worth Less Than Zero*
> By Jed Graham
> Fri., Feb. 25, 2011 12:08 AM ET
> Tags: Social Security - Debt - Deficit - CBO
> ...


----------



## tomahawk6 (26 Feb 2011)

Congress over the years raided the trust fund leaving behind IOU's. Its important to fix the problem ASAP. All it takes is political will. This is just the tip of the iceberg though as the States have a huge unfunded public employee retirement problem and no money to fix the problem. Couple that with increases in unemployment payments and increases in Medicaid the States are headed for bankruptcy.


----------



## Edward Campbell (1 Mar 2011)

Here is  fairly long but very interesting analysis of _"USA Inc"_ done by a team led by well known (until recently _Morgan Stanley_ super-star) analyst Mary Meeker. The 'report to shareholders' is (relatively) unprescriptive but it leaves no doubt that _*everything*_, including every nut, bolt, project and marine in DoD, must be on the table and cuts must be made everywhere - even as programmes aimed at improving _productivity_ (and the USA is already more productive than Canada!) are implemented.

See, also, this in _Time_ for a (reasonably) fair and dispassionate assessment of the state of play of public employment finances.

These are ticking time bombs for our best friend and most important trading partner, the USA; if they fail to meet the challenges they face we, Canadians, will suffer right along with them - no matter how well we might (have) manage(d) our own affairs.


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## a_majoor (1 Mar 2011)

Here is a good place to start:

http://online.wsj.com/article/SB10001424052748703749504576172942399165436.html?mod=rss_Politics_And_Policy



> *Billions in Bloat Uncovered in Beltway*
> 
> By DAMIAN PALETTA
> 
> ...


----------



## a_majoor (15 Mar 2011)

Creating a permanent underclass will have all kinds of negative social, economic and political fallout for decades to come:

http://pajamasmedia.com/blog/why-its-bad-business-to-hire-the-long-term-unemployed/?singlepage=true



> *Why It’s Bad Business to Hire the Long-Term Unemployed*
> 
> The Obama administration has overseen the utterly preventable destruction of human capital that is arguably unprecedented in human history — and it's their fault.
> March 15, 2011 - by Tom Blumer
> ...


----------



## a_majoor (20 Mar 2011)

Someone is going to have to try harder:

http://finance.yahoo.com/news/CBO-Obama-understates-apf-1323525507.html?x=0



> *CBO: Obama understates deficits by $2.3 trillion*
> CBO: Obama budget underestimates deficits by $2.3 trillion over upcoming decade
> 
> Friday March 18, 2011, 9:22 pm EDT
> ...



edit to add: Here is _one_ someone:

http://www.nationalreview.com/corner/262478/rand-takes-reins-robert-costa



> *Rand Takes the Reins*
> March 18, 2011 10:23 A.M.
> By Robert Costa
> 
> ...


----------



## a_majoor (25 Mar 2011)

Structural problems. You can see the incentive at work, and with the incentive being that great, it is hard to imagine that this can be fixed quickly or effectively:

http://blog.heritage.org/2011/03/25/general-electrics-jeffrey-immelt-looter-or-producer/



> General Electric’s Jeffrey Immelt: Looter or Producer?
> Posted March 25th, 2011 at 11:00am in Ongoing Priorities with 0 comments Print This Post
> 
> Ayn Rand did not sell almost 7 million copies of Atlas Shrugged by creating ambiguous characters. Rand’s world is neatly divided between the heroic “producers” (like steel magnate Henry Rearden) and the dastardly “looters” (like lobbyist Wesley Mouch). Further simplifying things, the good guys are all stunningly gorgeous captains of industry (Grant Bowler as Rearden pictured) while the conniving politicians are all … a bit frumpier (Michael Lerner as Mouch pictured).
> ...


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## a_majoor (29 Mar 2011)

Even if the entire $500 billion in cuts from the "Roadmap" plan were to be enacted, the day of reckoning will still arrive without entitlement reform, specifically Medicare, Medicaid and Social Security:

http://pajamasmedia.com/blog/social-security-obama-and-the-democrats-dodge-their-debris/?singlepage=true



> *Social Security: Obama and the Democrats Dodge Their Debris*
> 
> Posted By Tom Blumer On March 29, 2011 @ 12:00 am In Money,Politics,US News,economy | 65 Comments
> 
> ...


----------



## a_majoor (31 Mar 2011)

Follow link for charts and graphs. Canada is also in a similar situation, and a full fledged taxpayer revolt could start at the municipal level (bottom up) rather than Federal level (top down) in either nation.:

http://www.zerohedge.com/article/guest-post-could-declining-house-values-spark-next-taxpayer-rebellion



> *Guest Post: Could Declining House Values Spark The Next Taxpayer Rebellion?*
> Tyler Durden's picture
> Submitted by Tyler Durden on 03/30/2011 09:35 -0400
> 
> ...


----------



## a_majoor (5 Apr 2011)

Wow, even the Ryan Roadmap won't be enough to turn things around:

http://minx.cc/?post=314334



> *Ryan's Plan: Necessary But Not Sufficient (Bumped)*
> 
> Paul Ryan released his new deficit-cutting budget plan today, saving almost $6 trillion over the next 10 years, which is very nice. Really. The National Committee on Fiscal Responsibility and Reform released a similar plan last December, saving almost $2 trillion by 2020, and it too was nice.
> 
> ...


----------



## tomahawk6 (6 Apr 2011)

First 4 years of Obama's presidency has seen $5 trillion in new debt with no end in sight.


----------



## a_majoor (6 Apr 2011)

Since energy is the foundation of modern economies, looking at the energy policy and its effects is a good way of forecasting future economic growth. At a time when massive economic growth is needed to cut unemployment and pay down the deficit and debt, the economy will be literately starved of energy and financial resources:

http://pajamasmedia.com/blog/obamas-new-energy-policy-a-lesson-in-stealth-socialism/



> *Obama’s New Energy Policy: A Lesson in Stealth Socialism*
> 
> Posted By Mike McDaniel On April 6, 2011 @ 12:00 am In Uncategorized | No Comments
> 
> ...



The only point which *may* be contentious is biofuel. Corn ethanol is a disaster both from a food production and energy standpoint, but other alternatives such as using algae and bacteria to produce true oil substitutes would not have the deficiencies noted here. Bio oil can steadily displace mineral oil as production rises and the technologies refined. In the short term, new oil drilling technologies like "fracking" are putting old fields back in production and unlocking huge now finds like the Bakken in North Dakota and Saskatchewan, so there may be a means to "surge" oil production post 2012.


----------



## a_majoor (7 Apr 2011)

Paul Ryan on the "Roadmap": http://www.youtube.com/watch?v=Xwv5EbxXSmE&feature=player_embedded#at=122

We now have three plans proposed to cut spending, reduce the deficit and turn things around; Ryan's, Rand Paul's and the Simpson- Bowles commission report (which is the least dramatic, but probably most politically doable). 

One thing seems quite clear; the current path is unsustainable and will either be stopped with a controlled draw down (such as these plans), or a tipping point will be reached and the spending will stop by default as the economy crashes (depression, stagflation or hyperinflation are three possibilities; we are already into stagflation territory. Less pleasant are various forms of tax revolt and civil insurrection, or just plain breakdown of authority).

Since Canada is so dependent on the US economy, our situation will be like a lifeboat lashed to the deck of the Titanic...

update to add:

http://pajamasmedia.com/blog/paul-ryan%E2%80%99s-tea-party-budget/?print=1



> *Paul Ryan’s Tea Party Budget*
> 
> Posted By Peter Ferrara On April 6, 2011 @ 10:09 am In Money,US News,economy | 24 Comments
> 
> ...



I will leave you to ponder the state of affairs where a $12 billion cut in spending is "piddling"


----------



## a_majoor (14 Apr 2011)

This is the end, beautiful friend, the end.....

http://rightwingnews.com/john-hawkins/5-things-that-will-happen-to-you-when-america-goes-bankrupt/



> *Five things That Will Happen To You When America Goes Bankrupt*
> Written By : John Hawkins
> “Madness is rare in individuals – but in groups, parties, nations, and ages it is the rule.” — Friedrich Nietzsche
> 
> ...


----------



## ModlrMike (14 Apr 2011)

The two preceding articles clearly illustrate why Canada needs to reduce its integration with the American economy. Our 80% share of trade with the US needs to be spread around to insulate us from any catastrophe south of the border. We can, and should do this with the emerging power houses like India. We are still a resource driven economy, and can sell our goods anywhere. We can not continue to rely on convenient access to the US to drive our financial security.


----------



## Kalatzi (14 Apr 2011)

"The Office of the Comptroller of the Currency today announced formal enforcement actions against eight national bank mortgage servicers and two third-party servicer providers for* unsafe and unsound practices *  related to *residential mortgage loan servicing and foreclosure processing. * The eight servicers are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo. The two service providers are Lender Processing Services (LPS) and its subsidiaries DocX, LLC, and LPD Default Solutions, Inc.; and MERSCORP and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS).  ...


No telling if anyone will get a home back on this, but the possibility is out there since there is a solid argument being made in regional court actions that without wet signature documents and proper registration, the banks might not really hold claims they thought...  so watch this one carefully..."


----------



## Edward Campbell (14 Apr 2011)

ModlrMike said:
			
		

> The two preceding articles clearly illustrate why Canada needs to reduce its integration with the American economy. Our 80% share of trade with the US needs to be spread around to insulate us from any catastrophe south of the border. We can, and should do this with the emerging power houses like India. We are still a resource driven economy, and can sell our goods anywhere. We can not continue to rely on convenient access to the US to drive our financial security.




Agreed, but moving away from the Americans and towards the only really 'open' markets (the European Union being the biggest “protection” racket in the world) will be more difficult according to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/news/national/asia-from-opportunity-to-crisis-in-the-eyes-of-canadians/article1984793/ 


> Asia: from opportunity to crisis in the eyes of Canadians
> 
> Canadians are fully aware of the growing clout of China and other fast-growing Asian economies – and they grasp their rapidly increasing importance on the world stage. But the more they see, the more uneasy they are.
> 
> ...



Very often, maybe most often, *policy* is limited by the practicalities of *politics* and what Canadians believe is a practical political reality.


----------



## Journeyman (14 Apr 2011)

Kalatzi said:
			
		

> "The Office of the Comptroller of the Currency today announced .....


From this site's Guidelines:
• You will *properly attribute any quotes * to the appropriate author or speaker.


But you knew that because reading those guidelines is one of the conditions of signing up here  


.....oh, and you may wish to point out where your cut&paste ends and your insightful thoughts begin, since your use of quotation marks confuses the issue


----------



## Journeyman (14 Apr 2011)

The history of the US debt limit, which has been raised 10 times since 1917, and its current implications, are discussed in two recent Congressional Research Service publications: 

"The Debt Limit: History and Recent Increases," March 7, 2011:  http://www.fas.org/sgp/crs/misc/RL31967.pdf 

"Reaching the Debt Limit: Background and Potential Effects on Government Operations," February 11, 2011:  http://www.fas.org/sgp/crs/misc/R41633.pdf


----------



## a_majoor (16 Apr 2011)

They Ryan budget passes the House. While it is clear the Dems still control the Senate and the President is assured of vetoing it, they key is to signal intent (which will calm jittery markets) and make everyone stake out their positions. Anyone who votes "no" to the budget will have a lot of explaining to do.

In a way, this is similar to the early 1990's, when Canada's debt threatened to overwhelm us (anyone recall the "Northern Peso?"). We had several years of warnings, lurid press coverage and finally the Economist magazine declaring Canada to be an honourary third world nation before the Chreitien government took action. Paul Martin did eventually hack and slash the budget by raiding EI, cutting spending and offloading services to other levels of government (but it is only evil when the other side of the political spectrun does this, as Mike Harris could attest), thus reducing the deficit, but never the debt. The Ryan budget is one of the last warnings before any serious action is taken (and given political realities, we wait until 2012 or the bond market demands serious risk premiums (interest rates) against US Treasuries).

http://www.nationalreview.com/corner/264872/ryans-budget-passes-house-daniel-foster



> *Ryan’s Budget Passes House*
> By Daniel Foster
> Posted on April 15, 2011 3:08 PM
> The House has adopted Rep. Paul Ryan’s 2012 budget resolution, which would cut $6 trillion in spending over the next 10 years, on a 235-193 vote. No Democrats voted for the plan.
> ...


----------



## a_majoor (20 Apr 2011)

The administration sees the writing on the wall and tries to influence events (but not in a meaningful manner):

http://www.washingtonpost.com/business/economy/obama-administration-officials-tried-to-keep-sandp-rating-at-stable/2011/04/19/AFfAeO8D_print.html



> *Obama administration officials tried to keep S&P rating at ‘stable’*
> 
> By Zachary A. Goldfarb, Tuesday, April 19, 8:55 PM
> 
> ...


----------



## littleprairie (20 Apr 2011)

The ingenious economists of America are reasonable persons amenable to the fact that the only way to modernize its economy and prosper is to leave 90-95 percent of industries to the market. Prices and wages are allowed to settle accordingly based on the supply and demand. Determining wages by the law of supply and demand while establishing a safety net minimum wage are great attractions that cause the American workforce to be very productive. Why would I settle in a forest in Siberia if the wage is not attractive if not high? Privatized healthcare is not the end of the world for Obama, distrustful of God that He would grant us a healthy body by praying. That is why the US healthcare is two -tier. Government hospitals in Chicago can accomodate those who cannot afford them pllust he fact taht there will always be altruists among talented doctors..


----------



## a_majoor (21 Apr 2011)

Bracket creep, generational wealth transfer and now this...

http://www.nytimes.com/2011/04/18/opinion/18douthat.html



> *The Middle-Class Tax Trap*
> By ROSS DOUTHAT
> 
> “Let’s tell the truth,” Walter Mondale said, accepting the Democratic nomination in 1984. “Mr. Reagan will raise taxes, and so will I. He won’t tell you. I just did.”
> ...


----------



## a_majoor (21 Apr 2011)

Looking at how the debt is structured makes the issue of extracting ourselves from this mess even harder. Is there a similar calculation for Canada? (Note; the _$140 trillion_ figure represents the sum total of Federal, State and Municipal debts, plus all their unfunded liabilities such as Social Security and pensions)

http://www.nationalreview.com/exchequer/265199/four-national-debts



> *The Four National Debts*
> April 20, 2011 4:00 A.M.
> By Kevin D. Williamson
> 
> ...


----------



## a_majoor (22 Apr 2011)

What happens if we don't use spending cuts:

http://www.theatlantic.com/business/archive/2011/04/large-tax-increases-are-not-a-semantic-question/237699/



> *Large Tax Increases Are Not A Semantic Question*
> By Megan McArdle
> 
> Apr 21 2011, 12:02 PM ET 138
> ...


----------



## Edward Campbell (22 Apr 2011)

In my opinion the President needs to offer America a _radical_ programme which I call "Five-0" the 0 being zero. I recommend that President Obama say:

"I intend to have *no, zero, growth in discretionary spending for five years* - for the remainder of my first term and all of my second. I encourage the congress to make spending cuts, here and there, if they can agree on any, but my cabinet secretaries *will* submit budgets that are, at the bottom line, exactly the same as this year - if Homeland Security, for example, wants more border guards they will have to cut somewhere else; if the Pentagon wants new ships they will have to scrap enough older ones, or bombers or Marine battalions, to pay for them, dollar for dollar, years by year. *I will veto any budget that comes back from the congress with even one red cent of additional spending in any budget envelope*."

"I will keep taxes where they are - except that I will do away with the Bush tax cuts for those with _net_ earnings of more than $1 Million per person - that should protect small and medium business owners."

"But your federal government will shrink - by, at least, the rate of inflation. The national debt will stop growing - unless we have to pay more in bond interest. We will get used to the idea of living within our means, at home and abroad, and then we will find it easier to actually shrink spending and, eventually, balance our budgets.

We are in a hole; we need to stop digging - now, and we must not start digging again next month or next year or even for the next decade."


----------



## a_majoor (25 Apr 2011)

Governor Palin paid attention in economics 101 (after all, even I could figure out that QE was going to be a bust; I'm just not famous!), now the Administration gets owned yet again (as Glen Reynolds [Instapundit] would say; "Unexpectedly!"):

http://www.nysun.com/editorials/sarah-palin-for-the-fed/87317/



> *Sarah Palin for the Fed?*
> Editorial of The New York Sun | April 24, 2011
> 
> The big question as Chairman Bernanke gets set for his first quarterly press conference is how Sarah Palin was able to figure out sooner than everyone else that the Federal Reserve’s campaign of quantitative easing wouldn’t work. Disappointment in the Fed’s policies is being reported this morning at the top of page one of the New York Times. It reports that “most Americans are not feeling the difference” from the Fed’s “experimental effort to spur a recovery by purchasing vast quantities of federal debt.” It reports that “a broad range of economists say that the disappointing results show the limits of the central bank’s ability to lift the nation from its economic malaise.”
> ...



More unexppected. Is this the hope or the change?

http://blogs.dailymail.com/donsurber/archives/32861



> *Palin vs. Krugman*
> April 24, 2011 by Don Surber
> The Fed bet $900 billion it didn’t have — and it lost.
> 
> ...


----------



## a_majoor (25 Apr 2011)

How soon will the tipping point come? The worst case scenario:

http://pajamasmedia.com/blog/maxed-out-america-coming-sooner-than-you-think/?print=1



> *Maxed Out America: Coming Sooner Than You Think*
> 
> Posted By Tom Blumer On April 25, 2011 @ 12:00 am In Uncategorized | 11 Comments
> 
> ...


----------



## a_majoor (26 Apr 2011)

Gas prices are controlled by supply and demand. Guess what happens when you manipulate supply?

http://pajamasmedia.com/blog/thanks-to-obama-gas-jumps-in-a-flash



> *Thanks to Obama, Gas Jumps in a Flash*
> 
> Posted By Will Collier On April 26, 2011 @ 12:00 am In "Green" tech,Politics,Science & Technology,US News,economy | 7 Comments
> 
> ...


----------



## a_majoor (8 May 2011)

Ground level report by VDH. Note the final paragraphs:

http://pajamasmedia.com/victordavishanson/thoughts-on-a-surreal-depression/?print=1



> *Thoughts on a Surreal Depression*
> 
> Posted By Victor Davis Hanson On May 7, 2011 @ 9:59 am In Uncategorized | 65 Comments
> 
> ...


----------



## Rifleman62 (9 May 2011)

*A Frightening Satellite Tour Of America's Foreclosure Wastelands*

Unfortunately, prices are still dropping

http://www.businessinsider.com/satellite-tour-foreclosure-cities-2011-1?slop=1#boise-idaho-1-in-21-homes-in-foreclosure-the-red-dots-show-foreclosures-1

Note: The red dots shows homes currently in foreclosure. The slide title describes the fraction of homes that received foreclosure filings in 2010.

See link.


----------



## observor 69 (9 May 2011)

New York Times

May 8, 2011
The Unwisdom of Elites
By PAUL KRUGMAN
The past three years have been a disaster for most Western economies. The United States has mass long-term unemployment for the first time since the 1930s. Meanwhile, Europe’s single currency is coming apart at the seams. How did it all go so wrong? 

Well, what I’ve been hearing with growing frequency from members of the policy elite — self-appointed wise men, officials, and pundits in good standing — is the claim that it’s mostly the public’s fault. The idea is that we got into this mess because voters wanted something for nothing, and weak-minded politicians catered to the electorate’s foolishness. 

So this seems like a good time to point out that this blame-the-public view isn’t just self-serving, it’s dead wrong. 

The fact is that what we’re experiencing right now is a top-down disaster. The policies that got us into this mess weren’t responses to public demand. They were, with few exceptions, policies championed by small groups of influential people — in many cases, the same people now lecturing the rest of us on the need to get serious. And by trying to shift the blame to the general populace, elites are ducking some much-needed reflection on their own catastrophic mistakes. 

Let me focus mainly on what happened in the United States, then say a few words about Europe. 

These days Americans get constant lectures about the need to reduce the budget deficit. That focus in itself represents distorted priorities, since our immediate concern should be job creation. But suppose we restrict ourselves to talking about the deficit, and ask: What happened to the budget surplus the federal government had in 2000? 

The answer is, three main things. First, there were the Bush tax cuts, which added roughly $2 trillion to the national debt over the last decade. Second, there were the wars in Iraq and Afghanistan, which added an additional $1.1 trillion or so. And third was the Great Recession, which led both to a collapse in revenue and to a sharp rise in spending on unemployment insurance and other safety-net programs. 

So who was responsible for these budget busters? It wasn’t the man in the street. 

President George W. Bush cut taxes in the service of his party’s ideology, not in response to a groundswell of popular demand — and the bulk of the cuts went to a small, affluent minority. 

Similarly, Mr. Bush chose to invade Iraq because that was something he and his advisers wanted to do, not because Americans were clamoring for war against a regime that had nothing to do with 9/11. In fact, it took a highly deceptive sales campaign to get Americans to support the invasion, and even so, voters were never as solidly behind the war as America’s political and pundit elite. 

Finally, the Great Recession was brought on by a runaway financial sector, empowered by reckless deregulation. And who was responsible for that deregulation? Powerful people in Washington with close ties to the financial industry, that’s who. Let me give a particular shout-out to Alan Greenspan, who played a crucial role both in financial deregulation and in the passage of the Bush tax cuts — and who is now, of course, among those hectoring us about the deficit. 

So it was the bad judgment of the elite, not the greediness of the common man, that caused America’s deficit. And much the same is true of the European crisis. 

Needless to say, that’s not what you hear from European policy makers. The official story in Europe these days is that governments of troubled nations catered too much to the masses, promising too much to voters while collecting too little in taxes. And that is, to be fair, a reasonably accurate story for Greece. But it’s not at all what happened in Ireland and Spain, both of which had low debt and budget surpluses on the eve of the crisis. 

The real story of Europe’s crisis is that leaders created a single currency, the euro, without creating the institutions that were needed to cope with booms and busts within the euro zone. And the drive for a single European currency was the ultimate top-down project, an elite vision imposed on highly reluctant voters. 

Does any of this matter? Why should we be concerned about the effort to shift the blame for bad policies onto the general public? 

One answer is simple accountability. People who advocated budget-busting policies during the Bush years shouldn’t be allowed to pass themselves off as deficit hawks; people who praised Ireland as a role model shouldn’t be giving lectures on responsible government. 

But the larger answer, I’d argue, is that by making up stories about our current predicament that absolve the people who put us here there, we cut off any chance to learn from the crisis. We need to place the blame where it belongs, to chasten our policy elites. Otherwise, they’ll do even more damage in the years ahead. 

http://www.nytimes.com/2011/05/09/opinion/09krugman.html?_r=1&src=ISMR_HP_LO_MST_FB


----------



## a_majoor (12 May 2011)

Political manipulation of energy markets will have huge long term negative effects (notice the cost of the drilling moratorium in the Gulf. Now expand that amount of economic activity to other areas where drilling and production occurs):

http://pajamasmedia.com/blog/gas-prices-are-high-because-the-liberals-want-it-that-way/?print=1



> *Gas Prices Are High Because the Liberals Want It that Way*
> Posted By Gary Wickert On May 12, 2011 @ 12:00 am In Money,Politics,Science & Technology,US News,economy | 10 Comments
> 
> High gasoline prices are not a cause of the current economic recession, they are an avoidable and unnecessary symptom of liberal environmental and economic policies. When President Barack Obama took office the price of gasoline was $1.83 per gallon [1]. Today it’s over $4.00. Understanding why that is so will give you insight into the patient game plan of the fossil-fuel-hating, combustion-engine-despising, environmentally obsessed left.
> ...



The "A scary strategic problem - no oil" thread demonstrates there is actually lots of oil, and various techniques exist to squeeze more out of each unit of energy produced (as well as lots of facts and figures on various green, nuclear and alternative energy sources which can help suppliment but not replace hydrocarbon fuels), so a change in the political landscape can open the door for lots of changes to the market.


----------



## Redeye (12 May 2011)

I find all this nonsense about gas prices from the right in the USA to be hilarious.  The reality seems to be from a variety of studies that even if suddenly the US Government opened a free-for-all on drilling for oil in US territory, not only would it take years to come on stream, but the impact on prices wouldn't be huge.  The idea that somehow oil companies would then necessarily supply this to US customers is also hilariously wrong.  They'd sell it for the highest price, and OPEC would continue to have a great impact on that price.  The USA's largest supplier of oil is Canada, and while we're not a member of OPEC, we sell at the price that they are only too happy to manipulate to an extent, and to which speculators in the market happily add when they see fit.

The only thing funnier and stupider spouted by some (all righties, interestingly) is a comparison of gas prices in other countries - pointing to places like Iran etc where government subsidies exist, something I don't think too many conservatives would actually argue for, unless of course they are complete hypocrites.

The fact is, a rise in the price of gasoline isn't bad, though I'd rather have seen it be a gradual increase, like President Obama said.  Oil is a scarce resource and will continue to be, and it's in our interest for a variety of reasons to use less, find alternatives, and adapt ourselves to the reality that it will become more and more expensive to extract and thus to buy.  The US economy could use the growth that could come from taking the lead on this, but it seems they're too busy arguing about stupid things like abortion, funding NPR, etc, to actually really figure out where they're going for the next few years.



			
				Thucydides said:
			
		

> Political manipulation of energy markets will have huge long term negative effects (notice the cost of the drilling moratorium in the Gulf. Now expand that amount of economic activity to other areas where drilling and production occurs):
> 
> http://pajamasmedia.com/blog/gas-prices-are-high-because-the-liberals-want-it-that-way/?print=1
> 
> The "A scary strategic problem - no oil" thread demonstrates there is actually lots of oil, and various techniques exist to squeeze more out of each unit of energy produced (as well as lots of facts and figures on various green, nuclear and alternative energy sources which can help suppliment but not replace hydrocarbon fuels), so a change in the political landscape can open the door for lots of changes to the market.


----------



## observor 69 (12 May 2011)

Seems like every time gas goes up we get the same old story in the media  ........
Bicycles, e-bikes and scooter sales are up. Yet as I bike around my neighbourhood people look at me like I am too poor to own a car.  :


Toronto fights back against rising gas prices

http://www.thestar.com/news/article/989236--toronto-fights-back-against-rising-gas-prices?bn=1


----------



## a_majoor (13 May 2011)

Failure to note that the mere announcement of the lifting of US drilling restrictions by President George W Bush caused the price of oil to collapse within 24 hr of the announcement being made suggests that you are either not understanding the response of the market to signals, or are simply attacking the messenger without reference to the message.

And of course the second part of the message demonstrating that they physical product is readily available also suggests that there is a lack of understanding about supply and demand. Supply is being manipulated and negative signals are being sent to the market, hence the price spike.

Knowing how things work can lead to the discovery of solution; trying to shout down the messengers not so much....


----------



## a_majoor (15 May 2011)

And of course reality eventually cannot be ignored:

http://tigerhawk.blogspot.com/2011/05/drilling-for-votes-president-obama.html



> *Drilling for votes: President Obama caves to the Republicans *
> 
> By TigerHawk at 5/14/2011 07:39:00 AM
> 
> ...


----------



## Redeye (16 May 2011)

Thucydides said:
			
		

> Failure to note that the mere announcement of the lifting of US drilling restrictions by President George W Bush caused the price of oil to collapse within 24 hr of the announcement being made suggests that you are either not understanding the response of the market to signals, or are simply attacking the messenger without reference to the message.



Actually, there's little evidence anywhere that Bush's announcement had a causative effect on oil price changes, in fact, as I recall, it had more to do with the collapse of credit available to leverage speculative positions.  Didn't I actually post a link on this.  See, what you and the blogs you post (most of which I find laughable) fail to do is actually establish causation.  It's not enough to say "Bush announced lifting of drilling restrictions and oil prices fell..."  You have to actually extend that to "oil prices fell because..." and provide evidence to support that claim.  I've noticed over the years that the right in particular doesn't really worry much about that, but that doesn't change anything.  There's nothing wrong with attacking the message when it's incomplete, and when it's in the messenger's interests to promote that incomplete message, I also see nothing wrong with attacking them.  They should know better, or do and persist because it suits those interests.



			
				Thucydides said:
			
		

> And of course the second part of the message demonstrating that they physical product is readily available also suggests that there is a lack of understanding about supply and demand. Supply is being manipulated and negative signals are being sent to the market, hence the price spike.
> 
> Knowing how things work can lead to the discovery of solution; trying to shout down the messengers not so much....



So you've just undermined your own argument, well done!  If the physical product is indeed readily available (and what I've read suggests both a) it is and b) US drilling restrictions don't really stand to impact that supply much anyhow), then it is clear that there's more to the story.  The impact of price speculation and ability of producers to manipulate supply (and to shift costs along their vertically integrated systems) are both contributing.  Stopping deep water drilling which we know can produce disasters the industry can't control, and drilling up wildlife habibat clearly aren't going to solve those problems.

Thanks for this though, it's refreshing to see you completely undermine your nonsensical claims in one single post.  BZ!


----------



## a_majoor (28 May 2011)

More interference with the market:

http://pajamasmedia.com/blog/startup-america-will-have-a-bad-ending/?print=1



> *‘Startup America’ Will Have a Bad Ending*
> 
> Posted By Jay Schalin On May 28, 2011 @ 12:00 am In Opinion,Politics,US News,economy | 9 Comments
> 
> ...


----------



## Edward Campbell (28 May 2011)

There is one inescapable fact: sooner rather than later both Obama/Reid/Pelozi and Boehner/McConnel will, indeed must take some responsible actions. Those actions must include politically damaging spending cuts and equally politically damaging tax hikes. No one who matters, and Obama/Reid/Pelozi and Boehner/McConnel really don't matter much, gives a damn what the politicians think, if they do that at all, or want. The people who do matter, people like D.J. Flint, Rex Tillerson and Wang Jianzhou, will decide what spending is to be cut and what taxes are to be raised. Note that 2/3 of the people who will decide American policy for Americans are not, themselves, Americans. Both the American politicians and the American people have abrogated both their responsibility and authority because they found their silly _culture wars_ over non-issues like gay marriage more important than governing themselves in a responsible manner. It's a wee bit sad and too bad but they - the Americans of all classes - have only themselves to blame.


----------



## tomahawk6 (28 May 2011)

Its going to take money and Congress wont be giving any for this project.If Obama wants to fund it he can out of unspent TARP funds.
The good news is that a massive oil shale deposit in Texas is gearing up - unless EPA steps in. But full production is years away.

http://www.nytimes.com/2011/05/28/business/energy-environment/28shale.html?_r=1

CATARINA, Tex. — Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses.

Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months. 

 The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska. 

 There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside. 

 The technique, also called fracking, has been widely used in the last decade to unlock vast new fields of natural gas, but drillers only recently figured out how to release large quantities of oil, which flows less easily through rock than gas. As evidence mounts that fracking poses risks to water supplies, the federal government and regulators in various states are considering tighter regulations on it. 

 The oil industry says any environmental concerns are far outweighed by the economic benefits of pumping previously inaccessible oil from fields that could collectively hold two or three times as much oil as Prudhoe Bay, the Alaskan field that was the last great onshore discovery. The companies estimate that the boom will create more than two million new jobs, directly or indirectly, and bring tens of billions of dollars to the states where the fields are located, which include traditional oil sites like Texas and Oklahoma, industrial stalwarts like Ohio and Michigan and even farm states like Kansas. 

 “It’s the one thing we have seen in our adult lives that could take us away from imported oil,” said Aubrey McClendon, chief executive of Chesapeake Energy, one of the most aggressive drillers. “What if we have found three of the world’s biggest oil fields in the last three years right here in the U.S.? How transformative could that be for the U.S. economy?” 

 The oil rush is already transforming this impoverished area of Texas near the Mexican border, doubling real estate values in the last year and filling restaurants and hotels. 

 “That’s oil money,” said Bert Bell, a truck company manager, pointing to the new pickup truck he bought for his wife after making $525,000 leasing mineral rights around his family’s mobile home. “Oil money just makes life easier.” 

 Based on the industry’s plans, shale and other “tight rock” fields that now produce about half a million barrels of oil a day will produce up to three million barrels daily by 2020, according to IHS CERA, an energy research firm. Oil companies are investing an estimated $25 billion this year to drill 5,000 new oil wells in tight rock fields, according to Raoul LeBlanc, a senior director at PFC Energy, a consulting firm. 

 “This is very big and it’s coming on very fast,” said Daniel Yergin, the chairman of IHS CERA. “This is like adding another Venezuela or Kuwait by 2020, except these tight oil fields are in the United States.” 

 In the most developed shale field, the Bakken field in North Dakota, production has leaped to 400,000 barrels a day today from a trickle four years ago. Experts say it could produce as much as a million barrels a day by the end of the decade. 

 The Eagle Ford, where the first well was drilled only three years ago, is already producing more than 100,000 barrels a day and could reach 420,000 by 2015, almost as much as Ecuador, according to Bentek Energy, a consultancy.

 The shale oil boom comes as production from Prudhoe Bay is declining and drilling in the Gulf of Mexico is being more closely scrutinized after last year’s Deepwater Horizon disaster.

What makes the new fields more remarkable is that they were thought to be virtually valueless only five years ago. “Everyone said the oil molecules are too large to flow in commercial quantities through these low-quality rocks,” said Mark G. Papa, chief executive of EOG Resources. 

 EOG began quietly buying the rights to thousands of acres in the Bakken and Eagle Ford after an EOG engineer concluded that the techniques used to extract natural gas from shale — fracking, combined with drilling horizontally through layers of rocks — could be used for oil. Chesapeake and a few other independents quickly followed. Now the biggest multinational oil companies, as well as Chinese and Norwegian firms, are investing billions of dollars in the fields. 

 The new drilling makes economic sense as long as oil prices remain above $60 a barrel, according to oil companies. At current oil prices of about $100 a barrel, shale wells can typically turn a profit within eight months — three times faster than many traditional wells. 

 But water remains a key issue. In addition to possible contamination of surface and underground water from fracking fluids, the sheer volume of water required poses challenges, especially in South Texas, which faces a severe drought and rapidly diminishing water levels in the local aquifer. 

 At the rate wells are being drilled, “there’s definitely going to be a problem,” said Bay Laxson, a local water official. 

 Dave Thompson, regional production superintendent for the oil company SM Energy said the industry knew that water issues were “an Achilles heel.” He said his company was building a system to reuse water in the field. 

 But unlike Pennsylvania and New York, where fracking for natural gas has produced organized opposition, the oil industry has been mostly welcomed in western and southern states. 

 Thanks to the drilling boom, the recession bypassed North Dakota entirely. Here in Dimmit County, Tex., the unemployment rate has fallen in half, and sales tax receipts are up 70 percent so far this year, allowing the county to hire more police officers and buy sanitation and road repair equipment. 

 “In my lifetime, this is the biggest thing I’ve ever seen,” said Jose Gonzalez, 78, a retired teacher and son of migrant farm workers, who leased mineral rights to Chesapeake for $27,000 and sold another plot for $100,000 to a company building an RV park for oil workers. “You can see I’m happy.”


----------



## Kalatzi (1 Jun 2011)

Before ypu break out the bubbly, you might want to cath the documentary "GasLand" on youtube. 

Note if you get the one with the zombies - its the wrong one serious. 

The main visual I recall from the real one is the dude running water into his kitechen sink and then lighting the running water with a zippo. 

To say that there are severe environmental consequences is putting it very mildly


----------



## GR66 (2 Jun 2011)

Going along with the idea that every silver lining has a cloud...

...this news from Britain as reported by Bloomberg / Businessweek:

http://www.businessweek.com/ap/financialnews/D9NIVOPO2.htm


----------



## Old Sweat (2 Jun 2011)

Kalatzi said:
			
		

> Before you break out the bubbly, you might want to cath the documentary "GasLand" on youtube.
> 
> Note if you get the one with the zombies - its the wrong one serious.
> 
> ...



According to the information at this site, gas in the water is naturally occurring and predates the extraction method. Further, it states that the producer of "Gasland" knew that there were documented cases of water burning dating back to 1936 and omitted that information as "irrelevant."

http://www.noteviljustwrong.com/General/gasland-director-hides-full-facts.html


----------



## GAP (2 Jun 2011)

When I was working up in the Shamattawa Reserve we would run the hot water and be able to light a lighter beside the faucet and have it burn as long as the water was running....this was natural Methane gas coming out of the permafrost . At one point we discussed a capture method with some engineers surveying the lagoon, and actually roughed out a capture process for heating.....nothing ever came of it.....


----------



## observor 69 (2 Jun 2011)

And on another note:


                                                                 2021
                                                                         barackobama.com
  
Friend --

Earlier today, a whole bunch of us who have already made a donation to the 2012 campaign decided something.

We decided we're ready to give for a second or third time -- if and only if you're willing to make your first donation to the campaign right now.

Your gift will be matched by a real person. You'll be able to see their name and town, and even exchange a message with them. Right now there are thousands of folks willing to match whatever amount you decide to give.

You'll have double the impact if you decide to make your first donation of $5 or more to the 2012 campaign now.

How about it?

https://donate.barackobama.com/page/contribute/o2012-june-match-matchees-nd?match_campaign_id=22&source=20110601_jm_nd1


----------



## FoverF (2 Jun 2011)

GAP said:
			
		

> When I was working up in Shamattawa...



My condolences...


----------



## Redeye (3 Jun 2011)

And with the inspiring Republican slate lined up against him, I don't want to sound cocky, but he's practically going to coast to the finish.



			
				Baden  Guy said:
			
		

> And on another note:
> 
> 
> 2012
> ...


----------



## Edward Campbell (3 Jun 2011)

Redeye said:
			
		

> And with the inspiring Republican slate lined up against him, I don't want to sound cocky, but he's practically going to coast to the finish.




I'm not so sure. Americans _seem_, to me, to be highly disapproving of him. It's not that his approval rating is so low, others have been lower, but his _negatives_ are reported (CNN, most recently) to be very, very high ... so high that no politicians with similar numbers has been re-elected.

I'm afraid that The Republicans will have trouble finding an attractive candidate, not least because sane men and women are unwilling to participate in a "race" that is being refereed by Sarah Palin even as she plays from an offside position. But, while the race is Obama's to lose, he might just manage that feat.

By the way, the same caution applies to Canadians politics: another Comnservagtive majority is far from a sure thing; ditto another 100 75 50 seat NDP showing and another <40 seat Liberal result.


----------



## Redeye (3 Jun 2011)

They appear - at least in their media - to be highly polarized, but at the same time I think the Democrats will get a whole lot of mileage out of the fact that while the economy has not roared back to life as strongly as they might have hoped, the GOP has failed not only to do anything about it - but to even try.  Most of their efforts in the House of Representatives have either been Quixotic attacks on healthcare reform, or attacks on reproductive freedom and access to healthcare.  That is something that will likely show up in advertisings when the time comes.  Additionally, the ongoing squabble about the (utterly pointless, IMHO) debt ceiling is getting traction.

I have to agree, the GOP is going to be in trouble when it comes to candidates.  You've got the likely unelectable Mitt Romney, the non-politician Herman Cain (whose problems include an absolutely insane fiscal policy and no grasp whatsoever of foreign policy), the ignorant lunatic twins in Sarah Palin and Michele Bachmann, and well, that's pretty much it it looks like at this point.  None of them are particularly attractive.



			
				E.R. Campbell said:
			
		

> I'm not so sure. Americans _seem_, to me, to be highly disapproving of him. It's not that his approval rating is so low, others have been lower, but his _negatives_ are reported (CNN, most recently) to be very, very high ... so high that no politicians with similar numbers has been re-elected.
> 
> I'm afraid that The Republicans will have trouble finding an attractive candidate, not least because sane men and women are unwilling to participate in a "race" that is being refereed by Sarah Palin even as she plays from an offside position. But, while the race is Obama's to lose, he might just manage that feat.
> 
> By the way, the same caution applies to Canadians politics: another Comnservagtive majority is far from a sure thing; ditto another 100 75 50 seat NDP showing and another <40 seat Liberal result.


----------



## Edward Campbell (3 Jun 2011)

Redeye said:
			
		

> They appear - at least in their media - to be highly polarized, but at the same time I think the Democrats will get a whole lot of mileage out of the fact that while the economy has not roared back to life as strongly as they might have hoped, the GOP has failed not only to do anything about it - but to even try.  Most of their efforts in the House of Representatives have either been Quixotic attacks on healthcare reform, or attacks on reproductive freedom and access to healthcare.  That is something that will likely show up in advertisings when the time comes.  Additionally, the ongoing squabble about the (utterly pointless, IMHO) debt ceiling is getting traction.
> 
> I have to agree, the GOP is going to be in trouble when it comes to candidates.  You've got the likely unelectable Mitt Romney, the non-politician Herman Cain (whose problems include an absolutely insane fiscal policy and no grasp whatsoever of foreign policy), the ignorant lunatic twins in Sarah Palin and Michele Bachmann, and well, that's pretty much it it looks like at this point.  None of them are particularly attractive.




We, Canadians, need to put the blame for the failing grade of the American economy where it belongs: on about 95% of Americans, be they Democrats, Republicans, Tea-Partiers or Independents, who all want the budget balanced provided only that their _interest_, be it the Pentagon or _Obamacare_ or tax increases (or cuts) are not touched.

Democrats are equally, arguably more, fiscally irresponsible than Republicans and the denizens of the Tea Party. But very, very few Americans can claim any degree of fiscal responsibility.

But we shall hear Canadians scream louder than Americans when the government is cut - as it *must* be - and when, finally, the Canada Health Act is revised to allow for multi-tiered health care


----------



## Edward Campbell (6 Jun 2011)

If we needed it, here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_, is further proof that the US political professionals are bent on driving the sound, sane people out of Washington, presumably to make way for the assortment of village idiots, like Palin and Limbaugh, who clutter up the horizon:

http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/fed-nomination-fight-a-new-low-in-partisan-politics/article2048730/


> [szie=14pt]Fed nomination fight a new low in partisan politics[/size]
> 
> KEVIN CARMICHAEL
> 
> ...




The US is shooting itself in the foot - apparently intentionally, as the culture wars rage on over issues, like abortion and gay marriage, that have neither moral nor political importance for either side but which serve to rally the faithful for endless, pointless political and social divisons sub-divisions.


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## Redeye (6 Jun 2011)

E.R. Campbell said:
			
		

> If we needed it, here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_, is further proof that the US political professionals are bent on driving the sound, sane people out of Washington, presumably to make way for the assortment of village idiots, like Palin and Limbaugh, who clutter up the horizon:
> 
> http://www.theglobeandmail.com/report-on-business/economy/economy-lab/daily-mix/fed-nomination-fight-a-new-low-in-partisan-politics/article2048730/
> 
> The US is shooting itself in the foot - apparently intentionally, as the culture wars rage on over issues, like abortion and gay marriage, that have neither moral nor political importance for either side but which serve to rally the faithful for endless, pointless political and social divisons sub-divisions.



There is no better description I've seen yet than your last paragraph.

It's getting more ridiculous now that the Republicans are trying to decide who they will choose to lose to Barack Obama next year (and given the crop, there should be little challenge in that task).  I'm particularly enjoying both the laughable ignorance of Sarah Palin (I'm Canadian, and even I know the story of Paul Revere's Midnight Ride), and the kooks coming out as candidates.

They keep going on about the US economic recovery hinging on business having "certainty" about taxes etc.  How do they not?  Taxes are going to rise.  That's a certainty, that's basic economics, they have to.  Regulations on things like the financial sector are a certainty.  Now that the fog is clear, get on with business.

A liberal commentator who was interviewed on CNN this morning hit the nail on the head.  It doesn't serve the GOP's interests to do anything to positively impact the US economy right now, because that will only make Obama stronger.  People need to realize that, and demand better.


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## Kirkhill (6 Jun 2011)

While I am surprised that the US allows Congress/Senate to vet Central Bank appointments I do have a problem with the concept of allowing "experts" into decision making positions.

Experts are marvellous advisors.  But I don't believe it necessarily follows that they should be placed in decision-making capacities.  Often they are so wrapped up in their own specialty that they are unable to understand the implications their decisions have on the rest of the system.    The may make the best decision possible to, in this case, reduce unemployment, but concurrently and as an unintended consequence, cause great harm to some other aspect of the economy.  This is not an unknown phenomenon here in Canada......


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## a_majoor (6 Jun 2011)

More numbers:

http://pajamasmedia.com/blog/the-job-market-far-worse-than-it-appears/?print=1



> *The Job Market: Far Worse Than It Appears*
> Posted By Tom Blumer On June 6, 2011 @ 12:05 am In Culture,Elections 2012,History,Politics,US News,economy | 32 Comments
> 
> The familiar items in the government’s Employment Situation Summary [1] on Friday were bad enough:
> ...



The most damning thing that can be said in the 2012 election will be to simply replay the promises of TARP, QE II and other Keynsian economic voodoo to keep unemployment from rising above 8%. Note too that these numbers exclude huge numbers of Americans who have given up searching for jobs (but are still unemployed) and there are also large numbers of Americans who are unwillingly working part time or otherwise underemployed. Added to the 9.1% official unemployment rate and you have real trouble.


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## observor 69 (14 Jun 2011)

An excellent summation of on the current political state in the US:


         
This copy is for your personal, noncommercial use only. You can order presentation-ready copies for distribution to your colleagues, clients or customers here or use the "Reprints" tool that appears next to any article. Visit www.nytreprints.com for samples and additional information. Order a reprint of this article now. 

June 13, 2011
Pundit Under Protest
By DAVID BROOKS
I’ll be writing a lot about the presidential election over the next 16 months, but at the outset I would just like to remark that I’m opining on this whole campaign under protest. I’m registering a protest because for someone of my Hamiltonian/National Greatness perspective, the two parties contesting this election are unusually pathetic. Their programs are unusually unimaginative. Their policies are unusually incommensurate to the problem at hand. 

This election is about how to avert national decline. All other issues flow from that anxiety. 

The election is happening during a downturn in the economic cycle, but the core issue is the accumulation of deeper structural problems that this recession has exposed — unsustainable levels of debt, an inability to generate middle-class incomes, a dysfunctional political system, the steady growth of special-interest sinecures and the gradual loss of national vitality. 

The number of business start-ups per capita has been falling steadily for the past three decades. Workers’ share of national income has been declining since 1983. Male wages have been stagnant for about 40 years. The American working class — those without a college degree — is being decimated, economically and socially. In 1960, for example, 83 percent of those in the working class were married. Now only 48 percent are. 

Voters are certainly aware of the scope of the challenges before them. Their pessimism and anxiety does not just reflect the ebb and flow of the business cycle, but is deeper and more pervasive. Trust in institutions is at historic lows. Large majorities think the country is on the wrong track, and have for years. Large pluralities believe their children will have fewer opportunities than they do. 

Voters are in the market for new movements and new combinations, yet the two parties have grown more rigid. 

The Republican growth agenda — tax cuts and nothing else — is stupefyingly boring, fiscally irresponsible and politically impossible. Gigantic tax cuts — if they were affordable — might boost overall growth, but they would do nothing to address the structural problems that are causing a working-class crisis. 

Republican politicians don’t design policies to meet specific needs, or even to help their own working-class voters. They use policies as signaling devices — as ways to reassure the base that they are 100 percent orthodox and rigidly loyal. Republicans have taken a pragmatic policy proposal from 1980 and sanctified it as their core purity test for 2012. 

As for the Democrats, they offer practically nothing. They acknowledge huge problems like wage stagnation and then offer... light rail! Solar panels! It was telling that the Democrats offered no budget this year, even though they are supposedly running the country. That’s because they too are trapped in a bygone era. 

Mentally, they are living in the era of affluence, but, actually, they are living in the era of austerity. They still have these grand spending ideas, but there is no longer any money to pay for them and there won’t be for decades. Democrats dream New Deal dreams, propose nothing and try to win elections by making sure nobody ever touches Medicare. 

Covering this upcoming election is like covering a competition between two Soviet refrigerator companies, cold-war relics offering products that never change. 

If there were a Hamiltonian Party, it would be offering a multifaceted reinvigoration agenda. It would grab growth ideas from all spots on the political spectrum and blend them together. Its program would be based on the essential political logic: If you want to get anything passed, you have to offer an intertwined package that smashes the Big Government vs. Small Government orthodoxies and gives everybody something they want. 

This reinvigoration package would have four baskets. There would be an entitlement reform package designed to redistribute money from health care and the elderly toward innovation and the young. Unless we get health care inflation under control by replacing the perverse fee-for-service incentive structure, there will be no money for anything else. 

There would be a targeted working-class basket: early childhood education, technical education, community colleges, an infrastructure bank, asset distribution to help people start businesses, a new wave industrial policy if need be — anything that might give the working class a leg up. 

There would be a political corruption basket. The Tea Parties are right about the unholy alliance between business and government that is polluting the country. It’s time to drain the swamp by simplifying the tax code and streamlining the regulations businesses use to squash their smaller competitors. 

There would also be a pro-business basket: lower corporate rates, a sane visa policy for skilled immigrants, a sane patent and permitting system, more money for research. 

The Hamiltonian agenda would be pro-market, in its place, and pro-government, in its place. In 2012, on the other hand, we’re going to see another clash of the same old categories. I’ll be covering it, but I protest. 

http://www.nytimes.com/2011/06/14/opinion/14brooks.html?hp


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## a_majoor (18 Jun 2011)

Some grounds for optimism (a small step in the right direction anyway):

http://www.washingtonpost.com/blogs/right-turn/post/the-optimistic-debt-scenario/2011/03/29/AGztf4XH_blog.html



> *The optimistic debt scenario*
> By Jennifer Rubin
> 
> The Democrats began the year demanding more domestic spending and tax hikes. President Obama talked about it in his State of the Union address. His budget reflect those positions. And in his attack on Rep. Paul Ryan (R-Wis.) he reiterated those goals. Now debt-ceiling talks are progressing, according to multiple sources, with very substantial cuts, Medicare reform and hard spending caps contemplated. Moreover, Democrats are now talking about a payroll tax cut. How’d we get from there to here?
> ...


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## Edward Campbell (23 Jun 2011)

This, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_, is a dangerous escalation:

http://www.theglobeandmail.com/news/world/americas/top-republican-quits-us-budget-talks-as-debt-ceiling-deadline-looms/article2072424/ 


> Top Republican quits U.S. budget talks, as debt-ceiling deadline looms
> 
> ANDREW TAYLOR
> 
> ...



Let me be clear: the United States is, already, a *deadbeat*. It has been since May, some accounting tricks have been used to delay the final, deadly phase: default.

Everyone with the brains the gods gave to green peppers knows that the US must make _massive_ spending cuts to entitlements and to the _Pentagon_, too, and there must be tax increases – ideally a national value added tax à la Canada's HST. The political problem in the US is that Obama wants the US Congress to share the _blame_ for any and all tax increases and the Republicans want to lay all the blame at Obama's feet. With the election campaign sputtering to life that matters.

There are, to be sure, some people who oppose all tax increases but they all failed Economics 101 – even the ones with PhDs in Economics.

This matters to Canada because we hold a huge amount of the US debt – not as much, in absolute terms, as China but, proportionately, more, I think than anyone else. When, if, the US formally defaults we will take a real beating.

Q: What's the difference between the Boy Scouts and the United States of America?
A: The Boy Scouts have adult leadership.


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## Kirkhill (23 Jun 2011)

E.R. Campbell said:
			
		

> ....the US must make _massive_ spending cuts to entitlements and *to the Pentagon, too*, and there must be tax increases ...



It will be interesting to see the impact of the withdrawal of the "World's Policeman" from the street corner.  Will the rest of the world come to understand the value of such an entity? Will they set up an alternative UN Police Force ( I can't hold my breath that long)?  Will they hire the US Military to continue doing the job they are doing and thus improve the US balance of payments?  Or will we come to love the freedom known as anarchy and head back to the great days of the VOC, the HEIC and the HBC when your employer guaranteed your security?  (And how far removed from accepting the Queen's Shilling is accepting the HBC's Shilling?)

Stay tuned.....


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## Edward Campbell (23 Jun 2011)

Kirkhill said:
			
		

> It will be interesting to see the impact of the withdrawal of the "World's Policeman" from the street corner.  Will the rest of the world come to understand the value of such an entity? Will they set up an alternative UN Police Force ( I can't hold my breath that long)?  Will they hire the US Military to continue doing the job they are doing and thus improve the US balance of payments?  Or will we come to love the freedom known as anarchy and head back to the great days of the VOC, the HEIC and the HBC when your employer guaranteed your security?  (And how far removed from accepting the Queen's Shilling is accepting the HBC's Shilling?)
> 
> Stay tuned.....




That's a really good point. At a very conservative estimate the US pays something like $250 Billion (more than 10 times Canada's total defence spending or four time's the UK's total defence spending) on being the "world's policeman," that is to say providing security to other countries - including Canada and Europe and Japan and, and and ...

China will want to move to "police" parts of East Asia and India may want to "help" in South West Asia - to threaten Pakistan, China's (sometime) friend, but no one will want to pick up all or even most of the pieces.


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## Edward Campbell (25 Jun 2011)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_, is more about some of the _global_ impacts when, not if, the USA must reduce and retreat: 

http://www.ottawacitizen.com/opinion/America+turns+away+from+world/4996358/story.html


> America turns away from the world
> 
> By DAVID VAN PRAAGH
> 
> ...




At the risk of repeating myself: failing to solve its _long term_, *structural*, fiscal problems is national suicide for the USA, and while I may think that too many American legislators, including President Obama, are too long of partisan politics and too short on intellect and strategic vision, I doubt they want to destroy America. To avoid destroying America politicians must, sooner rather than later:

1. Cut spending on _entitlements_ (Social Security, Medicare, etc) - a move which is opposed by 85%+ of Americans;

2. Cut defence spending - a move which is also opposed by most Americans; and

3. Raise taxes - another move which is opposed by about ⅔ of Americans.

Two out of three will not work - America must and will make a _strategic_ withdrawal and will, once again, embrace isolationism for, at least, a generation.

Van Praag is right - that move will sow the seeds for more, bigger and dirtier wars. China will not be willing, not until some long time after 2050, I think, or able to take up the mantle of the world's policeman.



Edit: deleted repeated words


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## Kirkhill (25 Jun 2011)

E.R. Campbell said:
			
		

> ....
> 
> Two out of three will not work - America must and will make a _strategic_ withdrawal and will, once again, embrace isolationism for, at least, a generation.
> 
> Van Praag is right - that move will sow the seeds for more, bigger and dirtier wars. *China will not be willing, not until some long time after 2050, I think, be willing or able to take up the mantle of the world's policeman*.



Sorry ERC but that may be the only dimly bright light in your recital.  I believe I would rather have a world ungoverned than one governed by "The Red Dynasty".


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## a_majoor (26 Jun 2011)

The only other realistic contender is the Anglosphere nations acting in concert, raising Canada, Australia and India to the front ranks of the world's nations (and perhaps honouraries like Japan and the Netherlands also raising their profiles as well).

We will live in interesting times


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## Edward Campbell (26 Jun 2011)

I'm not sure the Anglosphere, or even an _Anglosphere+_, is willing or able, either. Britain is broke, too. India has some global strategic ambitions but it, like China, is focused on its _home_ region, and is likely to remain so for a generation or more.

I'm wondering if the US would be interested in _privatizing_ some services - like strategic sea and air lift and (stocked) supply depots - and allowing them to be used by some 'clients' who are conducting _approved_ missions. (Approved by whom? The UNSC?) It would lower O&M costs - which are always greater than capital and bring in a small, one-time capital infusion and it would keep people on someone's payroll.


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## a_majoor (29 Jun 2011)

Time to start making preparations:

http://pajamasmedia.com/vodkapundit/2011/06/28/its-delightful-its-delicious-its-default/?print=1



> *It’s Delightful, It’s Delicious, It’s Default*
> Posted By Stephen Green On June 28, 2011 @ 2:37 pm In Uncategorized | 128 Comments
> 
> The chatter today has been all about Lawrence Lindsey’s WSJ column about our dire fiscal situation. Excuse me — the meaningful chatter. The meaningless chatter has been about Michele Bachmann, and whether she’s the Gaffe-O-Matic or merely gaffetastic. After watching her embarrassing campaign launch yesterday, I can’t say I much care. Honestly, it was the worst GOP presidential announcement since the last one. Bachmann and Jon Huntsman might turn out to be the Dueling Flame-outs, bookending the left and right of the party.
> ...


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## tomahawk6 (30 Jun 2011)

What the democrat scare mongers arent pointing out is that the Treasury has billions of dollars in revenue coming  so a default is not very likely. Obama wants the debt ceiling raised so that he can continue to spend money - which is the root of the problem.Too much spending until thats reduced you cant begin to bring the budget into balance.


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## a_majoor (3 Jul 2011)

Perhaps the problem on a more meta level is the basis of wealth has changed and we haven't figured out the adjustment yet:

http://washingtonexaminer.com/politics/2011/07/replacing-property-source-wealth-creation



> *Replacing property as a source of wealth creation*
> By: Michael Barone | Senior Political Analyst Follow Him @MichaelBarone | 07/02/11 8:05 PM
> photos.com
> 
> ...


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## Redeye (4 Jul 2011)

tomahawk6 said:
			
		

> What the democrat scare mongers arent pointing out is that the Treasury has billions of dollars in revenue coming  so a default is not very likely. Obama wants the debt ceiling raised so that he can continue to spend money - which is the root of the problem.Too much spending until thats reduced you cant begin to bring the budget into balance.



That's not scaremongering. That's the reality.  They have billions in revenue coming, but they have billions in spending obligations - a substantial amount more.  When they hit the debt ceiling, they default. Period.  That's how it works.

Despite the claims of the GOP (who raised the debt ceiling how many times during their adminstrations?  Reagan did it 17 times?), they have a spending AND a revenue problem.  Without raising taxes substantially and undertaking some spending changes, there's no solution.  Raising the debt ceiling (a useless legal construct to begin with) isn't an optional thing.  It's inevitable.


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## Edward Campbell (4 Jul 2011)

Redeye said:
			
		

> ...  Raising the debt ceiling (a useless legal construct to begin with) isn't an optional thing.  It's inevitable.




I agree. The consequences of _not_ raising the debt ceiling, of defaulting, in other words, are so dreadful that not even the dumbest American legislators - who are evenly distributed across all party and _movement_ lines - want to do that.


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## Kirkhill (4 Jul 2011)

So is it fair to say that the histrionics will continue until August 1st at which time a deal will be announced that ratchets down spending (not as much as Ryan would like) and also raises the debt ceiling until the next time?  The drama will then continue on August 2nd until Nov 4 2012.


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## Edward Campbell (4 Jul 2011)

Kirkhill said:
			
		

> So is it fair to say that the histrionics will continue until August 1st at which time a deal will be announced that ratchets down spending (not as much as Ryan would like) and also raises the debt ceiling until the next time?  The drama will then continue on August 2nd until Nov 4 2012.




That's a good guess ... the spending cuts will, most likely, be made at the expense of mostly useful, _productive_ programmes; wasteful, ill-conceived programmes, especially those in the DoD, will continue unabated; no consideration will be given to a _productive_ (national consumption) tax but it may be necessary to take useful money out of the hands of those most likely to use it in a _productive_ manner and give it to those (bureaucrats) who will waste it quickly.


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## Kirkhill (4 Jul 2011)

E.R. Campbell said:
			
		

> That's a good guess ... the spending cuts will, most likely, be made at the expense of mostly useful, _productive_ programmes; wasteful, ill-conceived programmes, especially those in the DoD, will continue unabated; no consideration will be given to a _productive_ (national consumption) tax but it may be necessary to take useful money out of the hands of those most likely to use it in a _productive_ manner and give it to those (bureaucrats) who will waste it quickly.



Gawd.... to be so cynical so young.  >


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## tomahawk6 (4 Jul 2011)

There is plenty of revenue,the administration just has to reduce spending. Something democrats are loathe to do. In his first year or so in office Obama spent more than any other President in our history.With very little accountability.


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## Edward Campbell (4 Jul 2011)

tomahawk6 said:
			
		

> There is plenty of revenue,the administration just has to reduce spending. Something democrats are loathe to do. In his first year or so in office Obama spent more than any other President in our history.With very little accountability.




Here is one _estimate_ of US federal revenues out to 2016:






Source: http://www.usgovernmentrevenue.com/federal_revenue_chart

And here, same source, is an estimate of how it is collected in 2011:




Source: http://www.usgovernmentrevenue.com/US_fed_revenue_pie_chart

Given that even the Ryan Plan requires nearly $4.0 *Trillion* in spending in 2016 (same source) and the _guesstimate_ is revenues of $4.5 Trillion there is not an awful lot of room for _contingencies, bad guesses or bad politics.
_


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## Redeye (4 Jul 2011)

tomahawk6 said:
			
		

> There is plenty of revenue,the administration just has to reduce spending. Something democrats are loathe to do. In his first year or so in office Obama spent more than any other President in our history.With very little accountability.



Spoken like a man with no understanding whatsoever of the US federal budget.  Cutting all discretionary budget items to zero will not fix the problem - and that in and of itself is not possible.  Taxes are at historic lows, and they are in no way sustainable at those levels.  Taxes must rise, it is really that simple.


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## Kirkhill (4 Jul 2011)

Redeye said:
			
		

> Spoken like a man with no understanding whatsoever of the US federal budget.  ......



Redeye - just a thought that I hope will be taken constructively.

Do you find it absolutely necessary to take the attack to the man all the time?  Often your very relevant comments are obscured by all the fire and smoke you generate by the manner in which you present them.  And that is a shame.

Play the ball, not the man..... ;D


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## CBH99 (4 Jul 2011)

Not only that, but much of the spending authorized in the government bailouts was done prior to Obama taking office.  So while the money was spent under his administration, it was a long time coming & had a majority of it organized and authorized by the prior Bush administration.


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## Redeye (4 Jul 2011)

Kirkhill said:
			
		

> Redeye - just a thought that I hope will be taken constructively.
> 
> Do you find it absolutely necessary to take the attack to the man all the time?  Often your very relevant comments are obscured by all the fire and smoke you generate by the manner in which you present them.  And that is a shame.
> 
> Play the ball, not the man..... ;D



Fair comment - it just infuriates me that people will make statements that are so obviously false, as though they've never bothered to even consider them.  This is exactly why there's so little meaningful political discourse in the US in particular, because they can't even discuss anything from a basis in reality.  This "we don't have a revenue problem" mantra is a lie being sold to Joe Public in the USA and not questioned at all, and it is not always easy to stomach that.


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## Edward Campbell (6 Jul 2011)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_, is an opinion piece with which I mostly agree:

http://www.ottawacitizen.com/news/empire+verge+again/5055723/story.html 


> An empire on the verge, again
> 
> By Dan Gardner, The Ottawa Citizen
> 
> ...




There are two points where I disagree with Gardner:

First: the lunacy, irresponsibility, call it what you will, is not confined to the Republican party, not even to its fruitcake wing. The Democrats deserve a full, fair, *equal* share of the blame; and

Second: it is not the American political system that is broken ~ it is American culture, and specifically the _culture wars_, that began in the late 1950s and that have poisoned American (and often Canadian) political discourse for the past 50± years, that is broken. 

But, for the rest, I agree: America is on the “eve of destruction” and there are more than enough irresponsible idiots in leadership roles – in the White House, in the Congress, in the _commentariat_ and academe and in society at large who are willing to risk destruction in order to make their own, petty, partisan (Democrat, Republican and Tea Party) points. But, as Garden reminds us, it is unwise to count America out; let's hope they manage to “exhaust all the alternatives” before 2 Aug 11.


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## astecki (6 Jul 2011)

E.R. Campbell said:
			
		

> Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_, is an opinion piece with which I mostly agree:
> 
> http://www.ottawacitizen.com/news/empire+verge+again/5055723/story.html
> 
> ...



Could not agree more with your second point, was thinking the same thing as soon as he brought the point up.  It's not just the politicians or the system that's broken, it's the underlying acceptance of the status quo by the majority involved.  It's a bipartisan problem that cannot be solved with partisan solutions, and that requires more than simple recognition by those in the system.  It requires a serious change of attitude and focus by those that prop up the system, i.e. the general public, the culture as a whole.


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## Brad Sallows (6 Jul 2011)

>Taxes are at historic lows, and they are in no way sustainable at those levels. 

High taxes might be "unsustainable" (ie. the people taxed will literally be taxed out of their assets and become unable to pay any more taxes).  Low taxes are easily sustainable.

I assume you mean that US federal spending is unsustainable.  That spending - at around 24% of GDP - is not only unsustainable at current levels of tax revenue (somewhere just above 15% of GDP); it is unsustainable compared to the oft-cited 18% of GDP around which US federal tax take has hovered since WWII.  Occasionally that tax take has stuck its nose up to just over 20% (at the tail end of WWII, and at the height of the dot-com boom, which emphatically are not periods similar to the one in which we find ourselves).

Given the gap between "24" and "18", or even just "24" and "20", let alone "24" and "15", it should be clear to even basically innumerate people that spending is the problem.  The reality is that the basket of policies followed for the past 3+ years have failed to goose the economy - they'd be lucky to hit the historical 18% average any time soon.

Government spending (there and here) should have been cut significantly and immediately when the trouble began to brew.  Only a small hole (recession) can be paved over with deficit financing.  The 1997-2007 decade of relative prosperity was an abnormality; the corresponding tax revenues were abnormal.  Government spending was calibrated to those boom levels; spending now needs not only to fall to the baseline, but below the baseline since so much future tax revenue has already been spent.


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## Redeye (7 Jul 2011)

Brad Sallows said:
			
		

> High taxes might be "unsustainable" (ie. the people taxed will literally be taxed out of their assets and become unable to pay any more taxes).  Low taxes are easily sustainable.



That would actaully be ipretty much mpossible under the US tax system (and ours) since taxes are based on income, not assets (with the specific exemption of the estate tax and ad valorem property taxes, which in the US tend to be low).  That said, at some level high taxation becomes a disincentive to work more and earn more income, this is the balance that must be found and maintained.



			
				Brad Sallows said:
			
		

> I assume you mean that US federal spending is unsustainable.  That spending - at around 24% of GDP - is not only unsustainable at current levels of tax revenue (somewhere just above 15% of GDP); it is unsustainable compared to the oft-cited 18% of GDP around which US federal tax take has hovered since WWII.  Occasionally that tax take has stuck its nose up to just over 20% (at the tail end of WWII, and at the height of the dot-com boom, which emphatically are not periods similar to the one in which we find ourselves).



Absolutely - the problem, as I said, is both a revenue problem and a spending problem.  What makes it particularly troublesome is that there's not a lot of interest in taking on some of the huge items.  For example, when President Obama negotiated the New START treaty, which would reduce the US nuclear arsenal substantially (at a not insignificant cost saving), many on the right in the US attacked him for "undermining security", even though the US nuclear arsenal after the treaty would remain more than sufficient to wipe life off the earth a few hundred times over.  Similarly, the massive handouts given to countries like Israel (almost $4bn a year) aren't up for discussion, but defunding Planned Parenthood and saving what in relative terms is a pittance seemed to be some kind of progress?  That's the "culture wars" Mr. Campbell refers to at work.



			
				Brad Sallows said:
			
		

> Given the gap between "24" and "18", or even just "24" and "20", let alone "24" and "15", it should be clear to even basically innumerate people that spending is the problem.  The reality is that the basket of policies followed for the past 3+ years have failed to goose the economy - they'd be lucky to hit the historical 18% average any time soon.



Spending is a problem.  It is not the problem.



			
				Brad Sallows said:
			
		

> Government spending (there and here) should have been cut significantly and immediately when the trouble began to brew.  Only a small hole (recession) can be paved over with deficit financing.  The 1997-2007 decade of relative prosperity was an abnormality; the corresponding tax revenues were abnormal.  Government spending was calibrated to those boom levels; spending now needs not only to fall to the baseline, but below the baseline since so much future tax revenue has already been spent.



Not only was government spending "calibrated" to those levels, the boom was used as an excuse to make massive, unaffordable tax cuts, the ones that President Obama would desperately like to get rid of but is presently unable to.  That would make some difference.  The economic value of them is wildly debated, but I tend to think that restoring the rates that existed under the Clinton Administration would likely have a minor impact if any at all.  The idea of cutting government spending when hard times are on the horizon sounds great in theory, but cutting that spending in such times is probably even more difficult than it is now.  The idea now, for example, of slashing federal government employees as some means of cutting spending is a little laughable, because that will simply serve to worsen the US' already terrible unemployment figures.


----------



## Kirkhill (7 Jul 2011)

If the apple cart is about to be upset in any case because of circumstances maybe the right thing to do is upset it on your own terms at a time and place of your own choosing.

If the current system of income based taxation, and a rule book that makes the Byzantines look positively Scandinavian, is insupportable maybe now *is* the time to (ware Scottish metaphor) "grasp the nettle" and chuck out the old system.  In its place eliminate the income tax entirely and replace it with ERC's favourite consumption tax, perhaps even a carbon based tax if that is popular with over 50% of the population.    Many people that are opposed to a carbon tax on philosophical grounds would get over it if they didn't have to fill out income tax forms and watch the government abscond with the 20 to 40% of the fruits of their labour.    The poor among us - omnipresent - could be protected with credits, supplements and/or grants.

That would allow the government to rebalance the books (revenue increases included) without having to fight the old battles.  

The question is: Can and "old" government get away with that? Or is there too much stored ill will so that it requires a new "trusted" government to upset the cart and convince people that it was absolutely necessary, there were no other options and the result isn't as bad as they feared?


----------



## Redeye (7 Jul 2011)

That would perhaps be an ideal solution - scrap the entire system altogether and build a new one from the ground up - but doing so I suspect would take quite a while just to get organized, then you'd need a "conversion date" (ie the start of a new fiscal year) to start using the new system.  There's something to be said for a consumption tax being the primary source of revenue, and even though it's largely fairer, it's still going to rub people the wrong way.  All the "you don't have income tax taken off your pay" won't go far when you're facing a 25% (or more) sales tax on everything but essentials.



			
				Kirkhill said:
			
		

> If the apple cart is about to be upset in any case because of circumstances maybe the right thing to do is upset it on your own terms at a time and place of your own choosing.
> 
> If the current system of income based taxation, and a rule book that makes the Byzantines look positively Scandinavian, is insupportable maybe now *is* the time to (ware Scottish metaphor) "grasp the nettle" and chuck out the old system.  In its place eliminate the income tax entirely and replace it with ERC's favourite consumption tax, perhaps even a carbon based tax if that is popular with over 50% of the population.    Many people that are opposed to a carbon tax on philosophical grounds would get over it if they didn't have to fill out income tax forms and watch the government abscond with the 20 to 40% of the fruits of their labour.    The poor among us - omnipresent - could be protected with credits, supplements and/or grants.
> 
> ...


----------



## Brad Sallows (7 Jul 2011)

This article Do we really have a revenue problem? illustrates why spending is the problem for the US.

Look at the second chart.  Join the far left and far right endpoints of the revenue line.  Notice that the line does not fall much below the long-term "wiggle" with the "bubbles" ignored; I suppose the long-term average for 2011 would not lie more than $300B to $500B above the actual revenue.  Also note that the chart is in adjusted (2010) dollars, which illustrates conclusively that the US is essentially awash in revenue.  Finally, note the spending line.  In 2006 their spending was above the bubble peak, and well above the long-term baseline.  In 2011, they have jacked up their spending even further, while revenues fell back to and most likely below the long-term baseline.  Spending is the problem.


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## Sham (7 Jul 2011)

"When the Government doesn't work; we must build ourselves another Government like the Declaration of Independence says to when the old one ain't working – just – just a little farther out West." -JFK movie. That's my .02 cents worth.


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## a_majoor (7 Jul 2011)

Sadly, no amount of charts, historical data or anecdotal evidence will sway people wedded to the idea that there is always more tax revenue to be had, somewhere.

This is really more about "class warfare" than rational economics; and the envy driven desire to strip away the gains and property of the wealthy will probably be a force which will never be abated so long as humans reamain human. Since the really wealthy know how to shelter their wealth or can engage in crony capitalism (or join the ruling oligarchy), then the brunt will end up falling on the middle class who have less ability to shelter their wealth and much less time to do so (having to earn a living).

Class warfare is a dangerous weapon, however. The wealth has been shifting for decades, and now government employees with job security, generous pay, benefits and pensions will be the targets, since they now have visibly become the wealthy segment of the middle class. (A recent National Post article points out that if government employees were paid the same wages as their private sector counterparts, there would be an annual wage saving of $19 billion/year in Canada). How long before voters turn upon them?


----------



## GnyHwy (7 Jul 2011)

Warren Buffet will save America.  Too bad he is too old to be Pres!  Long live Warren!


----------



## GnyHwy (7 Jul 2011)

Warren Buffet!


----------



## a_majoor (10 Jul 2011)

An older article but worth repeating, the scale and scope of the problem is simply beyond imagination (to give you an idea, the actual debts and liabilities are almost _three times_ the accumulated stock of wealth in the United States)

http://www.nationalreview.com/articles/print/229942



> *The Other National Debt*
> This article originally appeared in the June 21, 2010, issue of NR.
> 
> About that $14 trillion national debt: Get ready to tack some zeroes onto it. Taken alone, the amount of debt issued by the federal government — that $14 trillion figure that shows up on the national ledger — is a terrifying, awesome, hellacious number: Fourteen trillion seconds ago, Greenland was covered by lush and verdant forests, and the Neanderthals had not yet been outwitted and driven into extinction by Homo sapiens sapiens, because we did not yet exist. Big number, 14 trillion, and yet it doesn’t even begin to cover the real indebtedness of American governments at the federal, state, and local levels, because governments don’t count up their liabilities the same way businesses do.
> ...


----------



## Edward Campbell (11 Jul 2011)

Obama's going to win this one, and he should.

Boehner is a good man with good ideas but the is hamstrung by the juvenile delinquent Neanderthals in the _Tea Party_.

Of course there must be spending cuts - big, painful cuts to entitlements that are as deeply ingrained in the USA as our equivalents are here in Canada, but they must be pared down, by the trillions. But there must be some more revenue, too, and it is there that Obama has captured the high ground and outflanked the amateurs from the _Tea Party_. Americans don't like the super rich; they don't like the bankers who flew to DC is private jets; they don't like 'big oil;' nor do they like any of the "super rich." It is true and fair to call the rich 'job creators,' but it is lousy politics when unemployment is stuck at 9% or more. In fact Republicans should, as I think Boehner wants to do, embrace "close the loopholes." It is a good, or at least not too bad, plan. Obama is offering 4 dollars in cuts for every dollar in new revenue found by closing tax loopholes. The smart move would be to bargain him up to 5 or 6 or even 7 to 1; the dumb move, the dumbass Tea Party move is to tell him "no."

There is, now, a slightly better chance (than on Sunday) that the US will be politically paralyzed and will default on its debt and when Americans take stock of that disaster they will, correctly, blame the Republicans and they will return Obama in 2012 and then another Democrat in 2016 - all because of the dimwits in the Tea Party.

Jesus wept.


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## Kirkhill (11 Jul 2011)

21 more days of histrionics.


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## GAP (11 Jul 2011)

Yeah, I agree, I love the timing on his calling their bluff......they can't help but take the blame....no matter which way it goes, he's just won his second mandate..... :nod:


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## Brad Sallows (12 Jul 2011)

>But there must be some more revenue, too, and it is there that Obama has captured the high ground and outflanked the amateurs from the Tea Party.

But there are actually two ways to increase revenue: increase the slice of the pie, or increase the size of the pie.  The "amateurs" want to increase the size of the pie by adopting appropriate policies (ie. reduce and eliminate what lies at the heart of the "regime uncertainty" buzzword that has lately become popular).  A major component of the deficit squeeze is due to revenue collapse (which is true in Canada also).  Trying to solve the problem by taking a larger slice of a smaller pie means the slice will have to be very much larger - it is difficult.  Even most Democrats seem to agree with the conventional economic wisdom that increasing taxes under current circumstances will militate against increasing the revenue base (and the increased slice will doubtless trigger responses which shrink the pie, thus negating part of the increased slice).  Finally, nearly everyone's long term strategy is to assume a sudden recovery (insert hoped-for miracle here) to something like the prior revenue base followed by historical rates of growth.

So: course of action "A" is both difficult and harmful and does not promote the long-term strategy.   Course of action "B" has plenty of suggestions on deck (ie. we know what could be done, therefore it is relatively "easy"), is helpful, and supports the long-term strategy.  Yet "A" is the one that supposedly educated and intelligent people all over the leftosphere believe is a prudent course of action to increase revenue while those who favour "B" are fools, idiots, ideologues, etc, etc.  I think the roles are reversed.

Selection and maintenance of the aim, and main effort: grow the revenue base; it is the vital ground.


----------



## Redeye (12 Jul 2011)

Brad Sallows said:
			
		

> >But there must be some more revenue, too, and it is there that Obama has captured the high ground and outflanked the amateurs from the Tea Party.
> 
> But there are actually two ways to increase revenue: increase the slice of the pie, or increase the size of the pie.  The "amateurs" want to increase the size of the pie by adopting appropriate policies (ie. reduce and eliminate what lies at the heart of the "regime uncertainty" buzzword that has lately become popular).  A major component of the deficit squeeze is due to revenue collapse (which is true in Canada also).  Trying to solve the problem by taking a larger slice of a smaller pie means the slice will have to be very much larger - it is difficult.  Even most Democrats seem to agree with the conventional economic wisdom that increasing taxes under current circumstances will militate against increasing the revenue base (and the increased slice will doubtless trigger responses which shrink the pie, thus negating part of the increased slice).  Finally, nearly everyone's long term strategy is to assume a sudden recovery (insert hoped-for miracle here) to something like the prior revenue base followed by historical rates of growth.



Conventional economic wisdom actually doesn't say that at all.

It does say that all tax hikes are not the same - and that tax hikes which lower household discretionary spending are problematic.  Restoring some form of estate tax and taxing the "rich" who the American public are getting increasingly fed up with it seems is less likely to have an impact - particularly if the tax structures can be set up in such a way as to spur investment of the funds  - to get money off the sidelines and into the economy as it were.  If businesses invest a bit in getting going again, and employment increases, then demand will follow - it's kind of a Mexican standoff, but if a tax system can incent a move, then the engine might just turn over.

Ideally, we want to put money in the hands of the "working" and "middle" class, because they're the ones that spend it.


----------



## Edward Campbell (12 Jul 2011)

Redeye said:
			
		

> Conventional economic wisdom actually doesn't say that at all.
> 
> It does say that all tax hikes are not the same - and that tax hikes which lower household discretionary spending are problematic.  Restoring some form of estate tax and taxing the "rich" who the American public are getting increasingly fed up with it seems is less likely to have an impact - particularly if the tax structures can be set up in such a way as to spur investment of the funds  - to get money off the sidelines and into the economy as it were.  If businesses invest a bit in getting going again, and employment increases, then demand will follow - it's kind of a Mexican standoff, but if a tax system can incent a move, then the engine might just turn over.
> 
> Ideally, we want to put money in the hands of the "working" and "middle" class, because they're the ones that spend it.




I don't agree:

1. Estate taxes mostly take useful money out of _productive_ hands and put it into _unproductive_ ones;

2. The "rich" are both too easy a target and too hard to define; politicians almost always target everyone except the really, super rich;

3. Closing a lot of tax loopholes, especially for small, unpopular segments of society, is _politically_ smart - but not economically useful. That's why Obama is right, he doesn't care if he ever does the right things for the USA and its economy but he does want to serve his constituency;

4. The working and middle classes are simply a slow-through mechanism: their expenditures eventually get into the hands of the rich, who build and create jobs, etc. The best, in the long run the only way to put money in the hands of the working and middle classes is to create the political environment in which the "rich" (who are, very often just a subset of the middle class) want to build enterprises and create jobs for the working class. Governments don't, indeed cannot do that - at least not on the necessary scale.


----------



## Redeye (12 Jul 2011)

To suggest, however, that the rich are a monolithic group, all of whom "create jobs" is rather false, I don't think you can find any research to support that.

A modest estate tax, while not really my preference overall, is still a way to capture some revenue if income taxes can't rise.  I like consumption taxes better, of course.



			
				E.R. Campbell said:
			
		

> I don't agree:
> 
> 1. Estate taxes mostly take useful money out of _productive_ hands and put it into _unproductive_ ones;
> 
> ...


----------



## Edward Campbell (12 Jul 2011)

Redeye said:
			
		

> ...
> A modest estate tax, while not really my preference overall, is still a way to capture some revenue if income taxes can't rise.  I like consumption taxes better, of course.




Advocating an estate tax puts you foursquare against Locke and, therefore, makes you an illiberal. An estate tax is a complete violation of the ancient, bedrock common law principle that "a man's home is his castle." The state has no right to seize a man's home on his death (but a legal creditor might) and it, equally, has no right to seize his other property either - not just because the poor bugger died and his neighbours are jealous of his heirs . It is theft, pure and simple, but because it is theft proposed by the political left it is all gussied up as a tax.


----------



## Redeye (13 Jul 2011)

E.R. Campbell said:
			
		

> Advocating an estate tax puts you foursquare against Locke and, therefore, makes you an illiberal. An estate tax is a complete violation of the ancient, bedrock common law principle that "a man's home is his castle." The state has no right to seize a man's home on his death (but a legal creditor might) and it, equally, has no right to seize his other property either - not just because the poor bugger died and his neighbours are jealous of his heirs . It is theft, pure and simple, but because it is theft proposed by the political left it is all gussied up as a tax.



All tax can be painted as theft in some form.  For the record, I'm not really a fan of estate taxes for precisely the reason suggested (part of my living is made helping people structure affairs to minimize the much more modest probate fees in Canada, after all) - but in a desperate situation where it's touch to find ways to increase revenue it has to be looked at - if even as a stop gap.  They'd be far better off with some form of national VAT type tax - a modest one at that, but it seems a non-starter in most discussions.


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## Jed (13 Jul 2011)

Redeye said:
			
		

> All tax can be painted as theft in some form.


 Wow! You should go into politics with a diversionary comeback like that!


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## a_majoor (15 Jul 2011)

See, the debt isn't a probalm at all  >

http://www.whitehousedossier.com/2011/07/14/gops-big-debt-ceiling-card-obamas-birthday-bash/



> *GOP Debt Ceiling Ace in the Hole: Obama’s Birthday Bash*
> by KEITH KOFFLER on JULY 14, 2011, 12:09 PM
> Oh boy, this is going to look bad.
> 
> ...



Evidently they either didn't think about the timing and optics, or just don't care


----------



## Rifleman62 (15 Jul 2011)

Plus the cost of the Air Force One package for this political event. 

I doubt there is a new government project to ribbon cut in the local.


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## a_majoor (16 Jul 2011)

Any politician who went in this direction would need to screw up the sort of fortitude needed to "go over the top" in the Battle of the Somme (and a similar Canadian attempt would meet equal levels of resistance), but we are near the point where the only two choices are a controlled drawdown or an uncontrolled collapse:

http://opinion.financialpost.com/2011/07/15/lawrence-solomon-a-tea-party-budget/



> *Lawrence Solomon: A Tea Party budget*
> Comments Twitter	 LinkedIn Email
> Lawrence Solomon  Jul 15, 2011 – 8:45 PM ET | Last Updated: Jul 15, 2011 9:33 PM ET
> 
> ...



And just in case someone posts that the problem is lack of revenue or George W Bush again:

http://online.wsj.com/article/SB10001424052702304203304576446332084493902.html?mod=WSJ_Opinion_LEADTop



> *The Obama Downgrade*
> The real reason the U.S. could lose its AAA rating.
> 
> So the credit-rating agencies that helped to create the financial crisis that led to a deep recession are now warning that the U.S. could lose the AAA rating it has had since 1917. As painfully ironic as this is, there's no benefit in shooting the messengers. The real culprit is the U.S. political class, especially the President who has presided over this historic collapse of fiscal credibility.
> ...


----------



## Brad Sallows (17 Jul 2011)

>Even most Democrats seem to agree with the conventional economic wisdom that increasing taxes under current circumstances will militate against increasing the revenue base 

>>Conventional economic wisdom actually doesn't say that at all.

There are taxes which render my statement incorrect as an absolute ("all taxes") rule.  But unless those taxes are capable of producing revenues which will appear as more than rounding errors, they are uninteresting.  If all the serious money is in income and sales taxes, then the point still has to be addressed: that increasing taxes will militate against increasing the revenue base.  If you prefer to substitute "increasing tax rates" for "increasing taxes" to distinguish between that and elimination of deductions, fine.   The problem still exists unless there is a way of producing revenue from taxation on a useful scale without unacceptably damaging economic growth.


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## tomahawk6 (18 Jul 2011)

The democrats dont want to cut non-defense spending and instead would rather increase taxes. Before the recession that figure was $2.5 trillion.Just going back to 2002 spending levels[$2.6 trillion] would be a step in the right direction.The 2012 budget is at $3.7b.


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## a_majoor (18 Jul 2011)

High speed rail? What other useless stuff is being "fenced off" from spending cuts?

http://washingtonexaminer.com/politics/2011/07/federal-expansion-real-issue-debt-ceiling-debate



> *Federal expansion the real issue in debt ceiling debate*
> By: Michael Barone | Senior Political Analyst Follow Him @MichaelBarone | 07/16/11 8:05 PM
> 
> The nation's first high-speed train, Amtrak's Acela Express. In negotiations on the debt limit President Obama has fenced off several programs from any cuts at all. One is, astonishingly, the $53 billion he wants to spend on high-speed rail projects. To call high-speed rail a "boondoggle," as does House Budget Committee Chairman Paul Ryan, is to engage in considerable understatement, writes Examiner Sr. Political Analyst Michael Barone. It's hard to keep up with all the arguments and proposals in the debt limit struggle. But what's at stake is fundamental.
> ...


----------



## tomahawk6 (18 Jul 2011)

High speed rail is a waste of money.Hell low speed rail didnt last in Canada which is a damn shame.One summer I took the train from Prince Rupert to TO. It took 5 days and was alot of fun.


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## a_majoor (18 Jul 2011)

It is hard for people to know and understand the problem when the Legacy Media is distorting the message (and more people still get their information from the legacy media than via New Media). Once again we see that the real cause and effect chain was due to Regulatory failure rather than market failure; markets simply followed the flawed or perverse incentives:

http://pajamasmedia.com/andrewklavan/2011/07/17/how-network-news-helped-bring-about-the-crash/?print=1



> *How Network News Helped Bring About the Crash*
> 
> Posted By Andrew Klavan On July 17, 2011 @ 12:00 am In Uncategorized | 34 Comments
> 
> ...


----------



## Brad Sallows (19 Jul 2011)

>The democrats dont want to cut non-defense spending and instead would rather increase taxes. 

The Democrats are hoping that the tax take can be increased up to around 24% of GDP.  In effect, it is blackmail of the taxpayers: having raised public spending, their ultimatum is "pay, or else...".  It is simply the polar opposite of reducing taxation and delivering the ultimatum "cut spending, or else...".


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## a_majoor (23 Jul 2011)

So why the talks are going nowhere:

http://pajamasmedia.com/blog/deficit-negotiations-collapse-%E2%80%94-are-progressives-cheering/?print=1



> *Deficit Negotiations Collapse — Are Progressives Cheering?*
> 
> Posted By Richard Pollock On July 22, 2011 @ 5:25 pm In economy,Uncategorized,US News | 29 Comments
> 
> ...


----------



## 57Chevy (23 Jul 2011)

Shared with provisions of The Copyright Act

U.S. debt talks collapse in anger, recrimination
Sheldon Alberts/Postmedia News 22 July
http://www.canada.com/news/debt+talks+collapse+anger+recrimination/5147369/story.html#ixzz1StX6G9Ih
exerpt:
Obama and others have warned the country will miss interest payments on its debt and may not be able to cut more than 70 million cheques in August to seniors, members of the military and others if the debt ceiling is not raised.


The U.S. president said he had offered Republicans more than $1 trillion in cuts to discretionary spending — both on domestic programs and U.S. defence — and another $650 million in cuts to entitlement programs.
                  ____________________________________________________________________

Trouble in the butts :facepalm:


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## Rifleman62 (23 Jul 2011)

> Obama and others have warned the country will miss interest payments on its debt and *may not be able* to cut more than 70 million cheques in August to seniors, members of the military and others if the debt ceiling is not raised.



*"may not be able"*: Well, not a complete lie by the President. He could have said no cheques could be cut.


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## Nemo888 (23 Jul 2011)

The US is Mexico in ten days.


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## Edward Campbell (23 Jul 2011)

I'm not sure I fully or accurately understand what Senate Minority Leader Mitch McConnell, supported, I think, now, by Senate Majority Leader Harry Reid and House Speaker John Boehner, proposes but it looks to me as though he proposes to violate the US Constitution and threaten 750 years of constitutional history in order to secure a very slight political advantage in 2012.

(See Diane Francis' (_National Post_) commentary for the US Constitution issue.)

It was over 750 years ago, during the reign of Henry III in England, that we - our political ancestors - established the constitutional principle that the executive may propose new taxes but only the legislature can levy them. (See, e.g. Maddicott and Carpenter if you want to more fully understand that important issue.)

If I heard Boehner correctly, and I may have misunderstood, he said that he would support the McConnell (and Reid) proposal if President Obama cut spending and did not raise taxes. Now, I have no problems with Obama not raising taxes. Not doing something about tax increases is almost always acceptable. And, despite being elected with a national mandate and, therefore, accountable to the people, _tradition_ (and the Constitution itself, I think) say that, while the President may propose taxes, only the Congress can levy them. I think that the President can, by fiat, alter some tax collection regulations to improve the efficiency of how taxes are collected and such measures might bring in a few billions or even tens of billions of new revenue. Cutting some expenses should, also, be within the POTUS remit - I think that a cabinet secretary can say, to his or her department, "spend $_n_ billion less on these projects - ones which are not explicitly ordered by the Congress. But any wholesale cuts to programmes or increases in taxes *must*, in my opinion be approved by the Congress.

I recognize that, in the main, the US Congress (House and Senate) is populated by third rate party hacks, devoid of guts, brains and principles - all parties, including the Tea Party (some of whom are monumentally stupid), Democrats (most of whom are totally irresponsible) and Republican (too many of whom are cowards), are too blame, but they do have responsibilities, under their Constitution. I'm not sure if they don't understand or just don't care about their own country.


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## Brad Sallows (24 Jul 2011)

>may not be able to cut more than 70 million cheques in August to seniors, members of the military and others if the debt ceiling is not raised.

Two points about that have been repeated, perhaps not strongly enough, by commentators over the past few days.

1. It is difficult to interrupt the processes by which transfers to individuals are executed (eg. direct deposit, printed and mailed cheques).

2. For the transfers to individuals which originate in the agencies with "trust funds", the agencies can redeem their special bonds (aka intragovernmental IOUs).  The treasury extinguishes the obligation (debt) to the agency in the amount "X" and is able to issue new public debt in the amount "X" without violating the debt ceiling.


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## a_majoor (24 Jul 2011)

The Canadian experience in context:

http://princearthurherald.com/archives/6040



> *Interview with Chris Edwards, Director of Tax Policy at the Cato Institute*
> 
> Posted on July 24th, 2011 by Eleanor Vaughan in Interview
> 
> ...


----------



## a_majoor (25 Jul 2011)

John Galt makes his entrance:

http://www.davidmcelroy.org/?p=1586



> *I’m just quitting’: A scene right out of ‘Atlas Shrugged’ in Birmingham*
> by David McElroy
> 
> If it had been a scene in “Atlas Shrugged,” the guy would have disappeared into the secrecy of Colorado with a shadowy figure who we would later learn to be John Galt. In real life, the story will probably be more complex. But I wonder how long it’s going to be before businesspeople really do start walking away and deciding it’s not worth doing business in America today. Or it it already happening and we just don’t know it?
> ...


----------



## 57Chevy (25 Jul 2011)

E.R. Campbell said:
			
		

> I'm not sure if they don't understand or just don't care about their own country.



Agreed



			
				Thucydides said:
			
		

> My name’s Ronnie Bryant, and I’m a mine operator.............I’m just quitting.
> Thank you.



His action seems reasonable to me.



			
				Thucydides said:
			
		

> Vaughan: What lessons could the United States learn from Canadian fiscal policy?
> 
> Edwards: Politicians need to have spines, the courage to do the right thing. Far too many Republicans want to cut spending, but they simply don’t have the guts to do it because they fear the electoral consequences. Under Prime Minister Jean Chretien, Canada chopped the federal budget by 10 per cent in two years in the mid-1990s. That would be like the United States chopping $400 billion out of its budget in two years, which American politicians regard as impossible. But the Liberal government did it in Canada and went on to win many elections. What Americans should learn from Canada is that cutting spending is not bad politics.



American Impossibilism
 :nod:
*impossibilism:
a defeatist attitude; the belief that all things are impossible.


----------



## GAP (25 Jul 2011)

The Fed Audit: "U.S. provided a whopping $16 trillion in secret loans to bail out US and foreign banks"
by Senator Bernie Sanders Global Research, July 23, 2011
Article Link

The first top-to-bottom audit of the Federal Reserve uncovered eye-popping new details about how the U.S. provided a whopping $16 trillion in secret loans to bail out American and foreign banks and businesses during the worst economic crisis since the Great Depression. An amendment by Sen. Bernie Sanders to the Wall Street reform law passed one year ago this week directed the Government Accountability Office to conduct the study. "As a result of this audit, we now know that the Federal Reserve provided more than $16 trillion in total financial assistance to some of the largest financial institutions and corporations in the United States and throughout the world," said Sanders. "This is a clear case of socialism for the rich and rugged, you're-on-your-own individualism for everyone else."

Among the investigation's key findings is that the Fed unilaterally provided trillions of dollars in financial assistance to foreign banks and corporations from South Korea to Scotland, according to the GAO report. "No agency of the United States government should be allowed to bailout a foreign bank or corporation without the direct approval of Congress and the president," Sanders said.

The non-partisan, investigative arm of Congress also determined that the Fed lacks a comprehensive system to deal with conflicts of interest, despite the serious potential for abuse.  In fact, according to the report, the Fed provided conflict of interest waivers to employees and private contractors so they could keep investments in the same financial institutions and corporations that were given emergency loans.

For example, the CEO of JP Morgan Chase served on the New York Fed's board of directors at the same time that his bank received more than $390 billion in financial assistance from the Fed.  Moreover, JP Morgan Chase served as one of the clearing banks for the Fed's emergency lending programs.

In another disturbing finding, the GAO said that on Sept. 19, 2008, William Dudley, who is now the New York Fed president, was granted a waiver to let him keep investments in AIG and General Electric at the same time AIG and GE were given bailout funds.  One reason the Fed did not make Dudley sell his holdings, according to the audit, was that it might have created the appearance of a conflict of interest.

To Sanders, the conclusion is simple. "No one who works for a firm receiving direct financial assistance from the Fed should be allowed to sit on the Fed's board of directors or be employed by the Fed," he said.

The investigation also revealed that the Fed outsourced most of its emergency lending programs to private contractors, many of which also were recipients of extremely low-interest and then-secret loans.

The Fed outsourced virtually all of the operations of their emergency lending programs to private contractors like JP Morgan Chase, Morgan Stanley, and Wells Fargo.  The same firms also received trillions of dollars in Fed loans at near-zero interest rates. Altogether some two-thirds of the contracts that the Fed awarded to manage its emergency lending programs were no-bid contracts. Morgan Stanley was given the largest no-bid contract worth $108.4 million to help manage the Fed bailout of AIG.
More on link


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## Kirkhill (26 Jul 2011)

GAP said:
			
		

> The Fed Audit: "U.S. provided a whopping $16 trillion in secret loans to bail out US and foreign banks"
> by Senator Bernie Sanders Global Research, July 23, 2011
> Article Link
> 
> ...



Message to Sanders:

Feel free to return the world to the Gold Standard and relinquish authority over the direction of the international monetary system.  

You own the responsibility because you demanded the authority and the budget when your diplomats insisted that the governors of the Bank of England give up their authority over the Gold Standard based system in 1944.  You cemented your position when President Nixon refused to accept any discipline on the Dollar by completely cutting the Dollar from Gold.

You bought it.  You broke it.  Your problem.


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## Edward Campbell (26 Jul 2011)

Kirkhill said:
			
		

> ...
> You bought it.  You broke it.  Your problem.




Precisely, Kirkhill; well said.


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## Edward Campbell (26 Jul 2011)

And the _Globe and Mail_ gets it right, on the editorial page:






Reproduced under the Fair Dealing provisions of the Copyright Act from the _Globe and Mail_
http://beta.images.theglobeandmail.com/archive/01301/tueedcar26co1_1301512cl-8.jpg

Canada will get sideswiped when, not if the US cannot manage its own debts. Many, almost certainly most of you - Army.ca readers, will pay part of the price through higher prices and reduced exports which will mean lower tax revenues which will mean fewer public 'services.'

The USA has spent itself into the status of _deadbeat_.

Next:





A new global reserve currency?


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## DBA (26 Jul 2011)

E.R. Campbell said:
			
		

> all parties, including the Tea Party (some of whom are monumentally stupid), Democrats (most of whom are totally irresponsible) and Republican (too many of whom are cowards), are too blame, but they do have responsibilities, under their Constitution. I'm not sure if they don't understand or just don't care about their own country.



Negative and positive attributes are evenly distributed in large populations so neither party has a lock on any of them. All your doing here is judging others based solely on your own opinion of yourself. I am smart, I think X, therefore people who think Y are dumb.  I think the responsible thing to do would be X, others don't agree therefore they are irresponsible. In the same situation I would step forward and act, those who don't step forward and fail to act are cowards.  This is a very polarized and unyielding position to take. It's also where politicians want their base as it's surrounds them in an almost impenetrable wall of hubris blocking out conflicting opinions. Both sides are doing what they think best from various points of view evenly distributed across parties for smart, stupid, venal, honest, crooked, deceitful, inspired, selfish etc reasons. It would be less polarizing and more productive if we gave our opinion and reasoning on an issue and not just pronounce our judgment of people. 

Do I have any proof? Sure - after my side gets in power they inevitably proceed to do things I consider stupid, irresponsible and cowardly. They didn't change once elected, I was just often distracted from actually thinking about the issues (X is a good idea, this is why) with empty speech praising how good my viewpoint was and therefore how bad those with other viewpoints are. 

Same thing for the government / business divide. Nether side has a lock on any positive or negative attributes. Neither should be only trusted or only condemned.


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## Edward Campbell (26 Jul 2011)

Fair comment, DBA, if a bit pointless.

You're right I am critical of US politicians and, to be fair, our own, too.

The potential impact of a US default puts all the political aspirations of Democrats, Republicans and Tea Partiers in the shade.

Now, the 'answers' to the US dilemma are quite simple:

1. Raise the debt ceiling – failure to do so will be an act of stupid, venal, political irresponsibility;
2. Cut spending – that is the root of the problem; and
3. Consider raising some revenue, too – to avoid politically painful cuts (have you seen the AARP advertisements?) and, symbolically, to 'punish' the rich and corporations. An 8:1 ratio of spending cuts to revenue gains is about right – cut $6.4 Trillion in spending (over ten years) and the executive can close $800 Billion in tax loopholes, but insist that $2 Trillion in cuts are made in the 2012 budget. 

That's my plan, but it is, essentially, what has been proposed, over and over again, by Democrats, Independents and Republicans, in the USA over the past year.

The reasons that simple plan isn't on the table is that:

1. Some (at least two that I have read/heard about, and I said “some,” originally) Tea Party members are persuaded that a default is better than anything proposed, thus far, by Obama and/or Boehner. I remain very comfortable with my assertion that some Tea Party members are monumentally stupid.

2. Some, actually, it appears, many, maybe even most, Democrats would rather face default than visit the entitlements issue. I am comfortable considering that to be irresponsible – putting partisan political advantage ahead of the good of the country. So I remain comfortable with calling most Democrats irresponsible, too.

3. Some form of my 'plan' above could have been and should have been in place in May of this year. It is not because Obama and Boehner, mainly, are jockeying for political advantage in 2012. Now, that's fair enough – it is politics, after all. But, we have been told by both men, they got close to a deal that had all three components (raise the debt ceiling, cut spending, close some tax loopholes to raise revenue) but it failed because Boehner cannot bring his Tea Party members (some of whom are monumentally stupid, in my opinion) on side. He doesn't need them in order to do what's right but he, and others in the Republican leadership, are afraid of what Mark Williams, Sarah Palin _et al_ might do to them if they abandon the Tea Party and embrace some Democrats. To me that shows a lack of courage: putting self interest ahead of the national interest. Thus, I am also comfortable in saying that there are too many cowards in the Republican Party.

So, of course, faults (and strengths) are evenly distributed across any significant segment of humankind but in this particular political case three faults – monumental stupidity, irresponsibility and cowardice – are, visibly, getting in the way of doing the right thing.

But, thanks for your observations.


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## Brad Sallows (26 Jul 2011)

>Canada will get sideswiped when, not if the US cannot manage its own debts. Many, almost certainly most of you - Army.ca readers, will pay part of the price through higher prices and reduced exports which will mean lower tax revenues which will mean fewer public 'services.'

Yep.  It's our own durn fault though, for spending our way into such a large accumulated deficit (debt) and insisting on spending as if peak (bubble) revenues were the norm.  I'm looking forward to a normalization; hopefully the future is now and we will come to grips with our own imbalances and stop punting our problems into tomorrow.


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## Brad Sallows (26 Jul 2011)

>1. Raise the debt ceiling

In itself, it is neither stupid nor irresponsible.  The debt ceiling in the US is just a (helpful) mechanism which forcibly presents opportunities for periodic reviews of the public finances before the "bond vigilantes" unexpectedly and suddenly blindside the next Treasury auction and everything comes to a halt much more quickly than a government can ever hope to respond.  Stupidity and irresponsibility only enter during the prioritization of payments.   A rating downgrade due to abrogation of commitments other than public debt is not equivalent to a default on debt.  A rating downgrade will widely increase the cost of borrowing.  That increased cost will further worsen the US net balance.  It will also squeeze the economy.  There will be less spending.  That will mean less economic activity, thus less tax revenues, thus further squeezing the revenue side.  It hastens the day of reckoning, at which the cost of borrowing ceases to be practical and the statists must decide which programs they want to save and which must be sacrificed.  If they were smart, they would be hammering at the TP's door to give away whatever is necessary to preserve as much of their welfare state as possible.  The longer they delay and try to rope off the big entitlement programs, the larger the debt will grow and the fewer will be the programs which can be saved.  Conditions emphatically favour the people who refuse to pay any more.

It is smart to do the hard things while they are still easy.  It won't be as easy as it would have been 2 or 5 or 15 or 50 years ago, but it will be a lot easier now than it will be in a few more months or years. So, get on with it.

>The reasons that simple plan isn't on the table is that:

... the Democrats are convinced that somehow, someone can be made to pay for everything they've promised to fund.  They don't understand that, in fact, the time has come to choose what will be retained and what will be eliminated from program spending, and that to delay is only to lose more.

The TP members are not "monumentally stupid", that description belongs solely to the people who passed into law entitlements that can't be paid and the people who could read the balance sheet but loaned the money to the government anyways.

>putting self interest ahead of the national interest. 

That's an interesting proposition: that the "national interest" is to go along with whatever poor decisions are made by others.   Their greed and lack of foresight is not the TP's problem.  The end game was always predictable and predicted.


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## DBA (26 Jul 2011)

E.R. Campbell said:
			
		

> Fair comment, DBA, if a bit pointless.
> 
> You're right I am critical of US politicians and, to be fair, our own, too.
> 
> ...



Looks like you missed my point entirely as all you did was expand on the name calling and insults to any who doesn't agree with you while providing nothing to back up why your view is the correct one. Hint: If intelligence is distributed evenly then that means the Tea Party movement contains the same proportion of smart people as any other group.  

Maybe one day debate will be more along the lines of:
My position is X, the reasons are A, B and C. The other position Y is inferior because of D, E and F. Response in kind. 
Instead of:
The correct position is X, which will result in Y if followed and Z if not followed. Stupid people can't see that Z will be a disaster, cowards won't do X and the evil people want Z to happen. All of us who believe in X is so smart and virtuous that we deserve a cookie. Followed by wondering why the other side isn't listening and nothing is being accomplished.

The Republican and Tea Party influenced Congress passed an agreement avoiding default. The Democrat controlled Senate voted it down.


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## Jed (26 Jul 2011)

To DBA, I can not acertain the motive or the objective of your comments to ERC. In my opinion it seems like more of a 'hit and run sideswipe' to me.

Are you attempting to impose your method of debate or a presentation of one's opinion on another individual?


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## Kirkhill (27 Jul 2011)

GE moving X-ray business to China

In 832 the move of the Bones of St Mark from Alexandria to Venice marked the rise of Venice as a major power in the Mediterranean.


In 654 Muslims disconnected Alexandria from the Byzantine empire.  The Christians were allowed to continue trading as long as they paid their taxes.

By 725 the taxes had been jacked to such an extent that the Christians revolted.  They revolted again in 739 and 750.  In 750 the Ummayyad Muslims were deposed by the Abbasid Muslims of Baghdad.

The Abbasids were absentee governors who jacked the taxes yet again prompting both the Egyptian Christians and the Egyptian Muslims to Revolt in 828 and 831.

In 832 the money ran to safety in Venice......

Denouement - Abbasids send Turkish slaves to Egypt to reestablish Abbasid authority.  Strangely the Turks set themselves up as Governors in their own right and had to be deposed by force.......but never went away.


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## Edward Campbell (27 Jul 2011)

DBA said:
			
		

> Looks like you missed my point entirely ...




You are correct, DBA, I missed your point and, in the cool light of morning, I'm still missing it.

I get that you don't like my harsh, judgemental tone; I get that you think that I think I know all the answers; and I get that you object to both my attitude and self assurance. Fair enough. You remember, I'm sure, the old adage about opinions and anuses ... so I'm guessing that isn't your point.

I agreed with you that strengths and faults are pretty evenly distributed amongst the human population, but I continue to assert that that a very small (a few hundred) segment of that population, the US administration and the Congress - which operates in a very special way and has very great responsibilities, has failed in its responsibilities for reasons I will not repeat. But that cannot be your point because I agreed with it.

Now you, like Brad Sallows, might suggest, à la Cassius to Brutus, that “the fault  is ... in ourselves” or, at least, in the broad American electorate, but I find that too easy because, eventually, everything – except the weather – eventually reduces to our personal choices.

So, I'm sorry, but we will have to agree to disagree on the substance and tone of my pronouncements ... because I still don't get your point.


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## Edward Campbell (27 Jul 2011)

Reports that the US will, no matter what, lose its Tripe A credit rating are increasing in frequency and volume. The forthcoming (later today) grilling of the heads of the major bond rating agencies by the US Congress should be interesting.

The deficit stands, currently, at about $1.6 Trillion. That is a HUGE number for anyone except the USA. There is no reason why the budget cannot be 'balanced' in a very short time without any revenue increases. The US debt of nearly $15 Trillion will be harder to clear but a debt of, say, 25-35% of GDP (currently also about $15 Trillion) is quite manageable so the US is looking, within say, ten years, at reducing it's debt - i.e. running budget surpluses - by 'only' $10 Trillion.

Let's say a balanced budget by 2015 and then surpluses (totaling $10+ Trillion) by 2022. That is achievable with some spending cuts that need not 'gut' Medicare or Social Security or the Pentagon.

All it requires is some political will.

But if, as I expect they will, S&P, Moodies and Fitch do lower the US credit rating by one notch (from prime (AAA) to High Grade (to AA+)) then the costs of getting the deficit and debt under control will be greater.


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## GAP (27 Jul 2011)

What if they shot across the US bow with a one year reduction in rating, and raise it up again....depending...that might get the message across......(not likely though.....)


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## Edward Campbell (27 Jul 2011)

GAP said:
			
		

> What if they shot across the US bow with a one year reduction in rating, and raise it up again....depending...that might get the message across......(not likely though.....)




That's what I think they should and (likely) will do: their _responsibility_ is to tell prospective bond buyers how good, or not so good, a risk each country and corporation might be. When, as I think they *must* and *will*, the Americans get a grip on their budget then their rating should go back up again. In one year? Maybe. In two or three? Almost certainly.


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## Edward Campbell (27 Jul 2011)

I heard *part* of Devan Sharma's remarks in the US Congress today. It seems to me that he indicated that default, à la Argentina in 2002, is highly unlikely but, given the size and growth of the US debt and the apparent inability or unwillingness of the administration and the congress to take remedial action, a credit rating cut is inevitable.


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## Nemo888 (31 Jul 2011)

Shrinking government is not a great idea for the US right now.Later when they are back on their feet again I agree. They get horrible value for their money. They pay only 2% less in total taxes by GDP compared to Canadians and get significantly fewer services(health care, tuition, social safety net, etc). There is obviously some room for improvement.

 All the government cuts have thrown their economy into negative growth for over three years now. That's depression territory. It's why the job numbers keep getting worse. Government jobs and increasing unemployment benefits saves jobs and provides a safe form of stimulus when economies falter. The money paid to them goes directly back into the economy. The American economy is too weak for harsh medicine right now. Most economists are in agreement on this. This political theatre is really a self fulfilling prophecy that only sees the US economy get worse. Rather self serving to destroy a country to win an election.

http://www.economist.com/blogs/freeexchange/2011/07/americas-economy


> Distress signal
> 
> Jul 29th 2011, 13:58 by R.A. | WASHINGTON
> 
> ...


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## Edward Campbell (31 Jul 2011)

The rather modest cuts (<$3.0 Trillion) are being proposed over 10 years, with little to be cut right now. The US GDP is about $15 Trillion, annual government expenditures are around $3 Trillion. Thus the proposals are to cut current expenditures by around 10% (on average over 10 years). I think good adequate accountants can find 10% 'slaxk' or 'fat' in the expenditures of almost every developed democracy including Canada and the USA.

I am <sarcasm> _confident_ </sarcasm> that some (many? most?) politicians will want to cut in ways that secure the greatest disadvantage for the other party and which do the least damage to their own supporters rather than following the advice of non-partisan experts.


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## Nemo888 (31 Jul 2011)

I think the US economy is in much worse shape than you. Without a manufacturing base I think it is structurally flawed. They rely on being thought of as the heart of the global economy. Prestige is a large part of their economic strength. They seem to be working hard to diminish this. As this happens their dollar will lose value and since almost everything is imported inflation will spike. I could easily see things spiraling out of control in a few years. I think we should start opening trade to Asia and stop bugging China about human rights. Last year we sold more wood to China than America. I think that is the future. We only need one large market, not necessarily American. China has 438 million people in it's middle class now.


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## 57Chevy (31 Jul 2011)

Thinking on manufacturing/market.

The U.S. needs China as much as China needs the U.S.


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## Edward Campbell (31 Jul 2011)

Nemo888 said:
			
		

> I think the US economy is in much worse shape than you. Without a manufacturing base I think it is structurally flawed. They rely on being thought of as the heart of the global economy. Prestige is a large part of their economic strength. They seem to be working hard to diminish this. As this happens their dollar will lose value and since almost everything is imported inflation will spike. I could easily see things spiraling out of control in a few years. I think we should start opening trade to Asia and stop bugging China about human rights. Last year we sold more wood to China than America. I think that is the future. We only need one large market, not necessarily American. China has 438 million people in it's middle class now.




I agree with you. If I subscribed to conspiracy theories I might ask: "How much are the Chines paying these clowns (Obama and the Tea Partiers, akile, and almost everyone in between) to attack the US dollar?"

One of China's medium term aims is to replace the US Dollar with the IMF's SDRs as the world's reserve currency. Notwithstanding the merits or lack of same of that proposal, it was a non-starter ... until now.


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## Brad Sallows (31 Jul 2011)

To which cuts exactly does "All the government cuts have thrown their economy into negative growth for over three years now." refer?

"Unemployment" is not a saved job - it is unemployment.  Government jobs were saved, though - that seems to be where most or at least a large minority of the "stimulus" funding ended.  It is not hard to see why: hoping that the recession would be brief, the Democrats sought to protect their public service supporters (heavily and militantly unionized and vocal) by padding over shortfalls for a couple of years.  Unfortunately for them, the drop in economic activity represents the end of a bubble, not a dip in the road.  Now large cutbacks are looming (unless another "stimulus" can be sold as debt to protect the privileged interests).

Everyone who works puts money directly back into the economy.  Each unemployed worker represents a loss on the "contributions" side and a gain on the "expenses" side.  Policies to regrow the work force are more important than policies to protect public services from 10% cuts (salary/benefit cuts or job cuts; heck, let them choose by popular vote down at the union hall).

The concern that the economy is too weak for harsh measures now assumes it will get better, not worse.  That should not be assumed.  There is plenty of room downslope as well as upslope.


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## Nemo888 (31 Jul 2011)

57Chevy said:
			
		

> Thinking on manufacturing/market.
> The U.S. needs China as much as China needs the U.S.



Sure. But this is not 1990 anymore. I can’t buy a Tang dynasty bowl in Toronto Chinatown for less than 200$ anymore either. Things like that don’t leave China now. There are 132,000 millionaires living in Shanghai alone. 30 years ago there were none.  They now have a domestic middle class market larger than the total population of the US. They can start throwing their weight around now.  ie, I can no longer buy up unique cultural artifacts for a days pay.



			
				Brad Sallows said:
			
		

> To which cuts exactly does "All the government cuts have thrown their economy into negative growth for over three years now." refer?



Cuts at the State and local level have actually been much larger than the stimulus in 5 of the last 7 quarters. Enough to put put the GDP into negative territory. Policies that increase GDP, including debt spending, are the source of jobs and growth. Shrinking government is eating up all the gains in other sectors. Total spending drops.  Then on main street no one is buying pizza or a new vacuum. Then the pizza place goes under, the vac store declares bankruptcy and the last American vacuum factory lays off more employees, who no longer buy pizza, etc. The economic miracle in China works just as well in reverse. The more the economy grows, the more it grows. The more it shrinks, the more it shrinks. What we need now is equilibrium to stop more dominos falling. I suppose letting it all fall apart is another option. I don’t really see why though. Do you hate America for some reason?  > joke >


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## Edward Campbell (31 Jul 2011)

I think that shrinking government does, in at least the short term, shrink the economy, too. That's what we saw in Canada _circa_ 1995 and it's what we are seeing in the UK this year. It is quite likely that shrinking the US government, now, will also shrink the economy at an unfortunate time. But, my understanding is that there are only modest cuts proposed for 2013 and they will have to grow over the ten year period.

From the immediate and near term point of view there is never a good time to shrink government but, from the long term and even medium term points of view there is never a bad time to start shrinking government, not even in a period of very slow growth and high unemployment, because the available evidence appears, to me, to indicate that the economy can and will shake off the initial shocks and will grow again.

 :2c:


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## a_majoor (31 Jul 2011)

The increasingly shrill assertations that cuts in government spending will somehow hurt the economy seem to ignore the very demonstrable fact that the multiple billions of dollars in "stimulus" spending did not work at all. The Presidednt predicted that without "stimulus" spending the unemployment rate would increase to @ 8%, and only a massive stimulus could prevent it.

Well we got the massive stimulus demanded and official unemployment is stuck at a bit over 9% in the US, with an additional drag of people who have stopped looking for work. Since these are actually unemployed people, the true rate of unemployment is far higher than 9%.

Canada did have a modest "stimulus" forced on the economy for political reasons (see Liberal-NDP-Bloc coalition), but has followed a course of graduated tax cuts and now deficit reduction for the most part. Our job creation numbers are better and our unemployment is lower, which should suggest something to the objective observer.


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## Nemo888 (31 Jul 2011)

But State and local cuts were significantly greater than the Federal stimulus in the USA. The stimulus you are talking about is a fiction. Canada did have a real stimulus, 2% of GDP, like all the other G20 nations. I think it went fine. It gave us a breather and some economic equilibrium to change course and find new markets. Now we can pay it off and try and not get sucked down with the US.


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## a_majoor (31 Jul 2011)

More facts to dispel the clouds fo rhetoric:

http://reason.com/archives/2011/07/29/the-facts-about-spending-cuts/singlepage



> *The Facts About Spending Cuts, the Debt, and the GDP*
> Separating economic myths from economic truths
> 
> Veronique de Rugy | July 29, 2011
> ...


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## Nemo888 (31 Jul 2011)

Of course raising taxes and directly paying off debt with it shrinks GDP. Absolutely no one is proposing that now. But raising taxes and spending it is neutral up to a point as far as GDP goes. The problem with small to medium businesses is the same problem the US is facing now. If you aren't growing you are shrinking. Equilibrium is almost impossible. Slow steady growth overcomes obstacles. I would not invest in a business that was trying to cut it's way into solvency. Short term, to keep GDP up, you need to raise taxes to cover current expenditures. Cutting alone will gut the economy. You can have your cuts after 12 to 24 months of solid growth. Not after three consecutive years of GDP shrinkage. Now that the updated stats are out unemployment is exactly where it should be with a shrinking GDP(16.4% Real). Job creation is more important than short term partisan politics.  We need momentum to get through this. This plane feels like it is about to stall to me. Sure deploying flaps will give you more lift, but you won't stay airborne.


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## Brad Sallows (31 Jul 2011)

>Cuts at the State and local level have actually been much larger than the stimulus in 5 of the last 7 quarters.

Interesting, if true.  Link with numbers in USD, perhaps?


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## The Bread Guy (31 Jul 2011)

> President Barack Obama on Sunday announced a last-minute deal to raise the U.S. borrowing limit and avoid a catastrophic default and he urged lawmakers to “do the right thing” and approve the agreement.
> 
> Laying out the endgame in the U.S. debt crisis just two days before a deadline to lift the borrowing limit, the White House and congressional leaders said the compromise would cut about $2.5-trillion from the deficit over the next 10 years.
> 
> ...


Source:  Reuters, 31 Jul 11



> .... Mechanics of the Debt Deal
> 
> Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
> President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.
> ...


Source:  Whitehouse fact sheet, 31 Jul 11

_Edited to add fact sheet excerpt_


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## Brad Sallows (31 Jul 2011)

>Short term, to keep GDP up, you need to raise taxes to cover current expenditures. 

Short, middle, or long term, to keep GDP up you need to increase the rate at which money changes hands.  Fundamentally, that is what GDP measures.  People spend more freely when they spend according to their own decision criteria and don't have to make up shortfalls.  An increase in taxes presents a shortfall.  If my taxes go up $500, then I need to find $500, which generally means cutting discretionary spending (entertainment, home improvements and landscaping - the sort of money movement that is critical to the economy).  That $500 dollars does prevent government from having to make a $500 cut.  But the interesting thing is that money is completely fungible, so that $500 really represents protection of the [least] useful, and [most] inefficient and counterproductive $500 the government is currently spending.

Too many people are removing human behaviour from economics.  GIGO.


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## Brad Sallows (31 Jul 2011)

>President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.

I will cackle maniacally when something happens to increase costs between now and then so that the debt ceiling moves from sometime in 2013 to sometime just before Nov 2012.


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## Brad Sallows (31 Jul 2011)

>If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending.

This is going to be electoral gold for the Republicans if the default mechanism ever kicks in.


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## a_majoor (1 Aug 2011)

Brad will be cackling maniacally in about three months when the United States is stripped of its AAA rating and interest costs rise. I rather doubt the smoke and mirrors will fool bond rating agencies like S&P, nor will the Chinese take kindly to being fleeced of their trillion dollar nest egg.

There is some hope, although the usual nay sayers will continue to deny that this is even possible; the US "Red States" are continuing to produce jobs and economic growth using the magic formula of low taxes and regulations, in direct contradiction to the Keynesian model of stimulus spending and "revenue enhancement". (In Canada this is called "The Alberta Advantage"):

http://pajamasmedia.com/blog/data-show-majority-of-job-gains-in-red-states/?print=1



> *Red States, Including the ‘Newly-Reds,’ Excel at Job Growth*
> 
> Posted By Tom Blumer On July 29, 2011 @ 12:00 am In economy,Money,Politics,US News | 35 Comments
> 
> ...



And of course there are many historic examples to choose from, including the economic booms called the Roaring 20's, Go Go 60's and Roaring 80's, all powered by large tax cuts and deregulation by the administrations of the day. The economic resurgence of the UK under PM Margaret Thatcher and the economic resurgence of Ontario under Mike Harris (or the corresponding tanking under Dalton McGuinty) are attributable to tax policies as well.


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## Kirkhill (1 Aug 2011)

Dammit - I hate being wrong - I fully expected the histrionics for another 24 hours.


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## Edward Campbell (1 Aug 2011)

Some observers feel this _"down payment on future reform"_ will be (just barely?) enough to _"satisfy the credit rating agencies"_ according to this article which is reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/spending-cuts-may-salvage-us-credit-rating/article2115598/


> Spending cuts may salvage U.S. credit rating
> 
> KEVIN CARMICHAEL — WASHINGTON
> From Monday's Globe and Mail
> ...




It is still a long way to "Phase 2" and a lot of political hurdles stand between the debt/deficit and AAA. The biggest is the bipartisan congressional committee (equally Democrat and Republican and equally House and Senate, as I (doubtlessly imperfectly) understand it) which will, by the US Thanksgiving, make  recommendations that, I suspect, will make everyone unhappy. Failure to implement those recommendations, in an "up and down" (Yes or Nay, no amendments of any kind) vote will trigger across the board cuts - to every programme including the sacred cows of entitlements and defence.  My guess is that S&P, Moodies and Fitch all hope (because they do not want to cut the USA to AA+) that the US does go the across the broad cuts route because that is, probably, the best way to get started on the long, painful road to fiscal reform.


----------



## a_majoor (1 Aug 2011)

The charts are somewhat eye-watering, but the numbers just jump right out at you:

http://hotair.com/archives/2011/07/31/guess-what-happened-to-that-obama-recovery/



> *Guess what happened to that Obama recovery?*
> 
> posted at 2:30 pm on July 31, 2011 by Ed Morrissey
> 
> ...


----------



## Brad Sallows (1 Aug 2011)

And I see that other observers feel the agreement will not be enough to stave off downgrade.


----------



## Edward Campbell (2 Aug 2011)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_, is a nice, clear explanation of the 'real' debt crisis by Prof Ian Lee of Carleton University:

http://www.ottawacitizen.com/health/real+debt+crisis+still+come/5190610/story.html


> The real U.S. debt crisis is still to come
> 
> By Ian Lee, Ottawa Citizen
> August 2, 2011
> ...


----------



## Edward Campbell (2 Aug 2011)

Brad Sallows said:
			
		

> And I see that other observers feel the agreement will not be enough to stave off downgrade.




Including, apparently, Tim Geithner, according to this article, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_:

http://www.ottawacitizen.com/news/debt+fight+nears+downgrade+threat+remains/5192886/story.html


> U.S. debt fight nears end; downgrade threat remains
> 
> By Andy Sullivan and Jeff Mason, Reuters
> August 2, 2011
> ...




As I said a few days ago, I heard part of Devan Sharma's remarks in the US Congress and it seemed to me that he did not equate a 'deal' with retention of the AAA rating. He wanted more.





Devan Sharma, President of Standard & Poors, telling
Congress that a downgrade, while not inevitable, is possible
if the US does not take serious measures to get its financial
house in order.


----------



## Kirkhill (2 Aug 2011)

Just wondering who Devan Sherma's bosses  are -  




> Teachers push McGraw-Hill for changes
> 
> Reuters Aug 2, 2011 – 7:41 AM ET | Last Updated: Aug 2, 2011 9:50 AM ET
> 
> ...




McGraw-Hill Board of Directors



> Board of Directors
> 
> Pedro Aspe
> Chairman and Chief Executive Officer
> ...


----------



## Brad Sallows (2 Aug 2011)

"When former president Bill Clinton left office in 2001, the budget was balanced. In 2001, the U.S. government spent 18.2 per cent of GDP. By 2009, it increased to 24.6 per cent of GDP. While the increased spending was initiated by George W. Bush, it accelerated under Obama."

Dear God in Heaven, will the misleading presentation of data by academia ever cease?

From the US governments own historical tables: year/% GDP spending ("outlays")

1990/21.9
1991/22.3
1992/22.1
1993/21.4
1994/21.0
1995/20.6
1996/20.2
1997/19.5
1998/19.1
1999/18.5
2000/18.2
2001/18.2
2002/19.1
2003/19.7
2004/19.6
2005/19.9
2006/20.1
2007/19.6
2008/20.7
2009/25.0

You can see for yourselves what the customary measures were before and after the dot-com bubble.  By those yardsticks, Bush's contribution doesn't even merit mention, but of course it is de rigeur to never miss an opportunity for a drive-by.

Nevertheless, the conclusion that the entitlement beast has yet to really bite is correct.  Naturally, conventional wisdom has it that this is a "revenue problem", not a "spending problem" - we just need to make those young swine pay more since they had the ill grace to be born in fewer numbers.


----------



## Redeye (3 Aug 2011)

Brad Sallows said:
			
		

> "When former president Bill Clinton left office in 2001, the budget was balanced. In 2001, the U.S. government spent 18.2 per cent of GDP. By 2009, it increased to 24.6 per cent of GDP. While the increased spending was initiated by George W. Bush, it accelerated under Obama."
> 
> Dear God in Heaven, will the misleading presentation of data by academia ever cease?
> 
> ...



Except, as I understand it, those numbers are skewed because they did not included the cost of the War in Iraq, and a large part of the jump in 2009 was actually putting the war "on the books".


----------



## The Bread Guy (3 Aug 2011)

What's the Chinese up to?


> Chinese rating agency Dagong Global Credit Rating Co. said Wednesday it has cut the credit rating of the United States from A+ to A with a negative outlook after the U.S. federal government announced that the country's debt limit would be increased.
> 
> The decision to lift the debt ceiling will not change the fact that the U.S. national debt growth has outpaced that of its overall economy and fiscal revenue, which will lead to a decline in its debt-paying ability, said Dagong Global in a statement.
> 
> ...


Source:  Xinhua, 3 Aug 11

_Wall Street Journal_ blog:  So, is Dagong Global Credit Rating Co. on to something here, or just plain loco?


----------



## Brad Sallows (3 Aug 2011)

>Except, as I understand it, those numbers are skewed because they did not included the cost of the War in Iraq, and a large part of the jump in 2009 was actually putting the war "on the books".

Except, I pulled the numbers from the "total" column, not the "on-budget" or "off-budget" column, and the amounts are actual expenditures, not budget forecasts.  The jump is no different whether the costs were in the main appropriations or special appropriations.

Just in case, for the uninformed: when people criticize Bush for "off-budget" war spending, they invariably refer to the budget _plan_ submitted at the start of the year, usually out of ignorance or to mislead others (ie. propaganda).  Inevitably, when people debate revenues / expenditures / debt / deficit, they refer to _actual total spending_ (and revenues, etc) at year end.  Once a fiscal year enters history, nothing is "hidden" "off-budget".

Think of yourself at the start of your "fiscal year" drawing up your budget: you plan out your recurring monthly and annual income and expenses, but you might choose to leave your proposed cruise to the Bahamas "off-budget" because it represents an extraordinary (as in, not ordinary and recurring) expense.  When you write up your balance sheet at the end of the year, you record actual income and expenditures, including the vacation.  Your "budget" is at that point just an interesting historical artifact.

The war expenses were not off-budget (supplemental) to conceal them; supplemental appropriations are appropriate for things which are not desirable as part of the permanent baseline and, as it happens, supplemental appropriations also serve the purpose of putting things out in stark view.  Moving the appropriations into the baseline didn't move the expenses "on the books" because they were never really "off the books".  However, I suppose it now has served the purpose of pretending that the wind-down of the war represents savings (a reduction in the baseline) to be claimed even past the date at which everyone knows the operations will end.


----------



## Nemo888 (5 Aug 2011)

Looks we we are cutting the maximum amount of public spending without gutting the economy already in Canada. You'd think we had an economist running things. As long as we don't start lying in our stats we can weather this. Get unemployment to 6% and the economy can start really growing again then we can cut whatever we want.

"Robust job gains were seen in the private sector, where employers added 94,500 positions. The public sector shrank by 71,500 jobs."

http://www.cbc.ca/news/canada/montreal/story/2011/08/05/jobs-canada-july.html

_"Canada's unemployment rate dipped to 7.2 per cent in July as the economy added 7,100 new jobs, Statistics Canada reported Friday.

It was the fourth straight month of job growth, although the gain was weaker than the 15,000 to 20,000 new jobs economists had been expecting.

Statistics Canada said the unemployment rate dipped mainly because almost 29,000 people left the labour force and were no longer actively looking for work.

While overall employment gains disappointed, analysts noted that the number of full-time jobs jumped by 25,500, more than offsetting the decline in part-time workers.

The construction, trade, transportation and warehousing sectors saw the biggest increases in employment. The biggest job losses came in education, health care and social assistance.

Alberta and Newfoundland and Labrador posted job gains in July, while Ontario saw 22,400 job losses. The other province posted little or no change in job levels.

Saskatchewan's 4.9 per cent jobless rate was again the lowest among the provinces. Newfoundland and Labrador's 11.9 per cent unemployment rate was the highest, but was 4/10ths of a percentage point lower than it was in June.

Robust job gains were seen in the private sector, where employers added 94,500 positions. The public sector shrank by 71,500 jobs."_

_Edit_ Maybe a little too much if you include the 28,600 people who dropped out of the labour force. Net job loss of 5600. Not much but declines gain as momentum in the same fashion as growth. Go slowly on the cuts.


----------



## GAP (5 Aug 2011)

> The public sector shrank by 71,500 jobs."



That's the real good news here....that's 71,500 less sucking at the public teat.....


----------



## Nemo888 (5 Aug 2011)

You do know those numbers include the military right?


----------



## Redeye (5 Aug 2011)

GAP said:
			
		

> That's the real good news here....that's 71,500 less sucking at the public teat.....



I'm not gonna lie, I always chuckle when I see anyone military decrying people "sucking at the public teat".

It's particularly common amongst American conservatives, and funnier when pointed out to them.  On some blog some tool went on at length about suck "sucklers" and "public employees living off the work I do" and such nonsense.  Noticing that he claimed to be military, I highlighted to him that he was one, and hilarity ensued.


----------



## Edward Campbell (5 Aug 2011)

Reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_ is a report that the US credit rating has been downgraded:

http://www.theglobeandmail.com/report-on-business/sp-downgrades-united-states-credit-rating/article2121658/


> S&P downgrades United States credit rating
> 
> WALTER BRANDIMARTE
> NEW YORK— Reuters
> ...




That will make the cost of borrowing higher which _might_ mean that the bargained cuts to spending will not be enough to postpone the next credit limit debate until after the 2012 elections.


----------



## GAP (5 Aug 2011)

Nemo888 said:
			
		

> You do know those numbers include the military right?



I am well aware of it, but when the public service can reduce 71,500 jobs without discernible impact on services, you can rightly assume that some little empires are  going on a diet.....

How far does it need to go? Dunno, but there was a number quoted somewhere, of an increase of 20% something growth in the public service since 2006.....There hasn't been a 20% increase in services, so why the increase in personnel?


----------



## Brad Sallows (6 Aug 2011)

>"sucking at the public teat"

There are people for whom the description is apt; there are parasites in both public and private service.  The private service periodically sheds its burden; the public sector rarely does.  The usual symptom in the private sector is a sudden thinning of the number of layers and increase in span of control between the upper echelons and the coal face.  Business goes on, and the coal face is less harassed by frequent requests for information and "improvements" from people trying to look busy enough to justify their employment.


----------



## Edward Campbell (6 Aug 2011)

More on the bond rating downgrade, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/news/world/konrad-yakabuski/us-loses-its-triple-a-credit-rating/article2121769/ 


> U.S. loses its triple-A credit rating
> 
> KONRAD YAKABUSKI
> WASHINGTON— From Saturday's Globe and Mail
> ...



I do not agree with Konrad Yakabuski's assessment of the US and European political _systems_ as being “dysfunctional.” I will agree that political _practices_ in many legislatures, around the world, are dysfunctional but, despite my suspicions about some constitutions (those of France, Greece and Italy, for example), I think the _systems_ are good enough (most of Europe and e.g. Thailand) to very good, indeed (America, Britain, India, Netherlands, Singapore and so on). The problem is the politics – especially the politics of the culture wars that have consumed America for 50 years and most of the world for the last 25.

The culture wars are not about _liberal_ vs. _conservative_ (I doubt more than 10% of Americans (or Europeans) can apply any sensible definition to either term or to the difference between them), they are all about a return to the 19th century – to the battles between the "Know Nothings” and the _established_ Whigs and Democrats – and to simple solutions to hideously complex problems. The _Know Nothings_ and the modern cultural warriors want(ed) the same thing an America 'free' to decide its own destiny in its own way ~ and the devil take the hindmost. Fortunately, for us, we do not live in the 19th century and so we, all over the world, *must* cast aside the silly, isolationist, 19th century ideas and adapt to the 21st century and its imperatives.

That means that the modern, welfare state, “I'm entitled to my entitlements” *l*iberals must come to grips with the fact that money does not grow on trees and the modern, isolationist, America-first *c*_onservative must adapt to the fact that while America might be first it does not have absolute or supreme power – it has, like every other country, feet of clay. These are hard truths and few Americans (or Australians, Belgians, Canadians, Danes and so on) are eager to embrace them; acknowledging hard truths means changing how one thinks and adapting ones expectations (often only hopes).

Now, some will say, that, at root, the voter is to blame and all (s)he need do is put her self-interest first and all will be well. Maybe, if, and it is a great Big *IF*, (s)he can actually identify her self interests in the near, medium and longer terms, put them in some sensible order of priority and then find candidates suitable to represent them. In fact, I think that we need to start with the media and the commentariat – the so called “chattering classes” - who set the cultural agenda. Too much of what passes for information in America, Britain, Canada and so on, all the way down to Zimbabwe, is, in fact, socio-economic and political *propaganda* masquerading as “news and public affairs.” And many (most?) of us read/watch/listen to the 'news' (propaganda) that tends to reinforce our own preexisting views and reject that which might support a contrary position.

My  :2c:_


----------



## Nemo888 (6 Aug 2011)

I am depressed that the right has lost its way as far as understanding the basics of economics. Firstly starting a war and decreasing taxes. Then shrinking GDP to pay the debt. Ridiculous. GDP is negative already so the solution is to grow the economy. The more you cut the more revenues you'll lose, so the more you will have to cut. This is how accountants who think they understand economics destroy businesses. I've seen this process of slow starvation firsthand in the business world. You must not cut more than growth. This is capitalism 101. 

The right is supposed to be a beacon of economic reason, increasing opportunity and opening up markets. The left a beacon of enlightened generosity, cooperative labour for the betterment of society and providing fair access to opportunity. Instead we get douche bags who are masters of self interest and campaign financing beholden to special interest.


----------



## Brad Sallows (6 Aug 2011)

The "right" understands economics well enough, and "starting a war" is not an economic decision.

The basic principle in which the "right" believes is that if you allow people to spend their money on what they want, they are more willing to spend.  The more times a unit of currency exchanges hands, the greater the GDP and the greater the taxation revenue (sales taxes, income taxes on the employed people).  Many people understand that it is necessary to grow the economy (GDP) and then promptly turn around and enact policies contrary to the basic principle.


----------



## a_majoor (6 Aug 2011)

A very short piece with the upside to the credit downgrade:

ett/the-upside-of-the-downgrade/?print=1



> *The Upside of the Downgrade*
> Posted By Claudia Rosett On August 6, 2011 @ 1:21 am In Uncategorized | 29 Comments
> 
> The good news — and yes, this part really is good news — is that Standard & Poor’s has finally reduced the spending bacchanal of the U.S. government to a sound bite that anyone can understand: S&P has downgraded America’s sovereign credit rating.
> ...



I have also read suggestions that bond hawks could force the return on US Treasuries to climb to 9% (although the timeframe was not given), crushing the ability or willingness of the US government to borrow any more. Thinking back to when the US Treasury used high interest rates to crush inflation back in the early 1980's, this will be increadiby painful, but the pain will only be intensified the longer the US government (and by extension various Blue State and municipal governmens running huge deficits and debts and unfunded liabilities) continues on the present course.

The narrative of the TEA party movement has become that much stronger, even severely normal American voters with limited engagement in politics now have a clear and compelling principle to focus on (loss of AAA credit rating), and can easily compare this to their own household budget ( the government lost the AAA rating by spending more than they are bringing in).

The issue Canadians need to be concerned with is how can we build a firewall to limit the damage to our own economy? For that matter, what can we as individuals do to protect ourselves and our families?


----------



## Nemo888 (6 Aug 2011)

Keep cuts to less than half of GDP growth and open up trade to make up for shrinking American imports. We did sell more lumber last year to China than the US. Time to pretend we don't care about human rights and do the "trade opens China to the world more than protest" dance. Hope like hell we can find those markets and drum up business. Secondly hope that growth is strong enough that we don't pile on too much debt till this depression turns around.  Maybe a short term payroll employee side tax cut, but nothing stupid like slashing the GST. Stay the course. Cutting public spending too quickly will send us into a tailspin like the US. Alberta would hate it but that big pile of black gold up there could be taxed a little more in the short term to keep us from going down the toilet if things get worse.


----------



## ModlrMike (6 Aug 2011)

Nemo888 said:
			
		

> Keep cuts to less than half of GDP growth and open up trade to make up for shrinking American imports. We did sell more lumber last year to China than the US. Time to pretend we don't care about human rights and do the "trade opens China to the world more than protest" dance. Hope like hell we can find those markets and drum up business. Secondly hope that growth is strong enough that we don't pile on too much debt till this depression turns around.  Maybe a short term payroll employee side tax cut, but nothing stupid like slashing the GST. Stay the course. Cutting public spending too quickly will send us into a tailspin like the US. Alberta would hate it but that big pile of black gold up there could be taxed a little more in the short term to keep us from going down the toilet if things get worse.




I think we should give some credit to prior efforts to diversify our trading partners. While we like to say that 80% of our trade occurs with the US, I think the real number is somewhat smaller. We should continue this trend... shades of not putting all of our eggs in one basket. It's fair to look at the oil sands as a strategic financial reserve. Increasing the tax revenue from that source will be painful indeed, but if done carefully, the pain should be limited.


----------



## Edward Campbell (7 Aug 2011)

Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from the _Ottawa Citizen_, is a timely and, I think, pretty fair  interpretation of the credit downgrade:

http://www.ottawacitizen.com/business/Downgrade+where+counts+pocketbook/5217242/story.html


> Downgrade to hit U.S. where it counts: the pocketbook
> 
> By Jacqueline Thorpe, Financial Post August 6, 2011
> 
> ...


----------



## Northalbertan (7 Aug 2011)

Nemo888 said:
			
		

> Keep cuts to less than half of GDP growth and open up trade to make up for shrinking American imports. We did sell more lumber last year to China than the US. Time to pretend we don't care about human rights and do the "trade opens China to the world more than protest" dance. Hope like hell we can find those markets and drum up business. Secondly hope that growth is strong enough that we don't pile on too much debt till this depression turns around.  Maybe a short term payroll employee side tax cut, but nothing stupid like slashing the GST. Stay the course. Cutting public spending too quickly will send us into a tailspin like the US. Alberta would hate it but that big pile of black gold up there could be taxed a little more in the short term to keep us from going down the toilet if things get worse.



In reference to above, if oil prices hover around the $90-95 range the oil industry could swallow a small royalty increase, but a lot of the oil produced in Alberta is from the oil sands.  Due to the expensive recovery methods (SAGD more than open pit nowadays) it costs about $75/barrel to recover the oil.  If oil prices continue on the trend of the last few days you will probably see a lot of resistance to a tax increase from the oilpatch and the Alberta government.  Like it or not the oil industry is driving the economy of Canada right now with billions of dollars flowing to provincial economies outside of the west, Ontario being a big one to benefit from the activity out here.

As an aside, the Chinese have invested billions in the oilsands, having strong Asian trading partners is key to getting away from our dependence upon the American market.  

My 2 cents.


----------



## PPCLI Guy (7 Aug 2011)

Northalbertan said:
			
		

> Like it or not the oil industry is driving the economy of Canada right now with billions of dollars flowing to provincial economies outside of the west, Ontario being a big one to benefit from the activity out here.



Sigh - this old saw again.  What exactly is the mechanism whereby Alberta money gets given to Ontario?


----------



## Edward Campbell (7 Aug 2011)

I was listening to _'Meet the Nation'_ or _'Face the Press'_ (or whatever the Sunday morning talk shows are called) and Alan Greenspan made two points that I think matter:

1. Whatever the 'solution' is it will include some (much? most?) of Bowles-Simpson ~ which is a little depressing because it means that all this 2011 angst was avoidable; and

2. Whatever the 'solution' is it will involve *pain* - both tax increases and programme spending cuts hurt the economy in the short term (the former more than the latter according to Greenspan) and, of course, programme spending cuts are hard (painful) for politicians because Americans, like Canadians, feel very much "entitled to their entitlements," as David Dingwall might say.

The question is: how long will it take the American political classes to realize that Greenspan is right ... assuming he is, of course.


----------



## KJK (7 Aug 2011)

PPCLI Guy said:
			
		

> Sigh - this old saw again.  What exactly is the mechanism whereby Alberta money gets given to Ontario?



NorthAlbertan is absolutely correct if you reread his statement. Money is not given to Ontario, contracts are given to Ontario companies thereby sending money from Alberta to Ontario.

As for taxing oil on a federal level the CPC would never try because that would kill their chances of reelection. The liberals might try it as they have already written off the west in terms of votes. Just remember people out here remember the NEP and aren't likely to stand for a second go at it. Also it wouldn't hit only Alberta this time but BC and SK too. That's a lot of annoyed voters.

My $.02

KJK


----------



## Northalbertan (7 Aug 2011)

KJK said:
			
		

> NorthAlbertan is absolutely correct if you reread his statement. Money is not given to Ontario, contracts are given to Ontario companies thereby sending money from Alberta to Ontario.
> 
> As for taxing oil on a federal level the CPC would never try because that would kill their chances of reelection. The liberals might try it as they have already written off the west in terms of votes. Just remember people out here remember the NEP and aren't likely to stand for a second go at it. Also it wouldn't hit only Alberta this time but BC and SK too. That's a lot of annoyed voters.
> 
> ...



Thanks for clarifying my point.  We are pretty good at getting the oil out the ground out here but Ontario and Quebec have the manufacturing base to produce the equipment we need to accomplish that.  The money made from oil benefits all of Canada.  

The other mechanism is called transfer payments which Quebec wisely uses for daycare instead of infrastructure.   :


----------



## PuckChaser (7 Aug 2011)

Northalbertan said:
			
		

> The other mechanism is called transfer payments which Quebec wisely uses for daycare instead of infrastructure.   :



Bridges aren't flashy and don't buy votes.


----------



## Northalbertan (7 Aug 2011)

E.R. Campbell said:
			
		

> I was listening to _'Meet the Nation'_ or _'Face the Press'_ (or whatever the Sunday morning talk shows are called) and Alan Greenspan made two points that I think matter:
> 
> 1. Whatever the 'solution' is it will include some (much? most?) of Bowles-Simpson ~ which is a little depressing because it means that all this 2011 angst was avoidable; and
> 
> ...



There is no way out of the American crisis that does not include a tax increase.  You have to increase revenues in order to pay the debt the Americans have accumulated.  Get rid of the exemptions and add a small across the board personal income tax increase would help them greatly. All but impossible to get the politicos to chew on that with an election drawing down upon them.  

Decreasing the size of government would have to be a part of the process as well.  As you say program cuts are painful but necessary as well.  They are going to have to bite that bullet sooner or later.  Decreasing the size of government wouldn't hurt us any either.  

But I would expect both governments to feel a lot of pressure from some of the more powerful public sector unions making the choice that much more difficult.  I don't imagine we'll see much in the way of new taxes or program cuts down south, outside of what was agreed to recently, 'till after the next presidential election.

NorthAlbertan


----------



## Redeye (7 Aug 2011)

Northalbertan said:
			
		

> There is no way out of the American crisis that does not include a tax increase.  You have to increase revenues in order to pay the debt the Americans have accumulated.  Get rid of the exemptions and add a small across the board personal income tax increase would help them greatly. All but impossible to get the politicos to chew on that with an election drawing down upon them.
> 
> Decreasing the size of government would have to be a part of the process as well.  As you say program cuts are painful but necessary as well.  They are going to have to bite that bullet sooner or later.  Decreasing the size of government wouldn't hurt us any either.
> 
> ...



Well said, in all - the delusion that there is a way forward without tax increases in some form is a problem that the GOP in particular needs to grapple with.  Probably the best way forward, I'd submit, is some form of consumption tax - a national sales tax.  It seems to have worked well for us in tandem with targeted cuts to program spending.  It's also the fairest form of tax because its incidence on lower income people will be lower if things like groceries, children's clothing, and so on are exempted, as we do here.

The public sector union comment is interesting though - I don't think they're anywhere near as powerful as CUPE/PSAC are here - although there seems to be concerted efforts to expand unionization in the US, from what I've seen.


----------



## Nemo888 (7 Aug 2011)

The illusion that debt levels were critical was a manufactured emergency. It was entirely arbitrary. Obviously we are all carrying too much debt and we should start paying it off.  Driving the economy over a cliff was not necessary. A combination of cuts linked to GDP growth, tax hikes and closing loop holes would have worked fine. 
Public Debt Per Person.
Germany $27,612
UK $28,854
France $32,718
Us $32,931 
Greece $34,842
Ireland $37,959
Norway $37,895
Italy $37,175
Canadian $38,194
Iceland $42,845
Japan $86,072


----------



## Illini (7 Aug 2011)

Northalbertan said:
			
		

> The other mechanism is called transfer payments which Quebec wisely uses for daycare instead of infrastructure.   :




What could be more important than taking care of other people's children.  I mean, they have them, you pay for their
upbringing.  Hasn't that been the practice throughout all of human history?


----------



## Northalbertan (7 Aug 2011)

Redeye said:
			
		

> The public sector union comment is interesting though - I don't think they're anywhere near as powerful as CUPE/PSAC are here - although there seems to be concerted efforts to expand unionization in the US, from what I've seen.



The unions are not as powerful as those up here but they are more vocal, I'd like to say militant but they aren't quite in that category.  As we've seen up here a well orchestrated advertising campaign can have an effect on the outcome of elections.  I would think a lot of union money would go towards opposing anyone who mentions public service cuts during an election.  Be interesting to see what the Tea Partiers have to say as the election progresses.


----------



## PPCLI Guy (7 Aug 2011)

Nemo888 said:
			
		

> The illusion that debt levels were critical was a manufactured emergency. It was entirely arbitrary. Obviously we are all carrying too much debt and we should start paying it off.  Driving the economy over a cliff was not necessary. A combination of cuts linked to GDP growth, tax hikes and closing loop holes would have worked fine.
> 
> Public Debt Per Person.
> Germany $27,612
> ...



These stats shed very little light on the problem, unless our intent is to ask each and every person in each OECD country to personally pay down their government's debt.  Based on population as they are, it would suggest that a family of 12 with a debt of 100k is way better off than a family of 4 with a debt of 100K, which is, of course, nonsense.  

A more pertinent statistic is central government debt as a % of GDP, given that ability to pay of debt is related to the amount of money one makes...  Those stats (2010 numbers) look a little different:

Germany $27,612     44.4%
UK $28,854               85.5%
France $32,718         67.4%
Us $32,931                61.3%
Greece $34,842        147.8%
Ireland $37,959         60.7%
Norway $37,895        26.1%
Italy $37,175            109.0%
Canadian $38,194      36.1%
Iceland $42,845         81.3%
Japan $86,072          183.5%

And the "ranking" implied in your post now looks like this:

Norway
Canada
Germany
Ireland
US
France
Iceland
UK
Italy
Greece
Japan

These figures do not reflect sub-central debts (like. say, Quebec, or even California...)


----------



## aesop081 (7 Aug 2011)

PuckChaser said:
			
		

> Bridges aren't flashy and don't buy votes.



I bet you that right now, in Montreal at least, they would.


----------



## a_majoor (7 Aug 2011)

American politicians can learn from our experience:

http://www.theglobeandmail.com/globe-investor/investment-ideas/streetwise/sp-upgrades-saskatchewan-on-low-debt-burden/article2033171/



> May 24, 2011
> *S&P upgrades Saskatchewan on low debt burden*
> By TIM KILADZE
> From Wednesday's Globe and Mail
> ...



Of course the United States has a great deal of commodity wealth as well; techniques like Frakking are unleashing new oil and gas deposits (and revitalizing old ones), but the current administration has been preventing drilling for political reasons (to encourage "green" industries), and their business tax rate is in fact the highest in the OECD, which discourages investment and growth. Political initiatives like Obamacare caused major employers to make negative adjustments to their earning statements and forecasts as they had to account for new liabilities, also a major economic drag. 

The question ultimatly comes down to what sort of economic climate and culture the State is promoting; Saskatchewan was governed for decades by the NDP and had much diminised economic performance compared to Alberta, despite having a similar basket of resources. The Saskatchewan Party instituted a series of tax cuts and regulatory reform, with the results noted above.


----------



## PuckChaser (8 Aug 2011)

Nemo888 said:
			
		

> Alberta would hate it but that big pile of black gold up there could be taxed a little more in the short term to keep us from going down the toilet if things get worse.



Just what we need, another excuse for the price at the pumps to go up. Oil is under $90 US a barrel and I'm still paying 124.9 cents a litre in Kingston.


----------



## Northalbertan (8 Aug 2011)

We are at $1.08/L out here.  I'm right on the border of AB/SK.  I am fortunate however in that I get to bill the oil companies for my fuel.   ;D.  Either mileage or cost plus 30%.  Payback is a B@#ch.   :cheers:


----------



## Rifleman62 (8 Aug 2011)

Gas in West Kelowna S129.9 was $133.9. Price went up .10 cents a liter , or .45 cents a imperal gallon just before the long weekend. Gas in Omak Washington, one hour away, is $3.79 a US gallon (3.78 liters). It did not go up.

Try GasBuddy, a good site.  http://www.gasbuddy.com/


----------



## DBA (8 Aug 2011)

Nemo888 said:
			
		

> The illusion that debt levels were critical was a manufactured emergency. It was entirely arbitrary. Obviously we are all carrying too much debt and we should start paying it off.  Driving the economy over a cliff was not necessary. A combination of cuts linked to GDP growth, tax hikes and closing loop holes would have worked fine.
> Public Debt Per Person.
> Germany $27,612
> UK $28,854
> ...



Do you have a source for the numbers?  On February 12, 2010 the US debt ceiling was raised to $14.294 trillion and was recently raised again because they hit it. The population is 311,943,765 (1).  That works out to $45,822 for every man, woman and child. This is just the Federal debt. 

The Canadian figure is estimated at $564 billion and $16,470 (2) in Canadian dollars.

(1) U.S. POPClock Projection 
(2) Taxpayer.com DebtClock.ca


----------



## PPCLI Guy (8 Aug 2011)

DBA said:
			
		

> Do you have a source for the numbers?  On February 12, 2010 the US debt ceiling was raised to $14.294 trillion and was recently raised again because they hit it. The population is 311,943,765 (1).  That works out to $45,822 for every man, woman and child. This is just the Federal debt.
> 
> (1) U.S. POPClock Projection



Near as I can tell he used the OECD Data from 2010


----------



## a_majoor (16 Aug 2011)

Almost like watching a Monty Python skit. Progressives in CA were clearly warned of the result, but beleiving static analysis and disbelieving that capital and labour are mobile, or that people will change their behaviours, they press on with the Amazon tax, with predictable results. 

What makes this even stupider, the Amazon tax has been tried in several other States _already_, as well as "millionaire taxes", with the predictable result that Amazon severed its affiliate programs in those states and "millionaires" vanished the next tax season. Insanity is doing the same thing over again and expecting a different result.....

http://biggovernment.com/capitolconfidential/2011/08/15/californias-amazon-tax-already-proving-a-bust/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+BigGovernment+%28Big+Government%29



> *California’s ‘Amazon Tax’ Already Proving a Bustby Capitol Confidential*
> 
> California recently instituted as part of its budget solution an “Amazon Tax” aimed at forcing out-of-state, online retailers with no physical presence in the Golden State to collect and remit sales tax in respect of goods sold to Californians where the retailer in question advertises, or maintains an “affiliate” referral relationship, with websites based within state lines.
> 
> ...



The comments section has replies from people who fled other "Amazon tax" states, so you get a broader sample than just refugees from CA.


----------



## a_majoor (17 Aug 2011)

A long post on job creation in Texas, using primary statistics. There should be no more debate about what economic model "works". Follow the link to see the graphs:

http://www.politicalmathblog.com/?p=1590



> *Rick Perry And Texas Job Numbers*
> 
> Full disclosure: I don't like Rick Perry for our next president. I have my reasons that aren't worth going into here. However, when I was watching the GOP debate and pro-Perry people started bringing up Rick Perry's job numbers as a cudgel against other candidates, I looked into the BLS data on Texas jobs. Having familiarized myself with the data, I started noticing claims on the Texas jobs data that started popping up that directly contradicted what I was seeing in the data. So I wanted to clear up a couple of these common misconceptions.
> 
> ...


----------



## Kalatzi (31 Aug 2011)

_*U.S. lost billions to waste and fraud in war spending, panel says * _  

link here http://www.theglobeandmail.com/news/world/americas/us-lost-billions-to-waste-and-fraud-in-war-spending-panel-says/article2148916/

Truman made his repution in WWII overeeing a commitee that tried to rein in war profiteering

Example "the Martin Murderer"  The  manufacturer knew the thing was dangerous but opted to do nothing since they had the contract already.  Andftold him that to his face. 

He simply informed them that if they didn't fix the piece of sh*t they woule lose the contract

He, Eisenhower and Kennedy must be spinning in their graves. 

Martin as in Lockheed Martin Proud Producer of the POS F-35


----------



## Container (31 Aug 2011)

I can never tell what end is up in your posts Kalatzi.

Nor could I find any reference to Martin telling anyone that their product was dangerous and they didnt care because they had the contract. 

I did however find lots of articles on the B-26 Marauder that give extensive history on the upgrades, shortfall, and troubles suffered by the airframe and how Martin addressed them as well as the training changes that were made.

Of course maybe I missed the intention of your post because I didnt really understand it.

*edit I did find a line in a wikipedia article where Martin responded to the senate hearing about the aircrafts troubles that the wings were too short. But he also indicated that the plans were too far along. You also left out the part where it was still superior to other contemporary aircraft*


----------



## Kirkhill (31 Aug 2011)

Kalatzi said:
			
		

> _*U.S. lost billions to waste and fraud in war spending, panel says * _
> 
> link here http://www.theglobeandmail.com/news/world/americas/us-lost-billions-to-waste-and-fraud-in-war-spending-panel-says/article2148916/



I don't really see how you can avoid loss rates rising in conjunction with the rate a which decisions are made.  Fast decisions implicitly reduce the time available to gather and analyse data.   Wars demand fast decisions.   Waste will happen.

For the level of uncertainty I hark back to this Harvard Business School  article (under lock and key unfortunately) - US Army and US Marine Corps officers are expected to act when their surety level is only 70%,  US Navy and Air Force officers are expected to act only in response to clearly defined procedures and processes.  

As an aside: Navy and Air Force apparently do well in Big Business.  Army and Marines do well as entrepreneurs in small companies.


----------



## GnyHwy (31 Aug 2011)

Very interesting and it makes perfect sense.  The complexity of the operations and quick decision making is a perfect enviroment for mistakes.  

Wasting dozens of millions more trying to figure out what happened doesn't seem productive to me.  I believe the integrity of the Comds responsible for spending the money should be enough to justify it.

Another way to look at it in favour of the military would be to express the billions wasted in a per capita ratio for the entire time period that the money was wasted. Consider total man hours, fighting vehicles (air, sea and ground), the logistical vehicles to support and high end munitions all combined, and those billions of dollars would likely shrink to a very small number.

P.S. What was the amount of the wall street bailout?  How much has been given in bonuses to high end brokers since then?  They have likely doubled the military's wastage in just a couple of days of luxurious acts, with much less persons involved.


----------



## Kirkhill (31 Aug 2011)

As a related thought:

Hundreds of thousands of rounds are thrown down range.  Most of them miss.  They are mistakes.  They are wasted.

Unfortunately you can EDIT: cannot  achieve the aim without all those "wasted" rounds.

Dollars, bullets, beans or bandages...... all the same thing.

The accountants can pick up the pieces after the fact.


----------



## a_majoor (1 Sep 2011)

Want to talk about wast and fraud? Here is an example that set the US taxpayer back half a billion dollars. For comparison, a half billion invested in the private sector is the resources needed to create up to 10,000 full time jobs:

http://pajamasmedia.com/tatler/2011/08/31/breaking-solyndra-solar-plant-closes-535-million-vanishes-obama-curse-strikes-again/?print=1



> *Breaking: Solyndra solar plant closes; $535 million vanishes; Obama curse strikes again; UPDATE: Bankrupt*
> 
> Posted By Zombie On August 31, 2011 @ 9:09 am In Politics | 95 Comments
> 
> ...


----------



## Kalatzi (1 Sep 2011)

Thucydides said:
			
		

> Want to talk about wast and fraud? Here is an example that set the US taxpayer back half a billion dollars. For comparison, a half billion invested in the private sector is the resources needed to create up to 10,000 full time jobs:
> 
> http://pajamasmedia.com/tatler/2011/08/31/breaking-solyndra-solar-plant-closes-535-million-vanishes-obama-curse-strikes-again/?print=1



I never claimed that they have a monopoly on it.  Very liitle accounability, and lacks regualtion, among other things  is what is causing the WESTERN Economies to tank. 

More sunny news

Goldman settles with New York regulator over foreclosures 
REproduced under fair use of the copyright act. 

http://www.theglobeandmail.com/report-on-business/international-news/us/goldman-settles-with-new-york-regulator-over-foreclosures/article2150388/

"Litton’s regulatory troubles stem largely from the practice of robo-signing, in which bank employees signed foreclosure documents without reviewing case files as required by law. Many large banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co. and Citigroup Inc., have been targets of probes by state and federal regulators over the same issue."


----------



## Kalatzi (3 Sep 2011)

More detail - Reproduced  under Fair use of copyright act 

"After three years, the bipartisan Commission on Wartime Contracting completed its business this week. In its final report to Congress (PDF), it estimates that the federal government has lost between $31 and $60 billion to contractor fraud and waste since the wars in Afghanistan and Iraq started. "The government was not prepared to go into Afghanistan in 2001 or Iraq in 2003 using large numbers of contractors, and is still unable to provide effective management and oversight of contract spending," said commission co-chairman Michael Thibault.

Beyond its bureaucratic title ("Inattention to contingency contracting leads to massive waste, fraud, and abuse"), the most interesting chapter of the commission's 248-page report reads like a greatest-hits list of expensive bloopers that make that famous $600 Pentagon toilet seat look like a bargain. In ascending order of egregiousness, here are the top 10 war-contractor boondoggles detailed in the report:"

The All-Time 10 Worst Military Contracting Boondoggles 
http://motherjones.com/mojo/2011/09/contractor-waste-iraq-KBR

My point with the Marauder is that pretty much since the beginning of war there have been War profiteers,  seems that lately their on even more of a rampage with little effective oversite.


----------



## a_majoor (4 Sep 2011)

2012 is going to be a long, hard year for everyone:

http://pajamasmedia.com/blog/obamas-jobs-speech-to-offer-more-failed-stimulus/



> *Obama’s Jobs Speech to Offer More Failed Stimulus*Posted By Peter Roff On September 2, 2011 @ 12:00 am In economy,Elections 2012,Media,Politics,US News | 31 Comments
> 
> All eyes are on President Barack Obama as he prepares to deliver his highly anticipated speech on jobs after Labor Day before a joint session of Congress [1].
> 
> ...


----------



## a_majoor (6 Sep 2011)

How bad is US unemployment really?:

http://www.realclearpolitics.com/articles/2011/09/05/labor_day_blues_111199.html 



> *Labor Day Blues*
> 
> By Robert Samuelson
> 
> ...


----------



## a_majoor (8 Sep 2011)

So here is the offer:

http://washingtonexaminer.com/opinion/2011/09/obamas-stimulus-lite-wont-revive-americas-economy



> *Obama's 'Stimulus-Lite' won't revive America's economy*
> By: Examiner Editorial | 09/07/11 8:05 PM
> 
> There is an old saw that insanity means doing the same thing over and over, in the vain hope that the outcome will somehow change. But having seen the early reports on the jobs package that President Obama is expected to propose tonight during his speech before a joint session of Congress, it appears the chief executive is attempting a variation: Insanity is the belief that if something doesn't work, it will eventually succeed if you just do it with less gusto the next time.
> ...


----------



## a_majoor (9 Sep 2011)

And lets look the official unemployment history (remember, the actual figures may be far higher once the discouraged and involuntarily underemployed are added back in:

http://www.nationalreview.com/corner/276695/unemployment-rates-promised-vs-actual-veronique-de-rugy



> The Corner
> 
> *Unemployment Rates: Promised vs. Actual*
> September 8, 2011 5:23 P.M.
> ...


----------



## a_majoor (11 Sep 2011)

California passes an "Amazon.com Tax" with the predictable result that Amazon.com stops doing business in California (cutting all affiliate business). Here is one of the spinoff results; a company with 100 employees is preparing to leave the state. This was entirely predictable, and already happened in other US states (which makes this the definition of insanity; doing the same thing and expecting a different result):

http://hotair.com/archives/2011/09/10/savings-com-sends-dear-john-letter-to-california/



> *Savings.com sends Dear John letter to California*
> Share182
> posted at 12:45 pm on September 10, 2011 by Ed Morrissey
> printer-friendly
> ...


----------



## a_majoor (14 Sep 2011)

The EPA will certainly be another issue for the 2012 election; now that regulatory overreach is openly crippling the economy:

http://www.bostonherald.com/news/opinion/op_ed/view.bg?articleid=1365720



> *Obama’s EPA not a ‘rogue’ agency at all*
> By Mackubin Thomas Owens
> Wednesday, September 14, 2011 - Updated 21 hours ago
> 
> ...


----------



## a_majoor (15 Sep 2011)

Education can make a difference, and it seems that F.A Hayek is finally getting the attention he deserves:

http://www.powerlineblog.com/archives/2011/09/ohio-class-notes-hayek-is-overtaking-keynes.php



> Posted on September 15, 2011 by Steven Hayward
> *Ohio Class Notes: Hayek Is Overtaking Keynes*
> 
> I hope Power Line readers took in and enjoyed the two “Hayek v. Keynes” rap music YouTube videos that were a viral hit last year.  (The first one is up to 2.6 million views.)  They are the product partly of George Mason University economist Russ Roberts, who does one of the http://www.econtalk.org/more interesting interview podcast series around—worth checking on if you haven’t.)  One of the small subtexts of these videos is that Keynes is the more celebrated of the two; he gets the chicks (even though Keynes reportedly favored guys), the better hotel rooms, etc.
> ...


----------



## a_majoor (19 Sep 2011)

While this is certainly the largest example, lots of other "green" companies have been receiving loans and Stimulus funds; there should ba a close look at them as well:

http://www.nationalreview.com/articles/print/277512



> *The Solyndra Fraud*
> The solar-energy company was a con game.
> 
> The Solyndra debacle is not just Obama-style crony socialism as usual. It is a criminal fraud. That is the theory that would be guiding any competent prosecutor’s office in the investigation of a scheme that cost victims — in this case, American taxpayers — a fortune.
> ...


----------



## GnyHwy (19 Sep 2011)

I don't know if I can take the above article from Andrew C. McCarthy seriously.  He clearly has his own agenda and can't really call any of his work reporting.  His book "The Grand Jihad: How Islam and the Left Sabotage America" may hold some validity, but I dare say that he may be much further to right than any democrats are to the left.

I also noted that at first, he correctly mentions the $535 million dollar loan to Solyndra, but the next two times he mentions it, it is $535 billion.  Honest mistake? I think not.  A simple attempt to leave the readers with a big number in their head.  I think everyone knows, and has always known that green energy is not a money maker (yet), but it is step forward and it does employ people.  Unlike the 2008 bailout (not a loan) that still left people unemployed and only padded the pockets of very select few, with zero accountability.

I also looked for his articles about the 2008 bailout to see if he used the same level of scrutiny.  The articles I found are vague in details, even though they are talking about 1000 times the amount of money.  On the second page of this article he quickly mentions and deflects in one sentence the $85 Billion AIG bailout (once again, not a loan and 160x bigger than the Solyndra loan) only to go back his Obama bashing.
http://www.nationalreview.com/articles/225723/fraud-obama-guardian-american-taxpayer/andrew-c-mccarthy?page=2.  

I found some other right wing writers that label the bailout as a socialist takeover of the US private sector.  Yeah right, that problem was long brewing before Obama showed up and weren't the democrats mostly against the bailout, only to be pressured by the doomsday theories.

I realize that these writers, left or right, are very educated individuals (probably too educated to the point of brainwashed).  It's tough to take any of them serious when you know there is an underlying agenda free of any real journalism.  Ultimately, I can't trust a word they say.

Or, maybe I'm naive and that is the way the justice system is suppose to work.  Two opposite sides fling crap at each other and whoever has the most stuck to them at the end loses.


----------



## a_majoor (24 Sep 2011)

More on Solyndra in comments to Instapundit. The last line is a killer:

http://pajamasmedia.com/instapundit/  23 Sep 2011



> UPDATE: A reader emails:
> 
> The question I have not heard asked is, How many Solyndras are there?
> 
> ...


----------



## GnyHwy (24 Sep 2011)

Ironically, the below post is cut and paste from Elon Musk's Wikipedia page.



> SolarCity
> 
> He is also the primary investor and chairman of the board of SolarCity, a photovoltaics products and services 2006 startup company where his cousin Lyndon Rive is the CEO and co-founder.[19][20] The underlying motivation for funding both SolarCity and Tesla is to help combat global warming.[21]


----------



## a_majoor (24 Sep 2011)

The key difference is he is using his _own_ money to invest, not taking yours or mine.


----------



## a_majoor (30 Sep 2011)

The administration now has put over 1.2 billion of taxpayer money into these loan arrangements (they are not structured like normal loans, since the taxpayers seem to be at the end of the line rather than being the lead and secured creditors), and more _interesting_ information is coming out about the various people and companies involved:

http://reason.com/blog/2011/09/29/steven-chu-oh-where-are-you-so



> *Steven Chu, Oh Where Are You? (Solyndra Roundup)*
> 
> Tim Cavanaugh | September 29, 2011
> 
> ...


----------



## a_majoor (30 Sep 2011)

More proof (as if any was really needed) that the stimulus spending was doomed to fail. The policy makers of the next admininstration will be hard pressed to eliminate the vast excess money supply and crush the inflationary spiral that the stimulus started (much less deleverage the huge debt)

http://blog.american.com/2011/09/repeating-the-hoover-mistake-paul-krugman-and-the-new-republic/



> *Repeating the Hoover Mistake: Paul Krugman and The New Republic*
> 
> By Nick Schulz
> September 29, 2011, 3:36 pm
> ...


----------



## GnyHwy (30 Sep 2011)

Thucydides said:
			
		

> The administration now has put over 1.2 billion of taxpayer money into these loan arrangements (they are not structured like normal loans, since the taxpayers seem to be at the end of the line rather than being the lead and secured creditors), and more _interesting_ information is coming out about the various people and companies involved:
> 
> http://reason.com/blog/2011/09/29/steven-chu-oh-where-are-you-so



Will we be complaining the same way when the farming industry starts failing the same way?  Or, will we just charge larger amounts at the grocery store? 1.2B seems kind of small.  This is just a comparison because the farmer maybe next.  The farmer is working on minimal wage to begin with and considering he is providing what we really need he deserves every freebee necessary to keep him in production..  We need 2 things to survive, food and water.  A 3rd thing is power.

The 3rd thing is power.  Why are we nickel and dimeing these 3 things?  People such as financial gurus seem to be soaking up much more;  and to the advantage of much less people I would add. 

Someone or something (money) is pointing the talented lawyers and lobbyists in the wrong direction.


----------



## GnyHwy (30 Sep 2011)

I really wish I had time to research this properly, but a number I will pull out of my #$% would be 1B.

1B in the power industry would employ many people (maybe for only a short period of time and eventually with a loss), but provide cheap power to many more.

1B to financial execs = a days salary, lunch expenses and weekend bonus to a few.


----------



## GnyHwy (30 Sep 2011)

I apologize for the many posts, but lastly.

Hippies need to kick themselves in the junk.

Nuclear is the best solution.  I hope our elected brains at work are making this happen.


----------



## a_majoor (30 Sep 2011)

That Which is Seen, and That Which is Not Seen by Frederic Bastiat (1850) explains it all. Every dollar being spent on crony capitalism is a dollar that isn't available to farmers, small business, homeowners or anyone else for any purpose whatsoever. A billion dollars of private investment is the resources capable of creating up to 20,000 full time jobs.

US Agribuisness and Canadian "Marketing boards" are distorting the food markets much the same way various subsidies and price support schemes distort other markets. At least with food and water, you have a limited ability to take matters into your own hands (rain barrels and "victory gardens"; depending on local bylaws, facilities, squeamishness and skill you might even be able to raise rabbits or other small rodents for meat). 

Small solar panels *might* allow you to disconnect from the grid, but you will have to accept either paying a huge premium or a decades long payback time for any solar system capable of actually powering a house (assuming you are not demanding taxpayer subsidies. A full up solar roof array and all the control electronics and power inverters can set you back anything from $50K on up. If you are not in a favourable location the amount increases astronomically, and we havn't even added any sort of power storage capabilities either).



> Someone or something (money) is pointing the talented lawyers and lobbyists in the wrong direction.



Exactly. 

There are perverse incentives that favour crony capitalism in our society. Jane Jacobs pointed this out in her book "Systems of Survival", and advocated for a system which separated the "producers" from the "guardians", much like ancient Japanese Samurai were forbidden to engage in trade and commerce.


----------



## GnyHwy (30 Sep 2011)

Thucydides said:
			
		

> That Which is Seen, and That Which is Not Seen by Frederic Bastiat
> 
> Small solar panels *might* allow you to disconnect from the grid, but you will have to accept either paying a huge premium or a decades long payback time for any solar system capable of actually powering a house (assuming you are not demanding taxpayer subsidies. A full up solar roof array and all the control electronics and power inverters can set you back anything from $50K on up. If you are not in a favourable location the amount increases astronomically, and we havn't even added any sort of power storage capabilities either).



Can you explain this a bit better?  I was under the impression that surplus power would be bought back (in Canada anyway)(not sure about the states).  I have a fairly big middle income house and was quoted at 20K approx to do my house.  8K for a water heater.  50K seems large.  How could the Gov retract more money?  Is the US Gov that fikd up? 

If this is better for the Global Warming Superthread, please advise.


----------



## GnyHwy (30 Sep 2011)

Thuc,

If I ever get the time, I will read all your posts.

Thanks very much.
Gny


----------



## Nemo888 (2 Oct 2011)

It's been many years since it cost 50k for a solar arrray.  3k for the inverters and wiring, 3k for batteries and then the array. Unless you need over 40,000 Watts of panels 50k is excessive.

Avg household consumption for a family of 4 is 50KWh per day.  So a 6000 Watt array would do everything including hair dryers, microwaves and plasma TVs. Lets make it 8000 in case you want a fifth person. So that is 14000$ for hardware and 6k for installation. 20 k sounds right. As long as you have a decent shade free Southern exposure.


----------



## a_majoor (2 Oct 2011)

Imagine at a time when America needs jobs, revenues and energy independence, someone could offer all three. Now imagine what the admininstration does:

http://www.powerlineblog.com/archives/2011/10/the-smart-and-the-dumb.php



> *THE SMART AND THE DUMB*
> 
> The smart is Harold Hamm, the founder and CEO of Continental Resources and one of America’s richest men. Hamm is one of the primary developers of the Bakken oil fields; he estimates that they contain 24 billion barrels of oil. The dumb is Barack Obama. The Wall Street Journal describes Hamm’s meeting with Obama:
> 
> ...


----------



## cupper (3 Oct 2011)

Here's some food for thought.

*Cozy relationships and ‘peer benchmarking’ send CEOs’ pay soaring*

http://www.washingtonpost.com/business/economy/cozy-relationships-and-peer-benchmarking-send-ceos-pay-soaring/2011/09/22/gIQAgq8NJL_story.html?hpid=z1

It wasn’t until recently, however, that its pervasiveness and impact on executive pay became clear. Companies have long hid the way they set executive pay, but in late 2006, the Securities and Exchange Commission began compelling companies to disclose the specifics of how they use peer groups to determine executive pay.

Since then, researchers have found that about 90 percent of major U.S. companies expressly set their executive pay targets at or above the median of their peer group. This creates just the kinds of circumstances that drive pay upward.

Moreover, the jump in pay because of peer benchmarking is significant. A chief executive’s pay is more influenced by what his or her “peers” earn than by the company’s recent performance for shareholders, according to two independent research efforts based on the new disclosures. One was by Michael Faulkender at the University of Maryland and Jun Yang of Indiana University, and another was led by John Bizjak at Texas Christian University.


----------



## a_majoor (7 Oct 2011)

The cause and the end state in a nutshell:

http://www.lesjones.com/2011/10/04/california-dreamin-is-becomin-a-reality/



> *California dreamin’ is meetin’ with reality*
> Posted on October 4, 2011 by Les Jones
> 
> Michael Lewis in Vanity Fair – California and Bust:
> ...


----------



## cupper (13 Oct 2011)

Looks like the Senate Republicans are going to create jobs by turning the clock back and party like it's January 2009.

http://www.washingtonpost.com/politics/senate-republicans-offer-jobs-package/2011/10/13/gIQAKZg5hL_story.html?hpid=z1


The plan, whose sponsors include Senate Minority Leader Mitch McConnell (R-Ky.) and Sen. Rand Paul (R-Ky.) and has been embraced by most other GOP senators, would impose a temporary moratorium on new government regulations until the nation’s 9.1 percent unemployment rate drops to 7.7 percent, its level when Obama took office in January 2009.

Even then, any regulation projected to cost businesses $100 million a year would require congressional approval.

The 2009 federal health-care law would be repealed. So, too, would the Dodd-Frank Act imposing new rules on the financial sector after the 2008 economic meltdown.

Congress would initiate a balanced-budget amendment to the constitution, designed to dramatically reduce government spending; the president would receive a line-item veto of future congressional action.

Corporate and individual tax rates would drop from 35 percent to 25 percent. Congressional committees would be instructed to overhaul the tax code within 90 days to eliminate deductions and loopholes, using the new revenue to pay for the tax cut.

Corporations would get a tax break for bringing offshore earnings back to the United States.

And the plan would lift restrictions on offshore drilling.


It's like they are trying to undo everything the Obama Administration did since he took power. 

I'm beginning to think these guys are sore losers.


----------



## cupper (13 Oct 2011)

But the courts seem to be sending a message to Wall Street.

http://www.washingtonpost.com/business/economy/hedge-fund-billionaire-gets-11-year-sentence-in-fraud-case/2011/10/13/gIQAa0PZhL_story.html?hpid=z2

Raj Rajaratnam, the hedge fund billionaire at the center of one of the largest insider trading cases in history, was sentenced Thursday to 11 years in prison.

It was the longest prison term ever for insider trading, according to the Justice Department, and was the culmination of a years-long federal probe of cheating in the stock market.
...

Rajaratnam’s crimes “reflect a virus in our business culture that needs to be eradicated,” U.S. District Judge Richard J. Holwell said at the sentencing in New York.
....

Rajaratnam was ordered to forfeit $53.4 million and pay a fine of $10 million. Out on $100 million bail, he is scheduled to report for prison on Nov. 28.


----------



## a_majoor (13 Oct 2011)

There is a massive infographic on the link, which is worth looking at:

http://www.theatlantic.com/business/archive/2011/10/who-besides-solyndra-got-loan-guarantees/246637/



> *Who Besides Solyndra Got Loan Guarantees?*
> By Megan McArdle
> 
> Oct 13 2011, 2:40 PM ET 68
> ...


----------



## Rifleman62 (14 Oct 2011)

The old sage updated:

10 years ago; we had Steve Jobs, Bob Hope, and Johnnie Cash. . .. 

Today we have NO jobs; No hope; and NO cash. . .


----------



## GnyHwy (14 Oct 2011)

Can anyone speak on Warren Buffet?

From what I have seen on documentaries, he seems to offer the most valid opinion available; and the fact that he is Bill Gates' mentor, only makes him that much more appealing.

Too bad he is too old and tired to lead.

I think his example is a model for all to follow.


----------



## Brad Sallows (14 Oct 2011)

What example is that?  AFAIK he has not voluntarily cut any cheques to the US government as gifts.


----------



## MJP (15 Oct 2011)

Rifleman62 said:
			
		

> The old sage updated:
> 
> 10 years ago; we had Steve Jobs, Bob Hope, and Johnnie Cash. . ..
> 
> Today we have NO jobs; No hope; and NO cash. . .



God protect Kevin Bacon....


----------



## a_majoor (15 Oct 2011)

http://www.humanevents.com/article.php?print=yes&id=46849

These are the 1%, and they are _all_ Democrat Party supporters. (So was that guy convicted of insider trading who got 11 years. Funny how that is working out).


----------



## Edward Campbell (15 Oct 2011)

Here, in an article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Globe and Mail_, is a sad story, the likes of which I predict we will see again and again:

http://www.theglobeandmail.com/news/world/americas/harrisburg-state-capitals-bankruptcy-underscores-us-financial-woes/article2202142/


> Harrisburg: State capital’s bankruptcy underscores U.S. financial woes
> 
> RENATA D'ALIESIO  AND JACQUIE MCNISH
> HARRISBURG AND TORONTO— From Saturday's Globe and Mail
> ...




Message for Mayor Linda Thompson: you can, indeed, default on your debt ...
.
.
.
.
.
.
.
.
.
... *once*.


After that the bond holders will demand solid, real assets - your city property, parks for example, as surety on your outstanding debt. They may even get a court to agree that _n_% of city property taxes go to them - trough your receiver.

The bond market will not loan you any more money except at apparently (to you) _extortionate_ rates. No one has to buy your bonds; neither you nor Barack Obama nor even Hu Jintao (someone with *real* economic muscle) can conscript the bond market.

__________
_"I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody."_
James Carville
Bill Clinton's campaign manager


----------



## tomahawk6 (15 Oct 2011)

The Obama administration is all about crony capitalism.When he took office unemployment was under 6% now its double that or may be higher,because the Obama administration is not revealing the true unemployment numbers.


----------



## kstart (18 Oct 2011)

*Financial Crisis Inquiry Commission Report* (April 2011) re: 2008 Global Financial Crisis

http://cybercemetery.unt.edu/archive/fcic/20110310173535/http://www.fcic.gov/report/conclusions

“The Commission concluded that this crisis was avoidable. It found widespread failures in financial regulation; dramatic breakdowns in corporate governance; excessive borrowing and risk-taking by households and Wall Street; policy makers who were ill prepared for the crisis; and systemic breaches In accountability and ethics at all levels. Here we present what we found so readers can reach their own conclusions, even as the comprehensive historical record of this crisis continues to be written.”

Objections also noted.  Interesting read, perspectives. 


Tracking tools re: bailout money and payback (?):
Broad History of US Bailouts:
http://www.propublica.org/special/government-bailouts

More Detail: 
http://projects.propublica.org/bailout/list/index


Domestic:
Millions of homes lurk on bank inventories, casting doubts of rebound
http://www.newsobserver.com/2011/10/16/1561081/millions-of-homes-lurk-on-bank.html#ixzz1avO0l74S


----------



## kstart (18 Oct 2011)

*G20 ministers back big bank capital surcharge*http://www.reuters.com/article/2011/10/15/g20-regulation-idUSL3E7LF0A420111015



> Finance ministers and central bankers from the world's top economies backed on Saturday a mandatory capital surcharge on big lenders of up to 2.5 percent to be phased in from 2016, dealing a blow to banks hoping for a rethink or delay.
> 
> The communique from a meeting of G20 finance chiefs endorsed a 1-2.5 percent capital surcharge on top banks like Goldman Sachs , HSBC , Deutsche Bank and JPMorgan Chase .
> 
> The aim is to make sure they have enough capital to withstand market turbulence so that taxpayers won't have to rescue banks again in the next crisis.






> "Now that the framework applicable to G-SIFIs is agreed, we urge the Financial Stability Board to define the modalities to extend expeditiously the framework to all SIFIs," the communique said.
> 
> JPMorgan Chase Chief Executive Jamie Dimon has called the surcharge anti-American while insurers are battling against being saddled with one too, as are second tier banks.



 Bank of Canada's, Mark Carney to head Financial Security Board?



> FSB Chairman Mario Draghi steps down as chairman this month to become president of the European Central Bank. Asked if he was the lead candidate to replace him, Bank of Canada Governor Mark Carney told reporters: "I hope so."




From http://www.cbc.ca/doczone/meltdown/extras.html :



> In 2008, the World Economic Forum rated Canada's banking system *No. 1 in the world*. The U.S. came in right behind —* Namibia*.


  

Did anyone watch the CBC 4-part documentary series, Meltdown ?  I thought it was interesting for showing ripple effects felt globally, some banks have bigger effects that way, which also seems to be on the G20 agenda:



> A summit of the G20 leaders in Cannes, France in early November is set to give final approval to the surcharge plan and name the banks affected, known as global systemically important financial institution or G-SIFIs , G20 sources said.


(http://www.reuters.com/article/2011/10/15/g20-regulation-idUSL3E7LF0A420111015 )


----------



## cupper (18 Oct 2011)

> In 2008, the World Economic Forum rated Canada's banking system No. 1 in the world. The U.S. came in right behind — Namibia.



That would explain why my National Bank of Namibia stock is outperforming my US T-Bills. ;D


----------



## kstart (18 Oct 2011)

cupper said:
			
		

> That would explain why my National Bank of Namibia stock is outperforming my US T-Bills. ;D



LOL  ;D  Kind of sad though  

I wasn't sure if to post that on the "global economy" thread, but since US Banks are mentioned, and I can also see potential conflicts with Republican/bankers (article you recently posted on), but I suppose there's timing and phasing in of changes.  The CBC documentary was interesting, for example the effects fo Lehman Brothers going down, and how that affected the textile industy in China (caused millions of job losses, homelessness for the migrant labourers).  Paul Martin (previous Liberal PM here, credited with the stronger banking regulations we have now), comments on the effects of defaults on loans in the US, affecting jobs elsewhere in the world.  Just some examples of how somethings are very interrconnected.

To the Liberal-haters   -- Jim Flaherty, also made contributions in the CBC documentary.  He defended the US, WS by pointing out similar practices are also occuring world wide (in another clip, shows possibility of China's housing bubble, which can as well have worldwide, financial implications [job losses, homelessness, etc., elsewhere; there's a few around, China is a concern, because obviously, it's a big one, if it goes unstable, more global impacts on economies abroad as well).  In the global context, it shows countries need to work together on agreements, because of at least partial integration ("New World Order") among economies.


----------



## a_majoor (19 Oct 2011)

Incone inequality?

http://blog.american.com/2011/10/5-reasons-why-income-inequality-is-a-myth-and-occupy-wall-street-is-wrong/



> *5 reasons why income inequality is a myth — and Occupy Wall Street is wrong*
> By James Pethokoukis
> 
> October 18, 2011, 10:54 am
> ...


----------



## a_majoor (24 Oct 2011)

Croney capitalism and the "Blue" economic models reach the end of the road:

http://blogs.the-american-interest.com/wrm/2011/10/23/rhode-island-athens-of-america/



> *Rhode Island: Athens of America?*
> Walter Russell Mead
> 
> Rhode Island is looking more and more like Greece, and not in a good way.  That is one message of this important piece by Mary Williams Walsh in the New York Times.  Years of blue social policy have wrecked local and state government finance in the country’s smallest state, and now the bills are coming due.  Services are being cut to the bone and elderly retirees are losing money they thought was secure.
> ...




Unlike the author, I do not have sympathy for the "50 year old retired teacher", siince this is what they supported and voted for all their working lives. If you make the wrong choices in life, then you must accept the consequences as well...


----------



## Redeye (24 Oct 2011)

Thucydides said:
			
		

> Unlike the author, I do not have sympathy for the "50 year old retired teacher", siince this is what they supported and voted for all their working lives. If you make the wrong choices in life, then you must accept the consequences as well...



I'd love to watch the pension you paid into in good faith based on the information you had be taken from you, so I could then watch you snivel about it. If only.


----------



## a_majoor (24 Oct 2011)

My RRSP is doing just fine, thank you. I realized long ago that the only person who would take care of me is...me, so I make no plans based on CPP, the Reserve pension (no, I am not buying back any time) or any other government plan.

Right now we are in an unstable equilibrium, where any outside disturbance can/will have catastrophic consequences. I have firewalled as best as possible; including ensuring I have a little Euro denominated investments in my portfolio as possible, and steering clear of companies like GM, which only exist by government fiat. OTOH, I have been investing more in India, since they seem to be best positioned to weather the coming blows.


----------



## Brad Sallows (24 Oct 2011)

I could have some sympathy for people who paid into a pension in good faith.  What I have no sympathy for is bad faith bargaining: the notion that the demanded increases on the total compensation envelope should outpace inflation or any other marker.  If you ask for more than is supportable, eventually some of it will be removed.


----------



## Kalatzi (27 Oct 2011)

*Defense Industry: Keep Paying Us or the Economy Dies*

http://www.wired.com/dangerroom/2011/10/defense-industry-cuts-economy/

"Defense giant Lockheed Martin had a totally sweet quarter, raking in $700 million and looking forward to the same this time next year. So it raises eyebrows when Lockheed’s anointed mouthpieces predict mass economic disaster if Congress touches the defense budget.

On Tuesday, the aerospace industry put out a report saying that chopping the defense budget would put over a million Americans out of work. Cuts that could total up to a trillion dollars over 10 years would “devastate the economy and the defense industrial base and undermine the national security of our country,” said Marion Blakeley, president of the Aerospace Industries Association, which sponsored the report."

"It’s natural for defense cuts to raise anxiety in a military-industrial complex that’s reaped a decade of cash windfalls. And it’s just as natural for defense companies to cherry-pick arguments to support their revenue. That’s all in the game. But unless they’re also willing to accept big tax hikes to finance their continued desired spending, then it’s hard to see how reports like this get around Winston Churchill’s (or maybe Sir Ernest Rutherford’s) famous aphorism: “Gentlemen, we have run out of money. Now we have to think.”"


----------



## a_majoor (29 Oct 2011)

The pension disaster is coming home to roost. US State and municipal government pensions are estimated to be over $2 trillion in the red. Like I said, the people who demanded these sort of benefits and supported politicians who wrtoe and approved these agreements get no sympathy from me:

http://finance.yahoo.com/news/AP-Newsbreak-Brown-to-seek-apf-3979443126.html?x=0&sec=topStories&pos=7&asset=&ccode=



> *AP Newsbreak: Brown to seek sweeping pension cuts*
> AP Newsbreak: Calif. Gov. Brown to seek higher employee pension, health care payments
> 
> Juliet Williams, Associated Press, On Thursday October 27, 2011, 12:33 am EDT
> ...


----------



## Old Sweat (29 Oct 2011)

The following oped piece from the Daily Telegraph on line edition, which is reproduced under the Fair Dealing provision of the Copyright Act, paints a gloomy picture of the future American society.

Can America survive without its backbone, the middle class?

As the gaps within the classes widen, American society is starting to fracture.

By Anne Applebaum

8:47PM BST 28 Oct 2011

My friend J grew up in Chicago, but spent his summers in a small town on a Michigan lake. His family, because they came from the city and because they were “summer” visitors, were slightly more privileged than those who lived in the town. Nevertheless, the town considered itself “middle class” and the children observed no social distinctions playing together. J told me recently that he had been back to that town and found it utterly changed: shops were boarded up, houses were being repossessed, cars were old. He no longer had much in common with people he had known as children, some of whom were now unemployed, all of whom had far lower incomes than he.


J isn’t a hedge-fund manager or a plutocrat, but he is a member of the American upper-middle class, a group which is now sociologically and economically very distinct from the lower-middle class, with different politics, different ambitions and different levels of optimism. Thirty years ago, this wasn’t the case. A worker in a Detroit car factory earned about the same as, say, a small-town dentist, and although they might have different taste in films or furniture, their purchasing power wasn’t radically different. Their children would have been able to play together without feeling as if they came from different planets.


Now they couldn’t. Despite all the loud talk of the “1 per cent” of Americans who, according to a recent study, receive about 17 per cent of the income, a percentage which has more than doubled since 1979, the existence of a very small group of very rich people has never bothered Americans. But the fact that some 20 per cent of Americans now receive some 53 per cent of the income is devastating.


I would argue that the growing divisions within the American middle class are far more important than the gap between the very richest and everybody else. They are important because to be “middle class”, in America, has such positive connotations, and because most Americans think they belong in it. The middle class is the “heartland”, the middle class is the “backbone of the country”. In 1970, Time magazine described middle America as people who “sing the national anthem at football games – and mean it”.


“Middle America” also once implied the existence of a broad group of people who had similar values and a similar lifestyle. If you had a small suburban home, a car, a child at a state university, an annual holiday on a Michigan lake, you were part of it. But, at some point in the past 20 years, a family living at that level lost the sense that it was doing “well”, and probably struggled even to stay there. Now it seems you need a McMansion, children at private universities, two cars, a ski trip in the winter and a summer vacation in Europe in order to feel as if you are doing minimally “well”. You also need a decent retirement fund, since what the state pays is so risible, as well as an employer who can give you a generous health-care plan, since health care is so expensive.

I’m not going to argue about the economics of this shift in definition of “middle”, or the morality (of course, no one with a small suburban home and a car is “poor” by global standards). The point is that people’s perceptions have changed. Many who used to feel secure in “middle America” now feel, rightly or wrongly, left behind, and they don’t think they will ever catch up. Meanwhile, many of those who used to feel proud of coming from “middle America” now feel, like my friend, that they have little in common with their “heartland”. If this turns out to be a permanent change, the implications for American politics, even for Western politics, will be profound. For the past 50 years, Western democracy has flourished alongside the assumption of upward mobility: everyone could participate in the political system; everyone had a chance at improving his status; and everyone could hope, at least, that his children would live better than his parents had, in Britain, France and Germany as well as America. But if Americans are no longer “all in the same boat”, if some of them are now destined to live better than others, then will they continue to feel like political equals? If Britons, Frenchmen and Germans no longer have much in common with their countrymen, will they still want to take part in the same national debates? We don’t know yet – we’ve never lived without a “middle middle class” before – and we are about to find out.


----------



## Edward Campbell (29 Oct 2011)

And here is another "middle class" warning in an article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Globe and Mail_:

http://www.theglobeandmail.com/news/world/konrad-yakabuski/battle-rages-over-ohios-union-limiting-law/article2218168/


> Battle rages over Ohio’s union-limiting law
> 
> KONRAD YAKABUSKI | Columnist profile | E-mail
> COLUMBUS— From Saturday's Globe and Mail
> ...




Free collective bargaining performs a vital economic function: it allows business leaders to understand and account, correctly, for the cost (and sometimes the value) of labour as an input. But the operative word is "free." We cannot find the real value of labour if the laws regarding collective bargaining are tilted, one way or the other, to favour either business or labour.

Public service collective bargaining is an odd beast. The very words "public service" ought to tell us that the function, serving the public, is important. Some public sector workers have an unfair bargaining advantage because the withdrawal of their services would go farther than just costing the "business" (school board, hospital, city, region ... nation) money it (service withdrawal) might actually endanger the public - as, for example, when garbage collectors go on strike and (knowingly) create a public heath danger.

In the 1950s, before public sector collective bargaining became widespread, there was a tacit agreement - a _social contract_ if you will: public sector workers were, broadly, paid less than their private sector confreres but they had:

1. An excellent, *guaranteed* pension scheme; and

2. Nearly iron clad job security.

Now, 60 years on, public service workers, especially, bastions of the middle class- many of whom were, 60 years, _professionals_ who would have bridled at the terms "education worker" of "health care worker"have unsustainably high salaries and pensions and iron clad job security. There never was a "free bargain." The public, most of whom worked in the private sector, were and are held hostage.

One problem is that the public sector is too _public_: too many jobs that can, without any difficulty or danger, be done by the private sector are public. Consider the situation of e.g. garbage collection in some (many? most?) Canadian cities. Some garbage collection workers, those who collect garbage from most private homes are public sector workers. Others, those who collect garbage from public businesses, including condominiums (where many people reside) and even city hall and the fire halls, are private sector workers employed by contractors. Two questions arise:

1. Why is private (single family) garbage in need of public sector pick up and disposal while garbage from apartment buildings can be entrusted to the private sector?

2. Why are there so (relatively) few strikes in the private sector garbage collection business compared to the public sector garbage workers?

I have no answer to the first question but I have one for the second: COMPETITION. Competition keeps wages relatively low - but not too bad because in order to compete and make money garbage collection companies must pay well enough to get the job done on a consistently reliable basis - and competition gives individual businesses and e.g. condominium corporations flexibility: if the contracted company is hit by a strike then the customer can hire someone else. That "discipline" keeps both management and labour focused on their best interests. There is no such discipline in public sector unions.

So, solution one is: privatize, *P*rivatize, *PRIVATIZE!* There are some jobs - those that involve, for example, the potential use of deadly force on the Queen's (our) behalf (police, for example) or very high risk and unacceptable loss of service (fire, for example) that must be public (along with some bureaucratic functions that involve policy advice to governments). Solution two is to recast the bargain: everything, including pensions and job security are on the table every time public sector unions (be they municipal workers (e.g. public transit) or the national civil service) sit down across the bargaining table from management - the people we elect.

The solution is NOT, in my opinion to "attack" unions in an effort to stop free collective bargaining because free collective bargaining is a valuable, indeed even essential business tool.


----------



## Haletown (29 Oct 2011)

Margaret Thatcher was so right when she stated that socialism is wonderful until you run out of other people's money to spend.


----------



## a_majoor (29 Oct 2011)

A very interesting look at the numbers. Note that due to the negative "multiplier" effect of government spending [0.8], reductions in spending actually increase the size of the economy. OTOH, the amount of cutting is so vast and the targets are so deeply entrenched that the ability to cut the required amount is in doubt:

http://voxday.blogspot.com/2011/10/why-washington-will-collapse.html



> *Why Washington will collapse*
> 
> It's mathematically guaranteed, given the total failure of the supposedly responsible party, the Republicans, to even openly discuss the fiscal realities, much less address them. The Market Ticker walks through the numbers:
> 
> ...



(edit; .8 turned out to be  smiley. Who knew?)


----------



## ModlrMike (29 Oct 2011)

Here's an interesting table that shows where the US Treasury debt is held:

MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES

Interesting to note that Canada is 11th on the list and we've doubled our exposure since this time last year.


----------



## Edward Campbell (29 Oct 2011)

ModlrMike said:
			
		

> Here's an interesting table that shows where the US Treasury debt is held:
> 
> MAJOR FOREIGN HOLDERS OF TREASURY SECURITIES
> 
> Interesting to note that Canada is 11th on the list and we've doubled our exposure since this time last year.




This is one of those times when we should aspire to being Australia.


----------



## cupper (29 Oct 2011)

Actually, it does make some sense to have Canadian investment in US Treasuries. The high value of the Canadian Dollar against the US Dollar right now allows us to buy at a lower cost. And the Canadian Dollar is not going to stay at parity or close to it for an extended period of time. Once it starts to decline, the value in $Cdn will provide a larger return.


----------



## Edward Campbell (29 Oct 2011)

cupper said:
			
		

> Actually, it does make some sense to have Canadian investment in US Treasuries. The high value of the Canadian Dollar against the US Dollar right now allows us to buy at a lower cost. And the Canadian Dollar is not going to stay at parity or close to it for an extended period of time. Once it starts to decline, the value in $Cdn will provide a larger return.




I have a different view of our dollar: we are, increasingly, a _petrodollar_ country, and you can watch the exchange rate move, in near lockstep with the price of crude oil.


----------



## ModlrMike (29 Oct 2011)

cupper said:
			
		

> Actually, it does make some sense to have Canadian investment in US Treasuries. The high value of the Canadian Dollar against the US Dollar right now allows us to buy at a lower cost. And the Canadian Dollar is not going to stay at parity or close to it for an extended period of time. Once it starts to decline, the value in $Cdn will provide a larger return.



Perhaps there is some truth in that, however we don't need to be a creditor they're not going to repay some day (soon).


----------



## Edward Campbell (30 Oct 2011)

ModlrMike said:
			
		

> Perhaps there is some truth in that, however we don't need to be a creditor they're not going to repay some day (soon).




America is not, despite the _Tea Party_ rhetoric during the debt ceiling debates, in any real danger of defaulting on its debts, à la Greece, but it is in danger of debasing its currency in a deliberate attempt to lower its value so as to make American manufactured exports less costly for others to buy, thereby "creating" jobs.

(Jobs "created" by undercutting another producer in a wage "race to the bottom" are less 'created' than just moved from one place (say Mexico) to another (say USA). It's not the same sort of job creation as we saw during, say, the industrial revolution, or during the automobile age in the 1920s or the electronics age in the 1950s when new technologies and better wages created "demand" for new products that had to be made - real job creation.)


----------



## mariomike (30 Oct 2011)

E.R. Campbell said:
			
		

> 2. Why are there so (relatively) few strikes in the private sector garbage collection business compared to the public sector garbage workers?



I first saw this post in the "Global economy" thread, so replied there:
http://forums.milnet.ca/forums/threads/91627/post-1086510.html#msg1086510


----------



## a_majoor (30 Oct 2011)

Even the combined willpower of all the candidates would not be enough to enact a scheme like this, no matter how logical this is:

http://pjmedia.com/blog/entitlement-programs-a-plan-to-end-them/?print=1



> *Entitlement Programs: A Plan to End Them*
> Posted By Amit Ghate On October 30, 2011 @ 12:00 am In Uncategorized | 42 Comments
> 
> America’s financial situation is precarious. Over the past eight years our national debt [1] has doubled to $14.5 trillion, and our total unfunded liabilities now exceed an astonishing $114 trillion. That’s $1,115,000 per federal income taxpayer.
> ...


----------



## Kirkhill (30 Oct 2011)

E.R. Campbell said:
			
		

> This is one of those times when we should aspire to being Australia.



I am not sure that that table is all that it purports to be.

If it is an indication of national holdings then Luxembourg and Switzerland are particularly screwed.

On the other hand if it represents the banking centre in which those bonds are held - often by offshore interests - then the picture becomes, fittingly for our times, considerably more murky.

The real "tells", I believe, are the very high exposures in traditional banking centres - like Luxembourg and Switzerland as well as Britain and the Netherlands - as well as new comers like Singapore, Hong Kong and Ireland.

The clincher didn't make it to this list because it was difficult to divine the GDP of the entity



> Carib Bnkng Ctrs 4/   161.2



The Bahamas, Turks & Caicos, Cayman Islands etc (many of them British Dependencies like Jersey, Guernsey and Man) hold an additional 161.2 BUSD in treasuries.

Country		USTS	GDP	USTS/GDP
		BUSD	BUSD	
Luxembourg	62	41	151.2%
Switzerland	148	325	45.5%
Hong Kong	108	326	33.1%
Japan		937	4310	21.7%
Singapore		58	292	19.9%
Ireland		34	172	19.8%
UK		397	2173	18.3%
Taiwan		150	822	18.2%
China		1137	10090	11.3%
Brazil		210	2172	9.7%
Thailand		55	587	9.4%
Norway		22	255	8.6%
Israel		18	219	8.2%
Belgium		32	394	8.1%
Chile		19	258	7.4%
Phillippines	25	351	7.1%
Canada		83	1330	6.2%
Sweden		21	355	5.9%
Colombia		21	435	4.8%
Russia		97	2223	4.4%
Turkey		39	961	4.1%
Poland		29	721	4.0%
Netherlands	23	677	3.4%
Malaysia		13	414	3.1%
Korea, South	32	1459	2.2%
Germany		60	2940	2.0%
Mexico		28	1567	1.8%
Australia		12	882	1.4%
Italy		24	1774	1.4%
France		29	2145	1.4%
India		38	4060	0.9%


GDP data from CIA World Factbook (PPP model)


----------



## Edward Campbell (30 Oct 2011)

Kirkhill said:
			
		

> I am not sure that that table is all that it purports to be.
> 
> If it is an indication of national holdings then Luxembourg and Switzerland are particularly screwed.
> 
> ...




 :goodpost:

Yes, thanks, good catch.


----------



## a_majoor (30 Oct 2011)

This op ed is a pretty clear description of Trudeopian Canada as well:

http://www.nytimes.com/2011/10/30/opinion/sunday/douthat-what-tax-dollars-cant-buy.html?_r=3&ref=opinion



> *What Tax Dollars Can’t Buy*
> By ROSS DOUTHAT
> Published: October 29, 2011
> 
> ...


----------



## a_majoor (5 Nov 2011)

If reality has reached San Fransisco's city hall, then perhaps there is hope after all. The combined unfunded liabilities of public sector pensions is over $2 trillion dollars; who knows how much more for health care benefits? The backlash against the public sector unions wil probably be very intense; the people being forced to hand over their tax dollars to pay the extravagent wages, benefits and pensions of public sector union employees generally make far less, and have far lower pension or health care benefits, if any.

http://blogs.the-american-interest.com/wrm/2011/11/05/blue-san-francisco-plans-to-stiff-the-unions/



> *Blue San Francisco Plans To Stiff The Unions*
> 
> Scott Walker move over; San Francisco is the latest front line in the battle against abusive public sector unions.
> The bluest city in the bluest state in the union has woken up and smelled the latte; generations of extortionate collusion between shamelessly greedy and shortsighted union leaders and unforgivably opportunistic and irresponsible politicians have left the Blue Paradise on the Bay with a pension bill that it simply can’t pay.  As MercuryNews.com tells it,
> ...


----------



## a_majoor (6 Nov 2011)

The collapse of the US government's "green energy" policy will probably lead to a similar collapse here in Ontario. The few companies which are actually competative will benefit from the elimination of their heavily subsidized competition:

http://reason.com/archives/2011/11/04/america-waking-to-light-of-chinese-sun

[quot]
*America Waking to Light of Chinese Sun?*
Pot calls kettle green in solar dumping petition.

Tim Cavanaugh | November 4, 2011

It’s hard to spot all the absurdities in the death spiral of the U.S. government’s green energy policy. But here’s a big one: A group of solar equipment makers is trying to lock inexpensive products out of the United States, and the argument of these subsidized companies is that subsidies create an unfair market. 

Late last month the Coalition for American Solar Manufacturing (CASM), a group of seven domestic solar equipment makers led by SolarWorld Industries America Inc., petitioned the Department of Commerce and the International Trade Commission (ITC) over crystalline silicon photovoltaic cells (whether or not assembled into modules) from the People’s Republic of China. 

SolarWorld, the U.S. branch of a German company, alleges that Chinese manufacturers, using subsidies from Chinese taxpayers, are “dumping” their products—selling them at less than cost—in the U.S. market. Along with its six cohorts (whose petition is not being supported by the Solar Energy Industries Association, the main solar trade group), SolarWorld is seeking a finding of “damage” to the American industry and a countervailing tariff on Chinese solar imports. 

President Barack Obama has lost no time in showing his support for the protectionist petition. 

“We have seen a lot of questionable competitive practices coming out of China when it comes to the clean energy space, and I have been more aggressive than previous administrations in enforcing our trade laws,” the president told a Portland, Oregon TV station during a West Coast fundraising tour. “We have filed actions against them when we see these kinds of dumping activities, and we’re going to look very carefully at this stuff and potentially bring actions if we find that the basic rules of the road have been violated.”

Commerce and the ITC will not comment on the action until they decide whether to launch an investigation, but the evidence so far—even if we accept the anti-competitive, anti-consumer logic of “antidumping” laws—indicates SolarWorld’s cartel has a very weak case, as well as an extremely hypocritical complaint. Trina Solar Ltd., a Chinese manufacturer, tells BusinessWeek that even the well-known largesse of China’s Marxist government is modest compared to the pork dispensed by the American republic: 

Jifan Gao, chief executive officer of Changzhou-based Trina, said China Development Bank Corp. charges interest at the “market’s average level” of 6 to 7 percent. That exceeds the average rate of about 5 percent offered to Solyndra on $70 million the U.S. panel maker borrowed in 2011 before filing for bankruptcy protection in September, according to Bloomberg calculations based on filings by a U.S. Treasury bank.

Gao’s comments are the clearest defense yet by a Chinese solar executive against accusations they’ve used more than $30 billion in state subsidized loans to dump panels on overseas markets. U.S. manufacturers led by SolarWorld AG asked the Obama administration to slap duties of as much as 100 percent on more than $1 billion in Chinese imports to counter what they called illegal aid. That added to the debate in the U.S. over publicly funding solar companies that exploded with Solyndra’s collapse.

A look at the documents on ITC’s website (search for investigation number 701-481) supports Trina’s claim. Out of a total of 74 documents so far filed in the solar dumping petition, 46 of them—62 percent—are confidential. And the 28 that can be viewed contain plenty of oddities. 

At one point, SolarWorld notes, for example, that the Shandong Province Energy Fund provides RMB 2.133 billion in order to “finance renewable energy developers, supporting activities ranging from manufacturing to technology developers.” That sounds like a lot, and it is a lot. It comes to $337,509,217.11—about 64 percent of what U.S. taxpayers lost on Solyndra alone. The Department of Energy’s Energy Efficiency and Renewable Energy (EERE) program lavished $2.2 billion on domestic manufacturers in 2010, and DOE’s 2012 budget request jacks that up to $3.2 billion.

The Commerce investigation will only cover the effects of Chinese products on U.S. manufacturers. It will not address the effects of subsidies for American manufacturers by American taxpayers, nor will it examine the benefits inexpensive imports provide to buyers of solar material. The International Trade Commission (formerly the U.S. Tariff Commission) will supposedly take a broader look at the domestic market for solar panels. But it’s striking that as of this stage, end users do not appear to have been consulted. Certainly the people who spend their own money on solar products—and who will have to pay any tariff that gets imposed—deserve a say in what constitutes damage to the American solar market. 

But one solar industry observer points out the paradox of heavily subsidized American companies seeking to punish Chinese manufacturers (via American consumers) for winning the same game they themselves are trying to play. John L. Whisman, CEO of VeriSol, Inc., a solar marketing, development consultant, points out that the United States is a net exporter of solar technology by a margin of about $1.9 Billion.

“This is simply a self interested play by a group attempting to protect their businesses,” Whisman said in an interview. “I think it's shortsighted because economics is a long run game. [SolarWorld and its co-complainants] know that they may achieve some favorable result based on the idea that politics is a short run game.” 

You may have heard that there’s an election next year. Obama’s domestic policies have produced nothing but failure, so it’s not clear what, if anything, he should be saying as he transitions into a full-time campaign schedule. But while his well-established protectionism may still pay dividends, the president’s perverse loyalty to green subsidies can only lead to more shame. 

We can put this into dialectical-materialist terms that China’s rulers, Obama’s community-organizer mentors, and even the “Marxist professors and structural feminists and punk-rock performance poets” the future president met in school can all understand: 

The great green superstructure is collapsing amid the contradictions of material life, as the conflict between the forces of production and the social relations of surplus value undermines the president’s renewable energy policy. The green boondoggle has failed. Suing people in other countries won’t turn it into a success.

Tim Cavanaugh is managing editor of Reason.com.
[/quote]


----------



## Kalatzi (7 Nov 2011)

*How Cutting Pentagon Spending Will Fix U.S. Defense Strategy*
Austerity is the Best Possible Auditor 

link here http://www.foreignaffairs.com/articles/136637/benjamin-friedman/how-cutting-pentagon-spending-will-fix-us-defense-strategy?page=show

"Washington's defense establishment is incapable of making the kind of strategic shift these cuts would suggest, as politicians remains wedded to existing American military commitments. The White House, moreover, considers strategy a question for the military, and the Pentagon is never going to slash its own budget by explaining the uselessness of its own missions.

Those looking to trim the Pentagon budget significantly should follow the Nike approach: Just do it. Telling the services what their new budget is, but not how to reach it, will force a new kind of efficiency on the Pentagon. Military leaders will prioritize when they have to. With less money, they will sacrifice less important tasks and administrative bloat while salvaging their favored missions. Meanwhile, civilian leaders should jettison the so-called golden ratio, by which each service receives a fixed share of the Pentagon budget. If the services are forced to compete for the same funds, as they did in the 1950s, they will expose flaws in others' arguments and improve their own. "

Don't hold you breath.


----------



## a_majoor (12 Nov 2011)

This is bizarre, but  the idea of a Quid pro quo arrangement among "like minded" crony capitalists and politicians spanning international boundaries should not be surprising. If fact, given the massive failure to stampede people into various "Global Warming" schemes/scams, quietly fleecing the taxpayer is probably "plan B".

http://pjmedia.com/blog/another-doe-loan-scandal-abengoa/?print=1



> *Another DOE Loan Scandal: Are We Bailing Out Spain’s Solar Collapse?*
> 
> Posted By Richard Pollock On November 10, 2011 @ 12:00 am In "Green" tech,economy,Europe,Money,Politics,Science,Science & Technology,Spain,US News,World News | 38 Comments
> 
> ...


----------



## a_majoor (12 Nov 2011)

And for those with short memories, the primary cause of the 2008 crash (the ongoing economic turmoil is the deleveraging of unsustainable debt, but the 2008 crash is probably the trigger event for everything that came after. The dominos were going to fall one way or another):

http://washingtonexaminer.com/opinion/columnists/2011/11/conn-carroll-facts-show-fannie-freddie-led-mortgage-market-collapse



> *Conn Carroll: Facts show Fannie, Freddie led mortgage market to the collapse*
> By: Conn Carroll | 11/10/11 8:05 PM
> Senior Editorial Writer | Follow On Twitter @Conncarroll
> 
> ...


----------



## Edward Campbell (13 Nov 2011)

I agree with Conn Carroll and Michael Bloomberg re: the _main_ responsibility lying with a Congress that wanted to practice social engineering with taxpayers' money but we must remember that social engineering, albeit of a slightly different sort, is also the aim of the Tea Party.

The term _national interest_ has been harder and harder to define since Dwight Eisenhower left office. I attribute this to a steady, never ending decline in what George HW Bush (41) called "the vision thing."


----------



## Fishbone Jones (13 Nov 2011)

.


----------



## a_majoor (17 Nov 2011)

More budget trickery. There needs to be some adult leadership in the Senate and Executive branches:

http://pjmedia.com/blog/budget-chicanery-has-already-doomed-the-super-committee/?print=1



> *Budget Chicanery Has Already Doomed the Super Committee*
> 
> Posted By Roger Morse On November 17, 2011 @ 12:28 am In economy,Elections 2012,History,Money,Politics,US News | 1 Comment
> 
> ...


----------



## a_majoor (17 Nov 2011)

How'd that Hope and Change stuff work out for you?....

http://reason.com/blog/2011/11/17/cbo-on-the-stimulus



> *CBO on the Stimulus: "A net negative effect on the growth of GDP over 10 years."*
> 
> Peter Suderman | November 17, 2011
> 
> ...


----------



## a_majoor (18 Nov 2011)

Counterpoint: the TEA Party movement releases its budget plan:

http://blogs.freedomworks.org/files/TeaPartyBudget.pdf

(36 page report, fairly in depth. Download and read)


----------



## a_majoor (18 Nov 2011)

A very stark warning:

http://www.bizzyblog.com/2011/11/17/thank-you-ann-barnhardt-we-need-a-lot-more-people-with-her-courage-like-this/



> *Thank You, Ann Barnhardt; We Need More People With Your Courage*
> Filed under: Activism,Economy,Taxes & Government — TBlumer @ 8:35 pm
> 
> AnnBlendedAnn Barnhardt, a hedge broker specializing in cattle and grain, is quitting the brokerage portion of her business, and has posted an announcement as to why.
> ...


----------



## a_majoor (21 Nov 2011)

More on the real corruption:

http://pjmedia.com/spengler/2011/11/18/republicans-democrats-and-wall-street-fraud-or-whos-the-mf-now/?print=1



> *Republicans, Democrats, and Wall Street Fraud or: Who’s the MF Now?*
> 
> Posted By David P. Goldman On November 18, 2011 @ 5:59 am In Uncategorized | 84 Comments
> 
> ...


----------



## a_majoor (24 Nov 2011)

CBO on the "Stimulus":

http://news.investors.com/ArticlePrint.aspx?id=592709&p=1



> *The CBO Quietly Downgrades Obama's $825 Bil Stimulus*
> 
> Posted 11/23/2011 07:00 PM ET
> 
> ...


----------



## a_majoor (26 Nov 2011)

Mark Steyn:

http://www.ocregister.com/opinion/debt-328730-government-spending.html



> *Mark Steyn: SS Spendaholic sailing into debt abyss*
> 
> By MARK STEYN
> 
> ...


----------



## a_majoor (26 Nov 2011)

What was done can be undone....

http://www.americanthinker.com/printpage/?url=http://www.americanthinker.com/articles/../2011/11/spending_wars.htm



> *Spending Wars*
> 
> By Randall Hoven
> The ideas that federal spending exploded under George W. Bush, that "Bush's wars" account for our spending explosion, that Reaganism died with Reagan, and that we are on a spending binge that started decades ago are all nonsense.
> ...


----------



## a_majoor (30 Nov 2011)

A long (25 page) paper on the issue of taxation. Many points could apply here as well:

http://www.oaktreecapital.com/MemoTree/It%27s%20All%20Very%20Taxing%2011_16_11.pdf


----------



## tomahawk6 (1 Dec 2011)

A good snapshot of the Obama economy.Where we were and where we are.Click on the image to enlarge.


----------



## Kirkhill (1 Dec 2011)

Thucydides said:
			
		

> What was done can be undone....
> 
> http://www.americanthinker.com/printpage/?url=http://www.americanthinker.com/articles/../2011/11/spending_wars.htm



Those charts are extremely interesting....

Under Reagan-Bush 1 spending was on the order of 23% of GDP.
Under Clinton spending declined to 18% of GDP.
Under Bush 2 it up-ticked to 19 to 20% of GDP
Under Obama it has "sky-rocketed" to 1 to 2 points higher than the level seen under Reagan.

Now.

Did Reagan start with a lower GDP because of what he had inherited from Nixon and Carter? (Probably)
Was Reagan's spending on "Things" (Apaches, Abrams, Bradleys.......) more efficient than Obama's spending on Programs (EPA, Obamacare.....)? (One is a short term investment with lasting value while the other requires continuous investment).
Do wars "stimulate" the economy? (Arguably yes.  They provide employment for service personnel and ammunition suppliers and the stimulus lasts until the soldiers stop shooting).
Did Clinton decrease spending or increase GDP? (Think DotCom bubble - bust in Spring 2000 - Bush 2 election Nov 2000)?
Bush 2 was confronted with:
DotCom collapse
9/11
Oil being pushed through the $100 mark (Jan 2008) to $140 (ca Nov 2008) with the push starting ca Jan 2007 






Link

At least some of that oil movement was driven by individuals consciously acting to impact the market price .....



> How Oil First Hit $100 Per Barrel
> 
> by Sean Brodrick on August 17, 2010
> 
> ...


  Via http://blog.uncommonwisdomdaily.com/how-oil-first-hit-100-per-barrel-4424

And then he still had to deal with - 

Unfunded Medicare and Social Security as well as Fannie and Freddie (which he cited as a risk in April 2001.... before which comes before September).

In my view the short form is:  

Spending to GDP ratio today is not a problem.  The nature of the spending is (long term institutionalized vs short term material) and the trajectory (no defined target - just constantly rising to infinity as the population grows and expectations rise).


----------



## a_majoor (3 Dec 2011)

The current unelmployment numbers (not the "official ones"):

http://blog.american.com/2011/12/november-jobs-report-7-reasons-why-its-better-but-still-terrible/



> *November jobs report: 7 reasons why it’s better but still terrible*
> By James Pethokoukis
> December 2, 2011, 10:37 am
> 
> ...


----------



## a_majoor (4 Dec 2011)

Who is John Galt?

http://www.tri-cityherald.com/2011/12/03/1739803/kennewick-construction-company.html



> *Kennewick construction company auctions itself off*
> By John Trumbo, Tri-City Herald
> 
> KENNEWICK -- It took Bob Bertsch 25 years to build his construction business and just a day for it all to go away.
> ...



The thousands of other small business that are taking the same line (cancelling expansion, turning down work, selling the business) for much the same reasons are the real answer to why the "U6" unemployment rate is a horrendous 15.6% in the United States (see post above).


----------



## a_majoor (6 Dec 2011)

Who is John Galt (part x)

http://taxprof.typepad.com/taxprof_blog/2011/12/tax-cpa.html



> *Tax Practitioner Flees California for Nevada*
> 
> Tax practitioner and blogger Russ Fox is fleeing California for Nevada:
> 
> ...


----------



## a_majoor (7 Dec 2011)

The destruction of accumulated savings will cause many problems, perhaps the worst of which is ushering in political chaos and offering and opening for the "man on the white horse" who promises to restore stability...

http://finance.yahoo.com/blogs/breakout/fed-ruining-entire-class-investors-says-jim-rogers-153315477.html



> *Fed Is “Ruining an Entire Class of Investors” Says Jim Rogers*
> By Jeff Macke | Breakout – 22 hours ago
> 
> No matter what you've heard to the contrary, "there is QE3, the Fed is pumping money into the system," says legendary investor Jim Rogers, disregarding most every Federal Reserve statement over the last six months. In the attached video Rogers explains his lack of trust (read: contempt) for the Federal Reserve and Fed Chairman Ben Bernanke.
> ...


----------



## a_majoor (11 Dec 2011)

Access to cheap and reliable energy is _the_ underpinning of modern economies, so this development is applicable to lifting the US out of the current economic downturn. It is or should also be a key point in the upcoming elections; the current administration has been promoting policies which exclude development of domestic energy resources, killing jobs and reducing economic activity. (as a side bar, the royalties from all this oil could conceivably be enough to pay down a large chunk of the national debt).

http://www.timeslive.co.za/scitech/2011/12/08/us-shale-oil-seen-rising-fast



> *US shale oil seen rising fast*
> Reuters | 08 December, 2011 08:24
> 
> An aerial view of a shale oil drilling rig SAI-310 in the Patagonian province of Neuquen. File picture
> ...



The flaring issue can also be addressed by a development from BP (documented in the "No Oil" thread) which uses a fully developed version of the FT process to convert natural gas into a clean liquid fuel, increasing the amount of available petroleum products for domestic consumption.


----------



## a_majoor (19 Dec 2011)

Remember, these numbers are in addition to the US Federal debt...

http://finance.yahoo.com/news/public-retirement-ages-come-under-170328247.html



> *Public retirement ages come under greater scrutiny*
> With public workers eligible to retire at 55 or 60, governments look to boost retirement ages
> APBy Don Thompson, Associated Press | AP – Mon, Dec 12, 2011 12:12 PM EST
> 
> ...


----------



## a_majoor (28 Dec 2011)

And placing the blame where it is due. Amazing how quickly a dose of facts and figures destroys the leftist "narrative":

http://american.com/archive/2011/december/why-the-left-is-losing-the-argument-over-the-financial-crisis



> *Why the Left Is Losing the Argument over the Financial Crisis*
> By Peter J. Wallison and Edward Pinto
> Tuesday, December 27, 2011
> Filed under: Big Ideas, Economic Policy, Government & Politics
> ...


----------



## a_majoor (2 Jan 2012)

Some baby steps. Ending ethanol subsidies will also have a huge impact on the global food market since lots of corn was being diverted from human and animal consumption due to the subsidy. $6 billion a year is only a baby step (especially compared to the vast sums being spent on US "entitlement" programs where the real reform has to take place), but at least it is a step in the right direction. Perhaps the Congress needs to follow the Harper government's program of "boutique" targeted reductions tomake things politically palatable:

http://www.washingtonpost.com/opinions/overcharged/2011/12/30/gIQAzQ0yUP_print.html



> *Overcharged*
> 
> By Editorial Board, Published: January 1
> 
> ...


----------



## Redeye (2 Jan 2012)

Not sure what the impact will be, given how heavily subsidized the corn industry is to begin with, in all accounts. Farmers grow tremendous amounts of born that's forced the price well below any sort of "living wage" without massive subsidies that mainly benefit agribusiness that processes all that corn, turning it mostly into mostly unhealthy foods. It'd be nice if there was some way to tackle that, but I suspect that would never happen.



			
				Thucydides said:
			
		

> Some baby steps. Ending ethanol subsidies will also have a huge impact on the global food market since lots of corn was being diverted from human and animal consumption due to the subsidy. $6 billion a year is only a baby step (especially compared to the vast sums being spent on US "entitlement" programs where the real reform has to take place), but at least it is a step in the right direction. Perhaps the Congress needs to follow the Harper government's program of "boutique" targeted reductions tomake things politically palatable:
> 
> http://www.washingtonpost.com/opinions/overcharged/2011/12/30/gIQAzQ0yUP_print.html


----------



## Kirkhill (2 Jan 2012)

Redeye said:
			
		

> Not sure what the impact will be, given how heavily subsidized the corn industry is to begin with, in all accounts. Farmers grow tremendous amounts of born that's forced the price well below any sort of "living wage" without massive subsidies that mainly benefit agribusiness that processes all that corn, turning it mostly into mostly unhealthy foods. It'd be nice if there was some way to tackle that, but I suspect that would never happen.



Confused, me.

Corn subsidized.   Agreed.
Corn grown efficiently.  Agreed.
Corn grown so efficiently that the price per bushel is very low.  Agreed - sounds like straight supply/demand economics.

Consequence of low value corn.....farmers need to grow many bushels to make a living.
Only so many bushels can be grown per acre.  
Therefore farmers must seed many acres to grow many bushels to make many dollars.
Therefore market pressures drive farmers to acquire many acres.  
As there are only a limited number of arable acres then those acres come from other farmers.
Some farmers decide to go big.  Others decide to go home.

Consequence, in continuation of a pattern in evidence since the agricultural revolutions of Cluny, fewer and fewer people produce more and more food.   In Saskatchewan successful farmers don't farm Quarters or even Sections.  They are headed for Townships. These are successful "Family" operations that have decided to go big.  

When does a successful family farm become an evil Agribusiness?

If subsidies aren't benefitting the farmers, where are ADM and Cargill getting their supplies?   It is true that not all farmers benefit.  But it is also true that some farmers are benefitting greatly.

Does agriculture need subsidizing at all? Probably not.... but that won't change the dynamic that results in fewer people producing more food.

And what is this BS about Agribusinesses producing "unhealthy foods"?  You may not like Corn Flakes, White bread and Vanilla ice cream but judging from what people buy when given a choice, and they are not short of choices these days, they vote with their dollars and buy Corn Flakes, White bread and Vanilla ice cream.

Here's a tip.  Processors sell fat and salt because people like fat and salt.  Fat and salt reduce profit margins.  Fat and salt traditionally have been the most expensive ingredients in food.

Fat was valued as a source of calories, and flavour.  Salt was valued as a preservative, and flavour.

The foods produced by the food supply chain that you deride are the cheapest, cleanest, freshest, most varied and healthiest foods that the planet has ever seen and contribute markedly to the increase in life expectancy from less than 60 in the 1880s to over 80 today.

You know the way you make money in the food industry?

You sell air (as in ice cream).
You sell water (as in everything)
You sell carbohydrates (and fibre is great because it is indigestible, adds no food value - and thus has been traditionally a waste product - and binds tons of water, which see above).

Proteins, fats (to include corn oil, sunflower oil, canola and olive oil) and preservatives all cost money and are used as sparingly  as circumstances permit.


----------



## Redeye (2 Jan 2012)

Family farmers are mostly broke, even with subsidies, which mainly benefit agribusinesses like ADM and Cargill and consumers of things like Coke that are filled with high fructose corn syrup and the like - and cheap beef fattened on corn.  Efficiency is a relative term when you actually consider the massive amount of energy that is put into corn production. And when subsidies have to be involved, it's not "straight supply and demand" at all.

Rather than me do a second rate job of explaining it, go read The Omnivore's Dilemma - just the first section on corn in particular. It's absolutely fascinating. Food, Inc is also good, but the Omnivore's Dilemma is really a great way to get an understanding of how food works.

Your "argument" about people voting with their dollars doesn't in any way change the fact that the foods are unhealthy, and a fair chunk of people would be rather horrifying about what goes into producing the food they eat. The business of feeding people has some ugly aspects. What's notable as that the much vaunted "family farm" which only exists because of policies to support them is no longer practicing what used to be relatively sustainable agriculture. The thing is, they really can't anymore. But again, read the book. It's amazing, and I can't do it justice.



			
				Kirkhill said:
			
		

> Confused, me.
> 
> Corn subsidized.   Agreed.
> Corn grown efficiently.  Agreed.
> ...


----------



## Bruce Monkhouse (2 Jan 2012)

Redeye said:
			
		

> Family farmers are mostly broke, even with subsidies,



A quote I never forgot, [seconded by a farmer I befriended a few years ago] 
My father-in-law said there are 2 types of farmers,..stupid and very well off.

No business that can wangle subsidies is EVER going to say that we're doing alright, that would just be stupid.


----------



## a_majoor (2 Jan 2012)

Since Kirkhill has made his career in the food industry, it would do well to pay attention to his observations.

The practice of consolodation of small farms to ever larger farms (owned and operated by ever smaller numbers of people) isn't anything new; the astute historian can see the same economic drivers leading to the same results in the late _Res Publica Roma_, or even earlier in the Hellenistic period between the death of Alexander III and the rise of the _Res Publica Roma_. The only "subsidies" that work to reverse the trend is to break up the estates and distribute the land to smallholders. Since this historically happens after revolutions or dark ages, or in conquered territories as a reward to the soldiers of the invading armies, this isn't perhaps the best approach.

As for eating healthy foods, growing your own garden isn't very difficult (even window box gardens are possible for apartment dwellers), and greenhouse agriculture and "combined cycles" like intercropping different plants at the same time are possible for people willing to take the effort and pay the extra price.


----------



## ModlrMike (2 Jan 2012)

I recollect at the start of the biofuel craze warnings that it would push up the price of grains. One can easily see that using arable land for non food product farming may not be the wisest approach. The ensuing rise in everything grain derived from bread to beer should be evidence enough. There's plenty of plants that grow in marginal conditions that can be used for biofuels, but they never got the same attention from the environmental and agribusiness lobbies. Another example of cronyism?


----------



## Kirkhill (2 Jan 2012)

Redeye:

In Four Decades in the food industry, meeting, at a guess, over 10,000 people engaged in all aspects of the food industry, from feed lot and farm gate, through processor and distributor, and up to the board rooms of those evil Agribusinesses, in Europe, the US and Canada, I can honestly say that I have never met anyone, anywhere, that I felt was not committed to producing wholesome, healthy food.

And I say that without reservation.
Dead customers are bad for business.


----------



## a_majoor (2 Jan 2012)

ModlrMike said:
			
		

> I recollect at the start of the biofuel craze warnings that it would push up the price of grains. One can easily see that using arable land for non food product farming may not be the wisest approach. The ensuing rise in everything grain derived from bread to beer should be evidence enough. There's plenty of plants that grow in marginal conditions that can be used for biofuels, but they never got the same attention from the environmental and agribusiness lobbies. Another example of cronyism?



Crony capitalism is part of it (Corn farmers and producers have good lobbyists) but making ethanol requires high sugar inputs. Sugar cane and corn are the easiest inputs to process, while things like switchgrass and wood chips require energy intensive processing to break the cellulose down into sugars, making an already expensive and marginal enterprise totally uncompetative (it takes something like four units of energy to get three units of energy out of corn ethanol, so just imagine the ratio with cellulose). 

Sadly, alternatives like biodiesel from algae also requires lots of expensive processing (see the "No oil" thread), which explains why the US Navy ended up paying $16/gallon for biofuel (although the compay which produced the fuel also has links with the current Administration, so crony capitalism is a big factor as well).


----------



## Redeye (3 Jan 2012)

Kirkhill said:
			
		

> Redeye:
> 
> In Four Decades in the food industry, meeting, at a guess, over 10,000 people engaged in all aspects of the food industry, from feed lot and farm gate, through processor and distributor, and up to the board rooms of those evil Agribusinesses, in Europe, the US and Canada, I can honestly say that I have never met anyone, anywhere, that I felt was not committed to producing wholesome, healthy food.
> 
> ...



I don't ever recall saying that agribusiness is "evil". Because I didn't.

That said, industrial agriculture has produced food that in the long run is indeed less healthy for myriad reason. I have no issue with what you said based on your experience, it makes only perfect sense to me as a rational position anyone in the industry would make. It doesn't change the fact, however, that lobbyists have worked had to protect their ability to patent seeds, to keep things like rBST/BGH fed to dairy cattle (though it's illegal in Canada it's still done in the USA), to fill food with processed sugars etc. That isn't to say that anyone involved in the industry is manifestly evil, they're following the market imperative to make themselves the best returns they can. But we're getting into the weeds here. I will again emphatically suggest you check out The Omnivore's Dilemma. It's a really, really fascinating read.


----------



## Brad Sallows (3 Jan 2012)

There is also the oft overlooked point that industrial agricultural products are more healthy than starvation.


----------



## GAP (3 Jan 2012)

Brad Sallows said:
			
		

> There is also the oft overlooked point that industrial agricultural products are more healthy than starvation.



See!! there you go again dragging out useless, trivial truths when there is a whole industry worth billions, Billions, I say, that has a central theme of starving yourself until you reach an appropriate skeletal level..... ;D


----------



## Fishbone Jones (3 Jan 2012)

I know a little about this genetic stuff, from dealing with my clients.

Most genetic mods make the food the same. Colour, size, shape, etc. It doesn't do much to alter the nutritional value. Other than try make it taste better.

They do this because the Food Chain Supermarkets demand x number of 'tomatoes' per carton. All the same size, colour, and shape. They don't get it, they reject it.

I can show anyone that wants to come and look, tons of perfectly good tomatoes, that are put out onto fields because they don't meet supermarket specs.

They can't sell them elsewhere. They can't give them to foodbanks or anyone else, because the provincial health and food standards won't allow it.

The other mod that's made is in germanation. The fruit\ vegetable that is growing produces sterile seeds. This ensures that the supplier has return business, the producer has increased yield and the consumer gets the best value by getting the newest and 'bestest' thing on the market.


----------



## Redeye (3 Jan 2012)

Brad Sallows said:
			
		

> There is also the oft overlooked point that industrial agricultural products are more healthy than starvation.



The problem, in the long term, remains sustainability. To grow, for example, the massive amount of (heavily subsidized) corn that is produced in the US, massive monocultures have been set up that require huge amounts of inputs, mainly fossil fuel inputs. So, what happens when the price of oil soars and the supply finally dries up? That's the interesting issue. There's all sorts of other issues as well. In the book I referred to, there's a great contrast between monocultures and more "traditional" agriculture like the fascinating Polyface Farm in Virginia. The problem, of course, is that the explosion in industrial agriculture has basically allowed populations to grow to the extent that sustainable agriculture probably couldn't feed everyone. Especially not in the way we've become accustomed to eating.


----------



## Bruce Monkhouse (3 Jan 2012)

Are these the same heavily subsiduzed but broke farmers we're talking about here? ???


----------



## Redeye (3 Jan 2012)

Bruce Monkhouse said:
			
		

> Are these the same heavily subsiduzed but broke farmers we're talking about here? ???



Some interesting info on farm incomes - note sources of income:

http://www.ers.usda.gov/amberwaves/february05/findings/farmincomeless.htm

The subsidies paid to corn farmers seem to simply keep them above water, while most of them are dependent on other sources of income to make ends meet.

The book I've recommended anyone interested read talks a lot about how agricultural policy in the USA changed in the 1970s when the USA completely changed their farm income stabilization processes. It explains how that's impacted farmers' livelihoods and how it made corn such a business. It's fascinating, and has prompted me to get into a lot more reading on the subject.


----------



## a_majoor (4 Jan 2012)

Fiddling while Rome burns. I wonder what California is going to do once they run out of productive business and taxpayers?:

http://news.investors.com/Article/596620/201201031854/california-business-leaving-child-booster-law-arson.htm



> *The Great Golden State Business Exodus*
> 
> Posted 01/03/2012 06:54 PM ET
> States: California's in trouble. Businesses are leaving along with intellectual and investment capital and skilled workers. But rather than face up to serious problems, legislators pass silly laws.
> ...


----------



## a_majoor (11 Jan 2012)

Any wonder the US recovery is stalled? The 1937-38 capital strike was caused by overly intrusive regulation and taxation, expect the same response to the same conditions today:

http://www.humanevents.com/article.php?id=48741



> *EPA Fines Companies Because They Didn’t Use A Fuel That Doesn’t Exist*
> Gosh, it’s tough to figure out why that recovery is stalled.by John Hayward01/11/2012
> 
> The Orwellian nightmare of running a business in the shadow of the Obama Administration is nicely captured in this story from the New York Times, which explains why motor fuel companies are about to be fined $6.8 million for failure to use a biofuel that does not exist:
> ...


----------



## cupper (11 Jan 2012)

Interesting that nowhere in the article do they mention what the actual "biofuel" actually is.

Anyone want to take a guess as to what it is?


----------



## Kirkhill (11 Jan 2012)

cupper said:
			
		

> Interesting that nowhere in the article do they mention what the actual "biofuel" actually is.
> 
> Anyone want to take a guess as to what it is?





> the fuel, which is made from wood chips or the inedible parts of plants like corncobs



Cellulosic Ethanol



> a biofuel produced from wood, grasses, or the non-edible parts of plants



Not yet ready for prime time.


----------



## a_majoor (12 Jan 2012)

Falling demand  and underutilized capacity is dragging down wages everywhere, and the issues in the United States will affect us as well. London, Ontario is becoming ground zero for this as Caterpillar is offering a contract which essentially halves wages and benefits at the Electromotive plant. The alternative is the plant closes and the production moves to the US plant. What CAW and NDP supporters of the workers neglect to mention is that:

a. Locomotives can be manufactured anywhere, and
b. Caterpillar is beholden to its shareholders, not the CAW. Domestic politics may also be an issue, repatriating the Electromotive jobs to the US facility will provide some "goods news" to the US economy.

http://www.zerohedge.com/contributed/when-white-house-touts-falling-wages



> *When The White House Touts Falling Wages*
> Submitted by testosteronepit on 01/11/2012 21:34 -0500
> 
> Wolf Richter   www.testosteronepit.com
> ...


----------



## a_majoor (13 Jan 2012)

Maybe we should remind Apple Inc. that Canada's corporate tax rates are now among the lowest in the OECD:

http://www.tuaw.com/2012/01/11/most-of-apples-82-billion-cash-stockpile-is-trapped-overseas/



> *Most of Apple's $82 billion cash stockpile is 'trapped' overseas*
> 
> by Chris Rawson Jan 11th 2012 at 7:30PM
> 
> ...


----------



## a_majoor (21 Jan 2012)

One of the many and varied factors behind the Keystone XL cancellation:

http://www.freeenterprise.com/energy-environment/north-dakota-stuck-using-more-costly-railroads-move-oil



> *North Dakota Stuck Using More-Costly Railroads to Move Oil*
> by Sean Hackbarth
> Jan 20, 2012
> Facebook Twitter
> ...



And noted in Instapundit:



> And who has a big stake in Burlington Northern? A guy in Omaha named Buffett.
> 
> And by having TransCanada tie its Keystone XI to the border crossing approval you can’t get a segmented line from Montana to Port Arthur, TX that the Bakken field could tie into. That is the concept. A collector system named the BakkenLink runs down to Montana from ND and ties into Keystone XI (known as MarketLink). A twofer you might say.
> 
> So, in a way it is a Win-Win for Obama – He wins his Green base and his Crony Capitalism base. Pretty clever, eh?


----------



## cupper (21 Jan 2012)

Puh-leeze.

Nice leap of logic that the pipe line decision was a result of influence by Big Rail.  :Tin-Foil-Hat:

As I said before, the decision was made the day the obstructionists included the arbitrary deadline of February 2012, when they all knew that a new route required a new environmental evaluation, which would take months if not a year.

I go back to my previous post and say again wait for the "October surprise" when it will get preliminary approval.

The pipeline is not dead, and approval will eventually come through. But it will be done in a manner that follows all of the regulatory requirements, not some political expediency.


----------



## a_majoor (22 Jan 2012)

Or the Congress can force approval:

http://thehill.com/blogs/e2-wire/e2-wire/205579-report-congress-can-require-keystone-pipeline-approval



> *CRS report: Congress can require Keystone oil pipeline approval*
> By Ben Geman	 - 01/21/12 05:05 PM ET
> 
> Capitol Hill lawmakers probably have the Constitution at their back if they require a permit for the Keystone XL oil sands pipeline that President Obama rejected days ago, according to the nonpartisan Congressional Research Service.
> ...


_

The toxic process is certainly being influenced by everyone who feels they can benefit by the approval/disapproval of the pipeline, and numerous posters both here and in the blogosphere have noted the Administration is looking to win approval from their political supporters, and estimating which group(s) will provide more political and financial support based on the decision rendered.

Evidently, the "greens" and whatever crony capitalist support benefits from denying the pipeline seems to have more clout than the labour unions and small, medium and large business that would benefit from the go ahead, so you can expect this to be front and center during the campaign as both sides rally their supporters to the cause.

I perssonally tink this is a losing hand for the administration, since jobs and the economy are the clear issue among voters. Spending billions of taxpayer dollars on "green" energy companies without producing any visible jobs (or losing jobs with companies like Solyndra) and then blocking the direct and indirect jobs created by the pipeline is hardly a record to campaign on..._


----------



## a_majoor (23 Jan 2012)

A great series of papers from a symposium. Well worth the look (even from the initial skimming):

http://mercatus.org/publication/us-sovereign-debt-crisis-tipping-point-scenarios-and-crash-dynamics

How a Default Might Play Out

The Bond Market Wins

Courting an Avoidable Financial Crisis

How and Why a U.S. Sovereign Debt Crisis Could Occur

Some Possible Consequences of a U.S. Government Default


----------



## a_majoor (24 Jan 2012)

Inflation of some basics. This is probably hurting as much (or more) as the high unemployment:

http://cnsnews.com/news/article/under-obama-price-gas-has-jumped-83-percent-ground-beef-24-percent-bacon-22-percent



> *Under Obama, Price of Gas Has Jumped 83 Percent, Ground Beef 24 Percent, Bacon 22 Percent*
> By Christopher Goins
> January 20, 2012
> Subscribe to Christopher Goins's posts
> ...


----------



## cupper (25 Jan 2012)

Don't be blaming Obama for the rising WORLD price of oil. Blame the speculators in the market, the Gulf States and Saudis, and the Ethanol lobby.

And speaking of ethanol, you can blame the diversion of corn to produce ethanol for the rising price of food as well.


----------



## exabedtech (25 Jan 2012)

Obama has failed miserably at the one thing he claimed he could excel at - gaining consensus from opposing views.  His complete inability to manage pretty much anything has meant a lost opportunity to salvage something from the mess that is the US economy.  
Keystone is a nice little example of Obama politics...  Election is coming, 'dirty oil' is unpopular with many of his strongest supporters therefore pipeline decision needs to be delayed until after the election.  This despite the fact that the US desperately needs jobs, secure sources of oil and revenue.  Keystone offers all of this.
I did support this guy in the last election, but he has show a complete lack of either a strategic plan for his country or any ability to stick to one if it does exist.  
The US needs leadership desperately and currently seems to have none.  Looking at the republican lineup leads me to believe that their problems will be getting much worse before they get better.  If they get better at all.


----------



## GAP (25 Jan 2012)

I would like to think that most Republicans thought that the coming election would likely be a 2 for for Obama, so the only ones who ran were the B team, and it shows.....


----------



## Redeye (25 Jan 2012)

GAP said:
			
		

> I would like to think that most Republicans thought that the coming election would likely be a 2 for for Obama, so the only ones who ran were the B team, and it shows.....



That suggests a hidden "A Team" though, and I don't know that they really have one.


----------



## Brad Sallows (25 Jan 2012)

I think a fair number of people believe Christie or Ryan could win a presidential election.


----------



## GAP (25 Jan 2012)

We'll see who runs in 2016


----------



## a_majoor (25 Jan 2012)

cupper said:
			
		

> Don't be blaming Obama for the rising WORLD price of oil. Blame the speculators in the market, the Gulf States and Saudis, and the Ethanol lobby.
> 
> And speaking of ethanol, you can blame the diversion of corn to produce ethanol for the rising price of food as well.



Price information comes from the US Bureau of Labor Statistics.

Administration policy delaying or obstructing new sources of energy such as offshore drilling permits in the US Gulf of Mexico and the Keystone XL pipeline, or the closure of US refinineries due to increased regulatory burdens reduce additional supply to meet rising demand, driving up costs higher than they might otherwise be.

Ethanol subsidies and regulatory requirments to add ethanol to gasoline are also government policy supported by this administration, and direct subsidies only ended this year after action by the Congress.

So yes, you can blame Obama.


----------



## Redeye (26 Jan 2012)

US production and refining capacity is far to small to actually impact world prices significantly. Quite a while back I posted a link to a study showing that if all the known resources were brought online and into full production immediately (which is, notably, impossible), the impact on the global price of oil would be more or less negligible. So, no. We can't really blame Obama.

I'd go looking for the study again, but I know you won't read it anyhow.



			
				Thucydides said:
			
		

> Price information comes from the US Bureau of Labor Statistics.
> 
> Administration policy delaying or obstructing new sources of energy such as offshore drilling permits in the US Gulf of Mexico and the Keystone XL pipeline, or the closure of US refinineries due to increased regulatory burdens reduce additional supply to meet rising demand, driving up costs higher than they might otherwise be.
> 
> ...


----------



## Fishbone Jones (26 Jan 2012)

Redeye said:
			
		

> US production and refining capacity is far to small to actually impact world prices significantly. Quite a while back I posted a link to a study showing that if all the known resources were brought online and into full production immediately (which is, notably, impossible), the impact on the global price of oil would be more or less negligible. So, no. We can't really blame Obama.
> 
> I'd go looking for the study again, but I know you won't read it anyhow.



Watch your tone.

Milnet.ca Staff


----------



## tomahawk6 (26 Jan 2012)

The US has been a net exporter of gasoline in 2011.


----------



## Rifleman62 (26 Jan 2012)

A considerable amount to Canada, particularly Eastern Canada. Canadian Oil from Newfoundland/Labrador is refined in Houston TX, and shipped back to Canada.


----------



## GAP (26 Jan 2012)

Rifleman62 said:
			
		

> A considerable amount to Canada, particularly Eastern Canada. Canadian Oil from Newfoundland/Labrador is refined in Houston TX, and shipped back to Canada.



I thought the east coast had a refinery.....ComebyChance springs to mind.....


----------



## a_majoor (26 Jan 2012)

WRT capacity and price issues, there is an article posted upthread on how oil prices tumbled in very short order after President Bush signed an executive order allowing new drilling. *The market reacted to information far ahead of any possible oil production created by the permits*. 

World markets are now aware of the huge new discoveries in the United States, but are also aware of the administrations obstructions to development of thee resources.  Since the existing supply is all that is in play right now, any obstructions limiting supply create negative market signals which are also acted upon. 

WRT the newfoundland refinery, I believe there was a clause on the sale that it could only be used for local consumption (Newfoundland and Labrador) and excess production was for export. I am dubious about the legality of that clause, but someone with more background in law might expand on this.


----------



## larry Strong (26 Jan 2012)

> However, when Petro Canada sold the refinery, it stipulated that neither Newfoundland Energy nor any subsequent buyer could sell any product it refined at Come By Chance to the Canadian market – with the exception of Newfoundland and Labrador. As a result, the refinery exports up to 90 per cent of its production, primarily to the United States, and sells the remaining 10 per cent in Newfoundland and Labrador.



http://www.heritage.nf.ca/law/comebychance.html


----------



## cupper (26 Jan 2012)

As I pointed out in the election forum, the death of the Keystone Pipeline has little effect on the current movement of Tar Sands oil into US markets. There are plenty of other options available, including tankers from Richmond BC, the huge network of pipelines currently shipping oil to the US, and as I also pointed out, one company has applied for a permit to reverse the flow of a line coming into Ontario.

Keystone is essentially a non-issue when it comes to the state of the US Economy. The estimated number of jobs it will create were inflated. The oil is still getting to the markets, and the stock markets had little reaction to the so called decision to "kill" it.


----------



## Redeye (26 Jan 2012)

GAP said:
			
		

> I thought the east coast had a refinery.....ComebyChance springs to mind.....



There are refineries in Saint John (Irving) and Dartmouth (Esso). The oil refined there is imported from various places, including Venezuela and the Middle East. As I understand it, it's cheaper bringing oil by supertankers in to those refineries than overland from the West. The Come-By-Chance Refinery is owned by the Korea National Oil Company currently, having changed hands repeatedly.

The Maritimes also gets oil from the Ultramar/Valero Refinery at Levis, Quebec, I think most of it is shipped by barge as Ultramar has a fuel dock in Eastern Passage.


----------



## exabedtech (26 Jan 2012)

cupper said:
			
		

> As I pointed out in the election forum, the death of the Keystone Pipeline has little effect on the current movement of Tar Sands oil into US markets. There are plenty of other options available, including tankers from Richmond BC, the huge network of pipelines currently shipping oil to the US, and as I also pointed out, one company has applied for a permit to reverse the flow of a line coming into Ontario.
> 
> Keystone is essentially a non-issue when it comes to the state of the US Economy. The estimated number of jobs it will create were inflated. The oil is still getting to the markets, and the stock markets had little reaction to the so called decision to "kill" it.



I would argue that it is a HUGE issue.  Of course there are existing pipelines, but nowhere near what is needed to get the expected increases in capacity to market.  

http://news.nationalpost.com/2011/11/22/oil-sands-output-to-triple-by-2035-report/

When you couple our almost daily increases in production with the Mexican's almost daily drops in production, it becomes clear that if the US intends to continue consuming oil in the manner to which they are accustomed, then they will need more and more Canadian oil.  Not to get all 'peak oil', but the fact of the matter is that many of the worlds conventional oil fields are in decline.  This includes the major conventional fields in Canada, US and Mexico that the current pipeline network was mostly built to support.

Keystone isn't an answer to getting our commodity to market.  Its only an incremental step.  We have the 3rd largest reserves of oil on the planet, yet place 6th in production.  AEUB data shows that the oilsands produced 1.126m b/d in 2006 and predicts 3m b/d by 2020, 5m b/d by 2030. 

As Mexico becomes less able to maintain their output, Canada can fill the void, but only if we can get it to market.  Just my  :2c: 
As much as we need Keystone, we also need increased refining capacity and better access to Asia.  I don't think there is any question this pipeline and others will be built, just not in an election year.


----------



## a_majoor (29 Jan 2012)

A sad, sad comparison. Numbers always tell the real story:

http://blog.american.com/2012/01/is-it-unfair-to-compare-the-obama-and-reagan-economic-recoveries-no/



> *Is it unfair to compare the Obama and Reagan economic recoveries? No*
> By James Pethokoukis
> 
> January 28, 2012, 9:11 am
> ...


----------



## GAP (29 Jan 2012)

In the State of the Union Address by Obama I remember one spot as I flipped through the rhetoric to something  like Jeopardy, about him wanting to set up a homebuyer/mortgage program.

 The upshot I got in the few minutes I listened was that he would set up to refinance at a low rate, all these high value mortgages for a small fee, minimal paperwork. I didn't catch who would do it, but I assume it would be Fanny Mae/Freddy Mac.

I remember him making the comment that this would allow the banks to get their finances in order.


----------



## ModlrMike (29 Jan 2012)

GAP said:
			
		

> I didn't catch who would do it, but I assume it would be Fanny Mae/Freddy Mac.



In other words, the fox will once again be in charge of the hen house.


----------



## Fishbone Jones (29 Jan 2012)

As I've said before. Instead of giving this money directly to the mortgage companies and banks, they should give it to the homeowners.

The homeowners pay off their mortgage, have their home clear, and the mortgage companies and banks end up with the money again, but without the interest and hold on the homeowner.

Except for the set up and operation of a monster program like this, it would cost the government and taxpayer way less in the long run and without destituting half the population.

I don't proffess to understand high finance and the politics that go with it, but that's my Joe Sixpack view on it.


----------



## Redeye (29 Jan 2012)

recceguy said:
			
		

> As I've said before. Instead of giving this money directly to the mortgage companies and banks, they should give it to the homeowners.
> 
> The homeowners pay off their mortgage, have their home clear, and the mortgage companies and banks end up with the money again, but without the interest and hold on the homeowner.
> 
> ...



You hit it right when you mentioned "monster" program. But It's hard to argue the idea, because the current mess is causing massive distortions that will also have terrible long run impact. But it's worth trying to figure out how it could work. I was thinking about such an idea not long ago. You'd need to start, I think, by coming up with a a reasonable assessment of values based on current market conditions in each area, and set about a mortgage restructure around those values to allow people to keep their homes. The lenders should be forced to eat their losses, as they were the ones who made the loans to begin with,  They're going to take hits anyhow, because in non-recourse states they can only get back whatever the collateral brings.

It'd be almost impossible to actually execute, but essentially a reset of the housing market followed by a complete restructure of how mortgage markets in the US works with strong regulations (ours are a good start) is probably, as you suggest, cheaper in the long run.


----------



## Fishbone Jones (29 Jan 2012)

The world is about to end.

That's at least three times we've agreed recently


----------



## Brad Sallows (29 Jan 2012)

Does this mean the US government is going to remove all of its pressure on lending institutions to make risky loans priced below what the risk demands?  I doubt it.  It takes a special kind of asshole to start a witch hunt against people for following rules his administration enforces.


----------



## a_majoor (29 Jan 2012)

Like the holders of Greek bonds, mortgage lenders will have to take a haircut. Home valuation is estimated to be anywhere from 15 to 25% above the "real" market value, depending on where you are.

The sad thing is many of the mortgage lenders would not have gotten into that situation without a series of perverse government incentives (some dating back to the Carter Administration), so they and their investors will take that haircut without recourse.


----------



## tomahawk6 (30 Jan 2012)

The mortgage lenders have some serious problems ahead,fraud is the big one. Shell company the industry has used to "create assignments" and not recording assignments of notes and mortgages as they go from the originating bank to the investment trust creating a chain of faulty title.When a loan defaults the bank is forced to recreate documents[fraud] so that they can foreclose.One big mess and we are only seeing the tip.


----------



## a_majoor (30 Jan 2012)

Some good news in the US. There _are_ pockets of economic growth and recovery, and they all share a common factor:

http://pjmedia.com/blog/gop-states-saved-economy-in-2011/?print=1



> *GOP-Governed and Right-To-Work States Saved the Economy’s Bacon in 2011*
> 
> Posted By Tom Blumer On January 30, 2012 @ 12:07 am In Column,economy,Politics,US News | 39 Comments
> 
> ...


----------



## cupper (30 Jan 2012)

The latest bombshell today:

Freddy and Fanny were hedging their questionable mortgages with credit default swaps.

In other words, beting against the same mortgages that they were backing.

How soon before we see a 2012 version of Mary Shelly's Frankenstein?


----------



## a_majoor (31 Jan 2012)

"Unexpectedly!"

http://www.reuters.com/article/2012/01/31/us-usa-economy-idUSTRE7BM0AB20120131



> *Home prices drop, consumers turn gloomier*
> 
> By Leah Schnurr
> 
> ...


----------



## a_majoor (2 Feb 2012)

More bad news on the job front. This _should_ be a major issue in the upcoming elections (rather than class warfare rhetoric), but I suspect it won't receive the coverage that it should:

http://www.zerohedge.com/news/art-cashin-explains-why-several-hundred-thousand-jobs-are-about-vaporize



> *Art Cashin Explains Why Several Hundred Thousand Jobs Are About To "Vaporize"*
> Submitted by Tyler Durden on 01/31/2012 11:05 -0500
> 
> Art Cashin BLS Bureau of Labor Statistics MF Global
> ...


----------



## a_majoor (4 Feb 2012)

Well now we know how the unemployment number is dropping (Remember U3 is actually 11%):

http://www.zerohedge.com/news/record-12-million-people-fall-out-labor-force-one-month-labor-force-participation-rate-tumbles-



> *Record 1.2 Million People Fall Out Of Labor Force In One Month, Labor Force Participation Rate Tumbles To Fresh 30 Year Low*
> Submitted by Tyler Durden on 02/03/2012 08:51 -0500
> 
> BLS Bureau of Labor Statistics Unemployment Withholding taxes
> ...


----------



## Nemo888 (7 Feb 2012)

This time I am in complete agreement with you regarding the statistical shenanigans Thucydides. It gets even worse IMO. The number of US jobs has technically grown  by 2.5 million from Sept 2010 to Jan 2012.  The Treasury was depending on increased tax revues from new jobs to meet expenses. But the strange thing is revenue from income taxes is down by 1.5%. So good paying jobs are still disappearing at an alarming rate and they are rapidly being replaced by crap. 
This while posting a GDP growth rate of 2.8% in 2010 and 1.8%(??) in 2011. WTF?


So if the old average American salary of 26k was not competitive enough what are we going to sell these paupers?


----------



## cupper (7 Feb 2012)

Nemo888 said:
			
		

> But the strange thing is revenue from income taxes is down by 1.5%. So good paying jobs are still disappearing at an alarming rate and they are rapidly being replaced by crap.



Many companies saw the opportunity to reduce the deadwood from their employment rolls, or just downsize overall using the excuse of the economic downturn. As a result, when it came time for them to ramp up again, they could move younger employees up and replace them with entry level positions.

OR

They used the savings from reduced payroll to invest in improved production equipment to make the existing workforce more productive.

Thus the diminished return of tax revenues, even though the GDP has increased.


----------



## a_majoor (8 Feb 2012)

Wow, more good news just when we need it [/sarc]. We will live in interesting times:

http://www.nationalreview.com/exchequer/290140/armageddon-strip-mall



> *Armageddon at the Strip Mall*
> 
> By Kevin D. Williamson
> February 4, 2012 4:00 A.M. Comments 26
> ...


----------



## GAP (14 Feb 2012)

The Geography of Government Benefits
The share of Americans’ income that comes from government benefit programs, like Medicare, Medicaid and Social Security, more than doubled over the last four decades, rising from 8 percent in 1969 to 18 percent in 2009.

http://www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?ref=us


----------



## a_majoor (18 Feb 2012)

The Economist on US regulation:

http://www.economist.com/node/21547789



> *Over-regulated America*
> The home of laissez-faire is being suffocated by excessive and badly written regulation
> 
> Feb 18th 2012 | from the print edition
> ...


----------



## larry Strong (19 Feb 2012)

U.S. gas prices, already high, set to hit spring record

Read more: http://www.ctv.ca/CTVNews/TopStories/20120219/united-states-gas-prices-120219/#ixzz1mqBtctDK

Shared in accordance with the "fair dealing" provisions, Section 29, of the Copyright Act.



> NEW YORK — Gasoline prices have never been higher this time of the year in the U.S.
> 
> At $3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April.
> 
> ...


----------



## cupper (19 Feb 2012)

Anybody know what the difference between winter and summer blend is, and why we need two different blends?


----------



## muskrat89 (19 Feb 2012)

Summer blend contributes less to smog.

http://www.theoildrum.com/story/2006/9/13/234043/431

http://blog.gasbuddy.com/posts/Winter-blend-gasoline-rolling-out-drops-in-MPG-possible/1715-422955-413.aspx

http://ask.cars.com/2009/02/whats-the-difference-between-summerblend-gasoline-and-winterblend-gasoline-does-it-affect-my-cars-pe.html


----------



## a_majoor (21 Feb 2012)

More on US employment. The long term unemployed will be a drag on the system for a long time to come; their work skills will have atrophied or become obsolete, and of course their income will probably be much lower starting in new jobs if/when the economy recovers. Wealth creation shold be the overarching goal of any government, since it drives everything else:

http://blog.independent.org/2012/02/19/private-employment-has-recouped-only-three-eighths-of-its-recent-loss/



> *Private Employment Has Recouped Only Three-Eighths of Its Recent Loss*
> By Robert Higgs | Sunday February 19, 2012 at 8:45 PM PST
> 
> As the most widely reported rate of unemployment (U-3) has fallen in recent months, people with a political agenda served by painting a rosy picture of the recovery have made considerable noise about this decrease. Their political opponents have responded that one reason for the decline is that the labor force has fallen as more people have given up looking for work, some of them going into retirement sooner than they would have if the labor market had been more robust.
> ...


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## a_majoor (24 Feb 2012)

Curves of death. The one graph that says it all:


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## GAP (24 Feb 2012)

Thucydides said:
			
		

> More on US employment. The long term unemployed will be a drag on the system for a long time to come; their work skills will have atrophied or become obsolete, and of course their income will probably be much lower starting in new jobs if/when the economy recovers. Wealth creation shold be the overarching goal of any government, since it drives everything else:
> 
> http://blog.independent.org/2012/02/19/private-employment-has-recouped-only-three-eighths-of-its-recent-loss/



The chart shown in your post indicates that it takes 18 - 24 months for an employment recovery to start after a recession...


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## a_majoor (24 Feb 2012)

2008 was four years ago...


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## GAP (24 Feb 2012)

post partum depression.....


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## a_majoor (27 Feb 2012)

Actually a spike in US gas prices that shuts down consumer spending or any sort of upset in the Eurozone could set the US economy reeling and depress tax receipts to the point that the debt ceiling could lower on them by the end of summer. Another "black swan" could be a Capital Strike as business simply shuts down new hires, investments and expansion plans in response to escalating energy prices, coupled to ongoing uncertainty over taxes and regulations. That would certainly change the "narrative" for econmists and the political parties, especially as the election campaign will be in high gear by that point. A credit downgrade at that point would probably kill the Obama administration:

http://news.investors.com/article/602351/201202270822/national-debt-ceiling-congress-obama.htm



> *Debt ceiling limit looms months sooner than expected, during fall campaign*
> 
> Remember that major political struggle last summer over raising the nation's debt ceiling? How President Obama said Congress simply had to do it, even though he voted against a similar maneuver during his brief Senate stay?
> 
> ...


----------



## GAP (3 Mar 2012)

The latest in bulk buying? Houses
Reuters  Mar 1, 2012
Article Link

By Michelle Conlin

When Vena Jones-Cox entered the foyer of the once-grand Colonial-style home in downtown Columbus, Ohio, she stepped onto a wood floor that was so moldy and mushy that it actually wiggled. As Cox proceeded down the basement stairs, they disappeared from underneath her.

“I found myself lying on the floor,” says Jones-Cox, 45. “Staring at a dead rat, by the way.”

The house tour from hell didn’t stop her from making an offer on the place. While she was at it, she bid on some other houses, too. Forty nine houses, actually.

She’s paying $3,000 for each, a bit more than the cost of an Apple Mac Pro. “We’re at a bottom,” says Jones-Cox. “I mean, where else is there to go but up?”

As the greatest real-estate fire sale in the history of the United States rages on, the bulk buy is the dead hot deal of the moment. In some of the most foreclosure-ravaged parts of the country, it is almost as if the housing market has become the new big box store, with investors wiping out whole shelves at a time.

The idea is to arbitrage other people’s misery. With the ranks of the rental class expected to swell, investors can buy houses at clearance sale prices, pour some money into repairs and then take advantage of the difference between their low cost of capital and the rent they receive. Often, they bank cash from day one.

Hedge funds and private equity shops like McKinley Capital Partners started to quietly become landlords by buying up inventory last year. Now Main Street investors are following suit.

“They aren’t just buying one rental property,” says Oak Park, Illinois realtor Kyra Pych. “This is a frenzy. They are loading up.”

Pych has five clients who are in the process of buying more than one condo in Forest Park. Illinois. Units that sold for $180,000 during the boom are now going for as little as $13,500. So instead of putting that money into a retirement account, her customers are putting the cash into homes and renting them out.

In Detroit, the Midwest’s aspiring Donald Trumps are buying bungalows for $500 each. In Atlanta, a group of Florida investors are in the process of buying the remaining 322 units in downtown Atlanta’s swank, Art Deco Atlantic Residences, with room service and maids, near Atlantic Station. The prices start at $180,000.

In California, Waypoint Homes, which has already purchased 1,000 single-family homes, got $250 million in funding in January from Menlo Park private equity firm GI Partners for more bulk buys.

“The floodgates are starting to open,” says John Burns, the founder of Irvine, California-based John Burns Real Estate Consulting. “There’s billions of dollars of capital, of my clients alone, (looking) to invest in single-family rentals.”

GETTING EASIER TO BUY

Up to now, the business of buying foreclosed homes was often an old-fashioned affair. They were usually one off deals, and often involved an auction on the courthouse steps.

But the recent news of Fannie Mae’s pilot auction of a bulk sale of 2,500 homes was a signal to many housing experts that bulk buying is about to undergo a quantum change. The coming auctions will not only put mammoth amounts of inventory up for bid; they will also streamline and automate current procedures.

Amherst Securities managing director Laurie Goodman, a major housing bear who expects further declines in home prices, believes such bulk sales are the key to cleaning out the foreclosure pipeline before any kind of housing recovery gains traction.

It is not hard to see why U.S. housing is turning into the new value asset class of the moment. In an analysis of the 325 major metropolitan real estate markets across the globe, the U.S. was home to the top 24 most affordable markets, according to Demographia’s 2012 International Housing Affordability Survey.

No one can argue with the landlord’s seductive math. There are bank accounts and bonds and annuities with their less-than-one-percent returns, and then, west of Boca Raton, there’s the string of newly-renovated two-bedrooms overlooking the golf course, pool and cabana, along with all the people who have been foreclosed on who are now looking to rent.

For $19,000 in cash, investors can pocket $300 a month, after taxes and homeowner association dues, on each, a 19 percent annual return that compares to the zombie yields from most savings accounts.
Advertisement

In Charlotte, North Carolina, Cheryl and Bob Littlefield, who have five children, are already making the bulk buy work.

Two years ago, the Littlefields inherited $200,000. They considered all of their investment options. Like a lot of people, they found the stock market to be a scary, bi-polar nerve frayer. Bonds and bank accounts offered nothing.

Then there was the lovely little house for $16,000. After putting in a few grand, they cleared $600 a month, after taxes. It went so well they bought another house. And then another. Now they own eight and are in the midst of exploring financing to do a bulk deal for several more.

“I know houses, I don’t know stocks,” says Cheryl Littlefield, who estimates rental income covers 40 percent of the family’s expenses, the rest being covered by her husband’s work as a contractor. “I don’t know what to do if something goes wrong with Exxon Mobil. I know what to do if something goes wrong with a house.”

CAN’T BUY, BETTER RENT

The cruel irony known to every aspiring homeowner is that there has never been a better time to buy a house. It is cheaper to own – based on the monthly payments at the current interest rates of under four percent – than it is to rent in just about every market across the United States. In Phoenix, for example, it is 21 percent cheaper to own than it is to rent. In Minneapolis, it is 28 percent, according to Burns.

But most who aspire to the property ladder are shut out of the homebuying opportunity. They have no access to credit. They are crushed by record-levels of student debt. A greater share than ever of their paycheck is already going to housing costs, according to Harvard University’s Joint Center for Housing Studies.

That’s where bulk buying comes in to play.
More on link


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## a_majoor (5 Mar 2012)

This isn't going to be good:





> Biggest drop in factory orders, shipments in more than a year
> POSTED AT 11:35 AM ON MARCH 5, 2012 BY ED MORRISSEY
> 
> 
> ...



Notice the last paragraph. This is essentially describing a Capital Strike similar to the conditions in 1937-38 (the worst years of the depression), and for the same reasons: uncertainty caused by ever shifting and unclear government regulations and tax laws. Of course no one will make long term commitments in these conditions, especially if your investment could be wiped out due to capricious government intervention or simply favouritism towards a better connected government crony. In this light, the banking of capital by US busines is the only rational decision, and companies like Apple Inc. that have tens of billions of dollars offshore will not risk that cash by bringing it back to the United States.


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## a_majoor (8 Mar 2012)

Clearing out the regulatory thickets will probably have an impressive effect on the US economy (or ours, for that matter):

http://www.theatlantic.com/politics/archive/2012/03/its-time-to-clean-house/253921/



> *It's Time to Clean House*
> By Philip K. Howard
> 
> America is basically run by dead people: We elect new representatives, but continue on with policy from decades ago. To go forward, Congress needs to confront the past.
> ...


----------



## Brad Sallows (8 Mar 2012)

It is somewhat ironic that the people so much in favour of a "living constitution" don't seem to be able to breathe much life into stale legislation.


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## a_majoor (9 Mar 2012)

This is interesting for several reasons. First off, the Senators involved recognize that any political program needs to be done in a short time frame (i.e. five years) otherwise it will be overtaken by events. Secondly, it is focused on spending cuts; and rightly so. The insane increases in spending (5 trillion dollars added to the debt in just three years) can only be addressed through steep spending cuts. Lastly, it is a lesson for us, especially Ontarians. Mike Harris needed to make cuts totalling 3.9% to stabilize the economy and restart economic growth and balance the budgets in the 1990's. Dalton McGuinty has created such a mess that the Drummond report calls for cuts of 17%. Since Mr McGuinty seems set to ignore the report, the next Premier may have to start contemplating cuts on the order of 25% to reign in out of control deficits and tackle a debt load approaching 50% of Ontario's GDP at that point.

Given the US situation is far graver (debt is approaching the 100% of GDP mark, and unfunded liabilities for entitlements, pension and the like are in the hundreds of trillions of dollars range), either bold action needs to be taken very soon to make a controlled drawdown, or the equilibrium will be upset (most likely by an outside agency like the EU economic crisis or war in the Middle East; don't forget the "unknown unknowns" as well) triggering all kinds of negative economic, social and political consequences.

http://thehill.com/homenews/senate/215023-tea-party-senators-unveil-five-year-plan-to-balance-budget-reform-social-security-and-medicare



> *Tea Party senators unveil five-year plan to balance the budget*
> By Alexander Bolton - 03/08/12 02:16 PM ET
> 
> Members of the Senate Tea Party Caucus on Thursday announed a plan to balance the budget in five years, cutting spending by nearly $11 trillion compared to President Obama’s budget.
> ...



Note too the pension reform proposals and the use of block grants. Apparently Prime Minister Harper isn't the only one who sees the utility of these approaches. I am dubious on the projected surplus, especially since the so called "trust funds" for Social Security and Medicare are heading into negative balance starting in the projected time frame, but perhaps the Senators will re submit the proposals after November and redo the calculations based on a Jan 2013 start time.


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## cupper (9 Mar 2012)

Thucydides said:
			
		

> This is interesting for several reasons. First off, the Senators involved recognize that any political program needs to be done in a short time frame (i.e. five years) otherwise it will be overtaken by events. Secondly, it is focused on spending cuts; and rightly so. The insane increases in spending (5 trillion dollars added to the debt in just three years) can only be addressed through steep spending cuts. Lastly, it is a lesson for us, especially Ontarians. Mike Harris needed to make cuts totalling 3.9% to stabilize the economy and restart economic growth and balance the budgets in the 1990's. Dalton McGuinty has created such a mess that the Drummond report calls for cuts of 17%. Since Mr McGuinty seems set to ignore the report, the next Premier may have to start contemplating cuts on the order of 25% to reign in out of control deficits and tackle a debt load approaching 50% of Ontario's GDP at that point.
> 
> Given the US situation is far graver (debt is approaching the 100% of GDP mark, and unfunded liabilities for entitlements, pension and the like are in the hundreds of trillions of dollars range), either bold action needs to be taken very soon to make a controlled drawdown, or the equilibrium will be upset (most likely by an outside agency like the EU economic crisis or war in the Middle East; don't forget the "unknown unknowns" as well) triggering all kinds of negative economic, social and political consequences.
> 
> ...



I don't know. Sounds more lik socialism than what Obama is accused of doing. :stirpot:


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## a_majoor (10 Mar 2012)

cupper said:
			
		

> I don't know. Sounds more lik socialism than what Obama is accused of doing. :stirpot:



You're a funny guy cupper, I'll kill you last


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## cupper (10 Mar 2012)

Thucydides said:
			
		

> You're a funny guy cupper, I'll kill you last



Thanks Man. I feel honoured. ;D


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## a_majoor (13 Mar 2012)

Deciphering the US economy is becoming an exercise in Kremliology. The Administration and Legacy Media are spining stats like crazy, but the ground truth is not matching up. In an election year, people will start questioning why they and their neighbours are not particiating in this "recovery summer" (or the last two ones before), which may do more to sink both the Administration and the Legacy media than anything else. People will react pretty badly once they wake up and realize they were had:

http://online.wsj.com/article/SB10001424052702304537904577275261466314018.html



> *Something about the U.S. economy isn’t adding up.*
> 
> At 8.3%, the unemployment rate has fallen 0.7 percentage point from a year earlier and is down 1.7 percentage points from a peak of 10% in October 2009. Many other measures of the job market are improving. Companies have expanded payrolls by more than 200,000 a month for the past three months, according to Labor Department data. And the number of people filing claims for government unemployment benefits has fallen.
> 
> ...



The true answer is an entir ecadre of unemployed people (discouraged and not looking for work anymore) are not being reported (U3 is at about 11%); and the involuntarily underemployed are also not reported (U6 being 14%). By misreporting the labour participation rate, the Administration can make the false claim that unemployment is 8.3%.


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## a_majoor (17 Mar 2012)

"This American Life" host caught attacking the most successful American company in history. I think the more interesting story will be to track down the motivation behind this. 1% envy? Building the class warfare "narrative"? Following the Administration's attack on big business "narrative"? 

Watch for the Legacy media to be all over this one [/sarc]

http://news.yahoo.com/blogs/lookout/american-life-retracts-apple-episode-says-daisey-fabricated-175638428.html



> *This American Life retracts Apple episode, says Daisey fabricated parts*
> By Liz Goodwin | The Lookout – 18 hrs ago
> 
> Daisey (MikeDaisey.blogspot.com)The public radio show This American Life has retracted an entire storyline told by comedian and self-described Apple fanboy Mike Daisey that aired in early January after Daisey's translator said he made up significant details of the tale.
> ...


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## cupper (17 Mar 2012)

Thucydides said:
			
		

> "This American Life" host caught attacking the most successful American company in history. I think the more interesting story will be to track down the motivation behind this. 1% envy? Building the class warfare "narrative"? Following the Administration's attack on big business "narrative"?
> 
> Watch for the Legacy media to be all over this one [/sarc]
> 
> http://news.yahoo.com/blogs/lookout/american-life-retracts-apple-episode-says-daisey-fabricated-175638428.html



Here is a link to the retraction show.

http://www.thisamericanlife.org/radio-archives/episode/460/retraction

What get's lost in your article is the facts of what Apple and FoxConn are accused of, are in fact true. They have been independantly documented by other jounalists, Apples own audits, and other sources.

What was not true was Mike Daisey's own story. None of it ever happened. He based it all on things he's heard and read, not on his own personal experience.

It's just like every other hoax, it all starts with a grain of truth.


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## Brad Sallows (18 Mar 2012)

How refreshing it would be if everyone in media and publicity would stick to the grain of truth.  Exaggeration and lies in the service of belief, however, knows no ideological boundaries.  I'm sure there are many more fake-and-not-even-particularly-accurate stories yet to be told, irrespective of how much the damage they do outweighs the supposed good of the narrative they purport to uphold.


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## Rifleman62 (18 Mar 2012)

cupper: 





> It's just like every other hoax, it all starts with a grain of truth.




.....like Obama's mother was born in Kansas.


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## cupper (18 Mar 2012)

Rifleman62 said:
			
		

> cupper:
> 
> .....like Obama's mother was born in Kansas.



 :facepalm:


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## Rifleman62 (18 Mar 2012)

Joke.


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## cupper (18 Mar 2012)

Rifleman62 said:
			
		

> Joke.



The world would be a better place if everyone thought that it was a joke. :nod:


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## Rifleman62 (18 Mar 2012)

Obama is a joke, and the world knows it. With the exception of several million (out of several billion) left wing ideologists.


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## cupper (18 Mar 2012)

Rifleman62 said:
			
		

> Obama is a joke, and the world knows it. With the exception of several million (out of several billion) left wing ideologists.



Again:  :facepalm:


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## GAP (23 Mar 2012)

If you think their economy is bad....this kinda drives it home......

I Was a Warehouse Wage Slave
My brief, backbreaking, rage-inducing, low-paying, dildo-packing time inside the online-shipping machine.
—By Mac McClelland March/April 2012
Article Link

"Don't take anything that happens to you there personally," the woman at the local chamber of commerce says when I tell her that tomorrow I start working at Amalgamated Product Giant Shipping Worldwide Inc. She winks at me. I stare at her for a second.

"What?" I ask. "Why, is somebody going to be mean to me or something?"

She smiles. "Oh, yeah." This town somewhere west of the Mississippi is not big; everyone knows someone or is someone who's worked for Amalgamated. "But look at it from their perspective. They need you to work as fast as possible to push out as much as they can as fast as they can. So they're gonna give you goals, and then you know what? If you make those goals, they're gonna increase the goals. But they'll be yelling at you all the time. It's like the military. They have to break you down so they can turn you into what they want you to be. So they're going to tell you, 'You're not good enough, you're not good enough, you're not good enough,' to make you work harder. Don't say, 'This is the best I can do.' Say, 'I'll try,' even if you know you can't do it. Because if you say, 'This is the best I can do,' they'll let you go. They hire and fire constantly, every day. You'll see people dropping all around you. But don't take it personally and break down or start crying when they yell at you."

Several months prior, I'd reported on an Ohio warehouse where workers shipped products for online retailers under conditions that were surprisingly demoralizing and dehumanizing, even to someone who's spent a lot of time working in warehouses, which I have. And then my editors sat me down. "We want you to go work for Amalgamated Product Giant Shipping Worldwide Inc.," they said. I'd have to give my real name and job history when I applied, and I couldn't lie if asked for any specifics. (I wasn't.) But I'd smudge identifying details of people and the company itself. Anyway, to do otherwise might give people the impression that these conditions apply only to one warehouse or one company. Which they don't.

So I fretted about whether I'd have to abort the application process, like if someone asked me why I wanted the job. But no one did. And though I was kind of excited to trot out my warehouse experience, mainly all I needed to get hired was to confirm 20 or 30 times that I had not been to prison.

The application process took place at a staffing office in a run-down city, the kind where there are boarded-up businesses and broken windows downtown and billboards advertising things like "Foreclosure Fridays!" at a local law firm. Six or seven other people apply for jobs along with me. We answer questions at computers grouped in several stations. Have I ever been to prison? the system asks. No? Well, but have I ever been to prison for assault? Burglary? A felony? A misdemeanor? Raping someone? Murdering anybody? Am I sure? There's no point in lying, the computer warns me, because criminal-background checks are run on employees. Additionally, I have to confirm at the next computer station that I can read, by taking a multiple-choice test in which I'm given pictures of several album covers, including Michael Jackson's Thriller, and asked what the name of the Michael Jackson album is. At yet another set of computers I'm asked about my work history and character. How do I feel about dangerous activities? Would I say I'm not really into them? Or really into them?
More on link


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## a_majoor (23 Mar 2012)

Setting the stage as far back as 2008. (Frédéric Bastiat would understand):

http://pjmedia.com/blog/obamas-broken-window-company/?print=1



> *Obama’s Broken Window Company — And His Larger, More Serious Damage*
> 
> Posted By Tom Blumer On March 21, 2012 @ 12:02 am In "Green" tech,economy,Elections 2012,Money,Science & Technology,US News | 40 Comments
> 
> ...


----------



## larry Strong (23 Mar 2012)

GAP said:
			
		

> If you think their economy is bad....this kinda drives it home......
> 
> I Was a Warehouse Wage Slave



Just read the article......Holy crap Batman  Good thing I have a pretty slack, obscenely well paid job now.......


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## a_majoor (27 Mar 2012)

What a huge range of budget proposals. The Administration budget would lock in trillion dollar deficits for years to come. The Ryan budget takes several decades to unwind spending, while this budget suggests it can be done in as little as five years. (Of course the Democrat controlled "do nothing" Senate has neither proposed nor passed a budget of any sort in over 1000 days, so would be budgeters may have to reset their starting conditions to 20 Jan 2013):

http://pjmedia.com/blog/conservative-caucus-we-can-balance-budget-in-five-years/?print=1



> *Conservative Caucus: We Can Balance Budget in Five Years*
> 
> Posted By Bridget Johnson On March 27, 2012 @ 4:00 am In Politics | 20 Comments
> 
> ...


----------



## cupper (27 Mar 2012)

Hell, anyone can balance the budget in any given amount of time. Simple concept, Money going out = Money coming in. Can't cover the expenses, cut them or raise taxes.

But don't expect to be able to sell it to anyone.


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## a_majoor (27 Mar 2012)

I think enough American voters have taken heed that some drastic measures can be taken.

Don't forget the Liberal Government was on a similar merry tax and spend binge back in the early 1990's, which came to an abrupt halt as voter interest was focused on the rising Canadian debt. An external shock helped too; the Economist magazine characterized the dollar as the "Northern Peso", which sent investor confidence screeching to a halt as well.

The end result was the government taking action considered unthinkable even one year previously (and actions that people like the Canadian Taxpayers Federation had been pleading for for years), and bringing the deficit and debt under control.

The downgrade of America's AAA credit rating, constant shenanigans to do with the "debt ceiling" (another round may come as early as Sept this year) and the trillion dollar deficits the Administration has posted each and every year (over 5 trillion dollars accumulated debt since the Administration took office!) have alarmed a large portion of the voteing population; they will be looking for politicians who can offer solutions. My bet is the 5 year plan is too drastic, while the Ryan plan is seen as taking too long and the Administration's budget with another trillion dollar deficit is considered unacceptable. A plan that draws down spending over a decade may be considered an acceptable compromise.


----------



## a_majoor (28 Mar 2012)

Obamacare being directly linked to the poor economy and high unemployment is yet another sign that this administration is going to have very tough sledding during the campaign:

http://www.thefiscaltimes.com/Columns/2012/03/28/How-Obamacare-Derailed-the-Economic-Recovery.aspx#page2



> *How Obamacare Derailed the Economic Recovery*
> By LIZ PEEK, The Fiscal Times March 28, 2012
> 
> Here we go again. All eyes are on the Supreme Court as it wrestles with whether or not President Obama’s healthcare bill is constitutional. The country is divided on the merits of the law, but this we can say with certainty: Obamacare profoundly gummed up our recovery from the financial crisis.
> ...


----------



## GAP (29 Mar 2012)

Foreclosure Deal Credits Banks for Routine Efforts
Article Link
 By SHAILA DEWAN and JESSICA SILVER-GREENBERG
Published: March 27, 2012 

In February, JPMorgan Chase donated a home to an Iraq war veteran in Bucoda, Wash., and Bank of America waived the $140,000 debt that a Florida man still owed after the sale of his foreclosed home. Over the last year, Wells Fargo has demolished about a dozen houses in Cleveland. 

Banks do things like this — real estate transactions that do nothing to prevent foreclosure — all the time. But beginning this month, they can count such activities as part of their new commitment to help people stay in their homes.

 That commitment comes under the landmark $25 billion foreclosure abuse settlement between the government and five major banks announced last month. The settlement promises that of the $25 billion, the banks will give $17 billion “in assistance to borrowers who have the intent and ability to stay in their homes,” according to a summary of the settlement. But more than half of that money can be used in ways that will not stop foreclosures, including some activities that are already standard bank practices.

For example, the banks can wipe out more than $2 billion of their obligation by donating or demolishing abandoned houses. Almost $1 billion can be used to help families that have already defaulted move out.

“The $17 billion is supposed to be the teeth of this settlement,” said Neil M. Barofsky, the former inspector general for the Treasury’s bank bailout fund known as the Troubled Asset Relief Program. “And yet they are getting all this credit for practices that they do every day.”

Only 60 percent of the $17 billion designated for borrowers, or $10.2 billion, must be used to reduce principal for borrowers who owe more on their mortgages than their homes are worth — though banks can do more if they choose.

The architects of the settlement contend that it was meant not just to prevent foreclosure. The provisions allowing demolition and donation of homes are supposed to force banks to reduce a large inventory of empty homes that are in legal limbo, creating hazards and depressing property values, said Patrick Madigan, an assistant attorney general in Iowa who was instrumental in constructing the agreement. Just because the banks are doing some of those things already, he said, does not mean they are doing them enough. 
More on link


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## a_majoor (29 Mar 2012)

Cripes, even Dalton McGuinty can craft and present a budget. Three years without a budget is essentially a recipie for lawlessness; agencies are essentially operating unbound by any sort of rigour or oversight. By now the situation has become so bad even Democrat lawmakers have bailed en mass:

http://hotair.com/archives/2012/03/29/consistency-obama-budget-fails-to-get-a-single-democratic-vote-again/



> *Consistency: Obama budget fails to get a single Democratic vote … again*
> posted at 9:15 am on March 29, 2012 by Ed Morrissey
> 
> In early 2011, Barack Obama received a report from the Simpson-Bowles deficit commission he himself launched that outlined a series of significant cuts and new taxes that would have at least lowered the rate at which the country added to its debt.  Obama ignored the report completely and instead proposed a budget with nearly $1.5 trillion in deficit spending, with no serious attempts to cut spending.  It was so embarrassing that Republicans had to force the Democrat-controlled Senate in May 2011 to bring it up for a vote, where it failed unanimously, 0-97.
> ...


----------



## Fishbone Jones (29 Mar 2012)

Maybe we should change the thread title to:

*The Non Existent US Economy*


----------



## Edward Campbell (29 Mar 2012)

recceguy said:
			
		

> Maybe we should change the thread title to:
> 
> *The Non Existent US Economy*




Or maybe not, according to this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Financial Post_:

http://business.financialpost.com/2012/03/29/canada-u-s-leave-europe-behind-in-global-recovery/


> Canada, U.S. lead G7 recovery while Europe falters
> 
> Eric Lam
> 
> ...




The problems that beset the US Economy are global, even China and India have slowed or are slowing down. The US sunk less and is recovering faster than any country except China.

It's not President Obama's fault the global economy crashed but he deserves precious little credit for the (weak, but better than almost anyone else) recovery, either.


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## cupper (30 Mar 2012)

Has anyone considered the following:

If the US has not passed a budget in more than 3 years, why hasn't the government come to a screeching halt at some point?

Since it is the actual appropriations that keep the government funded and functioning, what relevancy does the US Budget even have?


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## Kirkhill (30 Mar 2012)

cupper said:
			
		

> Has anyone considered the following:
> 
> If the US has not passed a budget in more than 3 years, why hasn't the government come to a screeching halt at some point?
> 
> Since it is the actual appropriations that keep the government funded and functioning, what relevancy does the US Budget even have?



Well Belgium did without a government for just about 2 years.  Since it is the bureaucrats that keep the government functioning, what relevancy does the Belgian, or any, government have?


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## PuckChaser (30 Mar 2012)

Working without a government is all well and good when we want to maintain the status quo, but you need someone to make decisions on the direction finances need to take when we have something like the global economic crash. You can't just assume status quo will be fine and dandy, and that status quo was created by a government, not by the bureaucrats that just administer it.


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## Brad Sallows (30 Mar 2012)

>what relevancy does the US Budget even have?

Which part?  The president's proposed budget, or the actual appropriations made by Congress?  The former seems to be more important than the latter even though it is just a polite request - particularly when it comes to assigning blame for deficit appropriations.


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## Kirkhill (30 Mar 2012)

PuckChaser said:
			
		

> Working without a government is all well and good when we want to maintain the status quo, but you need someone to make decisions on the direction finances need to take when we have something like the global economic crash. You can't just assume status quo will be fine and dandy, and that status quo was created by a government, not by the bureaucrats that just administer it.



So we need a government to craft a plan and change the plan?  I believe that is the point of a budget. No?


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## cupper (30 Mar 2012)

Brad Sallows said:
			
		

> >what relevancy does the US Budget even have?
> 
> Which part?  The president's proposed budget, or the actual appropriations made by Congress?  The former seems to be more important than the latter even though it is just a polite request - particularly when it comes to assigning blame for deficit appropriations.



Which is exactly the point I was making.


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## GAP (1 Apr 2012)

He has a point...............

The best way for government to reduce oil dependence? Do nothing
David Frum  Feb 25, 2012
Article Link

Gasoline prices are rising in the United States — always bad news for an incumbent president.

Accordingly, President Barack Obama traveled yesterday to Miami to repeat his energy message, which can be summed up as follows: Help is on the way. The U.S. government is investing in new energy technologies — and in time, those investments will pay off in the form of cheaper energy and new jobs: “Our job is to help outstanding work that’s being done in universities, in labs, and to help businesses get new energy ideas off the ground — because it was public dollars, public research dollars, that over the years helped develop the technologies that companies are right now using to extract all this natural gas out of shale rock.”

The implicit promise here is that new forms of energy will preserve the familiar American way of life. Electrical motors or fuel cells may replace internal combustion engines, but Americans will continue to commute long distances to work in individual vehicles — or so this kind of talk suggests.

But what if the most cost-effective energy solution is not to change the energy we use, but rather to change the way we use energy?

After the oil shocks of the 1970s, the United States succeeded in reducing its use of oil. As late as 1995, the United States was using no more oil than it had used in 1978. Not its use per person, or use per vehicle, but its use, period.

This progress was not accomplished by reinventing the internal combustion engine. It was accomplished by (1) shifting homes from oil to gas heat; (2) ending the burning of heavy oil by electrical utilities; and (3) shifting freight traffic from trucks to trains. No government official planned these changes. They just happened, in response to market forces. Result: Even as Americans put more cars on the road — and drove further in them — they successfully decreased their oil reliance.

More impressively, they dramatically decreased the “energy intensity” of their economy: the amount of oil it took to generate an additional dollar of Gross National Product. In the cheap-oil era from 1995 to 2005, that progress slowed. By 2005, the United States was using 10% more oil than at the peaks touched in 1978 and 1995.

Such progress could resume again without any need for dramatic technological change. We don’t need to imagine anything heroic, like Los Angeles shifting from cars to subways — just an accumulation of small incremental changes: a consumer shift to hybrid cars or to smaller homes located closer to work.
More on link


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## a_majoor (6 Apr 2012)

More fun with figures. The fictional US unemployment data shoud be a huge issue as the election campaign unfolds, and if the Republicans were smart, they would simply post this graphic everywhere and every time they were asked any question whatsoever (to deflect class warfare, race baiting and other diversionary tactics):





> The big March jobs miss — and why the real unemployment rate sure ain’t 8.2%
> By James Pethokoukis
> April 6, 2012, 10:10 am
> A A A
> ...


----------



## Kalatzi (10 Apr 2012)

more good news 

Why Obama's JOBS Act Couldn't Suck Worse

http://www.rollingstone.com/politics/blogs/taibblog/why-obamas-jobs-act-couldnt-suck-worse-20120409

Here we go again.   I worked several  dot.coms in the late 90's early 2000's, including one as an agent for ENRON. 

The laxity of the accounting .... 

BOHICA - Bend over, here it comes, again

Here is a snippet reproduced under the fair dealing provision of the copyright act 

Sometimes the companies themselves were the victims in the fraud scams, and sometimes the company executives were beneficiaries of fraud. But in virtually all of these schemes, the casual investor was the big dupe in the con. When the dot-com bubble finally collapsed, costing the world about $5 trillion in losses, the major victims were ordinary people. We can expect a replay of the same thing now, only on a much bigger scale.

The finance world is buzzing over this bill. The reactions I've heard so far range from minutes-long guffaws of dark laughter to bloodcurdling, I-can't-freaking-believe-they-went-this-far outrage. "I thought I had lost the ability to be shocked," one friend of mine, a former regulator, told me this weekend, chuckling at the sheer stones it took to push the law. "But this thing is just inspired. They broke the mold with this one."





One hopes not


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## a_majoor (18 Apr 2012)

:rofl: 



> Jay Leno: "President Obama released his tax returns. It turns out he made $900,000 less in 2011 than he did in 2010. You know what that means? Even Obama is doing worse under President Obama."


----------



## cupper (18 Apr 2012)

Kalatzi said:
			
		

> more good news
> 
> Why Obama's JOBS Act Couldn't Suck Worse
> 
> ...



Did the author forget that it wasn't Obama's bill to start with, or did he just conveniently leave that part out? :Tin-Foil-Hat:


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## a_majoor (19 Apr 2012)

The Democrat majority Senate leaves the room again on their legal responsibility to pass a budget (or adopt the Ryan budget crafted in the House). I think this issue will come around to hurt the Dems even more than "Fast and Furioous", Soylendra, Keystone XL, foreign policy gaffes or the latest "Obama ate a dog" meme which has hit the Internet, since it will be seen (correctly) as an attempt to evade responsibility for the economy, and with unemployment still over 10% and economic growth very anemic at best, the economy is what voters will be focusing on. Watch for this during the downline senate races:

http://www.powerlineblog.com/archives/2012/04/harry-reid-shuts-down-budget-process-in-senate.php



> *HARRY REID SHUTS DOWN BUDGET PROCESS IN SENATE*
> 
> The Democratic Senate has not adopted a budget in three years. This is not only flagrantly irresponsible, it is a violation of federal law. Outgoing Budget Committee Chairman Kent Conrad, who is retiring at the end of the year, apparently felt pangs of conscience, because he decided it was finally time for his committee to mark up a budget. He announced that the committee would do so, starting tomorrow.
> 
> ...


----------



## a_majoor (21 Apr 2012)

An interesting prediction. If the presumptive Romney Administration were to move boldly towards a post progressive society as predicted, there would be a sharp shock as all the bureaucratic applecarts were upset, although the Reaganesque resurgence of economic growth following tax and spending cuts would certainly cushion the blow. Carefully examining the utility or even the need for government programs is also the promise of the Government of Canada, although the economic situation here allows for a more incrimental approach:

http://opinion.financialpost.com/2012/04/13/lawrence-solomon-better-than-reagan/



> *Lawrence Solomon: Better than Reagan*
> Lawrence Solomon  Apr 13, 2012 – 8:27 PM ET | Last Updated: Apr 16, 2012 7:46 AM ET
> 
> Romney will be America’s most free-market president
> ...


----------



## a_majoor (25 Apr 2012)

Tax increases on this scale will simply crush whatever sort of recovert tht the US is/might be experiencing. The Administration is making no effort to explore alternatives, has rejected the recommendations of its own panel, and the Democrat majority Senate has refused to pass a budget or propose one for over 1000 days (and thus prevented the House budget [Ryan Budget] from being implimented). It is perhaps fortunate that the process is now so muddled that a new administration will essentially have a clear hand to start with a fresh sheet of paper. The starting position will be pretty bad, with almost $7 trillion of new debt added to the books since 2008...

http://taxprof.typepad.com/taxprof_blog/2012/04/hubbard-obamas-.html



> *Hubbard: Obama's Budget Means 11% Tax Increase on Those Earning < $200,000*
> 
> Wall Street Journal op-ed, Obama's Budget Means a Tax Increase on Everyone, by Glenn Hubbard (Dean, Columbia Business School):
> 
> ...



And the Administration has been very consistent with the messaging...http://www.youtube.com/watch?v=Q8erePM8V5U&feature=player_embedded


----------



## a_majoor (10 May 2012)

More metrics. While it is possible that the ramped up "Red" State economies might drag this Administration over the finish line in November (aggregating the data to show an overall improvement in the American economy), the declines in "Blue" states might offset any overall gains as independents see their local conditions and vote accordingly. Another possible fracture point for the Republicans to exploit in the Presidential and downline elections:

http://news.investors.com/article/610481/201205080802/blue-states-jobs-suffer-under-obama.htm?p=full



> *Economy: Blue States Worse Than Red Under Obama*
> By JOHN MERLINE , INVESTOR'S BUSINESS DAILY
> Posted 05/08/2012 08:02 AM ET
> 
> ...



and from the comments:



> Murphy Davidson · Top Commenter · 104 years old
> Easy to explain. The vast majority of the stimulus went to the blue states, with the highest amount to the purple states that went to Obama. These governments are almost all democrat run, so they went the democrat route to fix their budgets. Higher taxes, and no layoffs or reforms to state union costs. They used the stimulus to cover the problem, whereas the red states barely got any stimulus, through refusal or political chicanery. They fixed their budgets with tax cuts, pension reforms, and business friendly regulation changes. The study just shows the end result. No real surprise here.
> Reply · 14 · Like· Tuesday at 2:15pm


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## Edward Campbell (11 May 2012)

Some may remember that, over six months ago, Jamie Dimon (CEO of _JP Morgan Chase_) blasted Bank of Canada Governor Mark Carney for, amongst other things, being too timid, an "old woman." Today Domin is eating crow, again, because _JP Morgan Chase_ is writing off Billions and Billions in trading losses, with more write downs to come, because Dimon's "startegy" is, in his own words, ill conceived and badly executed. But he's a _celebrity CEO_ so his investors will, most likely swallow the losses because ... because ... because they, the shareholders, are as stupid as Dimon is.

With CEOs like Dimon on Wall Street I can understand why my (privately managed) portfolio has no US financials in it.


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## a_majoor (15 May 2012)

Social security continues to crumble; if you thought our $500 billion unfunded federal liabilities problem was bad, this is orders of magnitude worse. For those of you who follow US electoral politics, the Democrats so called "Julia" ad, which suggests someone can go from cradle to grave on the government dime, now seems like a cruel joke:

http://pjmedia.com/blog/social-securitys-implosion-continues/?print=1



> *Social Security’s Implosion Continues*
> 
> Posted By Tom Blumer On May 15, 2012 @ 12:17 am In Column,Elections 2012,Money | 63 Comments
> 
> ...


----------



## a_majoor (25 May 2012)

One thing politicans never seem to understand is the market cannot be fooled for long; the made up numbers are not reflected in underlying market activity (and indeed, the sluggish US "recovery" and high (10% + U3) unemployment numbers seem to indicate the markets are already discounting the Administrations "official" numbers). Here is how the numbers look using normal accounting rules:

http://www.conservativecommune.com/2012/05/lies-deficits-and-even-more-irony/



> *Lies, Deficits and Even More Irony*
> By
> Bruce McQuain
> – May 24, 2012Posted in: Featured Stories
> ...


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## a_majoor (26 May 2012)

This is  the end state of the "Blue" economic and social model:

http://fullcomment.nationalpost.com/2012/05/25/would-the-last-person-out-of-detroit-turn-out-the-lights-oh-wait-too-late/#more-79431



> *Would the last person out of Detroit turn out the lights? Oh, wait, too late*
> 
> Matt Gurney  May 25, 2012 – 11:55 AM ET | Last Updated: May 25, 2012 1:48 PM ET
> 
> ...


----------



## GAP (6 Jun 2012)

Saskawisconsin
Terence Corcoran  Jun 5, 2012
Article Link

A funny thing happened on the way to Wisconsin’s vote Tuesday on whether to recall Republican Governor Scott Walker and replace him with a Democrat, Milwaukee Mayor Tom Barrett. Although maybe it wasn’t so funny for the state unions that backed the recall movement. Thanks to Governor Walker’s labour reforms, including elimination of automatic deduction of union dues, membership in a major Wisconsin public employee union plunged from more than 62,000 in March 2011 to below 29,000 last February.

Along with removing mandatory dues deduction, Governor Walker also curtailed rights to collective bargaining, including limiting the pay raises unions could extract for government employees to the rate of inflation. The reforms, known as Act 10, sparked one of the hardest-fought electoral contests in recent U.S. history.

Big labour unions, Bill Clinton and the Democrats flooded into Wisconsin to help overthrow Mr. Walker. On the Republican side, including a heavy Tea Party presence, millions of dollars were spent to keep Mr. Walker in office.

It was a battle that opened many eyes to the role of unions in government, and to the many privileges, perks, benefits and high salaries that government employees enjoy compared with private-sector employees. As a clash of policies and ideologies, the recall vote in Wisconsin — a centrist Democratic state through recent history — may also serve as a bellwether for the future of the union movement across America, with spillover potential into Canada, from Quebec to Ontario to Saskatchewan. Canada’s notorious Rand formula, which forces deduction of union dues by employers even for workers who decline union membership, could be vulnerable.

Brad Wall may not be Canada’s Scott Walker, but his Saskatchewan Party government last month issued a “consultation paper” on labour legislation that hints at some reforms for Saskatchewan that reflect the Wisconsin reforms. On union dues, the consultation paper asks: “Are there situations where employees should be able to opt out of the union for other than religious grounds?” And: “Are there any instances where union dues should not be collected in a situation where the employee has opted out?”
More on link


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## Edward Campbell (6 Jun 2012)

Just what President Obama doesn't need as he enters the 2012 campaign season: The _Wall Street Journal_ reports that the head offices of America's major defence contractors are forecasting massive layoffs announcements "ahead of November elections if Congress fails to reach a deficit-reduction deal ...  Firms including Lockheed Martin Corp., Boeing Co. and Northrop Grumman Corp. may idle thousands of workers at the beginning of the year, they said, when more than $50 billion in new defense cuts could take effect—along with similar reductions across federal agencies."

This is, of course, just a ploy to get the president and the congress back to the negotiating table but I'm not convinced that Obama and the _Tea Party_ can - or even want to - find enough common ground to avoid the mandated cuts.


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## a_majoor (12 Jun 2012)

Here is a pretty pickle for the Dems; the time period being talked about is the time the Democrats had control of the House and Senate, and from 2008 on, the Presidency as well. How do you run on or defend a record like that?

http://www.washingtonpost.com/business/economy/fed-americans-wealth-dropped-40-percent/2012/06/11/gJQAlIsCVV_story.html



> *Americans saw wealth plummet 40 percent from 2007 to 2010, Federal Reserve says*
> 
> Is the U.S. economic recovery stalling?: The Labor Department reported June 1 that the nation’s economy added only 69,000 jobs in May, bringing the unemployment rate to 8.2 percent (10%+ is the actual U3 figure). Here, a look at the fallout from our troubled economy and the troubles of economies overseas.
> 
> ...


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## GAP (12 Jun 2012)

America needed this, and Canada still needs to learn this. 

The US was well on it's way to this, or a worse state, long before the housing bubble caught up with the economy. The Great Depression taught frugality to whole generations, then their great grandchildren forgot it.

Lesson learned


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## mariomike (12 Jun 2012)

The Wall Street Journal
 June 4, 2012

"As Costs Soar, Taxpayers Target Pensions of Cops and Firefighters: 
Public sentiment toward the men and women in uniform has widely shifted, as many locals are up in arms over escalating pension costs for public-safety workers.":
http://online.wsj.com/article/SB10001424052702304821304577438452821346064.html

( This would include IAFF paramedics. )


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## Nemo888 (12 Jun 2012)

Thucydides said:
			
		

> Here is a pretty pickle for the Dems; the time period being talked about is the time the Democrats had control of the House and Senate, and from 2008 on, the Presidency as well. How do you run on or defend a record like that?
> 
> http://www.washingtonpost.com/business/economy/fed-americans-wealth-dropped-40-percent/2012/06/11/gJQAlIsCVV_story.html



Weird, is this April Fools? Have you and the Washington Post gone all occupy Thucydides? Middle class net worth has plummeted 39%, the wealthiest families net worth rose slightly, outsourcing, free trade and automation have decimated the labour market and killed 10 major industries. In that same time period 4.5 million jobs have been created and total payroll taxes have dropped.  Incomes are still dropping.

Obama is more right wing than Reagan. It is irrelevant which used car salesman becomes President. The problems in America are structural, not cyclical. The stock market is doing great. The DOW is higher than it has ever been. Nothing to fix there. The American middle class _*was *_capitalism's main market. The NEW Market is global. The period of adjustment to being poorer and less relevant will be messy in America, perhaps bloody even. Glad I don't live there.

It is an absolutely great time to be rich. The opportunities are excellent once you leave our borders. Hong Kong feels amazing. You can sense the coming prosperity in the air. The place is infected with wealth. People are starting to emigrate back to Asia for financial reasons.


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## a_majoor (13 Jun 2012)

Any time is a great time to be rich, this Administration and the previous House and (current) Senate are stifling the economy along multiple axis. Reporting the facts isn't Occupy (and realistically, the rhetoric of occupy does not match the real metrics of the economy anyway).

The heavy doses of taxation, regulatory control and crony capitalism limit the ability of the economy to shift in regard to structural changes; the very small start up companies which could be creating new opportunities and new wealth simply don't have the time, capital or manpower to do so under these conditions, while even large corporations need to devote a fair amount of internal resources to deal with the political and economic climate (or maintain the status quo). Many choose not to, sitting on their cash reserves and refusing to invest until the political chaos ends one way or another in November is a form of Capital Strike, similar to the one in 1937-38 which brought the Great Depression to its lowest point.

In fact the situation is becoming so bad that the AFL-CIO has withdrawn funding from the Democrat party for this election, showing the electoral Left is no more pleased with this Administration than the electoral Right.


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## a_majoor (20 Jun 2012)

The problem of incentives writ large:

http://fullcomment.nationalpost.com/2012/06/20/jonathan-kay-from-unbuilt-bridges-to-unfired-teachers-how-political-corruption-is-destroying-our-american-neighbour/



> *Jonathan Kay: From unbuilt bridges to unfired teachers — how political corruption is destroying America*Jonathan Kay  Jun 20, 2012 – 6:34 AM ET | Last Updated: Jun 20, 2012 7:00 AM ET
> 
> Imagine, for a moment, that the Tea Party gets its wish: Not only is Barack Obama booted from office, but so too are dozens of Democratic lawmakers. Their numbers strengthened by an incoming class of rock-ribbed GOP congressman, President Mitt Romney repeals Obamacare and systematically dismantles the heavily regulated welfare state that has been built up, by Democratic and Republican administrations alike, since the New Deal.
> 
> ...


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## GAP (13 Jul 2012)

I was thinking of puting this into the election 2012 thread, but it seems to belong here more than there....."it's about the economy, stupid" type thinking. The numbers are kinda scary when you think about the US going down that road.......

America's coming civil war -- makers vs. takers
By Arthur Herman July 12, 2012
Article Link

“A house divided against itself cannot stand.”  

Abe Lincoln used those words in 1858 to describe a country that was careening toward civil war. Now we’re a house divided again and another civil war is coming, with the 2012 election as its Gettysburg.  

Call it America’s coming civil war between the Makers and the Takers. 

On one side are those who create wealth, America’s private sector–the very ones targeted by President Obama’s tax hikes announced Monday.

On the other are the public employee unions; left-leaning intelligentsia who see the growth of government as index of progress; and the millions of Americans now dependent on government through a growing network of government transfer payments,  from Medicaid and Social Security to college loans and corporate bailouts and handouts (think GM and Solyndra).

Over the past century America’s private sector has been the source of productivity, innovation, creativity, and growth–and gave us the iPhone and iPad. The public sector has been the engine of entitlement, stagnation, and decline -- and gave us Detroit and the South Bronx.   

The private sector built the strongest economy in the world.  It armed the free world in World War Two, and then in the three decades after the war turned America into the most prosperous society history had ever seen.  It revived America in the  Reagan and Clinton years, and thanks to the Bush tax cuts brought this country back from economic collapse after 9/11.

In those same years a growing public sector, by contrast, turned Europe into a cesspool of debt, stalled economies, and chronic social dysfunction that’s set the streets of Athens -- and perhaps other European capitals--on fire.  

That’s where we’re headed, too, more rapidly than we like to think.  

That public sector–state, local, and federal -- now consumes 40% of GDP, compared to 33% just twelve years ago. It’s brought us to the point where 48% of Americans are now on some form of government handout, from 44% when Obama took office–almost a fifth more than during the Reagan years. And too many of them have been programmed to believe they have no future unless the government takes more from the Makers -- precisely what Obama promised on Monday.
More on link


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## a_majoor (15 Jul 2012)

With unemployment above 10% you would think that getting people to work would be the number one priority of the Administration. Sadly, this does not seem to be the case:





> Obama to Clinton welfare reform: Drop dead
> By Jennifer Rubin
> President Obama is the chief executive, obligated by the Constitution to “take Care that the Laws be faithfully executed.” Obama, however, seems to have — by executive order — altered that to read “take Care that the Laws [which he likes or wished Congress had passed] be faithfully executed. The list of laws he won’t enforce or is unilaterally amending is getting long: Defense of Marriage Act, immigration laws, voting laws, and anti-terror laws. He won’t even enforce all the provisions of his signature legislation as we’ve seen in the bushels-full of Obamacare waivers. The latest and most inexplicable gambit is his decision to undo bipartisan welfare reform.
> 
> ...



Perhaps the real clue is undoing "Clinton era" welfare reform. President Clinton has been sticking a fork in Obama repeatedly on the past several months ("I'm the only guy in the room who presented three balanced budgets...") so undoing what is arguably President Clinton's signature acheivment (although it was actually authored by Speaker Gingrich and the Republican House and Senate as part of the "Contract with America") may be spiteful political payback.


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## cupper (15 Jul 2012)

You need to define what employment rate you are choosing to justify your statement. The accepted rate is 8.2%.


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## a_majoor (16 Jul 2012)

The real rate (U3) is over 10%, the only reason the "accepted rate" is 8.2% is that 

a: the millions of people who are unemployed but no longer looking for work have been excluded from the count, and

b. it makes the Administration look better than saying 10%.

If you want to go deeper, we could always use U6, which also includes people who are involuntarily working part time (14%) or slice the number showing youth or minority unemployment (I haven't looked lately, but the numbers are at or near 20%)


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## Edward Campbell (16 Jul 2012)

Reason _a_ is used by most OECD countries - that's why it is the generally accepted measure.

Yes there are other measures, but it's not like money supply; while we commonly use 2 of the six measures of money supply (M1 and M2) we almost always all use only one for unemployment - the generally accepted one - so that we are (almost) all talking about the same thing ... except for blindly partisan politicians, of course, who use and abuse statistics _willy-nilly_.


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## Brad Sallows (17 Jul 2012)

The exact measure doesn't really matter except to people making pedantic points about "on whose watch" bad things happened.  People who are unemployed and underemployed know who they are, and can vote, regardless whether they are actively looking for work.


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## cupper (17 Jul 2012)

I'm pretty sure that if the situation was reversed Thucydides and others of the same leanings, they'd be quoting the 8.2 % number as being the real number.


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## a_majoor (18 Jul 2012)

Why would I? It is impossible to make an informed decision without accurate data, and without accurate data, it is also impossible to find the source of the problem and fix it.

Which is why historical data is so interesting and important, by following the successful policy prescriptions from the past we can achieve success. Pick times and governments when U3 was lower, see what the government of the day was doing and implement that again.

Of course once people do that and see names like Margaret Thatcher, Mike Harris, John F Kennedy, Ronald Reagan and so on (big tax cutters all) they become apoplectic and no longer participate in rational discussion.


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## cupper (18 Jul 2012)

Thucydides said:
			
		

> Of course once people do that and see names like Margaret Thatcher, Mike Harris, John F Kennedy, Ronald Reagan and so on (big tax cutters all) they become apoplectic and no longer participate in rational discussion.



Let's not forget that Reagan did cut taxes big time, only to reverse himself 11 times during the remainder of his presidential terms.

Which is why G.H.W. Bush came up with the slogan "Read my lips! No new taxes", and promptly got hoisted on his own petard.


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## PuckChaser (18 Jul 2012)

cupper said:
			
		

> I'm pretty sure that if the situation was reversed Thucydides and others of the same leanings, they'd be quoting the 8.2 % number as being the real number.



Sounds like the argument of someone who can't dispute the facts, call into question the character of the person(s) posting them. You should run attack ads for the Democrats.


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## cupper (18 Jul 2012)

PuckChaser said:
			
		

> Sounds like the argument of someone who can't dispute the facts, call into question the character of the person(s) posting them. You should run attack ads for the Democrats.



What's to dispute? The generally accepted unemployment rate is 8.2%. The Dems use it. The GOP uses it. If you want to factor in part time employed, people who decided to go back to school to improve their employment options, and so forth, and claim that it is more realistic, then so be it.

But the narrative is that Obama has done nothing to improve the situation. And by using a statistical cross section that makes the situation look worse, it strengthens your argument. If McCain had won, and the faced the same situation, the left would be citing the larger numbers, and the right would be crying foul and quoting the lower number.

Simple as that.

As for calling into question another's character, it's a fact of human mature and statistics. When trying to sell your side of an argument, you are going to use facts and statistics that are favourable to you (assuming that you are not either a pathological liar, or bat poop crazy). Tell me that I'm wrong.

As for running attack ads for the Obama campaign, nah. Not worth it. Romney is doing a great job of attacking his own self.


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## a_majoor (31 Jul 2012)

More on lies, damn lies and statistics. It seems that we are now devolving into Kremlinology to find the basic facts about the US economy. (A very similar effort exists attempting to gauge the true state of the Chinese economy by comparing things like electrical output, coal consumption, raw material purchases and so on to the "official" output numbers.) The worrying fact in both China and the US is various indicators no longer add up to the "official" numbers. Without clear metrics, investors are blind (a possible reason behind the US "capital strike" where companies simply refuse to invest their capital).

http://www.businessinsider.com/chart-of-the-day-the-us-garbage-indicator-economy-2012-7#ixzz21kvqeWsP



> *CHART OF THE DAY: The US Garbage Indicator Is Sending An Ominous Sign For The Economy*
> Sam Ro	 | Jul. 26, 2012, 4:53 AM | 34,494 | 40
> 
> Among the 21 categories of items shipped by rail, none have a tighter correlation to GDP than waste.
> ...



and additional comentary from Instapundit:



> UPDATE: Reader Stephen Barron writes:
> That waste car load chart also hints there may have been some creative accounting regarding GDP numbers during “Recovery Summer”, after pretty decent correlation in previous years.
> 
> Perish the thought.
> ...


----------



## a_majoor (5 Aug 2012)

Remember the downgrade? One year has passed without any substantive action from the Administration or Senate. This article suggests that one reason the bond vultures havn't swooped in yet is the overwhelming amount of bad news elsewhere; which makes the US seem like a relatively safe haven. Lord knows that thousands of wealthy French people have rushed to buy US property since the election of the Socialists in France, which should give you an indication of what the rest of the world thinks:

http://www.thefiscaltimes.com/Articles/2012/08/05/S-and-P-Downgrade-One-Year-Later-a-Message-Unheeded.aspx#page1



> *S&P Downgrade: One Year Later, a Message Unheeded*
> By YUVAL ROSENBERG, The Fiscal Times August 5, 2012
> 
> What little difference a year makes. On August 5, 2011 — one year ago today — Standard & Poor's shook global markets and rattled the U.S. political establishment by downgrading the federal government's credit rating from AAA to AA+.
> ...



Still, those gains don’t mean that investors are sanguine about the U.S. situation, fiscal or political. “It doesn’t mean it’s not a problem,” Citi’s Rose says. “It just means that it’s being overwhelmed by other issues in the near term. Investors still have concerns that the long-term fiscal situation in the U.S. is unsustainable, but in the near-term you’ve got far more concerns about countries such as Spain or Italy, and the weakness in growth in the U.S., Europe and globally.”

In explaining the downgrade, Standard & Poor’s pointed to U.S. fiscal policy, including the specifics of the agreement to resolve the debt-ceiling debacle. “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics,” S&P’s analysts wrote.

But the rating agency made clear that its move was also a condemnation of the dysfunctional politics behind those debt dynamics. “The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed,” the S&P analysts wrote. “Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers.”

“The rating agency actually did this country a huge favor,” says Weisberg, “because it sent a very very strong message to the politicians to stop what you’re doing and clean up your balance sheet.”

With a presidential election looming, the message has essentially been ignored. “Nothing has changed,” Weisberg says wistfully. “Nothing has changed.”

Not that officials didn’t respond to the downgrade. Even before S&P’s officially announced the downgrade, Treasury officials went back and forth with the ratings agency, pointing out a $2 trillion mistake in its analysis. S&P went ahead with the downgrade anyway, prompting a blistering response:

“Independent of this error, there is no justifiable rationale for downgrading the debt of the United States,” John Bellows, then the Treasury Department’s acting assistant secretary for economic policy, wrote in a blog post the next day. “There are millions of investors around the globe that trade Treasury securities. They assess our creditworthiness every minute of every day, and their collective judgment is that the U.S. has the means and political will to make good on its obligations. The magnitude of this mistake – and the haste with which S&P changed its principal rationale for action when presented with this error – raise fundamental questions about the credibility and integrity of S&P’s ratings action.”

President Obama addressed the downgrade the following Monday, noting in a speech from the White House state dining room that S&P had proceeded with the cut “not so much because they doubt our ability to pay our debt if we make good decisions, but because after witnessing a month of wrangling over raising the debt ceiling, they doubted our political system’s ability to act.”

Obama went on to acknowledge the fiscal and political issues, according to a transcript on the White House website, before adding that, “Our problems are eminently solvable.” Obama pointed to the spending cuts agreed to as part of the debt-ceiling deal and suggested that, “What we need to do now is combine those spending cuts with two additional steps: tax reform that will ask those who can afford it to pay their fair share and modest adjustments to health care programs like Medicare.”

The president also said he hoped that the downgrade would lend a “renewed sense of urgency” to the Super Committee tasked with devising a long-term budget plan as part of the agreement to raise the debt ceiling last year. “I assure you,” Obama said, “we will stay on it until we get the job done.”

The Super Committee, of course, failed to reach an agreement, meaning that $1.2 trillion in automatic cuts of defense and other programs are set to take place as of next year. Those changes, combined with the tax cuts also set to expire at the end of the year, have left the country approaching a “fiscal cliff” at the end of the year – an added dose of uncertainty at a time when the economic recovery appears to be slowing.

“Markets can deal with good news, markets can deal with bad news,” says Weisberg. “What markets cannot deal with is uncertainty. And the markets, unfortunately, are hostage to the politicians both in the U.S. and in Europe.”

RELATED: 10 'Kicked Cans' That Can Send the U.S. Over the Cliff

S&P also still sees increased political polarization as a threat to fiscal progress. “[W]e think that recent shifts in the ideologies of the two major political parties in the U.S. could raise uncertainties about the government’s ability and willingness to sustain public finances consistently over the long term,” S&P noted in a June report reaffirming its AA+ rating and negative outlook.

And given the depth of the political quagmire, S&P’s ratings analysts don’t place much faith in the idea that the election could finally lead to decisive action. “Although the 2012 elections could resolve the U.S. fiscal debate, we see this outcome as unlikely,” S&P’s June report said. “If, as commentators currently expect, the election is close, the race could, in our view, reduce bipartisanship from its already low level as each side strives to rally support by more clearly distinguishing itself from the other.”
[/quote]


----------



## a_majoor (8 Aug 2012)

In a report which is sure to make many heads explode, the Fed points out the cause of the 2008 recession. (On a similar note, economic historians point the finger to the same causal agent for the 1929 crash and subsequent Great Depression):

http://www.aei-ideas.org/2012/08/fed-study-says-bush-and-banks-didnt-cause-the-great-recession-the-fed-did/



> *Fed study says Bush and the banks didn’t cause the Great Recession. The Fed did*
> James Pethokoukis | August 6, 2012, 9:28 pm
> 
> It’s probably President Obama’s most politically effective line of attack against Mitt Romney.
> ...


----------



## a_majoor (16 Aug 2012)

Looking at how the Ryan plan would rework the tax and spending ratios of the US Federal government. The two tier taxation levels are not quite a single tax, but evidence from many nations that do have "flat taxes" demonstrate that this form of taxation does indeed provide greater revenues by broadening the tax base. People looking for those arguments should go here

http://opinion.financialpost.com/2012/08/14/william-watson-ryan-plans-secret-more-tax-revenue/



> *William Watson: Ryan plan’s secret: more tax revenue*
> William Watson | Aug 14, 2012 10:31 PM ET | Last Updated: Aug 15, 2012 6:49 AM ET
> More from William Watson
> 
> ...


----------



## a_majoor (17 Aug 2012)

"Success" in the case of the $80 billion auto bailout must be situational, since GM is heading for bankruptcy yet again. In political terms this can only hurt the Administration and their election chances, but it is even more instructive as to what happens when taxpayer dollars replace the rigor of the marketplace. GM hasn't made any products that stand out in the marketplace (the Malibu is dead last when compared to cars in its segment and overall market share is declining) because there was no need to with taxpayer dollars keeping it afloat. This is also a frightening forecast of what the medical industry is going to look like under Obamacare, and with the President proclaiming he wants to apply the same solutions to the rest of the US manufacturing industry (and by extension the economy as a whole, since this would eventually encompass the supply chain), you really don't need a crystal ball to see what that will do for jobs and the standard of living:

http://www.forbes.com/sites/louiswoodhill/2012/08/15/general-motors-is-headed-for-bankruptcy-again/



> General Motors Is Headed For Bankruptcy -- AgainMove up Move down
> Joann Muller
> 
> President Obama is proud of his bailout of General Motors.  That’s good, because, if he wins a second term, he is probably going to have to bail GM out again.  The company is once again losing market share, and it seems unable to develop products that are truly competitive in the U.S. market.
> ...


----------



## a_majoor (21 Aug 2012)

Canada to the rescue! These ungrateful Americans apparently are not tracking the fact these Canadian shoppers are providing a tax break for the citizens of that town ( up to $1000/person as calculated by one of the commenters). Of course the free market laws of supply and demand are at work here, so any government or regulatory interference will leave a lot of unsatisfied Canadians paying more for groceries and a lot of these townspeople holding the bag for higher property taxes:

http://blog.chron.com/hottopics/2012/08/costco-shoppers-want-‘american-only’-hours/



> *Costco shoppers want ‘American only’ hours*
> 
> Shopping and waiting … and waiting .. at Costco. (Photo is from a Miami Costco, by Creative Commons Flickr user miamism).
> If you’ve ever shopped at Costco on a weekend, you know it’s like an endurance sport, with tough parking, packed crowds and competitive lines for those mini-sausage samples.
> ...


----------



## a_majoor (27 Aug 2012)

One of the biggest reasons our economic recovery isn't faster is we are still highly dependent on the United States as our biggest single trading partner. We are "missing" something on the order of 33 million potential US customers (the U3 unemployment figure), pretty much the entire population of Canada. To compund the problem, the remaining potential customers are suffering from a declining income since 2008; much less to spend on goods and services that we provide:

http://news.investors.com/articleprint/623476/201208241814/obama-so-called-recovery-leaving-middle-class-behind.aspx



> *You Call This an Economic Recovery?*
> Posted 08/24/2012 06:14 PM ET
> 
> Back in August 2010, Treasury Secretary Timothy Geithner wrote an Op-Ed titled "Welcome to the Recovery." Two years later, most Americans would be right to ask: What recovery?
> ...


----------



## GAP (3 Sep 2012)

First Audit Results In The Federal Reserve’s Nearly 100 Year History Were Posted Today, They Are Startling!
Saturday, September 1, 2012
Article Link

~~~~
	What was revealed in the audit was startling:

$16,000,000,000,000.00 had been secretly given out to US banks and corporations and foreign banks everywhere from France to Scotland. From the period between December 2007 and June 2010, the Federal Reserve had secretly bailed out many of the world’s banks, corporations, and governments. The Federal Reserve likes to refer to these secret bailouts as an all-inclusive loan program, but virtually none of the money has been returned and it was loaned out at 0% interest. Why the Federal Reserve had never been public about this or even informed the United States Congress about the $16 trillion dollar bailout is obvious – the American public would have been outraged to find out that the Federal Reserve bailed out foreign banks while Americans were struggling to find jobs.

To place $16 trillion into perspective, remember that GDP of the United States is only $14.12 trillion. The entire national debt of the United States government spanning its 200+ year history is “only” $14.5 trillion. The budget that is being debated so heavily in Congress and the Senate is “only” $3.5 trillion. Take all of the outrage and debate over the $1.5 trillion deficit into consideration, and swallow this Red pill: There was no debate about whether $16,000,000,000,000 would be given to failing banks and failing corporations around the world.

In late 2008, the TARP Bailout bill was passed and loans of $800 billion were given to failing banks and companies. That was a blatant lie considering the fact that Goldman Sachs alone received 814 billion dollars. As is turns out, the Federal Reserve donated $2.5 trillion to Citigroup, while Morgan Stanley received $2.04 trillion. The Royal Bank of Scotland and Deutsche Bank, a German bank, split about a trillion and numerous other banks received hefty chunks of the $16 trillion.

    “This is a clear case of socialism for the rich and rugged, you’re-on-your-own individualism for everyone else.”- Bernie Sanders (I-VT)

When you have conservative Republican stalwarts like Jim DeMint(R-SC) and Ron Paul(R-TX) as well as self identified Democratic socialists like Bernie Sanders all fighting against the Federal Reserve, you know that it is no longer an issue of Right versus Left. When you have every single member of the Republican Party in Congress and progressive Congressmen like Dennis Kucinich sponsoring a bill to audit the Federal Reserve, you realize that the Federal Reserve is an entity onto itself, which has no oversight and no accountability.

Americans should be swelled with anger and outrage at the abysmal state of affairs when an unelected group of bankers can create money out of thin air and give it out to megabanks and supercorporations like Halloween candy. If the Federal Reserve and the bankers who control it believe that they can continue to devalue the savings of Americans and continue to destroy the US economy, they will have to face the realization that their trillion dollar printing presses will eventually plunder the world economy.

The list of institutions that received the most money from the Federal Reserve can be found on page 131of the GAO Audit and are as follows..

    Citigroup: $2.5 trillion ($2,500,000,000,000)
    Morgan Stanley: $2.04 trillion ($2,040,000,000,000)
    Merrill Lynch: $1.949 trillion ($1,949,000,000,000)
    Bank of America: $1.344 trillion ($1,344,000,000,000)
    Barclays PLC (United Kingdom): $868 billion ($868,000,000,000)
    Bear Sterns: $853 billion ($853,000,000,000)
    Goldman Sachs: $814 billion ($814,000,000,000)
    Royal Bank of Scotland (UK): $541 billion ($541,000,000,000)
    JP Morgan Chase: $391 billion ($391,000,000,000)
    Deutsche Bank (Germany): $354 billion ($354,000,000,000)
    UBS (Switzerland): $287 billion ($287,000,000,000)
    Credit Suisse (Switzerland): $262 billion ($262,000,000,000)
    Lehman Brothers: $183 billion ($183,000,000,000)
    Bank of Scotland (United Kingdom): $181 billion ($181,000,000,000)
    BNP Paribas (France): $175 billion ($175,000,000,000)
    and many many more including banks in Belgium of all places

View the 266-page GAO audit of the Federal Reserve (July 21st, 2011): 

More on link


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## Edward Campbell (3 Sep 2012)

GAP said:
			
		

> First Audit Results In The Federal Reserve’s Nearly 100 Year History Were Posted Today, They Are Startling!
> Saturday, September 1, 2012
> Article Link
> 
> ...




No and yes:

1. It is the very _nature_, indeed purpose, of central banks to print money and give it away. It would be malignant folly to give such power to elected politicians or, worse, the people ~ the former are venal and the latter stupid; but

2. Gresham's law still applies but now that exchange rates are set in the market, no mater what governments or central banks or the "people" say or do, the decline of a debased currency is predictable and one can defend against it.


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## a_majoor (12 Sep 2012)

While the "cue ominous music" theme on the Chinese thread is bad enough; the fact that this is out in the open staring at the American people should be the cue for the "Psycho" screaming violins...

http://www.americanthinker.com/blog/2012/09/bob_woodward_inadvertently_confirms_the_coming_economic_apocalypse.html



> *Bob Woodward Inadvertently Confirms The Coming Economic Apocalypse*
> Monty Pelerin
> 
> Bob Woodward has yet another book coming out, and the consummate Washington insider provides us with a glimpse of what's in it. In doing so, he inadvertently confirms what so many internet pundits have been warning about -- an economic catastrophe of unimaginable proportions.
> ...


----------



## a_majoor (15 Sep 2012)

Another downgrade. No one with even a minimal schooling in classical or Austrian economic theory would have ever suggested flooding more cash ito the economy, and even Keynesians should have recognized that the $800 billion "stimulus" and the $5 trillion in deficit spending since 2008 has failed (the 11% U3 unemployment figure and 7% drop in US median incomes is a devastating answer to anyone who would claim otherwise). Watch for the bond hawks to start coming out:

http://www.cnbc.com/id/49037337



> *US Credit Rating Cut by Egan-Jones ... Again*
> Published: Friday, 14 Sep 2012 | 3:43 PM ET
> 
> By: CNBC.com With Reuters
> ...



For those of you who don't recognize the term; Bond Hawks demand higher interest "risk premiums" on securities, so while the Fed may wish to have almost 0% interest rates, bond hawks will not purchase Treasuries until the Fed offers a higher risk premium.

And an update with a more detailed analysis:

http://princearthurherald.com/news/detail/?id=054129c1-3550-46c5-b1cb-21982a939d64



> *The Federal Reserve declares war on savers*
> by Erik Scanlon
> 15 September 2012
> 
> ...



Expect more bubbles forming as low interest rates and perverse incentives by the government attract this flood of easy money, by speculators, crony capitalists and desperate savers looking for higher rates of return. F.A. Hayek is probably shaking his head in economist's heaven right now.


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## tomahawk6 (19 Sep 2012)

Can you say desperation ? 8)


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## tamouh (20 Sep 2012)

The question needs to be asked is how much should a person gain from their money sitting doing nothing with little or no risk (i.e. gov't bonds, T-Bills). Can we justify 7% interest earned now a days on GICs? I've noticed in the past 10 years that many low income and middle income families now endulge in what was considered at a time fancy stuff. Take for example the increased number of people who dine at more expensive restaurants $20+ per plate , or consider a $4 capuccino cup the norm from Starbucks. 

I believe middle class is using this low interest rate to get a taste of the rich life. While the rich is using that money to get even more rich and find something the middle class can't do yet!

Granted, we're witnessing an exceptional time. The US interest rates have not been this low since the federal reserve was established. Also, if inflation is edging up at 1.5%-3.5% annually, shouldn't our money invested in GIC gain at least  double that amount?


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## Edward Campbell (20 Sep 2012)

I pay attention to three indices: _transparency_ - which defines levels of government corruption; _education_ - which defines how "ready" a country is for change (because change always happens) and this one, _economic freedom_. This is a somewhat depressing review, reproduced under the Fair Dealing provisions of the Copyright Act from the _National Review Online_:



> America’s Vanishing Economic Freedom
> *We’re on a slippery slope.*
> 
> By Michael Tanner
> ...




On the transparency index the key ratings are:

1. New Zealnd           - Least corrupt
5. Singapore
10. Canada               - Not very corrupt at all
12. Hong Kong
24. USA                     - Not very corrupt
46. Bahrain               - Pretty corrupt
180. Afghanistan  )
182. North Korea  )   - Irredeemably corrupt
182. Somalia        )

On the educational attainment index the key ratings are much harder to define and find but, generally, Canada ranks very high, often on top, the USA is high - almost always in the top 10 on everything except standardized test scores where it is often well below the top 10, Singapore and Hong Kong score lower on _attainment_, which is measured by years in school, but very, very high on standardized test scores. Very broadly:

   + Singapore and Hong Kong are full of very smart people, most of whom do not go to graduate school;
   + Canada and New Zealand are full of reasonably smart people who often go to grad school; and
   + America has far fewer smart people but an awful lot of them go to graduate school anyway.


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## a_majoor (20 Sep 2012)

Untangling the metrics. US job figures are shady enough (my insistence on using U3 is based on wanting "real" statistics), but zerohedge shows just how bad the manipulation actually is. Note the Legacy media rarely reports the revised figures, so people may not even be aware that the awfule figures released last month have been revised upwards (the current employment figures are bad enough, but wait until the revision comes next month). The cumulative claims graph sums this up pretty well:

http://www.zerohedge.com/news/initial-claims-print-so-bad-it-actually-good-market-sees-it-bad



> Initial Claims Print Is So Bad, It Is Actually Good, That Market Sees It As Bad
> Tyler Durden's picture
> Submitted by Tyler Durden on 09/20/2012 08:49 -0400
> 
> ...


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## Haletown (20 Sep 2012)

Interesting take on the US budget situation . . at least he knows the size of the deficit.

http://www.youtube.com/watch?v=jboTeS9Okak

you can skip to minute 8+ . . .  that is where the meat hits the grill.


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## a_majoor (22 Sep 2012)

As Glenn Reynolds would say: "Unexpectedly!" Watching the US grid go down would be a catastrophy of the first order (especially since in places like Ontario we are starting to get our power needs serviced by coal generators in the Ohio Valley in order to meet ever growing demand and to stabilize our grid against fluctuations due to wind generators). The second order catastrophy will be the massive layoffs and resultant economic meltdown in the US as energy costs rise, affecting the ability of our biggest market to purchase our exports:

http://dailycaller.com/2012/09/21/report-more-than-200-coal-fired-generators-slated-for-shutdown/



> *Report More than 200 coal fired generators slated for shutdown*
> 
> Within the next three to five years, more than 200 coal-fired electric generating units will be shut down across 25 states due to EPA regulations and factors including cheap natural gas, according to a new report by the American Coalition for Clean Coal Electricity (ACCCE).
> 
> ...


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## a_majoor (23 Sep 2012)

One reason that the US economy is tanking has to do with the level of understanding most people (even so called "elites") have about economics. This inadvertently hilarious segment has a panel puzzled over why anyone would think ‘redistribution of wealth’ is bad. 

http://www.mediaite.com/tv/msnbc-panel-baffled-why-anyone-would-think-redistribution-of-wealth-is-bad/



> *MSNBC Panel Baffled: Why Anyone Would Think ‘Redistribution Of Wealth’ Is Bad?*
> video
> by Noah Rothman | 1:25 pm, September 20th, 2012
> 
> ...



"Redistribution" explains a lot about the American election, and in a greater sense what is happening in Europe and around the world. A very large segment of the population wants "free" goodies, and other people to pay for them, but it is now starkly apparent to those people who actually pay the bills that the payments are no longer sustainable, and they are no longer willing to pay. Actually, lots of people are not willing to pay beyond a certain point anyway (see how tax avoidance kicks in as taxes and fees rise), so the "Blue model" (Walter Russel Mead's term) has built in limitations due to human nature.

The model is collapsing now due to moral and financial bankruptcy, so the political story will be do the payers manage to take control and set up a controlled drawdown, or do the "redistributors" manage to fight to the last taxpayer and usher in a catastrophic collapse?


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## Edward Campbell (23 Sep 2012)

E.R. Campbell said:
			
		

> I pay attention to three indices: _transparency_ - which defines levels of government corruption; _education_ - which defines how "ready" a country is for change (because change always happens) and this one, _economic freedom_. This is a somewhat depressing review, reproduced under the Fair Dealing provisions of the Copyright Act from the _National Review Online_:
> 
> Table shows Hong Kong in 1st place, Singapore in 2nd, Canada in 5th and the USA in 18th place.
> 
> ...




Here is another index worthy of note: the World Economic Forum's report on the state of national infrastructure (Item 201). America has fallen from 5th just 10 years ago to 24th now. Canada isn't doing much better at 15th. As in so many of these _performance_ indices Singapore and Hong Kong are in the top five.


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## Kirkhill (23 Sep 2012)

E.R. Campbell said:
			
		

> Here is another index worthy of note: the World Economic Forum's report on the state of national infrastructure (Item 201). America has fallen from 5th just 10 years ago to 24th now. Canada isn't doing much better at 15th. As in so many of these _performance_ indices Singapore and Hong Kong are in the top five.



The Trans-Singapore Highway?
Hong Kong National Railways?


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## Edward Campbell (23 Sep 2012)

Kirkhill said:
			
		

> The Trans-Singapore Highway?
> Hong Kong National Railways?




Actually, Singapore has some pretty impressive highways, they emphasize (*supurb*) public mass and rapid transit to move people, and highways, some of which run, mostly, underground, to move goods. Hong Kong does have a pretty good rail system: to move people and goods. You have to see both the HK and Singapore container ports and their supporting transportation systems to understand how modern, sophisticated countries take care of business.

I know we and America have huge distances with which to cope but we also have backwards politicians who do our countries major disservices by spending wasting money on _welfare_ when building and sustaining first class infrastructure would create jobs which are always preferable to social welfare.


Edit: punctuation


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## Kirkhill (24 Sep 2012)

E.R. Campbell said:
			
		

> Actually, Singapore has some pretty impressive highways, they emphasize (*supurb*) public mass and rapid transit to move people, and highways, some of which run, mostly, underground, to move goods. Hong Kong does have a pretty good rail system: to move people and goods. You have to see both the HK and Singapore container ports and their supporting transportation systems to understand how modern, sophisticated countries take care of business.
> 
> I know we and America have huge distances with which to cope but we also have backwards politicians who do our countries major disservices by spending wasting money on _welfare_ when building and sustaining first class infrastructure would create jobs which are always preferable to social welfare.
> 
> ...



Seen and agreed.  But the fact remains that we are still stuck with MacDonald's "Curse" of too much geography.  It cost's a wheen of a lot to connect Toronto to Vancouver with not a lot of people available to pay to bills.  The good news is that those few people are incredibly rich in treasure in the form of resources in the ground.  The obverse of the "Curse" of geography.

Hewers of wood and drawers of water are not in a bad position if they have lots of wood and water and everybody else is willing to pay.

Darius built his highway system to support his government and then charged locals for the "highspeed" service.  The Romans continued the policy.

In Canada MacDonald built his railway for the same reasons,  a combination of commercial, military and bureaucratic advantages.  His short term political and economic gamble is paying Harper dividends.

If we want to continue to enjoy the good life of wide open spaces, clean water, education and a safety net then we must continue to sell "wood and water" which in turn demands focusing investment on modern versions of Darius's highways.  Keystone and  Northern Gateway come immediately to mind.   

Nobody likes a highway through their backyard either.  But we build them (Allan Expressway notwithstanding - or is that just not standing?).

Other areas of investment for Canada that make sense to me are LTA barges for moving high value goods "upriver" into remote areas, seasonal navigation systems to float commodities "down river" from those same areas and continue the development of the network of airfields across the country.  Aircraft still make the most sense for moving people around in a timely fashion in Canada - for commercial, military and bureaucratic reason.

That infrastructure will bring in wealth from abroad, create natural nodes of growth as people determine how to best capture and exploit that wealth to their own advantage (renting forklifts or selling BC Bud). 

Toronto will never look like Singapore or Hong Kong.  We need to invest in pipelines and airfields rather than subways and buses. (Or, gawdelpus, windmills).


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## Edward Campbell (24 Sep 2012)

Kirkhill said:
			
		

> Seen and agreed.  But the fact remains that we are still stuck with MacDonald's "Curse" of too much geography.  It cost's a wheen of a lot to connect Toronto to Vancouver with not a lot of people available to pay to bills.  The good news is that those few people are incredibly rich in treasure in the form of resources in the ground.  The obverse of the "Curse" of geography.
> 
> Hewers of wood and drawers of water are not in a bad position if they have lots of wood and water and everybody else is willing to pay.
> 
> ...




For the very reason you enunciated we need to do both. We need to despoil the environment, *temporarily*, the environment in which only a tiny handful of us live, so that most of us, who live in urban and suburban Canada can have first rate infrastructure. One of the easiest ways to clean the air in Toronto is to build more and *much* better mass, rapid, public transit.

I like the _Asian Tiger_ urban model: good, high capacity highways are, broadly, there to move goods, and a clean (both physically and environmentally), safe, hyper-efficient rapid, mass transit system moves people. In the HK suburbs one jumps on a small_ish_ cheap, clean (both 'cleans' again) and frequent bus which takes one to a nearby MTR station which then gets you into one of the fastest and most reliable systems in the world. HK (and Singapore) transit systems serve the _city,_ not the individual rider or the _community_. System design is done, above all else, to *make money*: lines and stations which cannot pay their way are, ruthlessly, pruned - to hell with public sentiment because, in fact, *most* of the public wants an efficient and effective system. _Asian Tiger_ politicians are not afraid to piss off a local _community_ in order to advance the bigger public good.


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## tomahawk6 (24 Sep 2012)

We need to harden our electrical grid so as to be less vulnerable to an EMP type attack,or even a major solar event that would disrupt life as we know it. It would be every greenie's wet dream to turn back the clock 200 years.


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## a_majoor (24 Sep 2012)

The WSJ deconstructs the President's answers on "60 minutes", revealing what the next several Administrations are going to have to deal with (absent a terrifying economic crash). Anyone who is serious about the issue needs to know what the numbers actually are, such as the revenues and expenditures before and after various tax cuts or historic events, in order to determine what needs to be done. The full WSJ article provides numbers and context for the interested.

Not mentioned in the 60 minutes interview or in the WSJ article is the ominous background music as the Fed continues to purchase Treasuries, and is now in possession of 27% of the outstanding volume of US Treasuries, and this is before Q3...Crushing inflation was no fun last time (in the 1980's), and will be even less fun in the near to mid term. Another thing on a future Administration's "to do" list:

http://online.wsj.com/article/SB10000872396390444358804578016270614705726.html?mod=WSJ_Opinion_LEADTop



> *The 10% President*
> The annotated Obama: How 90% of the deficit becomes somebody else's fault.
> 
> A question raised by President Obama's immortal line on CBS's "60 Minutes" on Sunday—"I think that, you know, as President, I bear responsibility for everything, to some degree"—is what that degree really is. Maybe 70% or 80% of the buck stops with him? Or is it halfsies?
> ...


----------



## Kirkhill (25 Sep 2012)

E.R. Campbell said:
			
		

> For the very reason you enunciated we need to do both. We need to despoil the environment, *temporarily*, the environment in which only a tiny handful of us live, so that most of us, who live in urban and suburban Canada can have first rate infrastructure. One of the easiest ways to clean the air in Toronto is to build more and *much* better mass, rapid, public transit.
> 
> I like the _Asian Tiger_ urban model: good, high capacity highways are, broadly, there to move goods, and a clean (both physically and environmentally), safe, hyper-efficient rapid, mass transit system moves people. In the HK suburbs one jumps on a small_ish_ cheap, clean (both 'cleans' again) and frequent bus which takes one to a nearby MTR station which then gets you into one of the fastest and most reliable systems in the world. HK (and Singapore) transit systems serve the _city,_ not the individual rider or the _community_. System design is done, above all else, to *make money*: lines and stations which cannot pay their way are, ruthlessly, pruned - to hell with public sentiment because, in fact, *most* of the public wants an efficient and effective system. _Asian Tiger_ politicians are not afraid to piss off a local _community_ in order to advance the bigger public good.



ERC:

It would be easier for me to accept your prescription IF the Canadian tax regime were stood on its head.

Singapore and Hong Kong are cities with no hinterland and yet they are self-financing.  In fact they prosper.  

If a few million people on islands can be self-financing with no visible means of support then surely our cities can be as well.

I would be considerably more accomodating if Toronto, Montreal and Vancouver were granted the taxing powers available to provinces (in fact if they were declared separate provinces) and then get left to get on with it and live their lives as they see fit.  They then would be responsible for their own futures, both pluses and minuses.

But I'm afraid, as usual, I have dragged this US topic adrift.  Probably should take up the discussion on the Canadian economy threads.


----------



## Edward Campbell (25 Sep 2012)

An interesting video here.

You can, many will, quibble with his presentation of just one year's data ~ no one suggests that anyone balance their budget is just one year, but you cannot, in honesty, disagree with his conclusion. Cuts must happen *everywhere*, including in DoD and in _entitlements_, and revenues must go up, somehow.


----------



## a_majoor (25 Sep 2012)

Balancing the budget, recapitalizing American industry or even just getting ahead is difficult when incomes keep falling:

http://news.investors.com/092512-626958-household-income-down-82-under-president-obama.aspx



> *Household Incomes Fall In Aug., Off 8.2% Under Obama*
> 
> By JOHN MERLINE , INVESTOR'S BUSINESS DAILY
> Posted 03:55 PM ET
> ...


----------



## Edward Campbell (27 Sep 2012)

Reuters reports that _"Economic growth was much weaker than previously estimated in the second quarter as a drought cut into inventories, setting the platform for an even more sluggish performance in the current quarter against the backdrop of slowing factory activity ... Gross domestic product expanded at a 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month's 1.7 percent estimate, the Commerce Department said in its final estimate on Thursday."_

It's important to remember that the GDP is still expanding, albeit very, very slowly and, in another report, Reuters also reports that _"The number of Americans filing new claims for jobless benefits fell last week to the lowest level in two months, a hopeful sign for a labor market that has struggled to gain traction in recent months."_ Now, some will argue that this hopeful number just shows that more people have given up looking for work, but on its face this little bit of data can be seen as a glimmer of hope.


----------



## Edward Campbell (27 Sep 2012)

But, on the downside, Reuters also reports that _"New orders for long-lasting U.S. manufactured goods in August fell by the most in 3-1/2 years, pointing to a sharp slowdown in factory activity even as a gauge of planned business spending rebounded ... The Commerce Department said on Thursday durable goods orders dived 13.2 percent, the largest drop since January 2009, when the economy was in the throes of a recession ... Economists polled by Reuters had expected orders for durable goods -- items from toasters to aircraft that are meant to last at least three years -- to fall 5 percent ... Manufacturing, which has been the main driver of the recovery from the 2007-09 recession, has been hit by turbulence from sluggish domestic and global demand ... Fears that the U.S. Congress could fail to avert a "fiscal cliff" -- the $500 billion or so in expiring tax cuts and government spending reductions set to take hold in 2013 -- have also left businesses with little incentive to boost production."_

A 13% fall in durable goods orders is HUGE and it is very bad news.


----------



## cupper (30 Sep 2012)

Nick Hanauer in both an article for The Atlantic, and a speech at TED debunks the myth that the Rich are the "Job Creators" but rather that it is the Consumer that creates jobs, and that we have had it all backwards for the past 30 years as to how the economy should be run.

http://www.thedailybeast.com/articles/2012/09/29/who-are-the-real-job-creators.html

http://www.theatlantic.com/business/archive/2012/09/rich-americans-arent-the-real-job-creators/262833/

http://youtu.be/bBx2Y5HhplI



> When the economy is understood in 21st-century terms, as an ecosystem, it becomes obvious that jobs don't squirt out of business-people like jelly from doughnuts. Rather, jobs are the consequence of the feedback loop between customers and businesses. For this reason, it is middle-class consumers and the demand they create that are our true job creators, not rich business-people.



Best quote from the video:



> When business people take credit for creating jobs, it's a little bit like squirrels taking credit for evolution.


----------



## Kirkhill (30 Sep 2012)

Consumers create jobs
Consumers create jobs by consuming goods and services

Goods and services require money

People without money can't by goods and services.
People without money are called destitute.
A destitute person creates no jobs.  
(Except for public service jobs).

People with little money can by few goods and services.
People with little money are called poor.
A poor person creates few jobs.
There are many poor people.
Many poor people individually creating few jobs collectively create many jobs.

People with lots of money can by many goods and services.
People with lots of money are called rich.
A rich person creates many jobs.
There are few rich people.
A few rich people individually creating many jobs collectively create many jobs.

Jobs are created by everybody.

Not difficult.


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## cupper (30 Sep 2012)

Kirkhill said:
			
		

> Consumers create jobs
> Consumers create jobs by consuming goods and services
> 
> Goods and services require money
> ...



The only problem with what your simplified analysis is that, as Hanauer points out, that even though the rich have hundreds to a thousand times the income or spending capacity, they do not spend proportionally. As he says, his family only owns  cars, not 3000. He may only buy several pairs of pants each year, not several hundred. The rich alone cannot make up for the loss of consumer spending in the lower and middle income levels.

And he also points out, if lowering taxes causes the rich to spend more creating jobs, we should be flooded with jobs that cannot possibly be filled by the current population ("we'd be flooded with jobs").

Until the ability of the lower and middle income levels to purchase returns, the economy will remain glacial in its recovery.


----------



## tomahawk6 (1 Oct 2012)

The rich create jobs. They drive the engine that powers western economies. Its the communists that believe in class warfare. It worked so well in Russia. Even the PRC is more capitalist than some western countries.


----------



## Kirkhill (1 Oct 2012)

Once the rich have bought their first two dozen cars they get tired and start buying autodealers.  A few autodealers to their credit and they want to buy GM (well maybe not GM,  but you should get the point).


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## SeaKingTacco (1 Oct 2012)

The rich also invest in things.  This provides capital for new business ventures or expansion, which, inevitably require workers to be hired.

QED.


----------



## Brad Sallows (1 Oct 2012)

The "rich spend" and "rich do not spend" schools of analysis are both wrong.  The key is investment of capital.  A consideration of what people consume should make it abundantly clear that what comes first is innovation and production (ie. supply side).  Policies which retard the flow and investment of capital, and in particular policies which motivate capital owners to park capital in save havens (eg. tax-free or tax-deferred schemes) are counterproductive if the stated aim is "to create jobs".

There is enough capital available, and tax rates are high enough if economic activity resumes at 2007 levels.  The US just needs policies more favourable to investment and with fewer unknown future costs to be weighed against current known (calculable) margins of profit.


----------



## Edward Campbell (1 Oct 2012)

I'm not sure that the US _political classes_ are ready, yet, for _"policies more favourable to investment and with fewer unknown future costs to be weighed against current known (calculable) margins of profit."_ Both sides of the aisle are still much more committed to destroying the other than to rescuing their country. The American culture wars, which are neither uniquely American nor new (they go back, in England, for about 630 years (think _Wycliffe's Bible_ etc)) are still raging and the _warriors_ are much more interested in ideology than public service.


----------



## cupper (1 Oct 2012)

The stock market is climbing back to pre melt down levels, and companies are still sitting on over $2 Billion in assets. 

Businesses are not going to invest until demand comes back, and they need to hire more workers, upgrade equipment, etc.

As we all know, there are two sides to the coin, Supply AND Demand. If demand isn't there, why bother doing anything to deal with the supply side of the equation.

So instead, all the money sits idle, or they find ways to increase the pool of money by developing risky derivatives based on securitized debt which only really achieves the result of moving money from one pile to the other. It doesn't create jobs or increase consumer confidence, therefore demand stays stagnant.


----------



## Rifleman62 (1 Oct 2012)

The US Economy will improve when the current President and the Democrats get the boot. 

Here is an ad for two men, one a Republican and one a Democrat. You decide:

http://www.therightscoop.com/blistering-new-allen-west-ad-torches-patrick-murphy-for-earlier-arrest-shows-mug-shot-in-ad/


----------



## 57Chevy (3 Oct 2012)

The U.S. Debt Clock 
from US Debt Clock.org
in real time

http://www.usdebtclock.org/


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## a_majoor (4 Oct 2012)

More real numbers. Whoever is in office on Jan 2013 had better have a real grasp of this (and the House, Senate and all the State Governors and Legislatures need to know as well). The historical data also suggests how to fix the problems:

http://news.investors.com/100312-627990-presidents-case-for-re-election-rests-on-five-claims-all-phony.aspx?p=full



> *Obama's Re-Election Case Rests On 5 Phony Claims*
> 
> By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
> Posted 10/03/2012 05:06 PM ET
> ...


----------



## Edward Campbell (5 Oct 2012)

Unemployment, rigged numbers or not, is down and the Dow closed, today, at a five year high.

Guess who's laughing all the way to the voting booth?
.
.
.
.
.
.
.
.
.
.


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## Brad Sallows (6 Oct 2012)

Sure, I guess he just captured the votes of everyone who follows the Dow-Jones index and the monthly economic reports.  But October is a hard month on the stock market indices.  It'll be a shame if this is just the calm before the end-of-October storm.


----------



## Edward Campbell (7 Oct 2012)

Greg Ip, who is not exactly an Obama partisan, looks ahead at the US economy in this column which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Washington Post_ and suggests that the next president will have cause to thank President Obama for his custodianship of the country over the past few years:

http://www.washingtonpost.com/opinions/why-a-president-romney-would-have-obama-to-thank-for-an-economic-recovery/2012/10/05/bcce947c-0d6d-11e2-a310-2363842b7057_story.html


> Why a President Romney would have Obama to thank for an economic recovery
> 
> By Greg Ip
> 
> ...




Now, many will want to argue with some of Ip's 'pluses,' reappointing Ben Bernanke, for instance, is not seen, by some, as being a good thing, others will argue that President Bush set bank reform in motion and that Obama has been hesitant, not wise, in dealing with China, but Ip's key point is that a turnaround appears to be under way and, if that's true, then it occurred on Obama's watch.


----------



## a_majoor (8 Oct 2012)

Further deconstruction of the "You didn't build that" remark. According to the US census there are over 27 million small businesses in the United States, so there is a large pool of offended voters, their employees and families out there...Perhaps the more important result of that remark is it has finally opened the door to discussions about how the US economy (and economics in general) actually works. This sort of information getting broad circulation can eventually fuel  successful movements for regulatory and tax reforms:

http://tigerhawk.blogspot.ca/2012/10/building-it-in-which-i-explain-why-you.html#.UHGUl9VGDRY.facebook



> *Building it: In which I explain why "you didn't build that" so offended business people*
> By TigerHawk at 10/07/2012 10:41:00 AM
> 
> The American left frames the current election in terms of debt -- what one group of people owes to another. In their formulation, the wealthy owe more to everybody else, their "fair share," in the politically correct expression of the idea. About a year ago, the now Democratic candidate for the United States Senate, Elizabeth Warren, won the hearts of lefties everywhere with a speech that claimed that successful businesses were fundamentally collective instead of individual accomplishments:
> ...


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## tomahawk6 (8 Oct 2012)

Twice the Obama administration has hailed an economic recovery that hasnt materialized. If Romney is elected and rolls out an economic plan that creates jobs,then he will get the credit - not Obama. Obama's failed economy is the result of his policies. He is anti-coal. Anti- oil. Pro-environment mwhich has the EPA running roughshod over entire industries. It regulation that is a huge thorn in the side of business. Obama wants higher oil/gas prices to make his green agenda work.High gas prices Nov 6 may well be Obama's undoing. Or maybe not. California has the highest gas prices in the country because of their anti-oil agenda.Yet democrats keep getting elected there.


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## Redeye (8 Oct 2012)

tomahawk6 said:
			
		

> California has the highest gas prices in the country because of their anti-oil agenda.Yet democrats keep getting elected there.



Probably comes from an understanding that who sits in the White House has no control over the price of gasoline.


----------



## SeaKingTacco (8 Oct 2012)

That is only sort of true.

California has the highest gas prices in the US, because their State Legislature has enacted laws which force oil companies to make special blends, just for that market.  They also tax gasoline more than say, Texas.

All this is to say that indirectly through policy or law, governments at various levels can affect the price of gas.


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## Redeye (8 Oct 2012)

Correct - but only indirectly. The basis of the price of gasoline remains commodity markets which are beyond the control of politicians in general. When some like to point out how cheap gas was four years ago, it's worth reminding them that at the time, the global economy was in the tank, and demand for crude oil was thoroughly sapped, meaning that the price of a barrel of crude fell dramatically - and world fuel prices along with it.


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## tomahawk6 (8 Oct 2012)

California has aging refineries and hasnt built in a new one in decades all due to the environmentalists. Drilling has been stopped off the coast. These are political decisions,not due to the markets. Throw in California's special blends and it makes it near impossible to overcome shortfalls in supply.


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## Redeye (8 Oct 2012)

The political decisions, according to people who study the stuff for a living, are moot. That means, pretty much irrelevant. It's only fodder for political discussions because low-information voters don't get that.

Drilling up every ounce offshore of the United States would barely impact the global price of oil. Ever wonder why Democrats/liberals/whatever want to pursue alternatives to oil - solar, wind, everything else? Because in the long run it'll be whole lot cheaper, and as a nice side effect, it's better for people's health.

Yes, I know this is from ThinkProgress, but all is explained here. http://thinkprogress.org/climate/2012/03/01/435330/more-drilling-wont-lower-gas-prices/ It's all referenced, you can go sources like EIA to verify everything to your heart's content. The USA simply doesn't come anywhere near close to influencing the global price of oil. It just doesn't produce enough, and it cannot.

Drilling in the US has increased dramatically under the Obama Administration (see here http://www.chron.com/business/article/U-S-oil-gusher-blows-out-projections-3341919.php), and it's done nothing to bring gas prices down especially. And refineries, while working below capacity, continue to export their products because buyers outside the US will pay more for them - that's just the basics of how the market works. Several sources earlier on at the peak of discussion of Keystone XL highlighted that it would pump product to refineries which primarily export their products - so really, it isn't going to put a lot of new product on the market in the US.


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## SeaKingTacco (8 Oct 2012)

Ok- I am going to type this slowly so you understand, Redeye.

It is physically impossible (as in the laws of physics do not allow for it, no matter what some people may wish) for solar/wind/everything else to replace oil and gas. 

There is simply not enough energy density in those forms of energy and there is no way to reliably store what little power they do generate.  What is even worse, their presence actually destabilizes the power grid, as it is near impossible to match both phase and frequency of those thousands of widely fluctuating windmills and solar panels to the wider grid.  At best, they are niche players, best employed in remote locations that are disconnected from the wider grid.

The best  thing that we could do is invest heavily in nuclear ( perhaps thorium based, instead of uranium) to take care of electricity, while reserving carbon fuels for transport purposes.


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## kevincanada (8 Oct 2012)

Redeye said:
			
		

> Drilling up every ounce offshore of the United States would barely impact the global price of oil. Ever wonder why Democrats/liberals/whatever want to pursue alternatives to oil - solar, wind, everything else? Because in the long run it'll be whole lot cheaper, and as a nice side effect, it's better for people's health.



They have to keep drilling.  Oil unlike solar is a very limited source.  One day it will be all gone.  A few hundred years from now there will not be a drop left.  Presently the only true abundant long term fuel source is Uranium.  I don't have the numbers off hand, apparently we are good for thousands of years of nuclear energy.

Wind will never work better than it does today,  solar has a slim chance of improving.  For ever cubic foot of wind that pass's through a wind trap, there is only so much associated energy and it's not a lot.  For solar to improve it needs to be radically revamped with new technology.  Our method of capturing it is horrible at best.  There are under water turbines being installed in the United States (still testing phase) that look promising,  They get installed in large high flow rivers and capture the energy that way.  Kind of like how Niagara falls spins a turbine.  They help, but still not a solution.

They have to keep drilling, just like our government keeps pushing the oil pipe lines through.  I see two good reasons for it.  First one being population growth, demand always keeps rising, the second is war.   Best be prepared, than caught with your shorts down.


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## Haletown (8 Oct 2012)

Redeye said:
			
		

> Probably comes from an understanding that who sits in the White House has no control over the price of gasoline.



Except for appointing the head of  the EPA who can and does stop oil exploration, pipeline development and refinery contruction and sets the tone for policies related to use of hydrocarbon energy.

To say nothing of setting official policies on the exploration on Federal lands, green energy subsisidies, the use of biofuels and CAFE standards.


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## Redeye (8 Oct 2012)

SeaKingTacco said:
			
		

> Ok- I am going to type this slowly so you understand, Redeye.
> 
> It is physically impossible (as in the laws of physics do not allow for it, no matter what some people may wish) for solar/wind/everything else to replace oil and gas.
> 
> ...



You know, funny enough, no need to post like an a$$. Because I completely agree (and didn't think it needed to be spelled out). We also need to conserve petroleum supplies for petrochemicals and so on. Interesting thing about wind and solar, they're fueling investigation of storage technologies so that power generated when there is no demand for it can be stored in different ways. Some interesting concepts for this exist. That will allow them to contribute substantially to peak load demand, while sources like nuclear and hydroelectric generation provide the base load requirement wherever possible. 

We can't simply stop using oil, and no one in their right mind has ever suggested that. What we can do is use it a lot more efficiently.


----------



## a_majoor (8 Oct 2012)

It's rather amazing that the political dimension of oil and other pricing needs to be debunked so often. How many times will you willfully ignore or pretend that the simple action of President George W Bush signing an executive order opening federal lands to oil exploration in 2008 caused the price of oil to crash, despite the fact that there was no time for any actual oil to have been brought into production during that time frame.

There were no other extenuating circumstances that cause the crash, simply the calculation by the commodities brokers and futures traders that a large amount of US crude oil was going to become available in the near to mid future.

Since the Obama administration took office, we have seen a complete reversal of opening lands for exploration, closing or blocking of alternative sources and even a high ranking cabinet officer saying it would be necessary to force gasoline prices to rise to European levels (which has almost been achieved in California, BTW), and markets have reacted accordingly.


----------



## kevincanada (8 Oct 2012)

Just some quick math to show how awful solar energy is.  I've converted a litre of gasoline into btu and then into electrical watts for comparison.  Assume you have one 100 watt solar panel and are receiving 15% efficiency over 24 hour period.  You'll receive 360 watts a day from the panel.  1 litre of gasoline has 8834 watts in it.  That solar panel has to run 24.5 days for my truck to travel 6 kilometres.  A 70 litre tank lasts me a week for travel.

Therefore 1 solar panel would need to operate 24 hours a day for 4.70 years, for myself to drive around for one week in my truck.


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## Edward Campbell (8 Oct 2012)

The biggest _shock_ to the US economy, not to mention the collective US psyche, will come IF Barry Eichengreen, something of an expert on monetary policy, is right and, as explained in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Financial Times_, "the dollar’s days as reserve currency are numbered:"

http://www.ft.com/intl/cms/s/0/005370e2-1137-11e2-8d5f-00144feabdc0.html#axzz28kBveJwW


> The dollar’s days as reserve currency are numbered
> 
> October 8, 2012
> 
> ...


 

The US gains hugely by having its dollar as the global reserve currency. Ben Bernanke can print more and More and MORE without as much risk of devaluation (although there is some) as would be experienced by say, Germany or Japan were they to do the same.


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## tomahawk6 (8 Oct 2012)

The only way to stop the printing of money is to tie it to silver or gold,like the good old days.


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## Haletown (8 Oct 2012)

No worries kiddies.

Obama is on the case and he is the smartest, bestest economics genius the world has ever known.  He's told us he got game, so of course we can just chill while he social justice spreads the wealth around and makes us all fair.

We can all rest easy knowing he has it all figured out and is looking after our best interests.


----------



## cupper (8 Oct 2012)

Thucydides said:
			
		

> It's rather amazing that the political dimension of oil and other pricing needs to be debunked so often.



It seems that we are both amazed, but on opposite ends of the argument. And I refer you back to my post in the election thread:

http://Forums.Army.ca/forums/threads/83554/post-1173805.html#msg1173805

But please explain to me how opening up drilling has anything more than at instantaneous short lived effect based on speculative movement in a volatile market when it takes several years to bring a well on line.

And what is with the rush to drain domestic oil reserves. The whole point of developing energy independence is to put the US into a more strategically desirable position when it comes to control of it's own economy, vis a vis the cost of energy. Unless you look at alternative energy systems, and develop said systems to become more efficient, all you will achieve is kicking the energy dependence can down the road. Once the domestic oil supplies have been exhausted, you are back to where things were in the 70's when OPEC gave the US economy a massive kick in the 'nads.


----------



## Redeye (8 Oct 2012)

Thucydides said:
			
		

> It's rather amazing that the political dimension of oil and other pricing needs to be debunked so often. How many times will you willfully ignore or pretend that the simple action of President George W Bush signing an executive order opening federal lands to oil exploration in 2008 caused the price of oil to crash, despite the fact that there was no time for any actual oil to have been brought into production during that time frame.
> 
> There were no other extenuating circumstances that cause the crash, simply the calculation by the commodities brokers and futures traders that a large amount of US crude oil was going to become available in the near to mid future.
> 
> Since the Obama administration took office, we have seen a complete reversal of opening lands for exploration, closing or blocking of alternative sources and even a high ranking cabinet officer saying it would be necessary to force gasoline prices to rise to European levels (which has almost been achieved in California, BTW), and markets have reacted accordingly.



Pretty simple. I read what people with knowledge in the field say. And none of them seem to find this line of reasoning to holds water. Literally no source I can find with any credibility on the issue whatsoever suggests that there was anything but a short term swing which ended up being relatively meaningless, and further, that there is fundamentally no reason to believe that American production will substantially alter global supply.


----------



## cupper (8 Oct 2012)

kevincanada said:
			
		

> Just some quick math to show how awful solar energy is.  I've converted a litre of gasoline into btu and then into electrical watts for comparison.  Assume you have one 100 watt solar panel and are receiving 15% efficiency over 24 hour period.  You'll receive 360 watts a day from the panel.  1 litre of gasoline has 8834 watts in it.  That solar panel has to run 24.5 days for my truck to travel 6 kilometres.  A 70 litre tank lasts me a week for travel.
> 
> Therefore 1 solar panel would need to operate 24 hours a day for 4.70 years, for myself to drive around for one week in my truck.



I'd like to see you move your truck with a 100 Watt solar panel. That would be a feat.  :sarcasm:

There are a lot of questionable assumptions in the numbers you are putting out there, the biggest is assuming that there is a 100% efficiency in conversion of the fuel to direct motive power.

Not to mention that you are comparing apples and oranges when it comes to electric versus gas powered vehicles. Also your units of measure are not compatible, one a measure of power (watts) and the other a measure of energy (BTU). Power is energy expended over time.

A better comparison would be to look at the consumption of electrical output or gasoline for equivalent sized motors / gas engines.


----------



## Redeye (8 Oct 2012)

tomahawk6 said:
			
		

> The only way to stop the printing of money is to tie it to silver or gold,like the good old days.



What good old days were those? The days of the gold standard weren't necessarily so great, yet I'm not surprised you don't know that. There's a reason that's virtually no economists consider such an idea to be anything other than completely, utterly insane. Arbitrarily tying an economy to a single commodity rarely does much good. The idea that would prevent inflation doesn't hold up to any serious scrutiny (inflation occurred when the gold standard existed, and hasn't occurred significantly in the early 1980s in North America or Western Europe for the most part). And let's not forget that the likelihood of it surviving any serious economic crisis is nearly zero, since historically the US abandoned it because of the constraints it created.

http://online.wsj.com/article/SB10000872396390444914904577619383218788846.html

http://www.bbc.co.uk/news/magazine-19422104

http://www.theatlantic.com/business/archive/2012/08/why-the-gold-standard-is-the-worlds-worst-economic-idea-in-2-charts/261552/


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## tomahawk6 (8 Oct 2012)

Pretty dismissive of data that puts the lie to your convoluted logic. The US has the resources IF tapped that would end our reliance on Middle East oil. This in turn would keep us from getting embroiled in the politics of the region. People have been saying for decades that oil is a finite resource,but somehow we have not come close to pumping all the available oil,which might just be a renewable resource courtesy of mother nature. We have recoverable coal reserves of 275b tons which could fuel our energy needs for 250 years at current consumption rates. At some point in the future I hope we can move to hydrogen to fuel vehicles,power plants and everything else.We arent there yet.

Coal facts.
http://www.clean-energy.us/facts/coal.htm

http://www.moneynews.com/StreetTalk/Steve-Forbes-Gold-Standard/2011/05/11/id/395949?s=al&promo_code=C3FC-1

The United States will likely go back on the gold standard within five years in order to correct fiscal and monetary imbalances, says former GOP presidential candidate and Forbes Magazine Publisher Steve Forbes.

 The gold standard, under which the dollar is pegged to gold instead of other currencies as it is today, was abandoned by President Richard Nixon in 1971.

 "What seems astonishing today could become conventional wisdom in a short period of time," says Forbes, according to Human Events, a conservative media website.

A return to the gold standard would stabilize the dollar by discouraging hefty fiscal spending as well as preventing the Federal Reserve from printing excess money.

 "People know that something is wrong with the dollar," Forbes says, adding "you cannot trash your money without repercussions.”

 The dollar would not only be stronger today if the gold standard were in place, it would be less volatile.

 Currency volatility has helped open the doors for speculators to invest in commodities as a hedge against swinging currency values, which has helped stoke inflationary concerns.

Harder to Borrow

 Under a gold standard, it is "much harder" for governments to borrow excessively like they are doing today, Forbes says.

 The housing bubble, partly the product of loose monetary policy, would never have been so severe under a gold standard. 

 "When it comes to exchange rates and monetary policy, people often don’t grasp" what is at stake for the economy, Forbes says. 

 By restoring the gold standard, the country would move away from "less responsible policies" and toward a stronger dollar and a stronger America, Forbes adds. 

 "If the dollar was as good as gold, other countries would want to buy it."

 Talk of returning the country to the gold standard has risen in recent months.

 Sean Fieler and Jeffrey Bell, respectively the chairman and policy director of the American Principles Project, say resurrecting the gold standard can tame the Federal Reserve's money-printing campaign.

 "Members of Congress seeking to restrict the Fed's power need to consider what oppositional force is truly capable of hemming it in," the two write in recent The Wall Street Journal editorial.

 "One answer is a revived gold standard, which would once again obligate the Fed to redeem dollars for gold at a fixed rate." 

 With the dollar weakening and with the Fed in no hurry to change its policies, gold has been soaring.

 Precious metals often do when paper currencies soften.

 Gold recently hit a record $1,577.57 an ounce, which is six times higher than the precious metal’s low in August 1999, according to Bloomberg. 

 Gold's rally did take a breather recently, falling 1.6 percent after the Wall Street Journal reported that Soros Fund Management sold precious-metal assets. 

 Still, others say the metal has a ways to go before truly peaking.

 "I'm bullish on gold despite its current levels," says Hal Lehr, Deutsche Bank’s managing director for cross-commodity trading, according to Bloomberg. 

 "It could reach $2,000 an ounce in the next eight months.


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## Fishbone Jones (8 Oct 2012)

DO NOT let this go down the path of the 2012 election thread, or start using it as a surrogate for that thread or a debate on energy, etc.

It will not be given the chances and benefit of the doubt that the other one did.

The rest of the rules still apply. Ad hominem and personal attacks are out. Back up your claims with verifyable AND legitimate sources. Politicians, no matter what you think, will be portrayed civilly.

STAY ON TOPIC!

Posts judged out of bounds will be removed without warning or explanation. 

Warnings will be issued. *This is important, as some involved in these 'discussions' have no warnings left.* The EXIT is the next step.

This post serves as your notice.

Milnet.ca Staff


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## tomahawk6 (8 Oct 2012)

Too funny Hale. Heaven forbid a return to Victorian England. Pretty dismal place for everyone but the rich. Or New York City of the same time period.


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## Redeye (8 Oct 2012)

Tomahawk6, there's simply no credible source I can find that suggests that to be true. EIA, DOE, etc all acknowledge that it isn't possible. DOE's numbers suggest that any impact on prices would be negligible, and by the time they are realized, US resources would be pretty close to exhausted. And that doesn't tackle the other issue I mentioned earlier, that nothing will stop producers and refiners expiring their product if they can get more money that way. There often seems to be a subtext that domestic production will necessarily go to domestic markets but there is no rational basis for this assumption. 

Posting an opinion piece by Steve Forbes doesn't sway me at all. I don't see any real evidence that any mainstream candidate would seriously pursue a gold standard, and the suggestion of a committee (in which the idea would simply die) is a concession to attract voters from the Ron Paul camp. From the perspective of both mainstream economists, and even average Americans, it neither fixes any problems, nor offers any attractive benefits worth the impact it would have. See where he talks about the housing bubble? Why would that come to and end? Because consumer credit in general (which allows Americans and others to a great extent the lifestyle they desire) would come to a crashing, abrupt halt potentially. There are other ways to address the issue. As the Atlantic article above highlights in its two charts, the big pitch about inflation control via a gold standard does not actually have any basis in history.

Trying to turn energy policy into soundbites doesn't work. Ultimately the US economy will benefit from establishing more energy independence, but that is a lot more complicated that "drill baby drill". It will necessarily involved development of new sources of energy, and better uses of existing ones - especially those which are scarce. To me that ties well to the Nouriel Roubini piece Mr. Campbell posted in the Global Economy thread - that governments bound to election cycles have no particular incentive to look at long term policy. Roubini notes, however, that governments with no such worries (China, for example) are generally so risk averse that they don't look at bold changes too fondly either.

The solution seems, to me at least, dependent on good policy frameworks that manage existing resources and encourage initiative in developing new energy sources. In broader terms for the US economy, given that the heydays of a robust manufacturing economy are over and not coming back, this could be the direction the US has no option on. It's often bemoaned that China and India are churning out engineers and the like at a rapidly increasing rate, and maintain a manufacturing base at far lower cost. That positions them well to be able to overtake American innovation if no effort is made to keep that competitive advantage.

Problem is developing policies that don't simply create red tape that chokes off the economy, but that don't simply become a "cost of doing business" while not accomplishing the actual goal. Fuel economy standards come to mind, where as I recall companies whose product offerings who not hit targeted average fuel economy simply pay fines, which are just to them a cost of selling the product. I don't have an easy answer for that though.


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## cupper (8 Oct 2012)

recceguy said:
			
		

> DO NOT let this go down the path of the 2012 election thread, or start using it as a surrogate for that thread or a debate on energy, etc.




How could you discuss or debate aspects of the US economy without bringing up the election, politics, or energy policies? They all have an effect on the economy in one way or another?

That being said, I do agree with your warning about this spiraling in the same way as the election thread. And I fear that your warning will not be enough. I hope we're both wrong, but as some of my opponents have pointed out in the past, hope is no substitute for policy and action.


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## tomahawk6 (8 Oct 2012)

The Presidents plan to manage our resources is to not drill and to tax/regulate coal to the point where they have to shut down. Instead we are spending billions on green energy that is not viable. We are seeing food prices spike because of ethanol. Ethanol is poor substitute for gasoline and it increases the cost of living. We dont need to go hungry when we have the resources to produce gasoline and plenty of corn for food. The President is responsible for the state of the economy. Harry Truman had a placard on his desk "The Buck Stops Here". The man in charge gets the glory when things go well and when they dont he gets the blame. Its the way it should be.


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## GAP (8 Oct 2012)

I think we should reopen the election thread with strict priviso's....there's too much juicy stuff happening and it fun to watch the  :deadhorse:    ;D


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## Brad Sallows (8 Oct 2012)

"Wind" and "solar" ain't gonna do it for the foreseeable future.  (Solar, maybe, after we have the infrastructure to deploy solar power satellites in sufficient mass).  Reality check (time for one of these diagrams again):

Where energy comes from, and where it goes to (in the US)


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## cupper (8 Oct 2012)

tomahawk6 said:
			
		

> The Presidents plan to manage our resources is to not drill and to tax/regulate coal to the point where they have to shut down. Instead we are spending billions on green energy that is not viable. We are seeing food prices spike because of ethanol. Ethanol is poor substitute for gasoline and it increases the cost of living. We dont need to go hungry when we have the resources to produce gasoline and plenty of corn for food. The President is responsible for the state of the economy. Harry Truman had a placard on his desk "The Buck Stops Here". The man in charge gets the glory when things go well and when they dont he gets the blame. Its the way it should be.



You can't lay the blame for the Ethanol subsidy at the feet of the current administration. Lay it where it belongs, at the feet of the corrupt political system where lobbyists for the ethanol industry pour $millions into election coffers of a congress that is afraid to eliminate corn subsidies. I agree whole heartedly with you that there is no more stupid idea than shifting food resources to produce a fuel substitute which only results in a rise in the price of the fuel.

As for the coal industry, government policies are not to blame for the down turn in the industry. It is the drop in natural gas prices that has made coal uneconomical. Power plants are switching to cheaper and cleaner gas fired systems. Blame the loss of coal jobs on improvements in drilling technology.

But in the long term, we need to find alternate sources of fuel and energy if security is to be achieved. Simply using up the reserves that are there now while we can get at them as I said before only kicks the problem down the road. By developing policies that increase the choice of energy systems available while at the same time secure the existing domestic sources only makes sound judgement, as decreased demand on fossil fuels will help to secure future needs with domestic sources.


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## Fishbone Jones (8 Oct 2012)

cupper said:
			
		

> How could you discuss or debate aspects of the US economy without bringing up the election, politics, or energy policies? They all have an effect on the economy in one way or another?
> 
> That being said, I do agree with your warning about this spiraling in the same way as the election thread. And I fear that your warning will not be enough. I hope we're both wrong, but as some of my opponents have pointed out in the past, hope is no substitute for policy and action.



You can talk about energy and the economy without it turning into the Global Warming Superthread.

Staff


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## Fishbone Jones (8 Oct 2012)

GAP said:
			
		

> I think we should reopen the election thread with strict priviso's....there's too much juicy stuff happening and it fun to watch the  :deadhorse:    ;D



No

Staff


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## GAP (8 Oct 2012)

Ahh....gee.... ;D


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## Haletown (11 Oct 2012)

Very interesting speech by the  Dallas Fed CEO  . . . 


The closing humor but do read the entire speech.

"A friend of mine from Los Angeles recently encapsulated the difference between California and Texas in a short story that you Cato-ites might find amusing:

“The governor of California is jogging with his dog along a nature trail. A coyote jumps out and attacks the governor’s dog, then bites the governor. The governor starts to intervene, but reflects upon the movie Bambi and then realizes he should stop because the coyote is only doing what is natural.

“He calls animal control. Animal control captures the coyote and bills the state $200 for testing it for diseases and $500 for relocating it. He calls a veterinarian. The vet collects the dead dog and bills the state $200 for testing it for diseases. The governor goes to the hospital and spends $3,500 getting checked for diseases from the coyote and getting his bite wound bandaged.

“The running trail gets shut down for six months while the California Fish and Game Department conducts a $100,000 survey to make sure the area is now free of dangerous animals. The governor spends $50,000 in state funds implementing a ‘coyote awareness program’ for residents of the area. The Legislature spends $2 million to study how to better treat rabies and how to permanently eradicate the disease throughout the world.

“The governor’s security agent is fired for not stopping the attack. The state spends $150,000 to hire and train a new agent with additional special training, re: the nature of coyotes. People for the Ethical Treatment of Animals (PETA) protests the coyote’s relocation and files a $5 million suit against the state.

“The governor of Texas is jogging with his dog along a nature trail. A coyote jumps out and tries to attack him and his dog. The governor shoots the coyote with his state-issued pistol and keeps jogging.

“The governor spent 50 cents on a .380-caliber, hollow-point cartridge. Buzzards ate the dead coyote.

“And that, my friends, is why California is broke and Texas is not.”




http://www.dallasfed.org/news/speeches/fisher/2012/fs121010.cfm


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## Edward Campbell (16 Oct 2012)

An interesting analysis, reproduced under the Fair Dealing provisions of the Copyright Act from _Bloomberg View_:

http://www.bloomberg.com/news/2012-10-15/sorry-u-s-recoveries-really-aren-t-different.html


> Sorry, U.S. Recoveries Really Aren’t Different
> 
> By Carmen M. Reinhart and Kenneth S. Rogoff
> 
> ...




Looks like _*American exceptionalism*_ doesn't exist anywhere.


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## Nemo888 (16 Oct 2012)

They were one time and it was a total fluke.

After WWII they had the only production facilities that were not bombed into rubble and a huge market in those nations decimated by war. They also stole most of the great minds of Europe, Germany in particular. They took all these Einsteins and put them to work. Many became professors and joined American academia. Then the government stimulated the economy by spending ludicrous amounts by today's standards on infrastructure and FREE post secondary education to ALL veterans. Vets got educated by the best minds in the entire world. 

Voila, one of the most amazing meritocracies in history for a single generation. They are not called the Greatest Generation for nothing.


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## a_majoor (16 Oct 2012)

More by the numbers:


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## a_majoor (18 Oct 2012)

Most people already grasp the problem. I'm surprised the RNC hasn't come out with "It's the spending, stupid" as the unofficial election slogan. Here are the numbers (and despite the better predictions under a Romney administration, they are still out of sync; they would have taxes at 18% of the GDP while spending is still 20% of the GDP. One can only hope the spending could be brought down to 17% of the GDP so the debt trend line goes down rather than up...)

http://news.investors.com/101812-629794-sky-high-spending-not-bush-tax-cuts-drives-deficits.aspx?p=full



> *Sky-High Spending, Not Bush Tax Cuts, Drives Deficits*
> 
> By JOHN MERLINE, INVESTOR'S BUSINESS DAILY
> Posted 08:05 AM ET
> ...


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## a_majoor (21 Oct 2012)

One of the huge detriments to reform is the powerful lobby groups that exist to protect and extend tax loopholes at the expense of everyone else. While this plan may not be original (I am fairly sure I have seen some variation of this idea in the past), the fact that it is now a serious proposal in a Presidential campaign should give it some legs and traction. WSJ opinion via Tax Prof Blog:

http://taxprof.typepad.com/taxprof_blog/2012/10/wsj-romneys-tax-deduction-cap-good-economics-better-politics.html



> *WSJ: Romney's Tax Deduction Cap: Good Tax Policy, Better Politics*
> 
> Wall Stret Journal editorial:  Romney's Tax Deduction Cap:  An Idea to Finance Reform and Avoid Political Trench Warfare:
> 
> ...


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## a_majoor (23 Oct 2012)

If you really need to find the root cause of the economic difficulties facing the United States today, read this and remember this person has the right to vote in any Municipal, State and Federal election....

http://www.democraticunderground.com/?com=view_post&forum=1002&pid=1600092



> If You Have The Ability to Create Your Own Currency, How Can You Ever Be Broke? [View all]
> 
> Let's say that you have the ability to print your currency using your computer printer, and every merchant accepted your printouts as a valid exchange for goods and services. You need to pick up your dry cleaning? You printout a $20 bill and your cleaners hand over your garments without question. Same would be true for your mortgage, groceries, car note, etc. Your creditors even accept your printouts as payment on your debts.
> 
> ...


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## Edward Campbell (28 Oct 2012)

Here, reproduced under the Fair Dealing provisions of the Copyright Act from the _Washington Post_ is a thoughtful prescription from two distinguished American statesmen. While some members here will disagree, those who do not support Pete Domenici and Sam Nunn are, in my opinion, putting their own partisan political ideology ahead of their civic duty towards their country:

http://www.washingtonpost.com/opinions/pete-domenici-and-sam-nunn-building-a-better-fiscal-cliff/2012/10/26/caf63816-1e11-11e2-ba31-3083ca97c314_story.html


> Opinions
> Building a better ‘fiscal cliff’
> 
> By Pete Domenici and Sam Nunn,
> ...




And there it is: a simple, clear call for a _*grand bargain*_ that, unless one party or the other wins the White House and big majorities in both the House and Senate, must be bipartisan.

I agree with Domenici and Nunn: the _grand bargain_ must include both spending cuts (deep ones) and new revenue.

But I fear that the culture wars which are raging in the USA will drown out the rational people.


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## a_majoor (2 Nov 2012)

Look for the mad rush as people respond to the incentive (or rather disincentive). I'm not sure what the downstream effect wil be; lots of people will be sitting on cash, but depending on the outcome of the election(s) they may choose to sit on it or reinvest. Paying off personal and corporate debt is also an option:

http://online.wsj.com/article/SB10001424052970204789304578088931525397120.html?KEYWORDS=looming+tax+hike



> *Looming Tax Hike Motivates Owners to Sell*
> Article
> 
> By JOHN D. MCKINNON
> ...


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## Edward Campbell (7 Nov 2012)

Some helpful (to those who want to _*understand*_ what's happening rather than just bitch about it) comments on what last night's election results mean for the US Economy are reproduced under the Fair Dealing provisions of the Copyright Act from the _BBC_:

http://www.bbc.co.uk/news/business-20239114#TWEET341326


> US election: Four more years... of what?
> *Americans voted for four more years of President Obama - but what else did they vote for?*
> 
> Stephanie Flanders, Economics editor
> ...




While I agree with Stephanie Flanders that the Fiscal Cliff is not as "steep" as many analysts say - the Pentagon's budget cuts, for example, need not, most likely will not, produce the kinds of disasters the defence industry claims, and while I also agree that the Congress can, procedurally, step back - maybe, I disagree about the Fiscal Cliff's potential to push the US back into recession.

Flanders also, correctly, highlights the HUGE gap between Obama and the _Norquist Republicans_ - is it bridgeable?


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## a_majoor (7 Nov 2012)

Perhaps a better primer for what the next four years will look like can be found here:

http://www.amazon.com/The-Forgotten-Man-History-Depression/dp/0066211700


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## Edward Campbell (7 Nov 2012)

Thucydides said:
			
		

> Perhaps a better primer for what the next four years will look like can be found here:
> 
> http://www.amazon.com/The-Forgotten-Man-History-Depression/dp/0066211700



Or you could try: http://www.amazon.com/Essays-Great-Depression-Ben-Bernanke/dp/0691118205/ref=sr_1_3?s=books&ie=UTF8&qid=1352295138&sr=1-3&keywords=ben+bernanke%27s+books

Zhou Enlai was right, you know, back in 1972, when he (might have)* suggested that it was "too early" to consider the outcome of the French Revolution. There is still a lot of history to be read before we decide if either Shales or Bernanke is more right about the Great Depression.


_____
* It is very possible, even more likely that Zhou was responding to something else Kissinger said, about a more recent event ... but.


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## a_majoor (7 Nov 2012)

This is how the next four years is going to look, summed up in a single "tweet"

https://twitter.com/DaveRamsey/status/266164099770118145



> Expect the rich to dig in to survive big taxes rather than invest in the economy. Hope I am wrong. Good luck on new jobs.


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## Nemo888 (7 Nov 2012)

Ya, because the Bush years of cutting taxes to the rich and deregulating worked so well.  :


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## Nemo888 (7 Nov 2012)

P.S. mods please fix my account. I can't edit my posts.


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## muskrat89 (7 Nov 2012)

> Ya, because the Bush years of cutting taxes to the rich and deregulating worked so well.




Rolling eyes and sarcasm are what got all of the other threads locked. Knock it off.

Army.ca Staff


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## a_majoor (7 Nov 2012)

It's OK Muskrat. If Nemo can pull out graphs and charts with the timelines when the US deficit started exploding, unemployment went up, labour participation declined, median US incomes declined and so on he will have lots of reasons to start rolling his eyes. Plenty of these sorts of historical charts and analysis exist on this thread alone, so it isn't like there is a lack of information.

In the mean time, the Legacy Media is suddenly going to discover the following economic issues, which will kick in starting in December of this year. We will collectively have to be prepared to deal with the fallout of these issues for the next four years, as our largest trading partner grapples with them:

http://news.investors.com/ibd-editorials/110712-632397-five-stories-the-media-have-buried-.htm?src=IBDDAF&p=full



> *5 Big Stories The Media Will 'Discover' After The Election*
> Posted 09:42 AM ET
> 
> Now that the election is over, one thing is clear the country will have to deal with several major problems that the mainstream media largely ignored to protect President Obama.
> ...


----------



## Remius (7 Nov 2012)

E.R. Campbell said:
			
		

> Some helpful (to those who want to _*understand*_ what's happening rather than just ***** about it) comments on what last night's election results mean for the US Economy are reproduced under the Fair Dealing provisions of the Copyright Act from the _BBC_:
> 
> http://www.bbc.co.uk/news/business-20239114#TWEET341326
> 
> ...



A good article, worth look here http://www.spiegel.de/international/world/divided-states-of-america-notes-on-the-decline-of-a-great-nation-a-865295.html

A bit more doom and gloom though and about the state of the US and where it is heading.  Maybe a bit too negative but some points are well worth keeping an eye on.  It also touches on the Fiscal Cliff and why it could push the US back into recession.


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## Edward Campbell (8 Nov 2012)

The _Wall Street Journal_ did a survey of business leaders, the (approximate) results are:

20% believe Washington/politicians will lead the US over the Fiscal Cliff, probably triggering another recession;

20% believe Washington/politicians will make a fiscal deal to avert the Fiscal Cliff, probably avoiding a recession; and

60% believe Washington/politicians will craft a "phony," procedural "patch" that will "waive" the Fiscal Cliff and, thereby postpone the crisis, but which may, still, trigger a recession.


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## Edward Campbell (8 Nov 2012)

Here, reproduced under the Fair Dealing provisions of the Copyright Act from _The Economist_, is that newspaper's editorial take (written, I believe, by Greg Ip) on what's next:

http://www.economist.com/news/united-states/21566004-barack-obama-and-republicans-have-precious-little-time-act-cliff-and-beyond?fsrc=scn/tw_ec/to_the_cliff_and_beyond


> To the cliff, and beyond
> *Barack Obama and the Republicans have precious little time to act*
> 
> Nov 10th 2012
> ...




I agree that there are _procedural_ ways to move the Fiscal Cliff "off to the right" (in time) thereby postponing hard choices but eventually America, writ large, must come to grips with the fact, and it is a fact, that its government spends too much and, consequently, borrows too much and that there is too much foreign borrowing.

In pure economic terms, taxes do not need to be raised, indeed should not be raised, so, in those very narrow terms, Grover Norquist is right. But he and the many, many Republicans who have signed his "no tax hike" pledge are wrong. A tax hike may be a necessary political trade-off for very necessary spending cuts and tying one's own hand behind one's back is not, at least not where I learned fist-fighting, a good tactic. Ditto defence cuts; many American think that there are no possible cuts to the Pentagon budget - maybe not, but some may be politically necessary to get the needed cuts in entitlements.

My take:

1. Real, honest, comprehensive tax reform - which will take a year or to to write and another year or two to enact - can raise a ton of revenue. Tax increases are not necessary, but a tax increase for millionaires may be an acceptable trade-off;

2. The defence budget can be cut without doing any real, lasting harm to national security - I don't know how big the "safe" cuts can be but I am 99.99% certain that the US defence budget is bloated; and

3. Social _entitlements_ must be reformed, somehow, because that spending is unsustainable at current rates.

I believe President Obama and the Congressional leadership can come to an agreement along the above lines, I think President Obama and Speaker Boehner did so about a year ago. But: I am not sure that Speaker Boehner can bring his own caucus onside and I also doubt that President Obama and Senate Majority Leader Reid can convince enough (five) GOP senators to break ranks and support a tax increase on millionaires. Thus, I fear that Washington will fail and, either:

1. Force the Fiscal Cliff to do what politicians lack the courage to do themselves; or

2. Kick the can farther down the road, making the problem worse and the eventual solution more painful.


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## a_majoor (9 Nov 2012)

Some predictions. These are well grounded in reality, and (sadly) are probably the most "positive" set I have seen so far. I don'tthink I have enough time or resources to deal with the fallout of the US jumping over the fiscal cliff, but _everyone_ is going to have a very bumpy ride:

http://johnhcochrane.blogspot.ca/2012/11/predictions.html



> *Predictions*
> 
> I did a short spot on NPR's Marketplace this morning (also here). The announced topic was what I thought would happen to economic policy after the election. Jeff Horwich, the interviewer wanted to stitch together a story about everyone is going to get together and play nice now, which seemed like a fairly pointless line to pursue. What "I would do" is now off the table, and I didn't think it worth arguing with Jared Bernstein's repetition of Obama campaign nostrums.
> 
> ...


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## Edward Campbell (9 Nov 2012)

And here, reproduced under the Fair Dealing provisions of the Copyright Act from the _New York Times_, is why Nobel Prize winning economist and Democratic Party guru Paul Krugman thinks that the cost of avoiding the Fiscal Cliff might be higher than just accepting it:

http://www.nytimes.com/2012/11/09/opinion/krugman-lets-not-make-a-deal.html?smid=tw-share&_r=0


> Let’s Not Make a Deal
> 
> By PAUL KRUGMAN
> 
> ...




A lot of influential Democrats, including the folks who work and live in the White House, will have read this and many (maybe even most?) heads will be nodding  :nod: .


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## a_majoor (9 Nov 2012)

(Best GlennReynolds impersonation) "Unexpectedly!"

http://datechguyblog.com/?p=42080



> An Unexpected Parade of Events
> by Datechguy | November 8th, 2012
> 
> The first event this week for me that was unexpected was Mitt Romney’s defeat, the second was Question #2′s defeat
> ...



If this is the sort of news that is really happening (or just being reported now that the election is over), then the fiscal cliff is going to be the opening af a very long period of free fall as revenues collapse due to the suspension of wealth creation. In 1937-38 this was known as the Capital Strike, and was the worst year overall in the Great Depression.


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## Edward Campbell (10 Nov 2012)

More on the Fiscal Cliff, this time in an article by well known Canadian _conservative_* Brian Lee Crowley which is reproduced under the Fair Dealing provisions of the Copyright Act from the _Ottawa Citizen_:

http://www.ottawacitizen.com/opinion/columnists/praise+fiscal+cliff/7526848/story.html


> In praise of the fiscal cliff
> 
> By Brian Lee Crowley, Ottawa Citizen
> 
> ...




There's nothing really new here, but it shows why too much panic may be misplaced.


-----
* Please note the small *c*


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## Edward Campbell (15 Nov 2012)

Mohamed El-Erian, CEO of the global investment giant PIMCO, forcasts new, higher taxes for some (many?) Americans in President Obama's second term in this article which is reproduced under the Fair Dealing provisions of the Copyright Act from _Fortune_ via _CNN Money_:

http://finance.fortune.cnn.com/2012/11/13/obama-tax-rich-el-erian/?iid=SF_F_River


> Obama will tax the rich more
> 
> Obama will tax the rich more
> 
> ...




My, personal, opinion is that higher taxes, while probably counterproductive in the medium and long term, are justifiable in the immediate and short terms ~ for the *appearance* of _fairness_ at least. But it is more important to get spending, including both entitlement (social) and defence spending, under control.


_____
Evidently the Mods do not regard the state of the US economy as being a matter of "International Defence" or "Security," but 'Hitler' clothing store ... and Taliban Sodomy are ...  ???


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## Infanteer (15 Nov 2012)

E.R. Campbell said:
			
		

> Evidently the Mods do not regard the state of the US economy as being a matter of "International Defence" or "Security," but 'Hitler' clothing store ... and Taliban Sodomy are ...  ???



Not really, but we have decided that too much of our time is taken to moderating discussions on the disfunctional politics to the south, to the detriment of the sit, so we've binned it all in radio chatter as the finer points of U.S. politics is not the goal of this forum.


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## cupper (23 Nov 2012)

*Saxby Chambliss takes aim at Grover Norquist*

http://www.politico.com/news/stories/1112/84176.html?hp=l1



> Sen. Saxby Chambliss took aim at Americans for Tax Reform head Grover Norquist on Wednesday, telling a local television station he’s not worried about a potential primary challenge if he votes to raise taxes.
> 
> “I care more about my country than I do about a 20-year-old pledge,” said Chambliss, who signed Norquist’s “Taxpayer Protection Pledge” when he first ran for Senate. “If we do it his way, then we’ll continue in debt, and I just have a disagreement with him about that.”
> 
> ...


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## a_majoor (24 Dec 2012)

More regulatory failure. ZIRP will affect our economy as well, since the economic distortions will ripple through the US economy and affect the ability of our American customers to purchase our goods and services. (It will also affect the American economy as a whole, not for the better, by creating yet another asset bubble to burst later down the road):

http://www.weeklystandard.com/articles/we-ve-been-zirped_666600.html?nopager=1



> *We’ve Been ZIRPed*
> The perils of the zero interest rate policy.
> Dec 24, 2012, Vol. 18, No. 15 • By ANDY KESSLER
> 
> ...


----------



## cupper (24 Dec 2012)

I agree to a certain point with the author. I've felt that minimal or zero interest rate policies is both a blessing and a curse.

It is a blessing for those who are looking to borrow, because the historically low interest rates allows businesses to make capital purchases, and in some cases it can work out as a positive because incentives actually make the cost of borrowing a negative rather than positive value.

And for government wanting to do infrastructure renewal and investment, the same holds, although there isn't any going on (except quasi government bodies like state turnpike authorities which are not under DOT authority) .

The curse is on the investment side where there is no return on investment, and losses are incurred due to fees and so forth.

I've been wondering if the Fed's policy has been bass ackwards, and if even a small increase in rates by 1 to 2 % so that there was at least a breakeven for savings and safe investment instruments that some of the money that business is sitting on may start moving again.

But even that may not be enough. The uncertainty that currently exists in the economy, particularly with the approach to the fiscal low slope to nowhere. We've seen that the kick the can approach has only prolonged the uncertainty that came in after the markets bottomed out after the housing bubble burst.

If we're still talking about this by this time next year, it will have dire consequences for all members of congress, and the people will be completely fed up and ready for blood.


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## a_majoor (5 Jan 2013)

Attempting to fleece the taxpayers to the end, CalPERS is suing the very cities it has helped drive into bankruptcy (through extravagent pension and benefit obligations that civic politicians were stupid enough to sign on) in order to muscle out legitimate bondholders and creditors. (This is very much like what happened to the legitimate owners of GM and Chrysler, only that time the US government overrode the law). If CalPERS wins, there will be a huge domino effect across California as more cities get their bonds downgraded in anticipation of this happening to them as well:

http://www.bloomberg.com/news/2012-11-28/calpers-seeks-to-sue-san-bernardino-over-missed-pension-payments.html



> *Calpers Seeks to Sue San Bernardino Over Pension Payments*
> By Steven Church & James Nash - Nov 29, 2012 12:01 AM ET
> 
> The California Public Employees’ Retirement System is seeking to sue bankrupt San Bernardino over missed pension payments, the second potentially precedent- setting fight the fund picked with a California city this year.
> ...


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## GAP (10 Jan 2013)

And it just never ends


The latest U.S. foreclosure horror story: Curse of the zombie title
Michelle Conlin, Reuters | Jan 10, 2013 10:22 AM ET | Last Updated: Jan 10, 2013 
Article Link

These people have become like indentured serfs, with all of the responsibilities for the properties but none of the rights

COLUMBUS — Joseph Keller doesn’t expect he’ll live to see the end of 2013. He blames the house at 190 Avondale Avenue.

Five years ago, Keller, 10 months behind on his mortgage payments, received notice of a foreclosure judgment from JP Morgan Chase. In a few weeks, the bank said, his three-story house with gray vinyl siding in Columbus, Ohio, would be put up for auction at a sheriff’s sale.

The 58-year-old former social worker and his wife, Jennifer, packed up their home of 13 years and moved in with their daughter. Joseph thought he would never have anything to do with the house again. And for about a year, he didn’t.

Then it started to stalk him.

First, in 2010, the county sued Keller because the house, already picked clean by scavengers, was in a shambles, its hanging gutters and collapsed garage in violation of local housing code. Then the tax collector started sending Keller notices about mounting back taxes, sewer fees and bills for weed and waste removal. And last year, Chase’s debt collector began pressing Keller to pay his mortgage, which had swollen, with penalties and fees, from $62,100.27 to $84,194.69.

The worst news came last January, when the Social Security Administration rejected Keller’s application for disability benefits; the “asset” on Avondale Avenue rendered him ineligible. Keller’s medical problems include advanced liver disease, hepatitis C and inactive tuberculosis. Without disability coverage, he can’t get the liver transplant he needs to stay alive.

“I can’t make it end,” says Keller. “This house, I can’t get out.”

Keller continues to bear responsibility for the house because on Dec. 23, 2008 – about two months after he received Chase’s notice of sale – the bank filed to dismiss the foreclosure judgment and the order of sale. Chase said it sent Keller a copy of its court filing on Dec. 9, 2008. Keller says he never received any notification. Either way, his name remained on the property title.
More on link


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## a_majoor (14 Jan 2013)

Very interesting. The US Federal system was designed with this sort of thing in mind; laboratories of democracy where competing ideas could be tested and the best ones eventually adopted by all. It will be very interesting to see the contrasting results (especially in the 12 Blue States which will be raising taxes in concert with the Federal Government). People planning travel and investment in the United States can add these factors to your planning:

http://www.reuters.com/article/2013/01/13/us-usa-tax-states-idUSBRE90C08C20130113



> *U.S. states flirt with major tax changes*
> 
> By Nanette Byrnes
> 
> ...


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## cupper (15 Jan 2013)

Seems that there is a trend:

*U.S. Reports Best Budget Result for December Since 2007*

http://www.bloomberg.com/news/2013-01-11/u-s-reports-most-favorable-december-budget-result-since-2007.html



> The U.S. government budget deficit narrowed to its best December monthly result in five years, reflecting higher revenue, lower spending and calendar-driven shifts in some payments.
> 
> The shortfall last month shrank almost completely to $260 million from $86 billion in December 2011, according to Treasury Department data issued today in Washington. The gap was smaller than the $1 billion median estimate in a Bloomberg survey of economists. Through the first three months of this fiscal year, the deficit was 9.1 percent smaller than the same period last year.
> 
> ...


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## a_majoor (27 Jan 2013)

Yes, there are trends in the US economy:

http://pjmedia.com/tatler/2013/01/26/illinois-credit-rating-now-worst-in-the-nation/?print=1



> *Illinois Credit Rating Now Worst in the Nation*
> 
> Posted By Rick Moran On January 26, 2013 @ 10:52 am In Politics | 9 Comments
> 
> ...


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## a_majoor (8 Feb 2013)

To the cliff, part II. Now the GOP has some leverage, lets see if they have some spine:

http://fullcomment.nationalpost.com/2013/02/08/charles-krauthammer-obama-hands-republicans-leverage-for-spending-cuts/



> *Charles Krauthammer: Obama hands Republicans leverage for spending cuts*
> 
> Charles Krauthammer | Feb 8, 2013 6:04 AM ET | Last Updated: Feb 7, 2013 1:24 PM ET
> More from Charles Krauthammer
> ...


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## a_majoor (12 Feb 2013)

The US economy seems to be littered with these landmines. Cleaning up the mess will be a generational task (even if the Millenials say "screw this" and refuse to pay for Medicare, Social Security, extravagant government pensions and the like there will still be a huge and chaotic period of adjustment. In my opinion that will still be much shorter and less painful overall than many of the other possible outcomes...)

http://blogs.the-american-interest.com/wrm/2013/02/11/california-cheating-young-with-toxic-bonds/



> *California: Already Stoking the Next Big Financial Crash?*
> Walter Russell Mead
> 
> The next financial market meltdown may already be brewing: not in the housing market, this time, but in municipal bonds. Greedy bankers, opportunistic politicians and hobbled regulators are putting a time bomb in the muni market that could set off another devastating crash.
> ...


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## cupper (12 Feb 2013)

What is scary about the California situation is that it is the result of democracy run amok. It would be a fairly simple solution to repeal the various props that forced the State to fund this and fund that without allowing the requisite funding to be paid for. They can't cut, they can't raise taxes, or generate more revenue.


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## a_majoor (15 Feb 2013)

The various Props are part of a deeper malady; the Californians seem to believe that wealth and prosperity can be created out of thin air.

Prop 13 (the first one which limited taxation) should have resulted in the State legislature reigning in expenditures, which was the intention of the bill. Instead, the legislature has been using clever accounting for several decades to bypass the limitations imposed by Prop 13; while various special interest groups attempt to bypass the State legislature, the bureaucracy and each other with competitive Propositions.

So long as California has been able to borrow money, raise taxation and fees and get people to turn a blind eye to the effects of their increasingly dysfunctional governance (they had time to pass a law banning the sale and production of _Foie Gras_, but still don't have any way to cover non funded liabilities), they have been able to get away with it. Today, Governor Rick Perry of Texas is boldly poaching business from California to Texas, and other States like Arizona, New Mexico and even Utah have become attractive destinations for California business.

Since  the Legislature is deeply in the pockets of various special interest groups, we will not see a repeal of the Props, but rather an epic battle to the last taxpayer in order to retain the special perques and privileges. IF you save now, you may be able to buy up large amounts of California at fire sale prices soon.


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## cupper (15 Feb 2013)

Thucydides said:
			
		

> Today, Governor Rick Perry of Texas is boldly poaching business from California to Texas, and other States like Arizona, New Mexico and even Utah have become attractive destinations for California business.



But the down side is that it further erodes the tax base in California, and creates no net new jobs nationally. In some cases it ends up eliminating jobs. And the tax incentives used to lure them doesn't do much for the economy in the new location either.

Not to say that companies that move shouldn't. It would be a poor business decision not to move.


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## a_majoor (24 Feb 2013)

When President Obama claimed that Obamacare would bend the cost curve, he was right. Just not in the way most people who listened or voted for it believed...

http://online.wsj.com/article/SB10001424127887324616604578304072420873666.html?mod=WSJ_hp_mostpop_read



> *ObamaCare and the '29ers'*
> How the new mandates are already reducing full-time employment.
> 
> Here's a trend you'll be reading more about: part-time "job sharing," not only within firms but across different businesses.
> ...



Permanent, long term unemployment and underemployment will not only dramatically reduce the stock of savings and wealth now, but leave a smaller foundation of wealth and skilled workers for any recovery to build from. As well, trading partners like Canada will find the market for their goods and services diminished as well (with U3 at over 10%, the population of adult Americans who are unemployed is about equal to the size of the entire Canadian population).


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## GAP (24 Feb 2013)

Did anyone think of the bragging rights that come out of xx employees hired when the stats come out....the employment #s go down, the jobs created go up!! 

That means they don't qualify for unemployment insurance, welfare, et al....a politician's dream... :


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## a_majoor (26 Feb 2013)

Where the growth and job creation is in the United States. Anyone looking to move or invest in the United States shoudl focus their attention in these "Red Corridor" states:

http://online.wsj.com/article/SB10001424127887323549204578315714070017932.html?mod=WSJ_Opinion_LEADTop



> *America's Red State Growth Corridors*
> Low-tax, energy-rich regions in the heartland charge ahead as economies on both coasts sing the blues.
> 
> By JOEL KOTKIN
> ...


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## a_majoor (3 Mar 2013)

For anyone looking at the reasons America for American decline, here is one (of many):

http://nextbigfuture.com/2013/03/stop-streaming-america.html



> There are a series of ads that talk about the media streaming device Roku. Roku, the maker of set-top boxes that stream TV.
> 
> Here is the text of the ad about Keep Streaming America.
> 
> America, a majestic land made even more magnificent by the tenacity of our compatriots. And because we entrust this great country to these great Americans, you can just sort of take it easy, and watch Roku. Roku is a tiny box that streams your favorite shows on Hulu Plus, HBO Go, and hundreds of other channels straight to your TV. You want to watch episodes of ‘Glee’ for hours on end? Great! Someone else will successfully transplant a dolphin heart into a human being. Stream a ridiculous amount of ‘Modern Family.’ Let some other American create a battery-powered battery charger. Watch ‘New Girl’ till your eyes swell. Another American is testing a prototype engine that runs on compost. Let’s face it TV lovers, you weren’t the leading candidate to patch the ozone anyway. So get a Roku, and keep streaming America.


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## a_majoor (5 Mar 2013)

Ratings agencies say the Sequester isn't enough. While bringing long term debt to GDP down to the high 50% range is encouraging, the agencies have a real point in that the spending cuts have not been intelligently applied (the Administration seems determined to carry out the "Washington monument" strategy WRT cuts, and these cuts do not address long term issues like so called entitlement spending). 

This should be encouraging news to the TEA party movement and spur action among the 30 Republican States and subnational governments as well to preserve their ratings. Of course another downgrade will upend the various plans by the Fed and Treasury which are based on artificially depressing the credit market; this becomes impossible when "bond hawks" demand higher risk premiums for Treasuries:

http://thehill.com/blogs/on-the-money/budget/286057-credit-rating-agencies-shrug-off-sequester-say-more-cuts-needed



> *Credit rating agencies shrug off sequester, say more cuts needed*
> By Peter Schroeder - 03/04/13 04:33 PM ET
> 
> Credit rating agencies are shrugging off sequestration, saying the U.S. government will need to do more to reduce the deficit if it wants to prevent a downgrade of the nation’s credit rating.
> ...


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## cupper (5 Mar 2013)

We all know where this is heading. The GOP dominate house passes a budget that reinstates a significant portion of the Defense cuts while offsetting those with cuts in areas the Dems will find unpalatable.

The Dem dominated Senate refuses to take up the bill. And things just continue as before.

And just for shits and giggles, lets make the continuing resolution to keep the government running dependent on the passage of the GOP budget.

How long before everyone finally begins to realize that it's not the deficit and the debt that is the problem but the continued uncertainty in the economy due to both sides dicking around playing politics to score points to keep their own bases happy that is the problem.

Even Nero knew that there was a time to stop playing the fiddle.  :facepalm:


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## a_majoor (8 Mar 2013)

The collapse of the "Blue Model" places stresses on the entire social and political infrastructure of the Progressive State. The Progressive model will not just collapse due to its internal contradictions, but will be actively destroyed by the very agents who brought it into being. This is something to think about in Ontario, as the Liberal Party attempts to woo the Teachers union (and their massive "Working Families" election machine) while the rest of the Province sinks further into debt and decay. Some other group(s) will have to be thrown under the bus:

http://blogs.the-american-interest.com/wrm/2013/03/06/blue-civil-war-the-battle-for-california/



> *Blue Civil War: The Battle for California*
> 
> Via Meadia readers know that the most important political battle in America today isn’t the much-ballyhooed battle for the soul of the GOP. It is the blue civil war, pitting key elements of the Democratic coalition against one another as the old social model fails and the growth curve of rising blue model costs runs up against fiscal limits. Blue model policies, whatever their merits, don’t generate the revenue that can support blue model institutions and methods, and when those shortfalls appear, the coalition divides. It’s happened in Wisconsin, it’s happened in Indiana; it’s happened in Michigan and it is happening in California.
> 
> ...


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## a_majoor (12 Mar 2013)

Looks like the revenue shortfall problem is easy to fix after all:

http://taxprof.typepad.com/taxprof_blog/2013/03/312000-federal-workers.html



> *312,000 Federal Workers Owe $3.5 Billion in Back Taxes, Up 11.5% From Prior Year*
> 
> 311,566 federal workers and retirees owed more than $3.5 billion in back income taxes in 2011 (up from $3.4 billion in 2010, $3.3 billion in 2009, $3.0 billion in 2008, and $2.7 billion in 2007).
> Accounting Today, Tax-Delinquent Federal Employees and Retirees Increased 11.5% in 2011
> ...


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## a_majoor (12 Mar 2013)

And the grown ups have a budget which has the promise to eliminate the deficit and makes some much needed change to entitlements in order to continue these programs in a modified and fiscally sound(er) fashion:

http://www.rollcall.com/news/budget_chairman_ryan_projects_balance_through_5_trillion_in_spending_cuts-222981-1.html?pg=1



> *Budget Chairman Ryan Projects Balance Through $5 Trillion in Spending Cuts, Medicare Shift*
> 
> By Emily Ethridge
> Roll Call Staff
> ...


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## a_majoor (24 Mar 2013)

This is not a surprise for anyone who is paying attention, indeed it could be predicted on two basis: investors looking for higher rates of return since interest rates have been artificially suppressed, and tons of excess money being pumped into the economy with nowhere to go:

http://business.financialpost.com/2013/03/22/david-rosenberg-market-rally-a-result-of-fed-smoke-and-mirrors/



> *David Rosenberg: Market rally a result of Fed smoke and mirrors*
> Republish Reprint
> 
> David Rosenberg, Special to Financial Post | 13/03/22 | Last Updated: 13/03/22 2:22 PM ET
> ...


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## a_majoor (28 Mar 2013)

The day of reconing will be very ugly indeed:

http://opinion.financialpost.com/2013/03/28/bernankes-wwii-monetary-regime/



> *Bernanke's WWII monetary regime*
> Fed chairman Ben Bernanke has likened his policy to the monetary regime adopted during the 1940s.
> 
> The Fed’s real goal in keeping interest rates low is to finance government debt and deficits
> ...


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## a_majoor (2 Apr 2013)

California- run fast and run far:

http://blogs.the-american-interest.com/wrm/2013/03/31/nyt-pushing-california-comeback-over-heads-of-poor-jobless/



> *NYT Pushing California “Comeback” Over Heads of Poor, Jobless*
> 
> Over at the New York Times, where the California Comeback tune is sung louder than anywhere outside Jerry Brown’s office, Timothy Egan has written a heartfelt paean to what he sees as the Golden State’s bright future. Egan boasts that, despite “California-hating naysayers” predicting a Greek style collapse, California in fact “is dreaming once again”:
> 
> ...



Of course the only possible solutions are so at varience to the plans and goals current political "elite" that run California (fracking and developing the estimated multi trillion dollar treasure trove of shale oil under California, deregulating and reducing taxes to encourage business investment and job creation, reigning in public service unions pay and benefits) that the State will probably have a catastrophic economic meltdown before any political changes are possible.


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## a_majoor (15 Apr 2013)

An amazing testament to the inefficiency of government. The sequester + eliminating inefficiencies would provide a continuing saving of $180 billion dollars (enough to almost eliminate Ontario's debt in one year, to giver you a sense of scale).

I suspect that a similar list could be compiled for our own Federal Government departments, as well as for each of the Provinces (and the overlapping of Federal and Provincial responsibilities, especially Federal intrusion into Provincial responsibilities is probably worth another few billion as well):

http://www.thefiscaltimes.com/Articles/2013/04/14/Government-Wastes-More-than-the-Cost-of-the-Sequester.aspx#page1



> *Government Wastes More than the Cost of the Sequester*
> 
> By BRIANNA EHLEY, The Fiscal Times
> April 14, 2013
> ...


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## a_majoor (20 Apr 2013)

This will be like a bank run on government pensions, and other States with insolvent pension funds (Illinois, New York etc.) will probably see something like this happening soon as well. Given the unfinded liabilities of US government pension funds is estimated to be 2 trillion dollars, there is a lot of incentive not to be caught in it.:

http://blogs.the-american-interest.com/wrm/2013/04/18/california-city-abandons-sinking-pension-fund/



> *Sinking Pension Fund*
> 
> Canyon Lake, a small gated city in Southern California, has just announced plans to withdraw from Calpers. The move comes in response to the pension fund’s recent suggestion that cities kick in as much as 50 percent more to the fund to keep benefits secure. Calpers requires a “termination fee” for any municipality looking to exit, but the city apparently thinks paying that fee now offers a better deal than a future of contribution hikes with Calpers.
> 
> Calpers already has its hands full with rebellious cities. The fund has been embroiled in a long fight with San Bernardino, which is looking to delay payments as it goes through bankruptcy. But Canyon Lake is the only city so far that has decided to leave the fund entirely, and it’s not yet clear how Calpers will react to this move. It’s not that Calpers is afraid of the city’s departure on its own. Canyon Lake is an extremely small city, with only two full time employee. But if other, larger cities follow Canyon Lake’s lead, Calpers will have a serious problem on its hands.


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## a_majoor (3 May 2013)

The ever popular reality vs appearances employment graph is updated for April 2013. Accompanying article also clarifies things like labour participation rate and so on (Labour participation adds back all the "unemployed but no longer looking" people the BLS no longer counts when releasing their figures). The dark blue line is the projected unemployment rate with the "stimulus", the light blue line is the projected unemployment rate if the Stimulus package was not implimented, and the red dots are the real rate.

http://www.aei-ideas.org/2013/05/was-the-april-jobs-report-really-the-obamacare-jobs-report/



> *Part-time Nation: Was the April jobs report really the Obamacare jobs report?*
> James Pethokoukis | May 3, 2013, 10:05 am
> 
> Credit: Obama White House; AEI
> ...



The shortening of the work week and increasing numbers of part time workers are known as "29ers" in the United States; the "29ers" have their hours reduced below 30/wk in order to avoid the Obamacare penalties for workers over 30 hr/wk.


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## kevincanada (3 May 2013)

Thucydides said:
			
		

> The ever popular reality vs appearances employment graph is updated for April 2013. Accompanying article also clarifies things like labour participation rate and so on (Labour participation adds back all the "unemployed but no longer looking" people the BLS no longer counts when releasing their figures). The dark blue line is the projected unemployment rate with the "stimulus", the light blue line is the projected unemployment rate if the Stimulus package was not implimented, and the red dots are the real rate.
> 
> http://www.aei-ideas.org/2013/05/was-the-april-jobs-report-really-the-obamacare-jobs-report/
> 
> The shortening of the work week and increasing numbers of part time workers are known as "29ers" in the United States; the "29ers" have their hours reduced below 30/wk in order to avoid the Obamacare penalties for workers over 30 hr/wk.



I have to counter this article.  Reasoning below.

*Official USA Government statistics here*
http://www.bls.gov/cps/

*Not In Labour Force Chart*
http://www.bls.gov/webapps/legacy/cpsatab16.htm (check box Total not in the labor force, then click retrieve data on site)

If anyone likes statistical feel of how well the American economy is doing from the best source there is, those links will suffice.  The BLS (Bureau of Labour Statistics) website is a massive database.  I included the links for the critical stuff as pertaining to economic performance.

While it is easy to criticize the latest positive numbers is extremely good news I believe even if it just part time jobs.  My reasoning behind this is these jobs added is a actual reversal of citizens transferring from employment to unemployment to not in labor force.  The unemployment doesn't look to bad when it reads 7.. 6.. 5%, when those checks (cheques for us Canadians )run out and the people are transferred into "not in labor force" status.  They are not counted towards unemployment numbers.

At any given time around 63% +/-5% of the work force has jobs or 46% of the population as far back as year 1970.  37% +/-5% of working age is jobless, but this also includes students, stay at home mothers, the disabled and so forth.

Now looking at those numbers, the population grew 12million approx since 2008.  All things being equal.  5.52million should of found jobs, and 2.04million should be added to "not in labor force"  The chart shows in that time frame from the second link I posted that 10million approx was added to "not in labor force" status.  Nearly 8 million higher than what would of been appropriate given the the population growth.

Finally the labor market has been in decline in the USA since year 2000 according to LBS.gov charts and in the last 5 years the population grew approx 12million.  The number of people added to below the poverty line in the same time frame is roughly 12million people and 18million new food stamp recipients since 2008.  50% faster than the population growth.

Back to why I think this is good news? All three indicators were positive.  Job growth really did outpace labor force growth.  Hopefully it continues.  Maybe those trillions and trillions of dollars in Federal spending and Quantitative Easing is finally starting to work.


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## cupper (3 May 2013)

The only true point that can be gleaned from the information is that  no matter what measure you use, the numbers all show that unemployment is on the decline, and has been since October 2009.


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## a_majoor (4 May 2013)

The growing numbers of people being forced into the "29er" category are not transitioning into better jobs, they are transitioning into worse ones. The stats clearly show this.

Yes, unemployment is ever so slowly declining, but given the number of unemployed people (U3) is about the same as the actual population of Canada this is nothing to cheer about. Not only is is corrosive for the unemployed and a huge drag on the US economy, it hurts us as well, since Canada is deprived of a potential customer base the size of our entire nation for our goods and services. The (U6) number increasing to 13.9% is equally bad for everyone, since the involuntarily underemployed people are just keeping their heads above water, not generating wealth or purchasing goods and services.

This is hardly anything to cheer about, and the persistent high unemployment calls for a complete reversal of the destructive policies that prevent economic recovery.


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## cupper (4 May 2013)

Thucydides said:
			
		

> This is hardly anything to cheer about, and the persistent high unemployment calls for a complete reversal of the destructive policies that prevent economic recovery.



Which ones? The forced austerity of the sequester, the Dem uselessness, the Republican obstructionism, the Tea Party extremist view of " Give Me 0 tax rates or Give Me death"?

Two things that could get this economy rolling again - Infrastructure Investment and Job Creation. And in fact they could well be one in the same. The investments need to be made now, and it makes complete economic sense to do it now while the costs are lower than they will be in 5 to 10 years from now when you have no choice in the matter.

The economy is not growing because people are not getting back to work fast enough. Get  them back to work, revenues will increase (without the tax increases that Dems call for), deficits will decrease at a faster rate.


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## a_majoor (4 May 2013)

"Job creation" has been the promise since 2008 (that's where the graph comes from, The blue lines were what the President and the Dems promised would happen with thier economic plan, the red dots are the month by month tracking of the real unemployment rate vs the one that was supposed to happen if the "stimulus" never occured.

As for infrastructure, the Americans were also promised "shovel ready " projects were going to be funded...$5 trillion dollars later what do you see?

OTOH that has been a constant stream of class warfare rhetoric, tax and regulatory increases, and now the real effects of Obamacare are kicking in. Sorry cupper, but the mythical reasons for political and economic dysfunction like the sequester (a 2% spending cut. Really?) or the TEA Party movement agetating for smaller government just don't cut it. In fact, if you look at States where the TEA Party movement philosiphy is in effect you will also see most of the State where there is a positive outlook on economic growth and lower unemployment. I think you have to look higher up the food chain to find where the problem lies.


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## cupper (4 May 2013)

My argument is that the blame needs to be spread across the entire spectrum. We have a completely useless political system south of teh 49th parallel. It is in complete disarray, with a Republican Party that is hell bent on keeping anything the Administration proposes from coming to fruition, regardless of the original genesis of the idea. A Democratic Party that has the balls of a Naked Mole Rat subjected to years of steroids and Irish Spring soap that refuses to push back, and an Administration that has no concept of leadership and selling itself, except on the campaign trail.

And if I hear one more idiot down hear bitch and complain about being over taxed, I'm going to start climbing the nearest tall building and tracking targets.


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## a_majoor (4 May 2013)

Better get your ladder ready; the US has the highest business tax rate in the OECD. 

Canadians should be extolling the virtues of our 15% rate and luring as many American business as possible to the Great White North. If the US wants to play silly political games WE can use the surge in investment and job creation that a migration north would cause.


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## cupper (4 May 2013)

Thucydides said:
			
		

> Better get your ladder ready; the US has the highest business tax rate in the OECD.



That is true, if you only consider the marginal rates.

When you factor in loopholes and deductions, the actual rates are significantly lower than the marginal rates.


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## a_majoor (4 May 2013)

For crony capitalists, yes.

For small business, which does not have the resources to take advantage of loopholes or lobby for exemptions, not so much. And so small business adopts desparate strategies like pushing their workers into part time positions and hard capping hiring.

This is very similar to the situation with personal income taxes, the "rich" can avoid taxes, the middle class cannot. You might also pay attention to the way the tax debate is framed: the "rich" are poorly defined, and wealth and income are used synonymously (they are not). A person earning an income of $250,000 from a business is not in the same class or tax bracket (and is treated differently in tax law) as a person with $250,000 in assets; the first is income, the second is wealth.

The credulous press isn't helping; no one comments as to why the stock market is rising, even as business posts miniscule profits. (Hint, look up ZIRP), or delves into the real unemployment numbers, hence the stories and analysis are essentially fantasy.


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## cupper (4 May 2013)

Thucydides said:
			
		

> For crony capitalists, yes.
> 
> For small business, which does not have the resources to take advantage of loopholes or lobby for exemptions, not so much. And so small business adopts desparate strategies like pushing their workers into part time positions and hard capping hiring.
> 
> ...



One other thing to keep in mind though, the majority of small businesses are classed as "Chapter S" corporations where the principles pay the business taxes as part of their own personal income taxes. Again, it allows the business to pay at the lower personal tax rates, and spread the tax burden among the principles.

As for Zero Interest Rate Policies that the Fed is following, I have long believed that it has done more harm than good for all sectors. Personal savings are at their lowest for several reasons, but when you have no return on savings you aren't going to put it in a CD or savings account. Raise rates a few points, it shouldn't slow lending any more than not lending has. a few points of inflation won't hurt, and could actually speed growth.


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## a_majoor (6 Sep 2013)

To demonstrate just how out of sync the US political establishment really is, here is the historical spending patterns of the United States. A spending freeze coupled with the $95 billion savings of eliminating duplicate programs  (I personally believe the true number could be much higher if a rigerous program of examining all programs were to be done) would allow the economy time to grow and let rising tax revenues shrink the deficit and potentially the debt (over a long enough period of time). Sadly the issue of unfunded liabilites can still blindside this. 

These issues (and potential solutions) apply to us as well. We are starting from a better position, so a freeze plus elimination of duplicate and overlapping programs could get us out of debt much faster, and allow us the time needed to deal with the unfunded liabilites problem (another $500 billion on the Federal side alone at last count):

http://www.nationalreview.com/node/357523/print



> *Spending Freezes in History*
> 
> When the economy grows, lawmakers should cut spending or at least hold it flat.
> 
> ...


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## a_majoor (8 Sep 2013)

The long term US outlook is even poorer, as the job market continues to collapse and unfunded pensions turn out to be an even larger problem than previously thought. "Adding back" all the unemployed who are counted out leaves US unemployment still hovering around 10%, which in real terms means Canadians are missing out on a market of US customers the size of our entire population, and of course when the pension problem implodes, that will involve either crippling tax hikes or an even larger cohort of people who thought they were covered for retirement but are not:

http://www.bloomberg.com/news/print/2013-09-06/why-today-s-jobs-numbers-are-a-drag.html



> *Why Today's Jobs Numbers Are a Drag*
> By Megan McArdle - Sep 6, 2013
> 
> The unemployment rate has fallen, but keep the cork in the champagne bottles: it’s falling because people are just giving up looking for work. The share of the population that is either working, or looking for work, has fallen to a 35-year low. The economy created just 169,000 jobs last month, barely more than we need to keep up with population growth. It’s nowhere near enough to absorb the people who have been out of work for months or years -- what Karl Marx called the reserve army of the unemployed. No wonder fast-food workers are demonstrating for higher wages; jobs designed as supplementary income for kids, or housewives, are now being taken by breadwinners who can’t find anything else.
> ...



and

http://blogs.the-american-interest.com/wrm/2013/09/07/the-pension-crisis-is-worse-than-we-thought/



> *The Pension Crisis is Worse Than We Thought*
> 
> America’s pension crisis may be much worse than we thought. A new report from State Budget Solutions looks at each state’s pension liabilities using a lower estimate of the rate of return than the states use themselves, and found that the country’s plans are underfunded by $4.1 trillion, and only 39 percent funded overall. The state-by-state breakdown looks even worse, with Illinois, Connecticut, Kentucky and Kansas holding plans that are less than 30 percent funded, and another 27 states below 40 percent. Other states have it bad as well: Reuters notes that in five states, pension liabilities more than 40 percent as large as the state’s economy as a whole, and in Ohio and New Mexico, they’re more than half as large. Considering that many people consider plans to be “safe” only when their funded level is over 80 percent, this is troubling news indeed.
> These numbers are significantly higher than those we’ve seen before, which is due to the extremely conservative estimates of the rate of return.
> ...


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## Rifleman62 (11 Sep 2013)

For T6 and others who are aware of what is happening in the USA.

Ordering a Pizza in 2015

This is hilarious, . . ..and just a bit frightening. Watch how the pizza restaurant employee tracks everything on her computer.

Ordering a Pizza in 2015

https://www.aclu.org/sites/default/files/pizza/images/screen.swf


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## a_majoor (22 Sep 2013)

While I'm not sure that I agree with all the conclusions presented here, Megan McArdle is pretty clear headed about economic matters. Certainly the long term forecast seems correct; the factors that led to downward presssure on wages don't seem likely to be as large in the future (and the coming population bust will actually bring an upward pressure on wages, as employers bid for a shrinking pool of skilled labour in most Western countries).

http://www.bloomberg.com/news/2013-09-20/u-s-workers-pay-a-high-price-for-free-trade.html



> *U.S. Workers Pay a High Price for Free Trade*
> By Megan McArdle Sep 20, 2013 5:40 PM ET
> 
> When I was in business school, way back at the turn of the millennium, one of the things we learned was that labor always got about two-thirds of national income, with the other third going to capital. That percentage might fluctuate, as the economy waxed and waned, but it was basically steady.
> ...


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## a_majoor (7 Oct 2013)

With the US political system seemingly unhinged, looking ahead to a possible US default might be prudent:

http://pjmedia.com/tatler/2013/10/06/what-default-might-look-like-a-history-lesson/



> *What Default Might Look Like: A History Lesson*
> 
> by
> RICK MORAN
> ...


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## a_majoor (13 Oct 2013)

Sometimes good news comes in the strangest places. The Sequester and now the "shutdown" of the US government is showing people how much (or little) effect big government really has in their day to day lives. Since there are lots of people out there wondering what all the fuss is about, arguments for actually cutting government functions and spending are now much stronger, since people can now point and say "what really happened to you when the US Government cut spending by 2% (the sequester) or 17% (the "Shutdown"). 

Maybe the argument that @ 20% of government spending is non essential and can be eliminated permanently will really take hold among the voters.

The last paragraph is the money quote. The changes in demographics, ecponomics and technology that have reshaped our lives over the last 20 years have also made most of the poitical institutions erected since the 1930's obsolete. Politicians and rent seekers may try to continue to milk them for power and perques, but most voters are looking for more appropriate and local solutions.

http://www.creators.com/opinion/scott-rasmussen.html



> *No Good Options for Obama*
> 
> Not long ago, the conventional wisdom in official Washington held that the so-called sequester spending cuts would be a disaster for the Republican Party. They were expected to rise up in vehement protest once the "cuts" went into effect.
> 
> ...


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## Nemo888 (13 Oct 2013)

Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.


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## Kirkhill (13 Oct 2013)

Nemo888 said:
			
		

> Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.



Interesting point you bring up there Nemo.  

It seems that "some" Democrat voters got a glimpse of the pain yesterday.  Apparently a "glitch" prevented the welfare debit cards from working in 17 states yesterday.  Places included were 





> Alabama, California, Georgia, Iowa, Illinois, Louisiana, Massachusetts, Maryland, Mississippi, New Jersey, Oklahoma, Pennsylvania, Texas and Virginia



Link

That seems to me a potential two edged sword.   On the one hand it could be a goad to the Democrats clients to remind them of how much they need the Government.  In which case this short, sharp shock could benefit the Democrats.

On the other hand one of the key elements of Obamacare is a benefits card supported by software - much like the Debit card - and it is already being used by the Republicans as an argument supporting the delay of Obamacare - because it is Glitchy and not ready for rollout.  In that case this could be used to bolster their cause.

The game continues.......


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## a_majoor (13 Oct 2013)

Nemo888 said:
			
		

> Food stamps hit 20% of the US population. Perhaps raising the minimum wage and getting the moocher corporations to stop paying less than a living wage because of government handouts is in order. The US gov is essentially subsidizing the worst jobs in America.



Or perhaps the government should stop encouraging cronyism. Handing out foodstamps, Obamaphones and other goodies to buy votes (at the expense of others) is moraly repulsive to begin with, and crony capitalism (handing out tax breaks, subsidies etc.) to buy corporate support at taxpayer expense is simply the opposite side of the coin.

As an added bonus, a redical reduction in subsidies to both rich and poor will do wonders to the spending envelope, deficit and debt issues that plague America and most other Western democracies.


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## a_majoor (15 Oct 2013)

Stand by.....

http://www.cnbc.com/id/101093033



> *Fitch puts US AAA rating on rating watch negative*
> 
> Published: Tuesday, 15 Oct 2013 | 4:46 PM ET
> By: CNBC.com with Reuters
> ...



Of course after the first downgrade the US Administration responded by threatening legal action, rather than perhaps adressing the root cause.


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## Haletown (15 Oct 2013)

Kirkhill said:
			
		

> Interesting point you bring up there Nemo.
> 
> It seems that "some" Democrat voters got a glimpse of the pain yesterday.  Apparently a "glitch" prevented the welfare debit cards from working in 17 states yesterday.  Places included were
> Link



Other Democrat voters got a taste of spending as much of other people's money as they wanted.  No limit EBT  cards hit some areas and the word got out fast.  A Walmart was essentially looted.  The no limit glitch was fixed and the shopping mob left hundreds of full carts in the store once the jig was up.

www.nydailynews.com/news/national/chaos-la-walmart-stores-ebt-cards-dump-spending-limits-article-1.1484953


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## Haletown (15 Oct 2013)

The US economic situation nicely summarized.


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## a_majoor (18 Oct 2013)

Remember "you have to pass the bill to see what's in it?" Here is another example of the law of unintended conswquences:

http://thewaytheballbounces.blogspot.ca/2013/10/an-unintended-consequence-of-obamacare.html



> *An Unintended Consequence of Obamacare: The Underground Economy*
> 
> Unintended consequences accompany well-meaning government legislation. Welfare for single parents? What a compassionate idea! I know a guy whose daughter was tired of work, did the math, and went out and got pregnant so she would qualify. Of course, there was no husband, and no father in the child's life. The government probably didn't see that coming.
> 
> ...


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## a_majoor (18 Oct 2013)

A long video presentatio on this link on reforming the US pension system(s). Most municipal and State government pensions are dangerously underfunded and overgenerous (the city of Detroit went bankrupt for this reason), and the cumulative total for unfunded liabilites has been estimated to be anywhere from 2 to 4 _trillion_ dollars. This is in addition to the declared debt liabilities of municipalities and States through bonds and deficit spending. To put in perspective, if the various US Municipal and State civil service unions were somehow able to take Canadian wealth to fund their pensions, it would take 2 to 4 years of our GDP to fill that hole.

http://www.fed-soc.org/publications/detail/municipal-bankruptcy-and-pension-reform-a-way-out-event-audiovideo



> *Municipal Bankruptcy and Pension Reform: A Way Out? - Event Audio/Video*
> Sponsored by the Practice Groups of the Federalist Society
> October 15, 2013
> 
> ...


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## a_majoor (28 Oct 2013)

Long article from the Economist on how corporations are changing the way they work. While the usual crowd will scream about unconstrained corporate power, please note that:

a: Corporations adopted the structure because government laws changed; and,
b: Corporations are using these laws and regulations creatively in order to escape the laws and regulations that are suffocating the conventional corporate structure.

Without either a or b happening, these changes would not have occured:

http://www.economist.com/news/briefing/21588379-mutation-way-companies-are-financed-and-managed-will-change-distribution



> Rise of the distorporation
> A mutation in the way companies are financed and managed will change the distribution of the wealth they create
> Oct 26th 2013 | NEW YORK |From the print edition
> ..
> ...


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## a_majoor (1 Nov 2013)

Another example of the negative intersection between politics and business. While I would normally be in favour of having the private sector purchase the "dark" fiber and offer services, large telecom companies using the political process to stifle competition (sound familiar?) are simply preying on consumers and establishing entry barriers to competitors. Perhaps the only way to break this impass _would_ be the private sector, a company like Google or Apple has the financial resources to purchase the dark fiber and the technical ability to deliver highspeed broadband, should they decide to go head to head with companies like Comcast or Verizon. The question is would they see this as a market opportunity or would they stick to their core competencies?

http://www.washingtonpost.com/blogs/the-switch/wp/2013/10/31/comcast-is-donating-heavily-to-defeat-the-mayor-who-is-bringing-gigabit-fiber-to-seattle/



> *Comcast is donating heavily to defeat the mayor who is bringing gigabit fiber to Seattle*
> BY ANDREA PETERSON
> October 31 at 3:59 pm
> 
> ...


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## cupper (2 Nov 2013)

Thucydides said:
			
		

> Another example of the negative intersection between politics and business. While I would normally be in favour of having the private sector purchase the "dark" fiber and offer services, large telecom companies using the political process to stifle competition (sound familiar?) are simply preying on consumers and establishing entry barriers to competitors. Perhaps the only way to break this impass _would_ be the private sector, a company like Google or Apple has the financial resources to purchase the dark fiber and the technical ability to deliver highspeed broadband, should they decide to go head to head with companies like Comcast or Verizon. The question is would they see this as a market opportunity or would they stick to their core competencies?
> 
> http://www.washingtonpost.com/blogs/the-switch/wp/2013/10/31/comcast-is-donating-heavily-to-defeat-the-mayor-who-is-bringing-gigabit-fiber-to-seattle/



Good to see that they are using the money I pay them for something more useful than improving service.


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## a_majoor (13 Nov 2013)

A lot of charts, tables and graphs on the link. The really surprising thing is US unemployment is quite a bit higher than I had expected (I was estimating in the 10.5% range). this has dire downrange effects on us, an adult population higher than the entore population of Canada is not going to be in the market for our exports (in our number one trading partner). Think of the additional boost to the Canadian economy an extra 38 or so million customers would generate:

http://pjmedia.com/blog/what-is-the-real-unemployment-rate/?singlepage=true



> *What Is the Real Unemployment Rate?*
> It's far higher than the official 7.3 percent.
> 
> by
> ...


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## a_majoor (20 Nov 2013)

In addition to the horrifying effects on the US economy and political system, screwing with unemployment figures and other metrics in the US hurts Canadians and indeed the entire global econoy, since people are trying to make rational plans based on the information they are receiving. Now some people have known for a long time the figures have been manipulated by "counting out" the long term unemployed and so on, but now we know the figures are not distorted, they are fantasy:

http://pointsandfigures.com/2013/11/18/credibility-shot/



> *THEIR CREDIBILITY IS SHOT*
> 
> Posted by Jeff Carter on November 18th, 2013
> 
> ...



and

http://nypost.com/2013/11/18/census-faked-2012-election-jobs-report/



> *Census ‘faked’ 2012 election jobs report*
> By John CrudeleNovember 18, 2013 | 8:06pm
> 
> In the home stretch of the 2012 presidential campaign, from August to September, the unemployment rate fell sharply — raising eyebrows from Wall Street to Washington.
> ...


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## a_majoor (29 Nov 2013)

Know who you are dealing with. US States ranked using economic stats including debt, credit ratings and so on. It is interesting how Primary industry (mining, resources) has become the driver of wealth again. Full rankings on link:

http://247wallst.com/special-report/2013/11/21/the-best-and-worst-run-states-in-america-a-survey-of-all-50-2/print/



> *The Best and Worst Run States in America: A Survey of All 50*
> November 21, 2013 by Mike Sauter
> 
> Source: ThinkstockHow well run is your state? It can be difficult to objectively assess the quality of a state’s management. The economy and standard of living can be affected by decisions made decades ago, forces outside the control of the state’s government and administrators, as well as the government’s own actions.
> ...


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## a_majoor (9 Dec 2013)

Finally, a bit of common sense from a judge. If this is upheld, the principle can be used to lift the burden of between 2-4 Trillion dollars of unfunded municipal and State pension liabilities that have been racked up by feckless politicians promising unrealistically high pension benefits to workers, underfunding pension contributions and making unrealistic ROI assumptions on their funds, a massive relief to taxpayers everywhere:

http://www.bloomberg.com/news/2013-12-05/detroit-pension-debt-not-special-in-written-ruling.html



> *Detroit Pension Debt Not Special in Written Ruling*
> By Steven Church  Dec 5, 2013 3:39 PM ET  1 Comment  Email  Print
> 
> Detroit’s pensions can be cut in bankruptcy because they are no different from any other contractual obligation, the judge overseeing the $18 billion case said in his written opinion.
> ...


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## Nemo888 (9 Dec 2013)

If I remember correctly property prices were artificially inflated by the predatory lending practices of  corrupt bankers. Property taxes easily covered the cost of pensions until the bankers destroyed everyone's equity and the tax base by gambling. 

Perhaps the banks that destroyed house prices and the economy should shoulder some of this burden?


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## Kirkhill (9 Dec 2013)

I suddenly feel an urge to invest in Tulips and Teapots.


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## a_majoor (9 Dec 2013)

Nemo888 said:
			
		

> If I remember correctly property prices were artificially inflated by the predatory lending practices of  corrupt bankers corrupt politicians who forced banks to lend to unqualified people as part of their voting base. Property taxes easily never covered the cost of pensions until the bankers destroyed everyone's equity and the tax base by gambling but this coud be disguised by technicolour estimates of pension fund returns until more and more the municipal and State employees started reaching retirement age.
> 
> Perhaps the banks politicians and union leadersthat destroyed house prices and the economy should shoulder some of this burden?



FTFY


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## a_majoor (10 Dec 2013)

The US finally sells its shares in GM and the taxpayers lose $10 billion dollars. One wonders what our losses will be if/when the Canadian and Ontario governments finally unload the last of their shares. Another lesson in what not to do:

http://reason.com/blog/2013/12/09/us-sells-off-last-of-its-general-motors



> *U.S. Sells Off Last of Its General Motors Stock, at $10.5 Billion Loss*
> Brian Doherty|Dec. 9, 2013 5:27 pm
> 
> For one of the few times in its macro economic policy thought and action, the federal government relies on a subtle analysis of "things not seen" to defend its apparent $10.5 billion loss on the General Motors bailout as a success, via USA Today:
> ...


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## cupper (10 Dec 2013)

Thucydides said:
			
		

> > If I remember correctly property prices were artificially inflated by the predatory lending practices of  corrupt bankers corrupt politicians who forced banks to lend to unqualified people as part of their voting base. Property taxes easily never covered the cost of pensions until the bankers destroyed everyone's equity and the tax base by gambling but this coud be disguised by technicolour estimates of pension fund returns until more and more the municipal and State employees started reaching retirement age.
> >
> > Perhaps the banks politicians and union leadersthat destroyed house prices and the economy should shoulder some of this burden?
> 
> ...



I'm not sure I'd even call that an oversimplification of what caused the collapse in 2008, because it leaves out some very key points.

NPR's Planet Money and This American Life did several excellent show to explain various aspects of the economic and housing market collapse.

http://www.thisamericanlife.org/radio-archives/episode/355/the-giant-pool-of-money

I'm still wondering why none of the major players did a perp walk over what would amount to criminal activities with respect to the development of the toxic assets and default swaps.

And with respect to the failure of Detroit, the housing market collapse really was not a significant factor in the cause, but was more like the gust of wind that blows over a house of cards.


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## a_majoor (13 Dec 2013)

A quick look at what political party the majority of the players donated money to should answer the question of "why" no one has done a perp walk. Actually, most of the major players know to fill the bank accounts on both sides of the ailse, to keep their options open.


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## a_majoor (12 Jan 2014)

Well some number crunching makes the reason for the sluggish US economy clear: Unemployment has been above 10% since _2009_, and never dropped. With such a large percentage of the adult population you can see why economic recovery is so hard (and of course other positive indicators like savings and investment will be negative with this population almost by default). The counterproductive actions of this administration has prevented markets from clearing, and pushed or pulled people into dependency on government handouts as well, while on the supply side, a "Capital Strike" similar to the 1938 one is ongoing as companies are reluctant to invest (what can they invest in since interest rate signals are masked by ZIRP, while the threat of your investment being neutralized due to the actions of crony capitalists hangs overhead? Hiring is questionable since Obamacare raises the costs of hiring and maked dumping benefits like healthcare cheaper than offering it to workers).

http://pjmedia.com/rogerlsimon/2014/01/10/who-needs-ayn-rand-america-has-already-gone-john-galt/?singlepage=true



> *Who Needs Ayn Rand? America Has Already Gone John Galt*
> 
> January 10th, 2014 - 11:08 am
> 
> ...


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## a_majoor (16 Feb 2014)

Once again, this is important to us since the United States is our biggest trading partner. American unemployment has been at 10% pretty much since 2008 (a number of people almost equal to the _entire_ population of Canada), so a further hit, and a corresponding increase of U6 beyond its already high 16% or so will make our own recovery that much more difficult. While the Canadian government seeking entry into the TPP and signing deals with the EU might not have generated much enthusiasm or comment among the Canadian media, branching out like this might be the only way for us to prosper in the future:

http://washingtonexaminer.com/duke-university-44-of-u.s.-firms-consider-cutting-health-care-to-current-workers/article/2543506



> *Duke University: 44% of U.S. firms consider cutting health care to current workers*
> BY PAUL BEDARD | FEBRUARY 5, 2014 AT 1:07 PM
> 
> Adding to a devastating CBO report of how Obamacare could damage the economy, a Duke University survey of top companies found that 44 percent are considering reducing health benefits to current employees due to Obamacare, confirming the fears of millions of American workers.
> ...


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## a_majoor (29 Apr 2014)

Toyota leaves California for Texas. A cautionary tale, we will probably see many similar moves from high tax, high regulatory provinces like Ontario to Alberta and Saskatchewan, emulating Toyota's move, but probably not quite so dramatic in scale:

http://www.usatoday.com/story/money/cars/2014/04/28/toyota-move-texas/8358361/



> *Toyota moving U.S. headquarters to Texas*
> 
> Chris Woodyard, USA TODAY 7:45 p.m. EDT April 28, 2014
> 
> ...



And as Instapundit says, this could be the start of activist driven movements as well:



> UPDATE: Jim Bennett emails: “So, will shareholders of California-based companies start asking at shareholders’ meeting why their company isn’t moving? It affects the bottom line and return to shareholders fairly dramatically. For that matter, will shareholders start suing boards for not moving?”


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## a_majoor (27 Jun 2014)

A look at how Obamacare is unfolding (the way sceptics predicted). The massive financial stresses it is causing insurance companies and the need for ever greater amounts of public funding to pay for the sick clients on the "exchanges" will create greater strains on the Treasury as well (crowding out other spending):

http://www.bloombergview.com/articles/2014-06-26/obamacare-s-prognosis-grows-dimmer



> *HEALTH-CARE REFORM*
> Obamacare's Prognosis Grows Dimmer
> 3616 JUN 26, 2014 9:03 AM EDT
> By Lanhee Chen
> ...


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## a_majoor (30 Jun 2014)

The availability of usable wealth and resources defines the true power of a nation. This is incredibly bad news for the United States, her allies abroad and for us (as the biggest trading partner). Less wealth and resources for them means less customers for us (and the masses of unemployed Americans already is close to the number of Canadians in our entire country; we are missing a _nation's_ worth of customers for our goods and services):

http://dailysignal.com/2014/06/28/disappearing-labor-force/



> *Where Have All the Jobs Gone?*
> Stephen Moore	 / @StephenMoore / June 28, 2014 / 0 comments 167 5.5k
> 
> Stephen Moore, who formerly wrote on the economy and public policy for The Wall Street Journal, is chief economist at The Heritage Foundation.
> ...


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## a_majoor (3 Jul 2014)

A one quarter contraction of -5.5%? that is an insane drop and bodes ill for us as well, tied as we are to the US economy:

http://pjmedia.com/blog/economy-in-another-recession/?print=1



> *Is the Economy Already in Another Recession?*
> 
> Posted By Tom Blumer On July 3, 2014 @ 12:25 am In Column,economy,Health Care,Money,US News | 9 Comments
> 
> ...


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## a_majoor (3 Aug 2014)

A look at how credit driven economies falter and fail:

http://voxday.blogspot.ca/2014/07/why-home-buyers-arent-buying.html



> *Why home buyers aren't buying*
> 
> Back in June 2009, I introduced a concept I called the Limits of Demand, which pointed out that the Austrian Business Cycle did not revolve around a shift in capital vs consumer goods, but rather the "finite limit to the maximum consumable quantity of every consumer good available". I stated: "Once the artificially enhanced demand limits are reached, or even worse, consumers cannot afford to service their debt on the goods they previously purchased, the boom will come to a hard and fast end." As Neil Cavuto's lamentation for the housing market suggests, we appear to have finally reached those demand limits, as the six-year stagnation in L1 also indicates:
> 
> ...


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## a_majoor (18 Sep 2014)

Raising the white flag on the "War on Poverty". President Johnson’s quoted goal may not be what he actually had in mind (evidently there is another quote attributed to him about these programs: "I'll have them n*****s voting Democratic for the next two hundred years"), but it is certainly possible to go that route by emphasizing different approaches than cash payments and other handouts. Even within the construct of the welfare state, there are huge economies to be had; having 80 separate welfare programs (_outside_ of Social Security, Medicare or Unemployment Insurance) suggests an incredible amount of overlap, duplication and waste. As Instapundit notes "We spent $22 Trillion and I didn't even get the T shirt"

http://dailysignal.com/2014/09/16/war-poverty-colossal-flop/?utm_source=facebook&utm_medium=social



> *The War on Poverty Has Been a Colossal Flop*
> Robert Rector	 / September 16, 2014 / 0 comments 1868 0
> 
> Today, the U.S. Census Bureau will release its annual report on poverty. This report is noteworthy because this year marks the 50th anniversary of President Lyndon Johnson’s launch of the War on Poverty. Liberals claim that the War on Poverty has failed because we didn’t spend enough money. Their answer is just to spend more. But the facts show otherwise.
> ...


----------

