Bernanke: Economy needs help fast. (Good luck with that.)

[Thomas Veil]

Bernanke: Juice the economy 'quickly' (http://money.cnn.com/2008/01/17/news/economy/fed_bernanke/index.htm?cnn=yes)
Federal chairman tells lawmakers they should tailor efforts to boost consumer spending within 12 months.
By Paul R. La Monica, CNNMoney.com editor at large
January 17 2008: 10:32 AM EST

NEW YORK (CNNMoney.com) -- Federal Reserve Chairman Ben Bernanke told Congress Thursday that legislators should enact a fiscal stimulus package in order to help beleaguered consumers as recession fears grow.

Bernanke testified at a hearing before the House Budget Committee. His comments come as more economists and politicians are expressing concerns about the state of the economy, which has begun to weaken due to the subprime mortgage meltdown.

"To be useful, a fiscal stimulus package should be implemented quickly and structured so that its effects on aggregate spending are felt as much as possible within the next twelve months or so," Bernanke said in his prepared remarks.

Some economists have suggested that the economy is heading into a recession or may already be in one. Stocks have plummeted this year due to worries about a recession, and big banks Citigroup and Merrill Lynch reported huge quarterly losses this week resulting from bad mortgage investments.

Former Treasury Secretary Larry Summers told lawmakers at a hearing of the Joint Economic Committee on Tuesday that Congress should immediately consider a stimulus package of $50 billion to $75 billion through a combination of tax cuts and increased spending on unemployment benefits and other programs. He also advocated that another $50 billion to $75 billion be set aside in case economic conditions weaken further.

Bernanke cautioned though that any stimulus "should be explicitly temporary" in order "to avoid unwanted stimulus beyond the near-term horizon and, importantly, to preclude an increase in the federal government's structural budget deficit."NBC reported much the same the other night. Jobs are stagnant. Stores had weak Christmas sales. Just about everything that could be going wrong with the economy, is.

And Bernanke wants Congress to enact something fast? Has he seen the way Bush and Congress work hand-in-hand on solving our nation's problems? (<---intense sarcasm)

I don't see a chance of anything happening before January 20, 2009, do you?

[Swarmlord]

NBC reported much the same the other night. Jobs are stagnant. Stores had weak Christmas sales. Just about everything that could be going wrong with the economy, is.

<snip>

Should be seeing those soup lines forming up any minute then. If you think that "just about everything that could be going wrong with the economy, is" you're not using much of an imagination.

Just remember that the worst economic period during the Bush administration is still better than the best period during the Carter administration and we lived through that.

I guess we'll just have to hope that the next president raises taxes so that jobs and spending increase. Oh wait... that doesn't work.

[emw]

If you think that "just about everything that could be going wrong with the economy, is" you're not using much of an imagination.While I'd agree that things have been worse in the past, I believe the point was that there are numerous factors at play that are all pointing us down the wrong economic path. So while we're not there yet, there are few signs that improvement in the situation is coming, and more signs that things are going to get worse before they get better.

[Thanatoast]

I guess we'll just have to hope that the next president raises taxes so that jobs and spending increase. Oh wait... that doesn't work.

I guess we'll just have to hope that the next president lowers taxes for rich people and invades a middle eastern country so that jobs and spending increase...

I didn't see anybody suggesting that increasing taxes was the right answer. I'll do it, though. We should raise taxes back to Clinton-era levels and get the hell out of Iraq. The increase in revenue (born mostly by the recently coddled rich) and the decrease in costs could do wonders for the budget, consumer confidence and overall morale of the nation.

I have to say that endlessly blowing up brown people for no reason probably affects the country and economy in subtle and powerful ways, and not for the better.

[Swarmlord]

I guess we'll just have to hope that the next president lowers taxes for rich people and invades a middle eastern country so that jobs and spending increase...

I didn't see anybody suggesting that increasing taxes was the right answer. I'll do it, though. We should raise taxes back to Clinton-era levels and get the hell out of Iraq. The increase in revenue (born mostly by the recently coddled rich) and the decrease in costs could do wonders for the budget, consumer confidence and overall morale of the nation.

I have to say that endlessly blowing up brown people for no reason probably affects the country and economy in subtle and powerful ways, and not for the better.

Lol. Tax increases as morale builders. That's a new one.

BTW those "brown people" are blown up for a reason. You may not understand what that reason is, but there is a reason. And when we stop blowing them up, it's still not going to stop them from doing it to themselves. For the answer to that, you'll have to ask them. You might even get an answer before they free your head from your neck.

[ntrigue]

People are always looking for a quick fix. We know the economy today is a product of legislation 4-7 years past.

[leekohler]

BTW those "brown people" are blown up for a reason. You may not understand what that reason is, but there is a reason.

Yes- the reason is called money, don't even try to deny that.

[Ugg]

People are always looking for a quick fix. We know the economy today is a product of legislation 4-7 years past.

Just another reason the repubs need to be booted out. They've become economic junkies, anything for a quick fix as opposed to long term growth and stability.

There's probably little that can be done this time around, expect to see a lot of former employees of financial institutions declaring bankruptcy.

I wouldn't be surprised if a soup kitchen opened on Wall Street.

[Swarmlord]

Just another reason the repubs need to be booted out. They've become economic junkies, anything for a quick fix as opposed to long term growth and stability.

There's probably little that can be done this time around, expect to see a lot of former employees of financial institutions declaring bankruptcy.

I wouldn't be surprised if a soup kitchen opened on Wall Street.

Yup, nothing like a little additional long term growth of government and entitlement programs to fix the economy. The current "repub" congress critters should be replaced with others for acting like dems if anything.

[j26]

Lol. Tax increases as morale builders. That's a new one...

Actually it worked very well in Ireland in the late eighties. It paved the way for Ireland to become the poorest OECD nation to being one of the richest.

[mactastic]

Bush's solution is always tax cuts aimed at the most well-off among us. Economy's roaring along? Let's cut taxes, with the bulk of the cuts benefitting the rich. Economy kinda neutral? Let's cut taxes, with the bulk of the cuts benefitting the rich. Economy doing poorly? You guessed it, let's cut taxes, with the bulk of the cuts benefitting the rich.

Talk about a one-trick pony. Ah well, running businesses, baseball teams, and nations into the ground is what Bush is best at. It's his only real skill.

[yellow]

I expect this to get very bad considering middle-class pay increases have stagnated over the years and consumers have turned to their credit cards more and more to live out their materialistic fantasies. If the economy floats into dangerous waters like most sane people expect (fear?) it to.. I think we haven't even seen the tip of the "credit crunch" iceberg.. Stupid people mortgages are clearly above the waterline now, but what is below the surface?


I think the US Government should invest in infrastructure.. but **** roads and bridges. That just encourages more sprawl and gasoline usage. Invest in BROADBAND internet. Give the power of the information age to everyone, particularly in the rural areas and for stay-at-home folks. Then maybe some of the jobs that are lost overseas can come back home for telecommuting folks.

OK, so that is just an idea so I can stop being stuck with dial-up out in the sticks of NC. :rolleyes:
The negotiation sound is like nails in my brain!

RRRRRRRRRRRooooooOOooooRRRRRRRRscrrriiiiiichhhhhhhhh---AAAARRRRRRRRRRRVOOOOOOO.

[mactastic]

I expect this to get very bad considering middle-class pay increases have stagnated over the years and consumers have turned to their credit cards more and more to live out their materialistic fantasies. If the economy floats into dangerous waters like most sane people expect (fear?) it to.. I think we haven't even seen the tip of the "credit crunch" iceberg.. Stupid people mortgages are clearly above the waterline now, but what is below the surface?


I think the US Government should invest in infrastructure.. but **** roads and bridges. That just encourages more sprawl and gasoline usage. Invest in BROADBAND internet. Give the power of the information age to everyone, particularly in the rural areas and for stay-at-home folks. Then maybe some of the jobs that are lost overseas can come back home for telecommuting folks.

OK, so that is just an idea so I can stop being stuck with dial-up out in the sticks of NC. :rolleyes:
The negotiation sound is like nails in my brain!

RRRRRRRRRRRooooooOOooooRRRRRRRRscrrriiiiiichhhhhhhhh---AAAARRRRRRRRRRRVOOOOOOO.
I hear ya... I'm on dial up at home too. Still too cheap to spring for the satellite. Maybe if the economy were to improve...

[Thanatoast]

Lol. Tax increases as morale builders. That's a new one.

BTW those "brown people" are blown up for a reason. You may not understand what that reason is, but there is a reason. And when we stop blowing them up, it's still not going to stop them from doing it to themselves. For the answer to that, you'll have to ask them. You might even get an answer before they free your head from your neck.
You're right, balancing the federal budget wouldn't boost morale at all. Neither would ending morally repugnant wars and torture.

Believing our government is capable of performing it's duties without resorting to deficit spending and killing foreigners would really just depress people even more.

[Music_Producer]

Should be seeing those soup lines forming up any minute then. If you think that "just about everything that could be going wrong with the economy, is" you're not using much of an imagination.

Just remember that the worst economic period during the Bush administration is still better than the best period during the Carter administration and we lived through that.

I guess we'll just have to hope that the next president raises taxes so that jobs and spending increase. Oh wait... that doesn't work.

But.. but.. but.. haven't you been saying all this while that the economy is in great shape? "Look at the stock market, jobs, etc" ? :rolleyes:

Like I mentioned a long time ago.. when this starts, it will start in a great manner. You probably think this is a temporary thing.. as much as I hate that you should be proven wrong.. you will be.

[Thomas Veil]

Lol. Tax increases as morale builders. That's a new one.On the megarich, it'd sure increase my morale.

Yup, nothing like a little additional long term growth of government and entitlement programs to fix the economy.Sarcasm aside, nothing would fix the economy better than putting more money in people's pockets, so they can spend it. Of course, that'd imply giving growth of jobs and wages precedence over maximizing stockholder value. And since that's gonna happen when pigs fly, I expect really nothing to substantially change.

And I'd love to see something done about corporate welfare, but...see the above comment re: aviating swine.

While I'd agree that things have been worse in the past, I believe the point was that there are numerous factors at play that are all pointing us down the wrong economic path.Thank you.

But.. but.. but.. haven't you been saying all this while that the economy is in great shape? "Look at the stock market, jobs, etc" ? :rolleyes:Ah, you remember that too, eh? :D

[Rodimus Prime]

Just another reason the repubs need to be booted out. They've become economic junkies, anything for a quick fix as opposed to long term growth and stability.

There's probably little that can be done this time around, expect to see a lot of former employees of financial institutions declaring bankruptcy.

I wouldn't be surprised if a soup kitchen opened on Wall Street.

I highly doute the dems would of done any better in power. People blame the government for economic troubles when the truth to the matter is the government has control over the economy is reality little.

If you look though out history the party in control general changes when the economy starts going south. Lets see Bill clintion came into power when the US Economny was going down but near getting out and it was out of the reseasion well before he really could of done anything. Right after clintion left office the economy started dropping again to quickly for anything Bush could of done. Hell the Economy pulling out in 93 was more because of what the former Bush did. Going south could easily be blamed on Clintion because it was stuff from his time that caused it.

It more I think the goverment is not letting the business cycle take its natural course and letting it drop a little. Instead they are just putting it off. I say let economy y go into a minor repression and it will pull out on it own shortly after wards like history proves it.

[Desertrat]

The dollars per taxpayer that have been bandied about by various congressfolks aren't anywhere near enough to stave off any recession. At most, they'll just exacerbate inflation--and reduce the buying power of the dollar against foreign currencies. This next rate reduction by the Fed will also contribute to clobbering the dollar's comparative value.

This sub-prime mess is causing the loss of tens of thousands of high-pay jobs in the Big Financials. That will ripple through the economy, same as the wipeout of all those real estate agents who aren't selling houses. (We're back to the 1980s joke about the difference between a pigeon and a realtor. "A pigeon can make a deposit on a new Mercedes.")

The public would probably be better off if Congress were to void this recent energy bill. The higher food costs that will directly result from it are most likely a helluva lot more than any "stimulus package" dollars.

Greenspan and Bernanke worried so much about a "soft landing" and staving off a recession that now that their misguided efforts finally have come home to roost, the landing's gonna be a real SOB.

'Rat

[hulugu]

...The public would probably be better off if Congress were to void this recent energy bill. The higher food costs that will directly result from it are most likely a helluva lot more than any "stimulus package" dollars.

I agree with much of your post, but I wonder if we could keep parts of the energy bill. CAFE standards will be a good thing, but I agree with you about the larger effects of ethanol production.

Greenspan and Bernanke worried so much about a "soft landing" and staving off a recession that now that their misguided efforts finally have come home to roost, the landing's gonna be a real SOB.

Something that I haven't seen addressed is how the "Bankruptcy Bill" from 2005 may also be affecting borrowers.

..(We're back to the 1980s joke about the difference between a pigeon and a realtor. "A pigeon can make a deposit on a new Mercedes.")

:D

[Swarmlord]

<snip>
Sarcasm aside, nothing would fix the economy better than putting more money in people's pockets, so they can spend it. <snip>

So, you're for greater tax cuts and reduced spending? Or are you implying wealth redistribution?

But.. but.. but.. haven't you been saying all this while that the economy is in great shape? "Look at the stock market, jobs, etc" ? :rolleyes:

Like I mentioned a long time ago.. when this starts, it will start in a great manner. You probably think this is a temporary thing.. as much as I hate that you should be proven wrong.. you will be.

All economic swings are temporary. On that I will never be proven wrong.

[hulugu]

...Or are you implying wealth redistribution?

What does this really mean?

[Thomas Veil]

So, you're for greater tax cuts and reduced spending? Or are you implying wealth redistribution?The wealth redistribution has already occurred, from the middle class to the megarich.

All economic swings are temporary. On that I will never be proven wrong.The Soviet Union might disagree with you.

[Swarmlord]

What does this really mean?

Where the government takes money from one group of people and gives it to another group of people.

The wealth redistribution has already occurred, from the middle class to the megarich.

<snip>

What are you saying? Through the sale of goods and services or what?

[Thomas Veil]

Through the transformation of the US from a well-paying manufacturing economy to a poorly-paying retailing economy. What kind of wealth do Chinese-made electronics create for the US? We get depreciable products, and a profit for the stockholders at Target, but no manufacturing jobs, only a retailing job at that same Target, paying a lowly wage.

Incidentally, tax cuts are a ridiculous solution for a nation that already has one of the very lowest tax rates in the industrialized world. What is it with Republicans and tax cuts? (Not meaning Swarmy specifically.) It's like a sexual fetish with them -- the politico-economic version of big boobs. It really turns them on, and they go after 'em every chance they get.

[hulugu]

Where the government takes money from one group of people and gives it to another group of people...

So, if I paid income tax to the IRS and that money was distributed to the Defense Department which went to you. Isn't that wealth distribution?
I think you owe me money. ;)

[Swarmlord]

So, if I paid income tax to the IRS and that money was distributed to the Defense Department which went to you. Isn't that wealth distribution?
I think you owe me money. ;)

No, because it was used to design/build/purchase equipment to defend this country which is one of the few constitutionally mandated functions of the federal government.

[hulugu]

No, because it was used to design/build/purchase equipment to defend this country which is one of the few constitutionally mandated functions of the federal government.

I was just pointing out that your definition was maybe a little too broad.

Wealth redistribution is more like a shibboleth than an actual operative policy, so I still don't know what you mean by this exactly. What are you really trying to critique or describe?

[Eraserhead]

No, because it was used to design/build/purchase equipment to defend this country which is one of the few constitutionally mandated functions of the federal government.

Which is why you need to spend more of defence than pretty much every other country put together, to create an army that is incapable of winning a war (see Vietnam, Iraq) against soldiers armed with WW2 weapons :rolleyes:.

[IJ Reilly]

The wealth redistribution has already occurred, from the middle class to the megarich.

The only righteous kind of wealth distribution, of course.

Every single tax redistributes wealth. The taxing question is not whether wealth will be redistributed, but how. The prevailing view among our Republican friends is that wealth redistribution is fine so long as wealth is redistributed towards the rich. Comforting the comfortable -- could the slogan of the GOP if they were to be honest.

[Desertrat]

T.V., the reason cuts in tax rates are good is simple: The government takes in more money. That happened with JFK, Reagan and now Dubya. Tax cuts result in more business activity, which results in more tax take at any given rate.

Now, government spending over and above its income from taxes is a whole 'nother deal.

hulugu, yeah, I was focussing on the ethanolitis, "Let's all love and cherish ADM!" part of the energy bill.

'Rat

[Eric Piercey]

What are you saying? Through the sale of goods and services or what?

I'll take a crack. Independent entrepreneurs are few and far between. Successful small businesses are also rare. Why? Because the cost of doing business is very high. Why? Because the dollar is worth very little, coupled with the fact that disposable income is low from would be customers who will seek the lowest prices over quality any day of the week. Basically people work for big corporations and make fixed salaries which are stagananting with the falling dollar rather than for themselves. There's no room for the little man. In a corporate structure those at the bottom are serfs who run the machine. Those at the top do no work and make all the money. They make even more money by shipping jobs overseas to further increase margins. The execs make 1000x the salaries of the regular employees, get huge tax breaks, and benefit from an artificially stimulated economy. They siphon money from the middle class. Every penny and then some for most people goes to paying interest on debt on mortgages and credit cards, food, gasoline, and utilities which goes to... lets see who owns these things again?

Now granted people are in this because they put themselves there. The rich can't be blamed for middle class people spending over their means, although they certainly weren't complaining. The rich do control the media and the corporations however- which have put the little man out of business for himesself.. and largely determine how much, where, and what goods will be bought and sold. The thing is money does move toward the top. That's how the economy works. Interest- siphons money from the poor who borrow to the elite who lend. The more investment you have, the more you get back and you can live off interest while not contributing anything.

No, because it was used to design/build/purchase equipment to defend this country which is one of the few constitutionally mandated functions of the federal government.

A) Income tax goes to paying interest on debt, not funding the programs including the military. That funding comes from borrowing more money from central banks which make fiat currency electronically.

B) Gimme a break nobody capable of -any- level of critical thinking still believes Iraq has anything to do with defending our country. That's just insulting.

[hulugu]

Which is why you need to spend more of defence than pretty much every other country put together, to create an army that is incapable of winning a war (see Vietnam, Iraq) against soldiers armed with WW2 weapons :rolleyes:.

I have to disagree with this. The US military is more than capable of winning a war, the problem is the limited scope of the strategy by "little as possible" cheerleaders like Rumsfeld. If the entire weight of the US Army, Marines, and Air Force had been used in Iraq and Afghanistan akin to the strategy of World War II, we'd have a very different view of the situation.

Numerous military historians, intelligence agents, and others have pointed out that the insurgency in Iraq was bred by the vacuum created by the destruction or desertion of Iraqi military and police units which wasn't filled by the US military. This was a nearly mortal mistake and has cost us dearly. Following this with the 'de-baathification' blunder by the CPA created an easy insurgency with disenfranchised soliders and police-officers who took their guns and experience straight to the Shi'ia and Sunni insurgents. It's not a surprise that Al-Qaeda also came to the battle, hoping to ferment long-term and bloody war.

Also, of note, the insurgency has been fighting with AK-47s (and derivatives), RPGs, and explosives rigged with cell-phones. These are all essentially modern weapons and technology.

[Eraserhead]

I have to disagree with this. The US military is more than capable of winning a war, the problem is the limited scope of the strategy by "little as possible" cheerleaders like Rumsfeld. If the entire weight of the US Army, Marines, and Air Force had been used in Iraq and Afghanistan akin to the strategy of World War II, we'd have a very different view of the situation. Numerous military historians, intelligence agents, and others have pointed out that the insurgency in Iraq was bred by the vacuum created by the destruction or desertion of Iraqi military and police units which wasn't filled by the US military. This was a nearly mortal mistake and has cost us dearly.

But you didn't use a different strategy. If another strategy would have worked better in Vietnam/Iraq you could have used it. If not you need better generals, which cost some of the $400 billion you spend on defence.


Also, of note, the insurgency has been fighting with AK-47s (and derivatives),

Invented in 1947, which is practically WW2.

RPGs,
Invented in WW2 (http://en.wikipedia.org/wiki/Rocket-propelled_grenade), they are probably similarly complex as the insurgents aren't using highly sophisticated versions.

and explosives rigged with cell-phones.

Well these are "modern" as cell phones are modern but they are hardly particularly sophisticated.

You have to remember all the stuff the insurgents don't have. Aircraft, Tanks, Ships, long range missiles, GPS, Radar, Night-vision, Infra-red Vision.

[killerrobot]

You have to remember all the stuff the insurgents don't have. Aircraft, Tanks, Ships, long range missiles, GPS, Radar, Night-vision, Infra-red Vision.

I thought we gave all that stuff to the "good" guys, who then in turn gave it to the insurgents (http://www.nytimes.com/2007/08/07/opinion/07tue3.html). (Minus aircraft, tanks, ships).

As far as the tax cuts go, if people see a recession coming (such is the case) and they receive more money, do you really think they will spend it instead of holding onto it because they expect the worst to come still?

This whole recession goes way beyond just taxes, the megarich and the middle class - it goes towards the unhinging of the US as a superpower and its growing (in)ability to stay competitive with the rest of the world as playing fields start to even out that's creating a lack of jobs, lack of education, and lack of confidence in the government and its ability to do its job correctly.

[Eraserhead]

(Minus aircraft, tanks, ships).

You are correct, the insurgents regularly fire cruise missiles into US bases :rolleyes:.

Regardless, they spend a tiny fraction of the money you spend on your military, and they are holding up fairly well against you, the same applied in Vietnam, especially in places like Cu Chi, where you kicked the insurgents out of their tunnels within days (Oh wait you never did, damn).

[Desertrat]

"If another strategy would have worked better in Vietnam/Iraq you could have used it. If not you need better generals, which cost some of the $400 billion you spend on defence."

Well, actually, better politicians, not generals. We keep avoiding learning the mental processes of those with whom we deal. Hard for folks who live by two-year re-election cycles to cope with those who think in terms of generations.

Hard for folks of upper-class western European culture to understand the religious hatreds of Jihadist Islamics.

Hard for politicians who think that dealing with their alleged peers is the way to shape or re-shape a society; they think "top down" instead of "bottom up". "Hearts & minds" doesn't work as envisioned by the politicans.

'Rat

[hulugu]

But you didn't use a different strategy. If another strategy would have worked better in Vietnam/Iraq you could have used it. If not you need better generals, which cost some of the $400 billion you spend on defence.



Invented in 1947, which is practically WW2....

Well these are "modern" as cell phones are modern but they are hardly particularly sophisticated.

You have to remember all the stuff the insurgents don't have. Aircraft, Tanks, Ships, long range missiles, GPS, Radar, Night-vision, Infra-red Vision.

Actually, insurgents have been using GPS and NVGs, but in very limited aspects. Interestingly enough, you're right about the AK-47 and the RPG. Of course, tanks, ships, aircraft and radar are also WWII-era weapons. They've just been improved over the years.

What's more important is to look at how the US Defense budget breaks down. We're not spending it all on Iraq, rather we still maintain a huge submarine fleet, several carrier groups, plus a rather large contingent of troops in South Korea, Germany, and elsewhere. At the same time, the US operates with a massive expenditure on ABM systems, early warning radar (which other NATO countries depend on), and Drug Interdiction operations in Columbia.

Furthermore, the failure of strategy shouldn't just be hung on the soldiers of the Generals, but also the former Secretary of Defense, the current Vice President, and numerous other civilian and military adjutants including the former leaders of the Civilian Provisional Authority.

The war in Iraq is the consequence of not only a failure in strategy, but the inherent difficulties an invading army has when taking over a civilian population. This hard bloody work has broken nearly every army that has attempted it.

[skunk]

Hard for folks of upper-class western European culture to understand the religious hatreds of Jihadist Islamics.Where on earth did that come from? :confused:

[Desertrat]

Simple, skunk. Just watching the intial "pacification" process in Iraq should suffice. The idea that with Saddam gone, everybody would join hands and sing Kumbaya. Or a refusal to believe that somebody will kill you just because you're not part of "them", of their particular group. Or the idea that you can sit down and shmooze with these folks and everybody will then be buddies forever...

To drift back to the thread, it's the same sort of arrogance and hubris that leads folks to believe they can manipulate gigantic economic systems to never have worse than a "soft landing" and avoid any serious recession, ever. For that matter, the belief that a "stimulus package" can really accomplish much besides sound bites and newspaper headlines.

[skunk]

Simple, skunk. Just watching the intial "pacification" process in Iraq should suffice. The idea that with Saddam gone, everybody would join hands and sing Kumbaya. Or a refusal to believe that somebody will kill you just because you're not part of "them", of their particular group. Or the idea that you can sit down and shmooze with these folks and everybody will then be buddies forever...What in hell are you talking about? Was the "pacification" process - whatever you mean by that - run by "upper class Western Europeans - whatever that means? Was the idea that the invading, occupying, oil-stealing, murdering army would be greeted with flowers a European fantasy? Or was it rather the warped and dogma-blinded hallucination of a cabal of neo-Conservative lunatics who had just usurped your very own government? Please explain.

[killerrobot]

You are correct, the insurgents regularly fire cruise missiles into US bases :rolleyes:.


Does 2000 kilometers sound long range enough? (http://www.dailystar.com.lb/article.asp?edition_id=10&categ_id=2&article_id=88092) Yeah, it hasn't happened yet, but it'll only be a matter of time until insurgents in Iraq somehow mysteriously end up with some.
I guess until then all they'll need are their SAM (http://www.stratfor.com/analysis/iran_iraq_upping_ante_sams)s for now.

Edit: You might not have caught my sarcasm before because I'm basically agreeing with you that US war and defense funding is pretty messed up. I was just pointing out the fact that the WWII vs. Modern Warfare idea was a little skewed.

[Music_Producer]

All economic swings are temporary. On that I will never be proven wrong.

Um, the point is that you should NEVER look at the stock market's performance as a gauge of the economy. There were plenty of times when you held the opinion that 'As long as my stock portfolio is looking good, there's nothing wrong with the economy' .. which was a little laughable.

I see nothing but optimists everywhere, simply in denial - they think that the economy simply *cannot* go bad.

Temporary swings? How about if temporary lasts for your lifetime? I am not worried at all about a recession.. that is necessary for a correction to take place. The main thing I am worried about is the collapse of the currency system. Of course, that is a worst case scenario.. but I don't like the fact that the factors for that to take place, are already present - and we are going towards it.

[MacNut]

Is part of the problem an over inflated market. Are stocks higher then they should be, then when they fall everyone says oh no recession. The problem is that there are more expenses then ability to pay for anything. Tax cuts won't do any good if everything costs more to buy in the first place. We need to work on cheaper products that everyone can afford. Gas is to high, utilities are even worse. Things won't get better until we can get these things lower. It doesn't matter how many tax cuts we get if everything else gets higher.

[solvs]

T.V., the reason cuts in tax rates are good is simple: The government takes in more money. That happened with JFK, Reagan and now Dubya. Tax cuts result in more business activity, which results in more tax take at any given rate.
I keep hearing this over and over, but everything I've read on it that isn't just rhetoric says the exact opposite. CLAIM THAT TAX CUTS “PAY FOR THEMSELVES” IS TOO GOOD TO BE TRUE (http://www.cbpp.org/3-8-06tax.htm). This is just one of the many links, I can provide more if needed. BTW, revenue also went up under tax increases. And while I don't want to be taxed to death, cutting them further won't really fix the problem either. Every economist I've been listening to or reading has said Bush's plan simply (http://www.press-citizen.com/apps/pbcs.dll/article?AID=/20080119/NEWS01/801190326/1079) won't (http://www.nytimes.com/inc_com/inc1200316288100.html?ref=smallbusiness) work (http://www.huffingtonpost.com/2008/01/18/wall-street-draws-little-_n_82185.html). I don't see how more of the same is going to help avoid the impending recession from happening (and it is happening (http://www.marketwatch.com/news/story/odds-us-recession/story.aspx?guid=%7B80BE41BE-BCF3-4EFB-82F7-D2649FB6B67A%7D), for those who still think it isn't).

Just like with Iraq, the definition of insanity is doing the same things over and over again and expecting different results, but there they are wanting to do the same things and expecting a different result.

B) Gimme a break nobody capable of -any- level of critical thinking still believes Iraq has anything to do with defending our country. That's just insulting.
Some people still do, surprising as it is. Same type of people who believe we aren't nearing a recession. Or if we are, tax cuts on the rich and corporations will fix it. And if we aren't, tax cuts will make sure we won't have one.

[Eraserhead]

Sorry for jumping back a bit in the discussion however:

Well, actually, better politicians, not generals. We keep avoiding learning the mental processes of those with whom we deal. Hard for folks who live by two-year re-election cycles to cope with those who think in terms of generations.


So pay the politicians more, or get better ones, or use the Venetian system of making it compulsory to represent the country if you are the best person for the job. There is clearly money in the defence budget to spend, as then it would help the generals plan these wars.


Hard for politicians who think that dealing with their alleged peers is the way to shape or re-shape a society; they think "top down" instead of "bottom up". "Hearts & minds" doesn't work as envisioned by the politicans.

Tax the rich, feed the poor, sounds good!

[n8236]

If the stimulus package goes thru (which I think it will): A person who is single will get back an additional 800 dollars from their taxes while couples receive 1600.

[Desertrat]

solvs, what analysis is needed? Tax rates get lowered; the government's income rises. If government income rises from the greater tax take from more business activity, what's wrong with that? Folks say they want more government spending, so if there's more money to spend, isn't that a Good Thing?

This "tax the rich" BS is just jealousy, and an effort to create class envy. I've yet to see where anybody got rich by taking money away from me. Trump sure didn't, nor did Mike Dell or Bill Gates. Or Nicky Hilton.

Back to the thread: Tax breaks for small business is a sensible deal. After all, US corporate profits, these last several years were 50% in the financials. You know, those guys now writing down somewhere north of a hundred billion in losses. All other corporate profits have been in the conglomerate of Big Oil, small business, retail chain stores, food service, etc. The Big Guys in there can take care of themselves, as they always have and will.

But it's small business that employs the majority of lower-end jobs. E.g., the young folks just starting out in the work-arena, or those who can't get into the high-tech stuff. Without them, we'd be in a helluva lot worse mess as to unemployment.

'Rat

[MacNut]

Tax cuts won't do any good if everything else just keeps getting more expensive. That is the main issue, people can't afford to buy anything.

[IJ Reilly]

solvs, what analysis is needed? Tax rates get lowered; the government's income rises.

Only in theory. This is far from objectively true.

http://en.wikipedia.org/wiki/Laffer_curve

[Rodimus Prime]

Sorry for jumping back a bit in the discussion however:



So pay the politicians more, or get better ones, or use the Venetian system of making it compulsory to represent the country if you are the best person for the job. There is clearly money in the defence budget to spend, as then it would help the generals plan these wars.



Tax the rich, feed the poor, sounds good!

paying the politicians more will not get us better ones. Politions run for office because they want power nothing more. Look at how much the spend on campaigning. It a huge amount of money people give them to campaigning. Hell a better idea would be pay them nothing and guess what I be we would have the exact same people running for office.

[MacNut]

I would agree with get better ones, but they don't need anymore money. They are put there to help us not take our money and keep it for themselves.

[Eraserhead]

paying the politicians more will not get us better ones. Politions run for office because they want power nothing more. Look at how much the spend on campaigning.

True, however if the pay was higher you might get more candidates, some of which might be better for the job.

The main problem I think is that the current US election system leads to a polarisation of candidate choice, you guys need approval voting (http://en.wikipedia.org/wiki/Approval_voting) and then all the current primary candidates could stand for president, which would probably mean you'd get a better choice than bad and slightly better.

[atszyman]

paying the politicians more will not get us better ones. Politions run for office because they want power nothing more. Look at how much the spend on campaigning. It a huge amount of money people give them to campaigning. Hell a better idea would be pay them nothing and guess what I be we would have the exact same people running for office.

The only way we'll end up with different politicians is to move to 100% publicly funded elections. Anyone able to obtain enough verifiable signatures on a position is eligible for the funds, and that's it for running your campaign. Pay the elected politicians a reasonable living wage that does also compensate for the distance and frequency of their travel.

Without this politics is doomed to be ruled by the wealthy who can afford to get themselves more power while equally and maybe even more competent people in the middle and lower income ranges will never have a chance.

[Desertrat]

http://www.heritage.org/research/features/BudgetChartBook/charts_C/c1.cfm

The chart begins post-JFK, but it reflects what happened to Fed income after his tax cuts.

We had the Reagan tax cuts, and when activity picked up in 1983 the Fed income rose. We had the 2001 recession and then the Bushie cuts and when activity picked up in late 2003, the Fed income rose.

'Rat

[Rodimus Prime]

The only way we'll end up with different politicians is to move to 100% publicly funded elections. Anyone able to obtain enough verifiable signatures on a position is eligible for the funds, and that's it for running your campaign. Pay the elected politicians a reasonable living wage that does also compensate for the distance and frequency of their travel.

Without this politics is doomed to be ruled by the wealthy who can afford to get themselves more power while equally and maybe even more competent people in the middle and lower income ranges will never have a chance.


Well you do know that government already pay them over 200k a year and on top of that covers all their travel expensive

[IJ Reilly]

http://www.heritage.org/research/features/BudgetChartBook/charts_C/c1.cfm

The chart begins post-JFK, but it reflects what happened to Fed income after his tax cuts.

We had the Reagan tax cuts, and when activity picked up in 1983 the Fed income rose. We had the 2001 recession and then the Bushie cuts and when activity picked up in late 2003, the Fed income rose.

'Rat

The cause and effect is by no means unanimous, not even among Republican-oriented economists.

[hulugu]

http://www.heritage.org/research/features/BudgetChartBook/charts_C/c1.cfm

The chart begins post-JFK, but it reflects what happened to Fed income after his tax cuts.

We had the Reagan tax cuts, and when activity picked up in 1983 the Fed income rose. We had the 2001 recession and then the Bushie cuts and when activity picked up in late 2003, the Fed income rose.

'Rat

Well, that implies correlation, but not causation.

[solvs]

http://www.heritage.org/research/features/BudgetChartBook/charts_C/c1.cfm
K (even if we ignore who the Heritage Foundation is) maybe I'm missing something, but doesn't the next page page kinda disprove what you're saying?

http://www.heritage.org/research/features/BudgetChartBook/charts_C/c2.cfm

Revenue growth seemed to go down under Reagan and Bush, but up under Clinton. Adjusted. As I said, everything I've seen shows that what Bush wants to do hasn't worked in the past, isn't working now, and won't work in the coming months. A recession is coming, and again, I don't want to be taxed to death either, but we need to do something, and this isn't it. Tax cuts that we have no guarantee will go back into the economy when there are so many other things going wrong right now, when the deficit is still ridiculously high, no, that won't stop or delay or do anything to help against the impending recession. All it's going to do is increase our deficit even more to screw the next Pres and Congress, and offer a temp payout of a few hundreds dollars to some of us, some of which will go to people who don't need it. More here:

http://www.thecarpetbaggerreport.com/archives/6602.html

Wanting someone at the top making millions of dollars more than we do to pay more in taxes has nothing to do with jealousy either BTW. They should pay more. They make more. Why wouldn't they? :confused: I make more now than I used to, so I should pay more than when I was a broke college student and could barely pay the bills. Some CEO outsources jobs, lays a bunch of workers off, still loses his company money, then walks away with a huge severance package that's more than most of us will ever see? Yeah, he should pay more. Someone who's profiting from the increase in oil costs while there are those out there who can barely pay for gas, he should pay more too. He has the money, where else should we get it from? It isn't coming from the last couple of taxes cuts. Someone making 6 or 7 figures who makes their company a ton of money and gets a big bonus, we shouldn't punish him for it, but he should be paying more than a family of 4 making barely above minimum wage who are about to lose their home. We all have to pay our fair share, those of us with more should be expected to pay more. I don't understand why that's such a foreign concept to some people. Taxes aren't a punishment, they're what we pay to have a society. Some of us realize we aren't all going to be at the top, and someone has to pay it. If those who can afford it don't, those who can't will. Or worse, it'll be left for future generations to pay.

That doesn't sound very fiscally responsible to me.

[Desertrat]

Post-JFK, the income trendline was up.

Reagan came in with 14% inflation. Volcker jacked up the Fed rate and we had the recession. The tax cuts didn't fully kick in during the first year, so it was a two-year lag before business activity fully took off. Overall, however, the post-tax-cut trendline was upward.

Carter left Reagan a proposed budget of $700 billion. Reagan left Bush I a proposed budget of $1.1 trillion. Deficits or no, that still represented the availability of more money.

Clinton raised taxes on the heels of the recovery from the white-collar recession, as the dot-com bubble took off. The short-term gains taxes on the "buy the dips, sell the highs" churning meant a tremendous amount of tax income--particularly when coupled with higher income taxes. Then the bubble popped with the tremendous capital losses of 2000.

About the same time as the dot-com bubble popped, Fed rates were lowered and the housing bubble began. Bush comes up with his tax cuts. After the usual time lag for the economy to get sorted out and take off in a new direction, federal tax income again rose. Again, the overall trendline is upward after the tax cut.

And I'm not griping against rich folks paying more taxes. I gripe at the idea that their rate should be higher. A progressive rate is punishment for doing good for yourself. Why should Oprah pay at a higher rate than I do? Last I heard, she's worth over $250 million; good for her!

As far as how corporations do with golden parachutes and all, that, that's dumber'n dirt from a stockholder standpoint--but it's up to the stockholders to vote for their corporation's system to be different. Not you, not me, not the government.

'Rat

[atszyman]

Post-JFK, the income trendline was up.

Reagan came in with 14% inflation. Volcker jacked up the Fed rate and we had the recession. The tax cuts didn't fully kick in during the first year, so it was a two-year lag before business activity fully took off. Overall, however, the post-tax-cut trendline was upward.

Carter left Reagan a proposed budget of $700 billion. Reagan left Bush I a proposed budget of $1.1 trillion. Deficits or no, that still represented the availability of more money.

Clinton raised taxes on the heels of the recovery from the white-collar recession, as the dot-com bubble took off. The short-term gains taxes on the "buy the dips, sell the highs" churning meant a tremendous amount of tax income--particularly when coupled with higher income taxes. Then the bubble popped with the tremendous capital losses of 2000.

About the same time as the dot-com bubble popped, Fed rates were lowered and the housing bubble began. Bush comes up with his tax cuts. After the usual time lag for the economy to get sorted out and take off in a new direction, federal tax income again rose. Again, the overall trendline is upward after the tax cut.

And I'm not griping against rich folks paying more taxes. I gripe at the idea that their rate should be higher. A progressive rate is punishment for doing good for yourself. Why should Oprah pay at a higher rate than I do? Last I heard, she's worth over $250 million; good for her!

As far as how corporations do with golden parachutes and all, that, that's dumber'n dirt from a stockholder standpoint--but it's up to the stockholders to vote for their corporation's system to be different. Not you, not me, not the government.

'Rat

How many times on this board have we been told that correlation does not imply causation with other issues. Sure the trend is up but who's to say that the tax cuts had anything to do with the increase in income, the economic growth may be completely due to interest rate cuts by the FED and the tax cuts only decreased potential revenue.

For any given time there is an optimal income tax somewhere between 0%-100% if you tax at 0% you get nothing, if you tax at 100% no one is going to work. Too low and there's no income, too high and no one has incentive to grow since the personal gains aren't worth the effort. Unfortunately no one ever seems to know what that curve is.

Just because the federal budget increases, does not mean that there is more money available. I can apply for 100 different credit cards and buy a lot more stuff than last year, but that doesn't mean I made any more money.

[IJ Reilly]

For any given time there is an optimal income tax somewhere between 0%-100% if you tax at 0% you get nothing, if you tax at 100% no one is going to work. Too low and there's no income, too high and no one has incentive to grow since the personal gains aren't worth the effort. Unfortunately no one ever seems to know what that curve is.

The Laffer Curve was intended to illustrate this theory -- that there's some "sweet spot" in the taxation rate where government revenues are maximized. But even economists who subscribe to this theoretical model don't argue that lower taxes automatically result in higher revenues, which is not what the model purports to show anyway. What's more, they don't claim to know where that magic place is. Even more to the point, the Laffer Curve theory provides no information about who should be taxed at what rate -- it's at best an aggregate model.

If you don't think progressive taxation is fair, then by process of elimination you believe that regressive taxation is the way to go. All hail the new order. Maybe that's why the taxation system we have in place today is regressive overall. It's designed to comfort the comfortable. Even Warren Buffet thinks this is a sad state of affairs.

[atszyman]

The Laffer Curve was intended to illustrate this theory -- that there's some "sweet spot" in the taxation rate where government revenues are maximized. But even economists who subscribe to this theoretical model don't argue that lower taxes automatically result in higher revenues, which is not what the model purports to show anyway. What's more, they don't claim to know where that magic place is. Even more to the point, the Laffer Curve theory provides no information about who should be taxed at what rate -- it's at best an aggregate model.

That is the biggest problem. Is that I'm willing to bet that the curve is dynamic with time and income level and income levels, and figuring out where to put taxes is like guessing at roulette.

If the "cut taxes increases revenue" matra were true we'd just stop taxation and the government coffers would fill up and everyone would be happy, but obviously this is not true.

If you don't think progressive taxation is fair, then by process of elimination you believe that regressive taxation is the way to go. All hail the new order. Maybe that's why the taxation system we have in place today is regressive overall. It's designed to comfort the comfortable. Even Warren Buffet thinks this is a sad state of affairs.

Well there's always a flat tax, but with the massive variation in State taxes/sales taxes and all that fun managing to put together a truly flat taxation system would most likely prove to be impossible.

[Daveman Deluxe]

And I'm not griping against rich folks paying more taxes. I gripe at the idea that their rate should be higher. A progressive rate is punishment for doing good for yourself. Why should Oprah pay at a higher rate than I do? Last I heard, she's worth over $250 million; good for her!

It comes down to marginal utility. Let's embark upon a thought experiment. Suppose that we moved to a flat tax, where Oprah pays the same tax rate as I do (say 20% for the sake of argument). At these tax rates, Oprah can afford a third pleasure yacht, and I can afford to pay my bills.

Suppose that we move to a progressive tax system where I pay 15% and Oprah pays 25%. At these rates, Oprah can no longer afford a third yacht, but I can afford to have cable TV.

When rich people are taxed at a higher rate, they actually lose less as a result than a person of lower income would gain as a result of a lower tax rate. This is the theory behind a progressive income tax—those who lose the least from a higher rate are meant to pay a larger fraction of their income precisely BECAUSE they lose less.

[IJ Reilly]

If the "cut taxes increases revenue" matra were true we'd just stop taxation and the government coffers would fill up and everyone would be happy, but obviously this is not true.

I believe this is called the Infinite Joy Theory. ;)

Well there's always a flat tax, but with the massive variation in State taxes/sales taxes and all that fun managing to put together a truly flat taxation system would most likely prove to be impossible.

Even with the mildly progressive federal income tax, combined taxes in most states are already regressive. If the federal income tax went flat, then combined taxes would probably become regressive everywhere.

[atszyman]

I believe this is called the Infinite Joy Theory. ;)

I'm pretty sure that theory also involves something about me being very wealthy as well... oh, and something about super models, although I'm not entirely sure what... The theory always comes to me the best after consuming more alcohol than I should. Unfortunately I can never read the notes I took on the theory the next morning...

Even with the mildly progressive federal income tax, combined taxes in most states are already regressive. If the federal income tax went flat, then combined taxes would probably become regressive everywhere.

That was my point. If you used the federal tax to flatten all taxes, the complexity would put the current tax code look like second grade math.

[Desertrat]

Back to Bernanke: I guess folks have noticed that stock markets around the world have taken serious hickeys, and the Dow futures (at this moment) are down almost 600 points.

A given reason is that $150 billion isn't near enough.

Interesting background for all the underlying reasons, going back to the 1987 hearings on Greenspan's appointment to the Fed and Proxmire's concern about mega-banks and banks getting on beyond just banking. Investing in financial paper. As in these CDOs and derivatives suchlike. Sure enough, mega-banking financial institutions came into existence, worldwide, and now it's pay-the-piper time. Interesting 21 years, ain't it? But, hey, half of all U.S. corporate profits, these last some-odd years have been in the financials.

[takao]

Back to Bernanke: I guess folks have noticed that stock markets around the world have taken serious hickeys, and the Dow futures (at this moment) are down almost 600 points.

having a german bank going -2 billions (thanks to speculation in the us market) didn't help either
in fact it's the biggest drop in european stock markets since the 11 Sept. attacks

according to some traders it's like a panic sale going on

i wonder how the DJ is going to react when it's open again... (looks like many traders wont be sleeping very well tonight ;) )

[Desertrat]

"having a german bank going -2 billions (thanks to speculation in the us market) didn't help either"

Greed has no geographic limits. And bankers aren't any smarter than the rest of us. :D

Be that as it may, the changes in world banking around 1987 have led to today's mess. Trillions of dollars in "derivatives" paper--and a lot of that paper will be best-used as bird cage liner...

'Rat

[Ugg]

"having a german bank going -2 billions (thanks to speculation in the us market) didn't help either"

Greed has no geographic limits. And bankers aren't any smarter than the rest of us. :D

Be that as it may, the changes in world banking around 1987 have led to today's mess. Trillions of dollars in "derivatives" paper--and a lot of that paper will be best-used as bird cage liner...

'Rat

It's very reminiscent of the 1920s. Just goes to show that pyramid schemes never go out of style and that humans are just as gullible now as they've ever been.

[KingYaba]

Are we in favor of the $800 check to be given? I am not. Seems encouraging people to spend is the wrong idea considering Americans got in this hole by overspending. For God's sake at least encourage people to invest it. Save it for a rainy day. Not piss it away on retail bull ****.

[skunk]

http://www.counterpunch.org/martens01212008.html
January 21, 2008

$100 Billion and Counting

How Wall Street Blew Itself Up

By PAM MARTENS

The massive losses by big Wall Street firms, now topping those of the Great Depression in relative terms, have yet to be adequately explained. Wall Street power players are obfuscating and Congress is too embarrassed or frightened to ask, preferring to just throw money at the problem and hope it goes away. But as job losses and foreclosures mount and pensions and 401(k)s shrink, public policy measures to address the economic stresses require a full set of unembellished facts.

The proof that Wall Street is giving mainstream media a stage-managed version of what went wrong begins with a strange revelation by Gary Crittenden, CFO of Citigroup, on the November 5, 2007 conference call where he discusses what have now become the largest losses in the firm's 196-year history. Mr. Crittenden is asked by an analyst why the firm didn't hedge its risk. Here's his response:

"I mean I think it is a very fair question...we are the largest player in this [collateralized debt obligation; CDO] business and given that we are the largest player in the business, reducing the book by half and then putting on what at the time was three times more hedges than we had ever had at least in our recent history, seemed to be very aggressive actions given that we were a major manufacturer of this product...once this [decline in values] process started...the size was simply not there. The market is simply not there to do it in size in any way and it would have been uneconomic to do it."

What Mr. Crittenden really seems to be saying is that Wall Street, with Citigroup leading the pack, built a vast market of complex securities but neglected to put in place a liquid and efficient marketplace for hedging this risk. Say, for example, big, liquid, exchange traded indices and futures contracts that are routinely used to hedge everything from stocks to soy beans to crude oil by as diverse a group as Iowa farmers to Saudi princes.

In fact, the unabridged story is breathtaking in its callous disregard for the economic well being of this nation and its people. Exchange traded products did not emerge to hedge this risk because, behind the scenes, Citigroup, along with 12 other big banks and securities firms were funding a private company to gobble up all the necessary components to keep this burgeoning cash cow to themselves in the opaque, unregulated, over-the-counter (OTC) market, despite the fact that they knew it was dysfunctional.

The private company that would become Wall Street's ticker tape for pricing exotic credit instruments (derivatives on subprime mortgages and credit default swaps) started out as Mark-it Partners in 2001, the brain child of Lance Uggla while he was working for a division of Toronto Dominion Bank, TD Securities.
The official story goes like this: Mark-it Partners needed big broker dealers to submit daily price data. As an incentive, it offered 13 large security dealers options to buy shares in the company providing they would be regular providers of pricing data: ABN AMRO, Bank of America, Citigroup, Credit Suisse, Deutsche Bank, Dresdner Kleinwort Wasserstein, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, TD Securities, UBS. By 2004, according to an archived company press release, all of the companies had kicked in capital. The Financial Times would later report that these banks and brokerage firms held a majority interest of approximately 67%, hedge funds owned 13%, and employees 20%. The firm's web site currently says it has 16 banks as shareholders, without naming the banks.
Deutsche Bank, Goldman Sachs and JPMorgan were reportedly the first three firms to take an equity stake in Mark-it on or around August 29, 2003 when the three firms sold a proprietary database of credit derivative information to Mark-it. Since Mark-it is a private firm, financial terms have not been disclosed.
What would have been the incentive for three big Wall Street players to build a proprietary database and then, in a magnanimous gesture completely uncharacteristic of Wall Street greed, hand it over to be shared with their largest competitors?

One likely answer is that around this time regulators with a fetish for orderly paper trails (but myopic to the rapidly escalating financial hazard of this unregulated market) had stumbled upon the fact that there was a growing backlog of credit derivative trades that were never officially confirmed between the parties, reaching a peak of 153,860 unconfirmed trades by September 2005. Of this, 97,650 trades were more than 30 days overdue; 63,322 trades were a stunning 90 days past due according to a Government Accountability Office (GAO) report. (Although regulators knew about this spiraling trading nightmare as earlier as 2003, the GAO report did not come out until we were deep into the credit crisis in June 2007.) It was during this time that regulators got an agreement from the major dealers that Mark-it Partners would begin collecting and aggregating the data on unconfirmed trades, keeping individual dealer data confidential from other dealers and preparing a monthly report of aggregated data for regulators.
Who were the banks and brokerage houses responsible for this unmitigated mess? With only a few exceptions, the exact same firms with a majority ownership in Mark-it Partners.

To grasp the magnitude of this wild west world of trading, one needs to understand that we are not talking about a market of a few billion dollars. According to the International Swaps and Derivatives Association, the credit derivatives market has grown from an estimated total notional amount of nearly $1 trillion outstanding at year-end 2001 to over $34 trillion at year-end 2006.

According to the U.S. Office of the Comptroller of the Currency (OCC), JPMorgan, Citigroup and Bank of America handled about 90 percent of this trading among U.S. commercial banks in the fourth quarter of 2006. (These are the same three banks that were backing the scheme last year with the U.S. Treasury to create a $100 Billion bailout fund for exotic instruments that also had never seen the light of day of exchange trading. That plan failed when it appeared to be a thinly disguised artificial pricing mechanism to inflate values for the worst hit firms on Wall Street: namely, Citigroup.)

According to the GAO report, significant progress was achieved for a period in bringing down these unconfirmed trades but by November 2006, the numbers had climbed again: there were over 81,000 unconfirmed trades with around 31,000, or 54 percent, remaining unconfirmed for over 30 days. Raising images of the early 1900s curb market in lower Manhattan where traders posted securities for sale on lampposts, the report notes that this vast market is being handled manually to a significant extent. (Our nation has apparently devolved not only on torture and constitutional rights and habeas corpus and election integrity but we now seem to have wiped out 100 years of trading advances.)

The obvious solution, a transparent, regulated, automated, exchange traded model does not seem to have occurred to the Masters of the Universe or their timid regulators.

It did, however, occur to four Exchanges: Eurex, the Chicago Mercantile Exchange (Merc), the Chicago Board of Exchange (CBOE) and the Chicago Board of Trade (CBOT). In 2007, all four created exchange traded instruments to hedge the risk of credit defaults. Some traders call the response from the Wall Street firms a boycott; others call it a cabal that circled the wagons. According to a Bloomberg article in April 2007, "Banks and securities firms are keeping a stranglehold on the market, which has swelled to cover debt sold by more than 3,000 companies, governments and industries." A call to the CBOT on January 18, 2008 confirmed that they are still not seeing any business from the big Wall Street firms in their credit default product.

The track for this train wreck was put in place in December 2000 when Congress passed the Commodity Futures Modernization Act giving a free pass on regulation to the over-the-counter trading between sophisticated individuals and institutions. Brooksley Born, then Chairperson of the regulatory body, the Commodities Futures Trading Commission (CFTC), literally begged Congress to slow down the train and carefully consider the future ramifications of this legislation. Speaking before the House Committee on Banking and Financial Services on July 24, 1998, Ms. Born said:

"The CFTC or its predecessor agency, the Commodity Exchange Authority, has regulated derivative instruments for almost three-quarters of a century. Its authority is contained in the Commodity Exchange Act ("CEA" or "Act"), which is the primary federal law governing regulation of derivative transactions. The CEA vests the CFTC with exclusive jurisdiction over futures and commodity option transactions whether they occur on an exchange or over the counter. The Act generally contemplates that, unless exempted, futures and commodity options are to be sold through Commission-regulated exchanges which provide the safeguards of open and competitive trading, a continuous market, price discovery and dissemination, and protection against counterparty risk."

Alan Greenspan, Chair of the Federal Reserve Board at the time, testified before Congress in favor of this legislation and asked that it be "expedited." Last week, Mr. Greenspan joined the payroll of the hedge fund, Paulson & Company, which last year made $15 billion in profits betting that poor people's homes would be foreclosed on while using the unregulated over-the-counter contracts that Mr. Greenspan assisted in making possible.

The counter-party risk that Ms. Born highlighted in her testimony is now set to take center stage in 2008. As it turns out, this non-exchange based market of darkness totaling $34 trillion has done business with some parties that are unable to pay up or are teetering on a death spiral due to looming ratings downgrades. Last week, Merrill Lynch announced it was writing down over $3 Billion as a result of problems with its counter-parties.

As the threat of some antiseptic sunshine and competition from the exchanges reached the big Wall Street players late last year, Mark-it Partners, now known as Markit Group Ltd., had yet another amazing burst of good fortune. In November 2007, two consortiums owned by essentially the same group of banks and brokerage firms that were early investors in Mark-it Partners, who conveniently also owned the major credit default indices, CDS IndexCo and International Index Co., up and sold themselves to little Markit Group Ltd. Included in the deal by CDS IndexCo were the two subprime indices, ABX and TABX, along with the prominent CDX index which acquired much of its respectability by previously having the name Dow Jones in front of its three letters.

ABX and TABX were the indices Citigroup should have been able to hedge itself with if this over-the-counter market was liquid, functional and able to handle pesky details like proof the trade happened. Instead, 401(k) plans, endowments, public pensions and Citigroup employees' deferred compensation plans, loaded up to their eyeballs in Citigroup's bizarrely large float of 5 billion shares, have watched the stock value decline by 53% over the past 12 months as toxic debt that was never hedged comes home from holiday in the Caymans to blow up on Citigroup's books.

It was four years after the crash of 1929 before the major titans of Wall Street were forced to give testimony under oath to Congress and the full magnitude of the fraud emerged. That delay may well have contributed to the depth and duration of the Great Depression. The modern-day Wall Street corruption hearings in Congress were cut short by the tragedy of 9/11. They must now resume in earnest and with sworn testimony if we are to escape a similar fate.

Pam Martens worked on Wall Street for 21 yearsA very interesting, if disturbing, read.

[Desertrat]

"The massive losses by big Wall Street firms, now topping those of the Great Depression in relative terms, have yet to be adequately explained."

Well, bat guano. Okay, not adequately explained by the guys who screwed up and lost all that money.

The Agora Group folks, and guys like Doug Casey, have been predicting all this for well over a year. Been explaining how it would all come about, although they didn't try for the specific "when" or the exact numbers. Hell's bells, bits and pieces have been in the newspapers for months, now.

If folks can't connect the dots, shame on 'em.

Greenspan. US Congress. 1987 as well as 2000. The various central banks and investment firms overseas. They all contributed, along with others who didn't understand what sort of investment tiger was being turned loose.

"It's the best of all possible worlds." -- Pangloss.

Good luck.

[solvs]

Are we in favor of the $800 check to be given? I am not. Seems encouraging people to spend is the wrong idea considering Americans got in this hole by overspending. For God's sake at least encourage people to invest it. Save it for a rainy day. Not piss it away on retail bull ****.
That would be what people would do, save it or use it to pay off bills. Which would kinda defeat the purpose. Which is one of the (many) reasons those in the know aren't happy with it. The theory is that it would pay for itself by stimulating the economy, but it's not enough to do much even if spent and too much to waste that could be put to better use elsewhere for something that might actually do something. But people like a little money, so it may bounce his numbers a bit and give a temp jump, at least in appearance, even if it won't actually do anything to fix or even help the real problems.

And again, I have to ask, if we've seen this coming as everyone keeps saying we have, why didn't anyone proactively do something about it, or at least more, that might actually have done some good, any good even if we couldn't stop it, instead of what seems to have happened where we actually somehow might have made things worse?

And I'm sorry, but I have to point this out again:

http://www.heritage.org/research/features/BudgetChartBook/images/charts_C/C-2.gif

[Desertrat]

"...why didn't anyone proactively do something about it...?"

Congressfolks have focussed on the election for over a year. The people on the inside who had a clue were looking at their bonuses ($36 billions worth, at Citycorp alone) and churning paper. Those who saw that, "This can't go on!" generally aren't in any position of influence.

And, really, nothing truly illegal was being done. Just greed, stupidity on the part of those who bought bundles of junk as AAA ratings, and lots of optimism about the housing bubble going on forever. It's the old Ponzi thing about the last sucker being the loser.

You think it's bad so far? Groove on this tidbit: Two of the biggest commercial-bond insurers, with exposure of some $1.2 trillion, are in deep doo-doo. They're losing their AAA rating, which is contributing to this global meltdown in the stockmarkets.

Think dominoes...

'Rat

[solvs]

You think it's bad so far?

I know it's only going to get worse. We've been hearing it's going to get worse for quite some time now, and it's only going to keep getting worse. Everyone just stuck their heads in the sand. I just don't get that, because for some reason it seems stupid to me.

No wonder Jim Cramer has looked like his head is going to explode for the past year.

[Music_Producer]

I know it's only going to get worse. We've been hearing it's going to get worse for quite some time now, and it's only going to keep getting worse. Everyone just stuck their heads in the sand. I just don't get that, because for some reason it seems stupid to me.

No wonder Jim Cramer has looked like his head is going to explode for the past year.

Cramer? The guy who was yelling and asking the Feds to cut rates? Cramer just listens to what the Wall St idiots are complaining about.. and echoes the same sentiment.

That has just made this situation worse. I said months ago that even if you cut rates to 0, it's not going to make the credit fiasco problem go away. The worst thing is, it will make inflation sky rocket and erode the $'s value.

This is exactly what is happening now - watch as rates keep getting cut.. but the scenario just keeps getting worse. So what they will have to do is try and get rates as low as possible (and hopefully, stupid consumer and more stupid banks won't try to get into the whole cycle once again of no down payment loans, etc etc) and then when inflation is out of control - they will have to sharply increase rates.

They should have left the rates alone. A recession caused by loss of homes, jobs, etc.. is much better than a similar recession with all that *plus* out of bounds inflation.

This was something that most people have been expecting for more than a year. But then you have the 'optimists' who insist nothing is wrong.. simply because of a bubbling stock market. They've all shut up now.. this has just started.. wait till it gets worse. The only trigger factor left is for China or the Middle East to start switching their $ reserves to Euros or pounds.

[Ugg]

This was something that most people have been expecting for more than a year. But then you have the 'optimists' who insist nothing is wrong.. simply because of a bubbling stock market. They've all shut up now.. this has just started.. wait till it gets worse. The only trigger factor left is for China or the Middle East to start switching their $ reserves to Euros or pounds.

Well, the NYT is reporting that Tuesday trading in Asia is worse than it was on Monday.

Too bad swarmy got banned, it would be interesting to hear him spin this one.

[hulugu]

Too bad swarmy got banned, it would be interesting to hear him spin this one.

How'd he manage to do that?

[Ugg]

How'd he manage to do that?

I've no idea. He always pushed the limits but never seemed to go too far. Evidently this time he did.

[Music_Producer]

Well, the NYT is reporting that Tuesday trading in Asia is worse than it was on Monday.

Too bad swarmy got banned, it would be interesting to hear him spin this one.


What?! Our only optimist is banned! :p

[hulugu]

What?! Our only optimist is banned! :p

That seems like a ill omen, doesn't it? :D

[takao]

the funny thing for me as somebody who has very little interest in all those things is how the experts are clueless in what to do to stop it... i'm just reading through some comments of german/austrian traders and it's hilarious

edit: it not only went in asia bust already ... the german DAX went down more than 5 percent within the first minutes

and india had even to stop trading for an hour after the first minutes

[Music_Producer]

Uh.. I'm sitting here at my trading desk and I just read a report.. it's a rumor but nevertheless.. stating something that an Abu Dhabi investment group might not fund Citigroup .. and this might force Citigroup to file for bankruptcy protection.

WTF??? :eek: Just a rumor.. and it could just remain that, but not a good sign that a huge banking corporation should be subject to such rumors.

[Music_Producer]

the funny thing for me as somebody who has very little interest in all those things is how the experts are clueless in what to do to stop it... i'm just reading through some comments of german/austrian traders and it's hilarious


So called 'experts' say the exact opposite stuff.. all the time. I remember when I was burned in the stock market 6-7 years ago simply because I followed 'expert' advice.. instead of listening to my own. Since then.. I've always been amused and pissed at the same time.. when these idiots open their mouths.

Seriously though, I would love to work as an expert. Being paid to give out wrong advice? Wow .. cool job!

[atszyman]

Are we in favor of the $800 check to be given? I am not. Seems encouraging people to spend is the wrong idea considering Americans got in this hole by overspending. For God's sake at least encourage people to invest it. Save it for a rainy day. Not piss it away on retail bull ****.

That would be what people would do, save it or use it to pay off bills. Which would kinda defeat the purpose.

Actually heard a report on the commute home on NPR last night where they were basically saying the same thing about the $300 break from a few years back. How people used it to pay off debt (past purchases) rather than buying new stuff.

[Music_Producer]

Great.. Feds just cut rates by 75 bps.

[Thomas Veil]

Uh.. I'm sitting here at my trading desk and I just read a report.. it's a rumor but nevertheless.. stating something that an Abu Dhabi investment group might not fund Citigroup .. and this might force Citigroup to file for bankruptcy protection. Well, there was a story last week on NBC (I think) that Citigroup was selling a portion of itself to foreign investors, to get the money to stay afloat. That's bad enough news. From what you're saying I might infer, though I could be wrong, that even that is going down the tubes.

[IJ Reilly]

Great.. Feds just cut rates by 75 bps.

The markets didn't think it was so great.

[foidulus]

The latest rate cut proves that either a) he is attempting to destroy the American economy or b) he has totally lost his grip on reality. In either case, he needs to resign like tomorrow.

Why on earth would he cut rates, let alone that large and that suddent? The data might have been bad, but you don't add to the panic but drastically cutting rates. If you think the rate needs cut by .75, then do 3 .25 rates. By doing this, he sent what may have been a bit of a correction into stock prices into a full blown panic.

Furthermore, I still don't understand WHY he cut rates. Inflation is still high, and he constantly states that high energy prices are a threat to the economy. One of the reasons(in dollar terms) that energy prices are so high is because the dollar is so weak. So what does Bernanke do? Go out of his way to make the dollar even weaker! Um.... Brilliant? In my opinion, incredibly moronic. Oil prices and inflation are now going to skyrocket thanks to Mr. Bernanke as the dollar is going to fall significantly.

Furthermore, Bernanke complains about the low savings rate of Americans and about the crisis in liquidity, and then turns around and punishes people who have the most liquid savings vehicle there is, ie savings accounts? Just leaves me speechless.

Finally, the United States(and nowadays many companies) depend on foreign money to keep them afloat. In a time when China and many other buyers of American debt have stated that they are looking at severely reducing the amount of US debt they buy which could wreak havoc on the American economy, he goes and makes sure that future debt will bring even lower yields! While lowering the value of the dollar at the same time!

What is he thinking????

He has finally motivated me to click on one of those HSBC offshore bank ad thingies to turn my dollars into Euros and will move overseas at the first chance I get. I cannot trust Bernanke as the steward of my fortune because he obviously is not at all connected with reality.

[IJ Reilly]

The Dow was down in futures trading about twice as much overnight as it was after the rate cut was announced. So it did have some of the hoped-for impact on the markets. The main complaint about Bernanke's Fed is that they may have acted too little too late. Stringing out quarter-percent rate cuts certainly isn't going to impress anyone.

Inflation certainly is an issue, but the threat of recession is a more immediate one. The dollar has actually been gaining ground recently.

[gkarris]

T.V., the reason cuts in tax rates are good is simple: The government takes in more money. That happened with JFK, Reagan and now Dubya. Tax cuts result in more business activity, which results in more tax take at any given rate.

Now, government spending over and above its income from taxes is a whole 'nother deal.

hulugu, yeah, I was focussing on the ethanolitis, "Let's all love and cherish ADM!" part of the energy bill.

'Rat


Tax cuts don't do people who have been laid off and not able to pay taxes, or for anything else for that matter, any good.

The companies I've worked for who enjoyed "tax cuts" invested the monies overseas and the top executives enjoyed the tax savings by putting the mony into their own wallet.

Yea for tax cuts!

[foidulus]

The Dow was down in futures trading about twice as much overnight as it was after the rate cut was announced. So it did have some of the hoped-for impact on the markets. The main complaint about Bernanke's Fed is that they may have acted too little too late. Stringing out quarter-percent rate cuts certainly isn't going to impress anyone.

Inflation certainly is an issue, but the threat of recession is a more immediate one. The dollar has actually been gaining ground recently.

Yeah, but the Feds main mission isn't to shore up the short term value of the stocks,it's to control the money supply so that inflation doesn't get out of hand.

Bernanke is just making sure we return to the good times of stagflation we had in the 70's. Eventually, someone is going to have to set the US interest rate into the double digits to both control inflation and entice other countries to continue buying US debt. Bernanke is playing the part of the grasshopper in the ant and the grasshoper, do what feels good today and never mind what the consequences will be tomorrow.

[IJ Reilly]

Yeah, but the Feds main mission isn't to shore up the short term value of the stocks,it's to control the money supply so that inflation doesn't get out of hand.

Bernanke is just making sure we return to the good times of stagflation we had in the 70's. Eventually, someone is going to have to set the US interest rate into the double digits to both control inflation and entice other countries to continue buying US debt. Bernanke is playing the part of the grasshopper in the ant and the grasshoper, do what feels good today and never mind what the consequences will be tomorrow.

The Fed has multiple missions, which includes setting interest rates to respond to economic conditions, whether it be inflation or a slowdown in the economy.

The Fed is in a very difficult position. Inflation is up, but it would be factually incorrect to suggest that inflation is anywhere near the levels it reached during the 1970s, when the Fed raised rates astronomically to kill it off. At this point, your prescription would be worse than the disease.

[carbonmotion]

Should be seeing those soup lines forming up any minute then. If you think that "just about everything that could be going wrong with the economy, is" you're not using much of an imagination.

Just remember that the worst economic period during the Bush administration is still better than the best period during the Carter administration and we lived through that.

I guess we'll just have to hope that the next president raises taxes so that jobs and spending increase. Oh wait... that doesn't work.

I agree with Swarmlord. Everything comes in trends, if you listen to the news, you'd think everything was happening for the first time. This is an illusion. It takes a bit of life experience to see through that.

[skunk]

Everything comes in trends, if you listen to the news, you'd think everything was happening for the first time. This is an illusion. It takes a bit of life experience to see through that.Only the worse the news, the longer you need to have been around to have experienced it before.

[Desertrat]

solvs, your chart is irrelevant to what I said. It's percentage change, administration to administration. It doesn't reflect the increase in income during the time of an administration--and in some cases on beyond--that always has followed a reduction in tax rates.

I halfway feel sorry for those guys at the Fed. Without liquidity, the whole system collapses. But lowering rates to promote liquidity and injecting money into the marketplace lowers the strength of the dollar and increases the rate of inflation.

But, we the public have contributed. We've demanded services from government beyond what we're willing to pay. We've "bought things we couldn't afford with money we didn't have" by accumulating debt and reducing savings. We've priced ourselves out of competition in much of the world's industrial production, and haven't been able to create the communications-age jobs on a widespread-enough basis to replace the lost jobs. Consumeritis has meant a balance-of-payments deficit that dwarfs the federal deficits.

And folks wonder why things are getting rough? We've been planting seeds and cultivating the crop for over twenty years, fer cryin' out loud! And now it looks like harvest time.

Aw, well. Don't anybody feel bad. I haven't really been able to persuade my wife that they're not gonna quit makin' all that stuff she wags home from a discount outlet mall...

'Rat

[mactastic]

Going south could easily be blamed on Clintion because it was stuff from his time that caused it.
So you would also argue that this current "going south" could easily be blamed on Bush because it was stuff from his time that caused it? Somehow I don't think you'll be receptive to that argument...

T.V., the reason cuts in tax rates are good is simple: The government takes in more money. That happened with JFK, Reagan and now Dubya. Tax cuts result in more business activity, which results in more tax take at any given rate.
This is a lie. Even Bush's folks have admitted that the tax cuts they enacted, and to which you refer in the above line, have not managed to pay for themselves.

Why are you lying to us sir?

solvs, what analysis is needed? Tax rates get lowered; the government's income rises. If government income rises from the greater tax take from more business activity, what's wrong with that? Folks say they want more government spending, so if there's more money to spend, isn't that a Good Thing?
Perhaps you have some proof that lowering tax rates CAUSES government income to rise? If so, you haven't presented it to us yet.

Which forces me to ask again. Why are you lying to us sir? Why the abundance of bat guano from you on this subject?

This "tax the rich" BS is just jealousy, and an effort to create class envy. I've yet to see where anybody got rich by taking money away from me. Trump sure didn't, nor did Mike Dell or Bill Gates. Or Nicky Hilton.
The "untax the rich" calls from the Bushies were just jealousy over the gains the middle class made under Clinton. Turnabout is fair play, eh?

Besides, if you want to talk about creating class envy, how about all your conservative friends who like to refer to welfare recipients as "welfare queens"? That's straight class warfare right there, yet you turn a blind eye to it when "your guys" do it.

Back to the thread: Tax breaks for small business is a sensible deal. After all, US corporate profits, these last several years were 50% in the financials. You know, those guys now writing down somewhere north of a hundred billion in losses. All other corporate profits have been in the conglomerate of Big Oil, small business, retail chain stores, food service, etc. The Big Guys in there can take care of themselves, as they always have and will.
But who's getting the lion's share of the Bush tax cuts? I know many a small business owner, and I can assure you it's not them.

But it's small business that employs the majority of lower-end jobs. E.g., the young folks just starting out in the work-arena, or those who can't get into the high-tech stuff. Without them, we'd be in a helluva lot worse mess as to unemployment.
No, the big guys employ the majority of lower-end jobs. The McDonalds, the Wal-Marts, the Hiltons... the list goes on and on. The small business guys are the electricians and plumbers and what not that actually pay decently.

Are we in favor of the $800 check to be given? I am not. Seems encouraging people to spend is the wrong idea considering Americans got in this hole by overspending. For God's sake at least encourage people to invest it. Save it for a rainy day. Not piss it away on retail bull ****.
The whole reason for the tax rebates is so that people spend the money. If they save it, no stimulus is realized at all.

[IJ Reilly]

I didn't ask for a trillion dollar war.

[mactastic]

I didn't ask for a trillion dollar war.
A trillion if we're lucky...

[toontra]

Too bad swarmy got banned, it would be interesting to hear him spin this one.

I've heard enough of his c**p (through others quoting him) - good riddance.

[Music_Producer]

Inflation certainly is an issue, but the threat of recession is a more immediate one. The dollar has actually been gaining ground recently.

The thing is.. cuts won't help avoid a recession.. or even slow it down. It will make matters worse. The dollar's gains will be temporary.. remember that people usually flock to gold and $ during financial crises (plural of crisis? I hope I spelled that right)

*But* traders are not going to want to keep their $ investments long term.. considering the interest rate differential. If I were a bank, I would prefer that my deposits were in aussie $.. high interest rates.. their main exports are commodities.. so I would definitely favor switching from $ to something else.

When the $ downtrend begins.. it won't be a pretty sight. And when inflation jumps up with a surprise attack.. that will be even uglier.

Edit - These cuts are designed to help the banks.. not the average consumer. The consumer who is having a hard time making house payments.. won't see much benefit from these cuts. He can't afford the house anyway.. a 1 bps cut won't matter. He won't even have the money to refinance. The typical foreclosed home owner is the one who is using his/her credit cards to pay for utility bills.. you really think a foreclosure crisis will be avoided? Nah..

For banks who lend to each other.. the cuts are designed to help them. The problem is this has gone way out of hand .. the problem started a few years ago .. can't be fixed. It's better to have the banks disclose all their worthless assets .. and start fresh.. rather than try and make everything messy.

[mactastic]

I've even heard concerns about stagflation rearing it's ugly head again.

[Desertrat]

D'accord, Music Producer...

mac, calm down and quit with the name-calling. Besides, if you lie, you have to remember what you said--and I'm way too lazy to bother with that.

I've merely said that government revenues go up after reductions in income tax rates, and they always have. This does not mean, necessarily, that the increase must forever continue; policies change, the economy changes, etc. The recession that's upon us now may well reduce gross incomes to all levels of government.

Now, the issue of cuts "paying for themselves" is a different matter: If there is deficit spending, the increase from tax cuts may well not cover those deficits. So? I didn't say boo-diddley about spending or balanced budgets or deficits.

And, yeah, IMO, stagflation. IMO, we're just in the earliest stage of it.

'Rat

[mactastic]

D'accord, Music Producer...

mac, calm down and quit with the name-calling. Besides, if you lie, you have to remember what you said--and I'm way too lazy to bother with that.

I've merely said that government revenues go up after reductions in income tax rates, and they always have. This does not mean, necessarily, that the increase must forever continue; policies change, the economy changes, etc. The recession that's upon us now may well reduce gross incomes to all levels of government.

Now, the issue of cuts "paying for themselves" is a different matter: If there is deficit spending, the increase from tax cuts may well not cover those deficits. So? I didn't say boo-diddley about spending or balanced budgets or deficits.

And, yeah, IMO, stagflation. IMO, we're just in the earliest stage of it.

'Rat
Are you telling me you didn't say this?
T.V., the reason cuts in tax rates are good is simple: The government takes in more money. That happened with JFK, Reagan and now Dubya. Tax cuts result in more business activity, which results in more tax take at any given rate.
You appear to be arguing that the government is taking in more money as a result of Dubya's tax cuts. Is that what you were intending? Because it's sure as heck not true.

[miloblithe]

I've merely said that government revenues go up after reductions in income tax rates, and they always have. This does not mean, necessarily, that the increase must forever continue; policies change, the economy changes, etc. The recession that's upon us now may well reduce gross incomes to all levels of government.

Rat, no one who can do math believes this. OK. Let's say that the GDP is 100, and government taxes at 33%, so government revenue is 33. Government lowers taxes to 25%, meaning that to have the same 33 revenue, GDP would have to be 132. Are you seriously arguing that an 8% drop in taxes would lead to more than a 32% increase in GDP over and above the amount GDP would have increased if the tax cut had not been made in any reasonable amount of time?

The plausible argument is that GDP goes up with tax cuts. If you lower taxes to 25% from 33%, GDP will go up more than it would without the tax cut, so next year, instead of a 102 GDP, you'll have a 103 GDP. In the long run, the theory goes, we'll all be better off because of greater GDP growth. This point, although plausible, is also debatable.

[rhsgolfer33]

But who's getting the lion's share of the Bush tax cuts? I know many a small business owner, and I can assure you it's not them.


No, the big guys employ the majority of lower-end jobs. The McDonalds, the Wal-Marts, the Hiltons... the list goes on and on. The small business guys are the electricians and plumbers and what not that actually pay decently.

Thats funny, because my family owns a small business, actually, two of them, and we've definetly payed less in taxes after the Bush tax cuts than we did before.

As for small business guys paying decently, that's not always true, just like big guys paying poorly isn't always true. I can make similar salary/hourly wages at the big guys as I can at anyone small and I would probably have more benefit options at a larger company. I've been payed well at both large and small, but find that companies in the mid area tend to pay the best (small companies just don't have money and large ones are too stingy with it).

[solvs]

Perhaps you have some proof that lowering tax rates CAUSES government income to rise?
I guess not.

I didn't ask for a trillion dollar war.
Or the other things the gov has been spending money on that certainly aren't benefiting or who I think needs it. But it's easier to blame us than give responsibility to those who wasted it. Unless they're Democrats. Even if they become the fiscally responsible ones. Then our taxes are too high because we'd rather not pay tax while the gov bankrupts us with bridges to nowhere and sex ed plans that don't work and NCLB and corporate welfare. I especially love how the gov is telling us to keep spending to keep the economy afloat, like they did after 9/11, then we get someone telling us consumerism is the problem. I hope the GOP starts saying that more, that'll go over well. It's all your fault Americans! Blame America first indeed.

Besides, if you lie, you have to remember what you said--and I'm way too lazy to bother with that.
But you are saying something that isn't true, something I've noticed you've yet to back up.

I've merely said that government revenues go up after reductions in income tax rates, and they always have.
But they don't pay for themselves (http://www.detnews.com/apps/pbcs.dll/article?AID=/20071227/POLITICS/712270386/1374). And they also go up when taxes go up. And as you pointed out, it doesn't do anyone any good if spending goes up, and under who has spending gone up? More on what's going on and why Bush's plan won't help:

Tax Rebate or Payment? A Policy Debate Begins (http://www.nytimes.com/2008/01/20/washington/20rebate.html?sq=budget&amp;scp=36&amp;pagewanted=print)
No Quick Fix to Downturn (http://www.nytimes.com/2008/01/13/business/13econ.html?_r=1&em&amp;ex=1200373200&amp;en=23de104a1e60efa9&amp;ei=5087%0A/ohttp://www.nytimes.com/2008/01/13/business/13econ.html?em&amp;ex=1200373200&amp;en=23de104a1e60efa9&amp;ei=5087%0A&oref=slogin)
ADMINISTRATION STIMULUS PLAN FAILS TESTS FOR ACHIEVING MOST EFFECTIVE STIMULUS (http://www.cbpp.org/1-17-08tax-stmt.htm)

More where that came from. Still wondering why everyone has waited until it's already upon us to even talk about doing anything. No matter how you feel of people like Cramer (and I only used him as an example because he's out there talking about it and has been for awhile) people like him have been right about this and no one has listened until it was too late. I've been hearing we (http://www.msnbc.msn.com/id/22509324/) already (http://money.cnn.com/2008/01/09/news/economy/recession/index.htm?postversion=2008011004) are (http://www.economicnews.ca/login.php?page=reportsDetails&newsid=44415&prevview=&view=details&country=Canada&plimit=0&category=Canadian%20Economic%20Reports) in a recession, for what that's worth.

[mactastic]

Thats funny, because my family owns a small business, actually, two of them, and we've definetly payed less in taxes after the Bush tax cuts than we did before.

As for small business guys paying decently, that's not always true, just like big guys paying poorly isn't always true. I can make similar salary/hourly wages at the big guys as I can at anyone small and I would probably have more benefit options at a larger company. I've been payed well at both large and small, but find that companies in the mid area tend to pay the best (small companies just don't have money and large ones are too stingy with it).
Well if 'Rat can quote stats without any proof and without anyone calling him on it, then so can I! :p

(The truth is likely somewhere in between.)