Global Economic August Thread

Talk about the global and national economy to your heart’s content, as much as it takes to get it out of your system so the rest of the site can stick to real estate and housing.

For previous economic open threads, click here.

As of 09/07/2010, global economic comments that do not directly relate to Seattle-area real estate go only in threads designated for this specific subject.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

189 comments:

  1. 1
    Scotsman says:

    More signs of wage deflation, or just a “local issue?”

    Detroit teachers settle for a 10% wage cut:

    http://www.cnbc.com/id/43945644

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  2. 2
    Scotsman says:

    Pay up!

    http://www.youtube.com/watch?v=MqoGORXAv2o&feature=player_embedded

    “An economy can only sustainably spend what it generates in surplus. The U.S. has been exchanging paper with funny green ink on it for real stuff, far in excess of the surplus generated by our own labor and production. That is our trade deficit. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing. This is not spending a surplus we have earned, it is borrowing against future surpluses, surpluses of national income which we are now committing to debt service.

    Future generations won’t get to spend their surplus; they will have to devote it to servicing the debts we have gaily borrowed and blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

    http://www.oftwominds.com/blogaug11/demise-of-consumer-8-11.html

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  3. 3
    Scotsman says:

    “The consumer-debt-based economy is toast, but everyone’s too terrified by its demise to acknowledge this reality, never mind consider a new model. The entire creaking economy is based on a few ideas which no longer work:

    1) Create “aggregate demand” (i.e. consumer demand, which then creates business demand) and the economy “grows,” people are hired and get paid, and that’s good.

    2) When consumer demand slumps because people are over-indebted and can’t afford to buy more of anything, then “stimulate” demand with massive Central State spending to replace the vanished private demand.

    3) Demand is endless. You can never have enough stuff, food, vacations, education, healthcare and toys. Give people free money, or the ability to borrow nearly-free money, and they will spend, spend, spend. This creates “growth” which is always good.

    A funny thing happened on the way to the infinite demand/consumption model–or actually, two things:

    A. People borrowed all they could afford, and then borrowed more. Now they can’t borrow any more, even if the interest rate is low. By some estimates, American consumers need to pay down $4 trillion in debt just to restore the income-to-debt ratios of the early 1980s, never mind the early 1960s.

    B. Infinite demand met marginal return in a dark alley, and infinite demand is in the gutter, whoozy and bleeding profusely.”

    http://www.oftwominds.com/blogaug11/demise-of-consumer-8-11.html

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  4. 4
    BillE says:

    By Scotsman @ 1:

    More signs of wage deflation, or just a “local issue?”

    Detroit teachers settle for a 10% wage cut:

    http://www.cnbc.com/id/43945644

    Yes. These rotten union employees making $50k a year plus bennies are a disease and need to be put in their place. I mean seriously, who do they think they are?
    On the other hand, companies on the verge of death after failing at their supposed field of expertise need government funds so they can pay bonuses to their top brass. They were doing god’s work.

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  5. 5
    S-Crow says:

    RE: BillE @ 4 – I’ve never been a fan of unions ever since my “incident” with the City of Seattle changing a locker room shower head on my own at Queen Anne Pool back in college. My “efficiency” turned into a sit down with a manager who said they were receiving heat because it was a union job. So, a complaint from a customer that a shower head was defective and that I fixed in about 15 minutes turned into a Union issue.

    All that to say, you have a very good point. Lot’s of irony.

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  6. 6
    Pegasus says:

    RE: S-Crow @ 5 – Unions destroyed the American auto industry and Detroit. Obama bailed out GM to help the unions out and not the shareholders. Unfortunately since the population in Detroit has dropped 25 percent this is what happens. The city is imploding and the bills are not. The city pumps approximately 15 percent of their pay rate away to fund their retirement plan. What private company does that? Private companies are all dropping retirement plans and switching to 401k’s as the retirement plan where the employee funds most of their own retirement.

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  7. 7
    David Losh says:

    You forgot the debt markets.

    Once we had, have, and continue to generate, trillions of dollars in debts those promises to pay can be bundled into securities to be bought sold, and traded.

    Imagine the number of people who hold government bonds. Those are the safe harbors. How does that really look to any one today?

    Yes we need to get rid of debt, but that means regulating banks. It means government involvement in business. It means a further contraction of the economy.

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  8. 8

    By Pegasus @ 6:

    RE: S-Crow @ 5 – Unions destroyed the American auto industry and Detroit.

    Right. It had absolutely nothing to do with poor management and making the types of cars people didn’t want,etc.

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  9. 9
    David Losh says:

    Unions are the only thing standing between us and the wage scale of China. Unions are the front line of defense.

    If you want to use the school board as an example, our schools have more than enough money to operate if we run them like a business that gets government tax subsidies.

    Blaming workers for bad management, or saying the workers should be paid less is ridiculous.

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  10. 10
    Scotsman says:

    Guys- the issue wasn’t unions, it’s the fact the wages are falling.

    Rail against the banks- like this one- if you need to blow off steam. They’re the new “big oil.”

    “HSBC makes $11.5B in the first half, will lay off 30,000 employees.”

    http://www.reuters.com/article/2011/08/01/us-hsbc-idUSTRE7701HH20110801

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  11. 11
    Pegasus says:

    RE: Scotsman @ 10 – Wages are now internationally based and unions prevent a company from being competitive and forcing it into oblivion.

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  12. 12

    RE: Scotsman @ 10 – I skimmed that article earlier. The layoffs are apparently mainly related to pulling out of certain unprofitable areas entirely.

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  13. 13
    Blurtman says:

    RE: Scotsman @ 10 – You’ve hit the nail on the head! I wonder if we can petition Obama to release the details of his behind closed doors meetings with the banksters, a la Cheney with the oil barons. Well, maybe not. It is not as if Obama campaigned on increased transparency.

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  14. 14

    By Pegasus @ 11:

    Wages are now internationally based and unions prevent a company from being competitive and forcing it into oblivion.

    So that explains why largely non-union Airborne Express/DHL forced heavily unionized UPS into oblivion. Got it. /sarcasm.

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  15. 15
    Sweet Pea says:

    By Kary L. Krismer @ 12:

    RE: Scotsman @ 10 – I skimmed that article earlier. The layoffs are apparently mainly related to pulling out of certain unprofitable areas entirely.

    In my experience (not as an employee, but working with them as a service provider), HSBC is not a well-run company. It may make money, but it does not invest in its employees, so eventually it will probably reap what it’s sown. That may be at least partly what’s happening now. If they could hire robots, they probably would. Although they likely would cut costs on maintenance of said robots, and/or outsource them to Antarctica and break them. Not a company I would bet on for long-term health, unless they get lucky or make some serious changes.

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  16. 16
    Scotsman says:

    This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

    “In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections”

    http://www.cbo.gov/doc.cfm?index=12187&zzz=41733

    There will be serious riots in the streets before a true resolution is forced upon us.

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  17. 17
    Spherical says:

    RE: Scotsman @ 3 – Actually, that’s fairly close, but I think you miss the point of increased government spending during the current recession.

    Yes, American consumers racked up way too much during the last boom. Wages stagnated, and credit made up the gap. You’re absolutely right about that being the source of the problem.

    But what’s the current problem? The numbers say it, surveys of businesses say it: demand is down. It doesn’t matter how high your margin is or how low your taxes are, if you don’t have more customers you won’t hire more people or expand operations. And demand continues to be down because, well, it’s a recession, and in a recession everyone makes the entirely logical choice to cut back on personal spending, which reduces aggregate demand. What makes this recession particularly long lived is that there’s a huge overhang of household debt, and of people are choosing to pay off those debts prior to increasing spending. Of course, with the current unemployment rate as high as it is, a lot of people don’t have money to pay off debt with, if they even have money to pay their current bills.

    And look, you’re right that we can’t spend and borrow forever. But the correct policy is a fairly common sense counter-cyclical policy. Borrow money and increase spending during recessions to make up for the shortfall in demand, and cut spending when private industry starts to bounce back (increasing government spending during boom times can crowd out private investment or raise rates, which isn’t the case during recessionary times) and pay down the debt.

    Yes, we screwed up the boom times by increasing spending instead of cutting back. But that doesn’t mean we should also screw up policy during the down times by introducing austerity.

    As far as whether it’s a good idea to borrow right now… well, the real yield on 7 year treasury notes is currently -0.21% ( http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield ).

    In other words, our country has dramatically high unemployment, deferred infrastructure maintenance somewhere north of $2 trillion that people could be employed fixing, a massive overhang of household debt that people need jobs to pay off, and investors are literally willing to pay us to borrow their money!.

    Yes, we have a long term debt problem, but at this point in time it’s pure insanity not to be borrowing and spending– just as it was insanity to borrow and spend during the boom instead of balancing our budgets and paying down our debts.

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  18. 18
    Scotsman says:

    RE: Spherical @ 17

    “Yes, we have a long term debt problem, but at this point in time it’s pure insanity not to be borrowing and spending”

    No, the time when that might have worked has passed. We are now at the point where the only option is to take the hit and start over.

    You can’t just keep putting the inevitable off to tomorrow- it is, after all, inevitable. Tomorrow is now. The choice is gone. Time to pay up. When the marginal productivity of new debt is negative, more debt is poison, not a cure.

    http://market-ticker.org/uploads/2010/Mar/Diminishing-Prod.jpg

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  19. 19
    Cheap South says:

    This poor bastard was a big timer and now is blacklisted in his party. But he is not the first.

    http://www.cnn.com/2011/OPINION/08/01/frum.debt.republicans/index.html?iphoneemail

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  20. 20
    Blurtman says:

    RE: Scotsman @ 18 – Karl more frequently is letting his ideology thwart his logic. Today he is trying to rally his readership against repeal of the Bush tax cuts. Yes, the repeal will certainly harm the average American. Average American hedge fund owner, that is. And the rabble that are his readers seem to be composed signifcantly of the low information reactionaries one hears about.

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  21. 21
    Blurtman says:

    RE: Spherical @ 17 – Perhaps the consumer should have been bailed out. It is the consumer, after all, who really creates jobs.

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  22. 22
    Spherical says:

    RE: Scotsman @ 18 – Well, I’m not familiar with that individual’s blog (he appears to be a retired pilot who runs a couple of aviation related businesses and wrote an aviation themed “grow your wealth!” type book), but although he cites the source of the data, I’m rather fuzzy on what exactly he’s doing with it. I loaded up the St.Louis FRED graphing site and tried loading change in GDP/change in federal government debt, and it comes up with nothing even remotely similar to his results. Change in GDP/change in household debt is a bit more similar to what he shows (not surprising– he seems to be summing together both private sector and government debt, which would be incorrect– those are very different things as the government can borrow on much different terms than individuals can.), but it only shows a downward trend if you graph it in dollars and fail to adjust for inflation.

    Anyway, I’m not exactly sure what you mean by “time to pay up.” I hear that a lot, and it’s always said as though it’s an appeal to morality. We need functional solutions that produce the best possible short and long run outcomes, not appeals to pain. This isn’t your typical V-shaped recession, and it’s not going to just get better on it’s own– not for a long, long while, anyway: http://cr4re.com/charts/chart-images/EmployRecessJune2011.jpg

    Look, you’re essentially arguing that in order to produce a long term deleveraging, we have to cut now. We both agree that deleveraging is necessary in the long run, but you haven’t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.

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  23. 23
    pfft says:

    By Scotsman @ 2:

    Pay up!

    http://www.youtube.com/watch?v=MqoGORXAv2o&feature=player_embedded

    “An economy can only sustainably spend what it generates in surplus. The U.S. has been exchanging paper with funny green ink on it for real stuff, far in excess of the surplus generated by our own labor and production. That is our trade deficit. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing. This is not spending a surplus we have earned, it is borrowing against future surpluses, surpluses of national income which we are now committing to debt service.

    Future generations won’t get to spend their surplus; they will have to devote it to servicing the debts we have gaily borrowed and blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

    http://www.oftwominds.com/blogaug11/demise-of-consumer-8-11.html

    1. To extend “aggregate demand” to the moon, we borrow trillions of dollars via Federal deficits to fill the gap left by imploding consumer borrowing

    no we don’t. we borrow that because we had a drastic drop in revenue brought on by the
    great recession and all the bush spending/tax cuts. we basically have ZERO stimulus spending right now.

    2. they will have to devote it to servicing the debts

    wrong. our debt service hasn’t been this low as a percentage of GDP since the 1970s.

    two giant fails! good job.

    3. blown on digging holes and refilling them, part of our worship of the magical painted rocks of our false and hollow religion, Consumerism. ”

    this makes zero sense. first he conflates stimulus and consumerism which is nonsensical. the only reason we could have(and needed) stimulus is because people are CUTTING BACK on consumerism and saving(buying treasuries). we aren’t digging holes and filling them up again. that’s just a strawman. we have serious infrastructure problems in this country.

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  24. 24
    pfft says:

    By Scotsman @ 16:

    This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

    “In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimatesâ��a swing of $11.8 trillion from the January 2001 projections”

    http://www.cbo.gov/doc.cfm?index=12187&zzz=41733

    There will be serious riots in the streets before a true resolution is forced upon us.

    do you know why they missed? the unpaid for wars, tax cuts and medicare part d spending which Bush did!

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  25. 25
    pfft says:

    By Scotsman @ 16:

    This country will go bankrupt for the simple reason that the political class will never be incentivized to make the required changes. For all the talk about how the current debt limit deal will cut spending, it won’t. Any action planned for more than a year or so out is useless. For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:

    “In January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimatesâ��a swing of $11.8 trillion from the January 2001 projections”

    http://www.cbo.gov/doc.cfm?index=12187&zzz=41733

    There will be serious riots in the streets before a true resolution is forced upon us.

    whoa, I have to go back and get what you missed!

    “For proof, let’s go back 10 years and look at what the CBO said would be the situation now. They only “missed” by $12T- almost the entire national debt:”

    ok, let’s go back to your own article and see why you are wrong.

    “The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO’s forecast, and other factors”

    the answer was in your OWN article.

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  26. 26
    pfft says:

    I thought austerity was supposed to bring prosperity? what happened to those confidence inspiring policies?

    UK manufacturing sector contracts in July
    http://www.bbc.co.uk/news/business-14364578

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  27. 27

    RE: Spherical @ 17
    I think the big problem is that when times were good, when government ought to have been getting smaller, they were spending like a bunch of drunken sailors.
    Other than that, you’re right. There’s no doubt in my mind that this debt deal will result in a higher unemployment rate and push the country towards an almost inevitable double dip recession.
    Of course, my feeling is that a lot of Republicans know this and don’t care. If creating more economic misery means that they’ll grab the White House in 2012, then it’s worth it to them.
    The people with their little wants and needs don’t matter, only their votes.

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  28. 28
    Scotsman says:

    RE: pfft @ 25

    “the answer was in your OWN article.”

    Ummm, yes. And you still missed it. The point is that they will never balance the budget, let alone reduce the debt. And with the debt growing faster than the economy that supports it, eventually the debt overwhelms the underlying system.

    And austerity isn’t about prosperity- it’s about reaching sustainability, admittedly at a lower standard of living. You can’t have it all, especially when others are paying for it. But stability at a lower standard of living beats anarchy. Simple as that.

    By the way- you asked for a response- it’s here:

    http://seattlebubble.com/blog/2011/07/29/weekend-open-thread-2011-07-29/comment-page-1/#comment-138208

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  29. 29
    Scotsman says:

    RE: Spherical @ 22

    “you haven’t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.”

    It has to happen now because the Keynesian stimulus solution isn’t working. It can’t work. There’s an upper limit to the amount of debt a system can support, and we are pretty much there. It happens now because we don’t really have a choice. From where we are we can delay, but we can’t fix the underlying system- it’s past the tipping point.

    Think of it this way. If you make $50k and have $1M in debt you’ll never be able to pay it off. Now you do have $5k left on one credit card, and that will carry you for a month or two, but in the end you’re going bankrupt. That $5k you can borrow isn’t going to fix anything, is it? Same for the U.S. If you think putting the pain off for a year or two means less pain, you’re wrong. It may be less for you personally, but for the system it will only increase. In my example, by putting it off one more lender is now out the $5k you borrow. That’s more pain for the whole.

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  30. 30
    Scotsman says:

    RE: Ira Sacharoff @ 27

    Ira, too many still think there’s some magical solution, a way out. To my mind democrats want to pretend there isn’t a problem and the old ways can carry on forever. Republicans want to stop the run away train, but don’t want to hurt their own interests in the process. Both are living a fantasy. Our fundamental expectations about what government provides and who pays are about to come up for serious review. I hope we end up striking a different balance with realistic expectations for all. But like I told pfffft above:

    “. . . austerity isn’t about prosperity- it’s about reaching sustainability, admittedly at a lower standard of living. You can’t have it all, especially when others are paying for it. But stability at a lower standard of living beats anarchy. Simple as that.”

    By the way- what’s left of my garden totally sucks. AGW my asssss.

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  31. 31
    David Losh says:

    Well then I guess Putin is right. We should know our place.

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  32. 32
    Trigger says:

    RE: Scotsman @ 3 – Scotsman – I think the stimulus was too small. We need to go on a bigger rampage here. Spend more. Get people empowered by giving them more cash to spend on goods.

    I do not even understand why the stock market tanked. There should have been a rally. Debt ceiling is going up. Printers will start rolling again. Bernake will come up with a new stimulus.

    Maybe we should simply reward people who have debt by giving them more money. If you have too much debt then you should maybe get some money to reduce debt so you can spend more.

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  33. 33
    Trigger says:

    RE: Scotsman @ 30 – I find the following problems with your views:

    1) I think you use logic and put some thought to your views. You try to rationalize. It is what people at MIT or Princeton do. Instead you can think of new economy and new views on the economy. In the new economy you get into big debt and then this debt is forgiven for example.

    2) I think you need to try to find innovative quick scams to get out of this mess. People want to consume. If you preach things like living within your means – you get a big reset. This is the outcome you try to avoid at all costs.

    3) People want to have jobs and lots of money coming in. The US has the $ as the main currency in the world. It can use this to get out of debt.

    4) Obama could start a positive PR campaign and start teaching new economics to all the people around the world.

    5) Obama could put some pressure on the rating agencies so that they always give good ratings to US debts no matter what happens.

    I think you really need to brainstorm and see how we can pull off another 20 years riding on a really big debt without any strings attached. We need 20-40 years to just cool down, chill and do some hiking.

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  34. 34
    Blurtman says:

    RE: Trigger @ 33RE: Trigger @ 32 – I think you bring up some interesting points, although I believe they are “tongue-iin-cheek.”.

    As moral hazard has been thrown out of the window and run over with a steamroller by the bank bailouts and lack of criminal prosecutions, why not bail out the consumer? The consumer is the real job creator.

    More stimulus means an even weaker dollar and rising prices.

    Regarding the stock market tanking, do you think Obama’s strategy of threatening to default helps instill confidence? A dynamic, inspirational leader he is not. Clueless about what to do, he is. The new Hoover he will become, I fear. Yoda has spoken.

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  35. 35
    David Losh says:

    RE: Blurtman @ 34

    Obama did the right thing by holding out.

    He’s a great President.

    In my opinion you should all look at http://www.reuters.com/article/2011/08/02/us-global-economy-trend-idUSTRE7715FD20110802 and what the Frankfurt Stock Exchange is about to become.

    Unless we start seriously address debt, the way Germany did in the 1990s we will be losing more than control of the dominant currency.

    Obama did the right thing, once again, and brought in another dialog about the budget. He can now work on that, rather than have another petty political debate with Republicans.

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  36. 36
    Scotsman says:

    RE: Trigger @ 33

    You’re the best. I’ll try to reform my stodgey thinking. ;-)

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  37. 37
    Scotsman says:

    RE: David Losh @ 35

    “He’s a great President”

    Sure he is. Whatever. Can you PM me you dealer’s pager number- I need some “debt relief” if ya know what I mean. Natural relief.

    Obama via the alphabit:

    http://online.wsj.com/article/SB10001424053111903341404576481870724644008.html?mod=rss_opinion_main

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  38. 38
    pfft says:

    By Scotsman @ 28:

    RE: pfft @ 25

    “the answer was in your OWN article.”

    Ummm, yes. And you still missed it. The point is that they will never balance the budget, let alone reduce the debt.

    sure we can. we’ve done it before under clinton and carter. we probably won’t do it because republicans won’t agree to ANY tax increases.

    you don’t care about the deficit. you wanted the bush tax cuts to be extended which will add trillions of debt to our tab.

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  39. 39
    pfft says:

    By Scotsman @ 29:

    RE: Spherical @ 22

    “you havenâ��t shown that it has to happen now, at the very moment it will be most painful in both economic, fiscal, and social terms.”

    It has to happen now because the Keynesian stimulus solution isn’t working. It can’t work. There’s an upper limit to the amount of debt a system can support, and we are pretty much there. It happens now because we don’t really have a choice. From where we are we can delay, but we can’t fix the underlying system- it’s past the tipping point.

    1. “It has to happen now because the Keynesian stimulus solution isn’t working.”

    it wasn’t fully tried and what we did have helped a lot.

    CBO: Up to 3.3 Million People Owe Their Jobs to the Recovery Act
    http://www.offthechartsblog.org/cbo-up-to-3-3-million-people-owe-their-jobs-to-the-recovery-act/

    2. “There’s an upper limit to the amount of debt a system can support, and we are pretty much there.”

    you don’t understand a liquidity trap. a deleveraging economy keeps the government borrowing at very low rates. greece has reached the end point. the US two year yield closed today at 0.32%. that is less that 1/2 of a percent. the US is nowhere near there.

    http://www.bloomberg.com/apps/quote?ticker=USGG2YR:IND

    3. our interest payments/percentage of GDP is at 30+ year lows. at the very time you say our debt can’t be supported it’s actually at the LOWEST levels in 30+ years! it’s like you’re saying in the middle of a drought that we have too much water.

    The U.S. Is Not Drowning In Debt
    http://moneyland.time.com/2011/07/15/the-u-s-is-not-drowning-in-debt/?hpt=hp_t2

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  40. 40
    pfft says:

    By Scotsman @ 30:

    RE: Ira Sacharoff @ 27

    “. . . austerity isnâ��t about prosperity- itâ��s about reaching sustainability

    oh god no. what is sustainability? greece? portugal? spain?

    sustainability is keynes.

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  41. 41
    pfft says:

    the stimulus worked all around the world.

    How do stimulus size and economic growth compare internationally?
    http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_responds_how_do.html

    Rate this comment: Thumb up 0

  42. 42
    David Losh says:

    RE: Scotsman @ 37

    Ooh, Ooh, Ooh!!! I have an opinion too!!!

    A is for Arab. The authoer got that part correct, and I is for Israel.

    For the first time a President of the United States has taken on the Israeli coflict with Arab Nations. In the debt debate it was probably lost on you that http://mediamatters.org/research/201108020001 Netanyahu started talking about pre 1967 borders.

    That is what Bret Stephens is upset about.

    A lot of people are upset with Obama. His own party is turning on him which is also pointed out in the WSJ article. Obama has the same approval rating Reagan had.

    We could blame Ronnie for all the things he did wrong, or praise him for setting this country on a course where we can talk about deficits, and see a solution.

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  43. 43
    David Losh says:

    RE: pfft @ 39

    Once again I want to point out that austerity is a condition forced on the goverments of Portugaul, Spain, Ireland, Italy, and Greece, by the banking nation of Germany. These countries should default, and return to currencies that make sense for them.

    The Euro was a contrived currency that essentially wiped out these governments ability to provide services. Each of these countries needs to step in, nationalize the banks, forgive massive amounts of debt that consumers owe, and get on with building an economy.

    This is a Real Estate blog. The promise to pay a mortgage may be a major inconvenience here in this country. These mortgages on property price, in most cases at least $100K to millions of dollars over value, is a drain on our economy that we, thank God, can walk away from. Europeans don’t have that choice.

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  44. 44
    Sweet Pea says:

    By Scotsman @ 37:

    RE: David Losh @ 35

    “Heâ��s a great President”

    Obama via the alphabit:

    http://online.wsj.com/article/SB10001424053111903341404576481870724644008.html?mod=rss_opinion_main

    Well, you know what they say about opinions. And that piece is certainly full of them. Along with a nice back-handed compliment for H. Clinton.

    Fiddlesticks, I’m a couple of years older now than when Obama came into office. Clearly this is his doing! Worst President ever!

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  45. 45
    Macro Investor says:

    Eventually all the debtor nations will “go Greece”. Of the 7 billion people on the planet, 80% live on $10 a day or less; 20% live on $1-2. I think that’s proof that there just aren’t enough resources/jobs to go around. Governments try to fill in the gap with debt, just to keep people fed and housed, instead of taking what they need.

    In the US, more than 50 million are living on welfare and unemployment. People are spending as much as they can, and yet there will never be enough jobs to keep everyone busy. What is Obama to do? Cut them off, and wait for the inner cities to burn? Of course not. That’s why the debt ceiling debate was a sham. Both sides know they can’t vote for austerity.

    The US will just go last, after the weak European countries, then France, the UK and probably China. We’ve traded our jobs for short-term profit and Chinese glass beads. We will probably muddle along like this for years, but eventually all debt ponzis crash. There will be a few years of austerity, and then a new start. As someone already said — if you’re doing okay, just go for a nice hike and watch the show. No need to be angry or sad. We’ve had a nice run.

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  46. 46

    By David Losh @ 35:

    RE: Blurtman @ 34

    Obama did the right thing by holding out.

    Why do I get the feeling that if President Obama pulled a Gerry Ford, that you’d be here saying: “Obama did the right thing by falling down.”

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  47. 47
    David Losh says:

    RE: Kary L. Krismer @ 46RE: Macro Investor @ 45

    There is more to the world of finance, peace, and prosperity than the debt ceiling debate.

    Number one the BFD was health care. Health Care is jobs, and the right thing to do.

    Next was banking which is still way out of control. Those people making $2 per day now have credit cards, and it’s called the emerging markets.

    Last it’s world peace. We’ll need to stabalize how the world functions, globally.

    What has impressed me the most about Obama is that he brings a fresh perspective to global peace negotiations. Hilary was a great choice.

    If we can get a Middle East Peace Agreement, that would be the greatest accomplishment of this century, or possibly the last century.

    We’ll see what Obama does next, but I think he will be involved with the budget, and push for the tax increases.

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  48. 48
    Blurtman says:

    RE: David Losh @ 47 – Agree with you on the Middle East, but that is one very big goal. Quite a time to be President of the USA!

    Rate this comment: Thumb up 0

  49. 49
    Scotsman says:

    RE: Kary L. Krismer @ 46

    See, we can agree. ;-)

    Rate this comment: Thumb up 0

  50. 50
    David Losh says:

    RE: Scotsman @ 49RE: Kary L. Krismer @ 46

    Seeing as you both brought it up, I think Obama should have held out last time for an end of the tax breaks for the wealthy. It was a moment of weakness that may cost him reelection.

    In my opinion he could have simply raised the yearly income levels for the end of the tax breaks for the wealthy. I mean he started at $200K per year, and he should have said $500K per year, or end the tax breaks for people making over $750K per year. He could have made the yearly income as high as he wanted to show the absurdity of that part of the debate.

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  51. 51
    David Losh says:

    RE: Blurtman @ 48

    What I have been thinking for the past year is that if Obama had pulled troops out of Afganistan, and Iraq he would have diluted his military advantage.

    For whatever reason now does seem to be a time to broker peace, globally, and especially in the Middle East.

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  52. 52
    Scotsman says:

    RE: David Losh @ 50

    Think, David- why doesn’t he do what you suggest? How many people from GS are in his administration? How did he come from total obscurity and minimal experience to be president? The guy is bought and paid for by the people who put him where they wanted/needed him.

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  53. 53
    David Losh says:

    RE: Scotsman @ 52

    Whoa!!! Look, barricade the bunker for a couple of days to decompress. This will pass.

    Obama is black, and he’s tall. He’s a little goofy looking so as not to scare people. He also promised to end the wars in Iraq, and Afghanistan.

    He beat Hilary, but McCain was never a contender. The fact McCain got as many votes as he did showed how uncertain the American public was of electing an unknown.

    Obama was in the right place, at the right time.

    I think people dismiss the fact the global community wants world peace. Reagan, and Bill Clinton based their Presidencies on the Peace dividend.

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  54. 54
    Blurtman says:

    RE: David Losh @ 53 – If McCain came out against the bank bailouts, he might have gotten elected.

    Rate this comment: Thumb up 0

  55. 55
    pfft says:

    By Scotsman @ 52:

    RE: David Losh @ 50

    Think, David- why doesn’t he do what you suggest? How many people from GS are in his administration? How did he come from total obscurity and minimal experience to be president?

    his 2004 Dem convention speech.

    “How many people from GS are in his administration? ”

    I don’t know, how many are there?

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  56. 56
    Trigger says:

    RE: Scotsman @ 3 – Scotsman – We need the Fed to start buying back the stocks ASAP.

    http://www.chrismartenson.com/martensoninsider/martenson-insider-fed-pomo-activity-and-stock-market

    We need cash infusion so that the Fed:
    – buys stocks to get the Dow up
    – get new tax credits/shelters or whatever to prop up housing prices
    and finally
    – the fed needs to quickly start ordering new industrial materials so that demand remains strong
    – and it could start employing unemployed quickly so that they can get some cash and play with it.

    When will all of this happen?

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  57. 57
    Trigger says:

    I think the Fed could start a new rally ASAP. It just needs to put in enough cash.

    http://www.zerohedge.com/sites/default/files/PCM-A_G%20U%20T%20_of_Market_Manipulation.pdf

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  58. 58
    Blurtman says:

    Where is the plunge protection team when you need them? Personally, I am long red wine.

    Rate this comment: Thumb up 0

  59. 59
    Scotsman says:

    What’s different about this market downturn? Interest rates are already at or near zero:

    “In 2000, when the market tanked, the Fed Funds rate was 6.5%. The Fed immediately began cutting rates and eventually took them all the way down to 1%. (Where it left them for far too long, thus helping to inflate the housing bubble.)

    In 2007, when the market began to crack, the Fed Funds rate was 5.25%. The Fed immediately began cutting rates and eventually took them all the way down to 0.25%. Where they have been as long as anyone can remember. And where they still are today, just as the market is beginning to crash again.”

    http://static5.businessinsider.com/image/4e3b4e1becad045652000045/fed-funds-rate.png

    http://www.businessinsider.com/heres-the-problem-with-this-market-crash-2011-8

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  60. 60
    David Losh says:

    Government just needs to concentrate on handling the budget, get government working to clear debt, and build infrastructure. Tough task, but it’s possible.

    The low interest rates are a complete sham. It’s encouraging lending at a time when we should be dealing with cash.

    Banks have massive profits after the bail outs. Banks are doing business as normal while the rest of the world suffers. The Fed plays along like it’s a natural thing to do.

    The Fed should start to raise interest rates and let the stock market correct down to 9000. It could be incremental, we all know it has to happen, but that would get rid of dead weight.

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  61. 61
    Scotsman says:

    The blue colors of this graph show when Democrats held complete control of Congress, while the white areas show when Republicans held complete control. The two purple areas show when Democrats controlled the Senate, as York notes above, and when Republicans controlled only the House

    http://media.hotair.com/wp/wp-content/uploads/2011/08/private-employment2.jpg

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  62. 62
    David Losh says:

    RE: Scotsman @ 61

    Ah, the Repubican employment plan! Pizza Hut, McDonalds, Wal Mart, Bank of America, all lay people off when they don’t get free tax credits, subsidies, or corporate welfare handed to them for providing minimum wage jobs.

    Not to mention those very same communists complain that the minimum wage is too high.

    You keep bringing up what is called corporate communism, like it is something for us to worship. It makes no sense. We give more to military contractors to build weapons we will never use than any other program we have. We give tax incentives to insurance companies for raising rates.

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  63. 63
    One Eyed Man says:

    RE: Scotsman @ 61

    That blue and white Rorschach test is about as informative as the fact that I see an attractive girl (over the age of majority of course) in every ink blot when you see some kind of arachnid.

    Is the graph supposed to show that Republicans create jobs?

    Wait, I hear something. Did you say the white was the false employment booms of the tech and financial/housing bubbles? Or was that just mumbling from the other voice in my mildly psychotic inner dialogue? Anyway, it still looks to me like the white areas always end with all the lemmings going over the cliff.

    And I’m sure I’ve seen that graph before. I think it was in my niece’s college dorm room, except it was a progressive propaganda poster illustrating how unrestrained markets shown by the white areas attract swarms of greedy idiots who make fundamentally unsound economic choices leading to exacerbated boom and bust cycles.

    I’m pretty sure Pegasus has the same poster except his graphs white collar fraud peaking at the end of each white section.

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  64. 64
  65. 65
    One Eyed Man says:

    RE: Scotsman @ 64

    Then again, if McCain had picked a running mate whose reading list included something other than pop-up books, he might have gotten the opportunity to show if he really was a super hero come to save us. (Although I doubt any of the Keating 5 could spot a festering financial black hole if it sat down at the table with them.)

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  66. 66
    David Losh says:

    RE: Scotsman @ 64

    Not stupid facts, it’s propoganda.

    Rate this comment: Thumb up 0

  67. 67

    RE: One Eyed Man @ 65 – Given what happened to the economy right before the election, if God had come down from heaven and ran for President as a Republican, he would have lost. McCain was in a tough fight and probably would have lost anyway, but the economic news ruined what little chance he had.

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  68. 68

    And speaking of President Obama, the S&P downgrade of US debt is going to really hurt him. He’s the first President to have this happen during his watch, and it’s reportedly because Congress did too much of what he wanted, not too little.

    Seems like a rather political move by S&P. I really don’t see how the recent debt limit compromise could have possibly triggered that, since there was more spending approved prior to that time.

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  69. 69
    David Losh says:

    RE: Scotsman @ 64

    This is the kind of thinking that is dismissive to the real job of a Presidency.

    Let’s say that Obama was there to be thrown under the bus by the Democrats, so Hilary could have a progressive to beat. Hilary made some bad moves, was too stiff, and again, like Gore, distant from Bill Clinton, who people like.

    When the economy tanks under the Bush exit, and it’s clear McCain is insane, then no one wants the mess of presidency, so hey, why not the new guy?

    Obama made a major mistake by spending money to further the Bush agenda of propping up banks. He could have dumped the whole economic mess right from the start, he didn’t, that took courage. He has stepped up the the plate repeatedly, and taken responsibility. He has made compromises he should have never made.

    So looking forward, Obama has a Presidency of massive change. We’ll see what he does, but so far he has advanced an admirable agenda.

    That’s government. Government needs to regulate the tax investment we have in public institutions. There’s a lot to be done, but the Republican insistence that if we just hand more money over to the financial markets they will take care of us has proved to be a lie.

    Republicans are a tired record of giving our tax dollars away for no return. There is no benefit to the Republican agenda.

    Democrats, at the very least, talk about spending money to feed the poor, promote the public welfare, and investment in infrastructure.

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  70. 70
    Scotsman says:

    Expressions of cynicism will be accepted, but we might as well drop the simple partisan hacking. After all, we need to get ready to eat a big old shiiit sandwich over the next decade. Fun times ahead.

    United States loses AAA credit rating from S&P

    http://www.reuters.com/article/2011/08/06/us-usa-debt-downgrade-idUSTRE7746VF20110806

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  71. 71
    One Eyed Man says:

    RE: Scotsman @ 70

    I guess that strategic default concept has really caught on. Everybody knows that we can afford to pay our debt, but we just don’t seem to want to. Sure, it might not really hurt borrowing rates right now, but doesn’t it make you proud as an Amerikan to know that S & P has slapped the potential welcher lable on you.

    But, ironically it might be just what the economy needs to help with the deflation risk. After all, now the only way the Chinese and others can be sure to make up the risk of loss on all those bonds they hold is by charging a little more up front for the goods they sell us.

    So cheer up. Maybe this will help the dollar win the currency destruction war. And I’m sure it won’t affect our reputation as the guiding light for truth and liberty in the world. Everybody knows that our word is our bond and who pays attention to the fact it was just down graded by S & P.

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  72. 72
    whatsmyname says:

    RE: Scotsman @ 70
    From your article: “The downgrade was immediately pounced on by candidates vying for the Republican presidential nomination. Mitt Romney said the move was “a deeply troubling indicator of our country’s decline under President Obama,” while Jon Huntsman said it was due to spreading of a “cancerous debt afflicting our nation.”

    Quite an irony since the rating has always been a reflection of the sovereign’s ability to pay, ultimately through taxation. What’s changed is the focus – now on the sovereign’s willingness to pay. S&P is simply formalizing the implications of a Republican Congressional majority.

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  73. 73
    Blurtman says:

    RE: One Eyed Man @ 71 – Appreciate your wry comment on strategic default by the USG which so far has only been reflected in Obama’s comments regarding Social Security. That should be a lesson for the SS trust fund: never lend to a welcher.

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  74. 74
    Scotsman says:

    Christina Romer, the former chair of Obama’s Council of Economic Advisers on Friday offered a rather strong opinion concerning the announcement by Standard & Poor’s that the credit rating agency downgraded America’s debt to AA+.

    Appearing on HBO’s “Real Time,” Romer said we’re “pretty darn f–ked”

    Read more: http://newsbusters.org/blogs/noel-sheppard/2011/08/06/former-obama-economic-adviser-downgrade-were-pretty-darn-f-ked#ixzz1UK6t7sOq

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  75. 75
    David Losh says:

    RE: Scotsman @ 74

    What’s funny is that Maher had to set that up, to make news.

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  76. 76
    David Losh says:

    Debt ceiling debate caused a loss of our AAA rating according to Standard, and Poors. It makes no difference who was at fault.

    The fact is that the single most important investment a family can make didn’t wait for many Americans until after the debt debate had ended.

    Real Estate agents hawked over priced properties this selling season when they should have known that waiting was the best, the very best, strategy when advising people to buy.

    We’re going to hear an ear full from agents out selling, I mean, who represented clients, to the best of their ability to collect commissions. Agents are going to say, Kary, that no one can predict the future, but we can certainly wait for pertinent news.

    Debt debate was set for the end of July. A lot of sellers are very happy.

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  77. 77
    pfft says:

    By Scotsman @ 59:

    just as the market is beginning to crash again.”

    oh wow, thanks for the heads up!

    Rate this comment: Thumb up 0

  78. 78
    pfft says:

    By Scotsman @ 61:

    The blue colors of this graph show when Democrats held complete control of Congress, while the white areas show when Republicans held complete control. The two purple areas show when Democrats controlled the Senate, as York notes above, and when Republicans controlled only the House

    http://media.hotair.com/wp/wp-content/uploads/2011/08/private-employment2.jpg

    and we know why you didn’t do it by president…

    Rate this comment: Thumb up 0

  79. 79
    pfft says:

    By Scotsman @ 70:

    After all, we need to get ready to eat a big old shiiit sandwich over the next decade.

    no we don’t. our debt burden hasn’t been this low since the 1970s. you’re just making an unsubstantiated claim.

    the bond market isn’t crying for austerity. 2-year yield is less than 0.4%.

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  80. 80
    pfft says:

    Just in case people believe our debt is ruining us.

    The U.S. Is Not Drowning In Debt
    http://moneyland.time.com/2011/07/15/the-u-s-is-not-drowning-in-debt/?hpt=hp_t2

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  81. 81
    pfft says:

    how much you want to bet tomorrow the market will end down but yields will be down too!

    warren ain’t havin no downgrade.

    BUFFETT: “In Omaha The US Is Still Triple A”
    http://www.businessinsider.com/buffett-in-omaha-the-us-is-still-triple-a-2011-8#ixzz1UNDtimTA

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  82. 82
    pfft says:

    two thoughts on the supposed double-dip.

    1. yield curve ain’t saying that.

    http://stockcharts.com/freecharts/yieldcurve.html

    note this article is from last year when everyone was crying double-dip

    Double-Dippers Are All Wet Ignoring Yield Curve: Caroline Baum
    http://www.bloomberg.com/news/2010-07-13/double-dippers-are-all-wet-ignoring-yield-curve-caroline-baum.html

    2. Leading indicators aren’t saying recession.

    The ECRI Weekly Leading Index:
    Stabilization Continues
    http://advisorperspectives.com/dshort/updates/ECRI-Weekly-Leading-Index.php

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  83. 83
    pfft says:

    Here is why things feel so bad, inflation is in check and why stimulus helped our economy.

    when the recession ended the output gap(difference between what the economy could produce and what it actually was producing) is TRILLION of dollars below where it could be.

    Our underperforming recovery in one graph
    http://www.washingtonpost.com/blogs/ezra-klein/post/our-underperforming-recovery-in-one-graph/2011/07/11/gIQAApOUpI_blog.html

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  84. 84
    whatsmyname says:

    RE: Scotsman @ 74
    Great stuff, and followed by even better stuff from the resident posters. However, this can’t be too serious an issue as most of the posters were focused on even more tragic problems for America like….

    having a half black president,
    having a hip hop BBQ in the whitehouse (of all places), and
    (heaven forfend), being unable to have the n-word in a Clint Eastwood “multicultural” joke.

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  85. 85
    Blurtman says:

    RE: Scotsman @ 74 – Troubling, as her accuracy on matters economic is incredilby…..inaccurate. You can’t pick and choose the babble from these babblers to suit your point of view. Why that is quite, umm,…., political.

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  86. 86
    Scotsman says:

    The U.S. Congress sets a federal budget every year in the trillions of
    dollars. Few people know how much money that is so we created a
    breakdown of federal spending in simple terms. Let’s put the 2011
    federal budget into perspective:

    •U.S. income: $2,170,000,000,000 •Federal budget: $3,820,000,000,000 •New debt: $ 1,650,000,000,000
    •National debt: $14,271,000,000,000
    •Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

    It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from each of these numbersand pretend this is the household budget for the fictitious Jones family.

    •Total annual income for the Jones family: $21,700 •Amount of money the Jones family spent: $38,200
    •Amount of new debt added to the credit card: $16,500
    •Outstanding balance on the credit card: $142,710 •Amount cut from the budget: $385

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  87. 87
    pfft says:

    By Scotsman @ 86:

    The U.S. Congress sets a federal budget every year in the trillions of
    dollars. Few people know how much money that is so we created a
    breakdown of federal spending in simple terms. Let’s put the 2011
    federal budget into perspective:

    �U.S. income: $2,170,000,000,000 �Federal budget: $3,820,000,000,000 �New debt: $ 1,650,000,000,000
    �National debt: $14,271,000,000,000
    �Recent budget cut: $ 38,500,000,000 (about 1 percent of the budget)

    It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from each of these numbersand pretend this is the household budget for the fictitious Jones family.

    �Total annual income for the Jones family: $21,700 �Amount of money the Jones family spent: $38,200
    �Amount of new debt added to the credit card: $16,500
    �Outstanding balance on the credit card: $142,710 �Amount cut from the budget: $385

    a families budget has no relation to a government’s budget. apples to oranges.

    you’re a deficit fraud anyway. You were for extending the $3 trillion dollars bush tax cuts for the rich that weren’t paid for.

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  88. 88
    Blurtman says:

    Geithner: S&P showed terrible judgment
    Geithner attacks S&P for terrible judgment in downgrading government credit rating

    Ha, ha, ha, ha, ha,….. This is too rich.

    Talk about the pot calling the kettle black.

    Rate this comment: Thumb up 0

  89. 89
    pfft says:

    By Blurtman @ 88:

    Geithner: S&P showed terrible judgment
    Geithner attacks S&P for terrible judgment in downgrading government credit rating

    Ha, ha, ha, ha, ha,….. This is too rich.

    Talk about the pot calling the kettle black.

    he’s right though.

    treasury yields don’t lie. the reaction of the bond market will probably be a drop in yields tomorrow…

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  90. 90
    Scotsman says:

    Obama and his crew- doing what’s best for the U.S:

    “Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, is moving even more GE infrastructure to China. GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it “is moving the headquarters of its 115-year-old X-ray business to Beijing”. Apparently, this is all part of a “plan to invest about $2 billion across China” over the next few years. But moving core pieces of its business overseas is nothing new for GE. Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.”

    You seriously can’t make this stuff up!

    http://theeconomiccollapseblog.com/archives/ge-ceo-jeffrey-immelt-the-head-of-obamas-jobs-council-is-moving-jobs-and-economic-infrastructure-to-china-at-a-blistering-pace

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  91. 91
    David Losh says:

    RE: Scotsman @ 86

    OK, let’s pretend it’s a household budget, and it’s you, and me. I want to hire 100 people by the end of this year, that’s my stated goal. I want my business to grow four times the size it is today.

    What are your goals?

    You see that’s what determines the budget. What the global economy is saying is that the economy is contracting. Is that true? or are there several billion more consumers in the world today compared to ten years ago?

    Are you going to fire people to cut business costs? or hire more, because you need to make more money when times are tough? Are you going to advertise more? buy more equipment? and pay more in taxes as a result, or fold?

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  92. 92
    David Losh says:

    RE: Scotsman @ 90

    Over dinner tonight my wife and I are discussing where to set up business next, Spain, or Peru. I don’t know anything about Asia, but if it were an area of my interest I would probably set up shop there.

    It’s a global economy. Jobs in China are another set of consumers, and they love American goods.

    Let me give you an example, as I think you are a car buff. I was working with a woman from Thailand who wanted to buy American Harley parts for export. Couldn’t do it, tax, and tarrif. She could however sell after market design for manufacture in Thailand, however the Thais would rather pay full boat for actual Harley parts, packaged here.

    How much business does the United States lose because we don’t have all the trade agreements we could?

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  93. 93
    pfft says:

    By Scotsman @ 90:

    Obama and his crew- doing what’s best for the U.S:

    “Jeffrey Immelt, the head of Barack Obama’s highly touted “Jobs Council”, is moving even more GE infrastructure to China. GE makes more medical-imaging machines than anyone else in the world, and now GE has announced that it “is moving the headquarters of its 115-year-old X-ray business to Beijing”. Apparently, this is all part of a “plan to invest about $2 billion across China” over the next few years. But moving core pieces of its business overseas is nothing new for GE. Under Immelt, GE has shipped tens of thousands of good jobs out of the United States.”

    You seriously can’t make this stuff up!

    http://theeconomiccollapseblog.com/archives/ge-ceo-jeffrey-immelt-the-head-of-obamas-jobs-council-is-moving-jobs-and-economic-infrastructure-to-china-at-a-blistering-pace

    isn’t that news like a month old?

    Rate this comment: Thumb up 0

  94. 94
    Bingo says:

    RE: pfft @ 81

    i hope you were able to get some takers on your betting offer ;o)

    Rate this comment: Thumb up 0

  95. 95
    pfft says:

    By Bingo @ 94:

    RE: pfft @ 81

    i hope you were able to get some takers on your betting offer ;o)

    I wish!

    stocks are absolutely getting CRUSHED right now.

    Rate this comment: Thumb up 0

  96. 96
    Bingo says:

    RE: pfft @ 95

    And Treasuries are rockin! Exactly as you predicted.

    Rate this comment: Thumb up 0

  97. 97
    Scotsman says:

    RE: Bingo @ 96RE: pfft @ 95

    Yeah, even Krugman is admitting that it’s going to be a total disaster- that there is no recovery- just like I predicted!

    “Paul Krugman: “I am not sure that the investors — there wasn’t going to be much money anyway. So I am not sure if the debt deal did it.

    “What I think is that after all of the distraction about the debt fight, they sort of looked around and said, ‘What are the basics here? What are the fundamentals? What’s going on?’ They realized there is no recovery, there is no prospect of policy for recovery and they also were getting some blow back from the fact the Europeans are, you know, each unhappy economy is unhappy in its own way. And the Europeans are coming apart at the seams for their own reasons and that’s blowing back to us. So, bad stuff.”

    http://www.realclearpolitics.com/video/2011/08/08/paul_krugman_investors_realize_that_there_is_no_recovery.html

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  98. 98
    pfft says:

    By Scotsman @ 97:

    RE: Bingo @ 96RE: pfft @ 95

    Yeah, even Krugman is admitting that it’s going to be a total disaster- that there is no recovery- just like I predicted!

    there is a recovery just not a very quick one. most numbers are pretty good it’s just that employment is very slowly coming back. we added over 100,000 jobs last month and the previous month was revised upwards.

    if there is a problem it’s Europe and it’s some hedge fund getting liquidated.

    1. economy is still adding jobs

    2. yield curve is positive

    3. leading indiactors aren’t saying recession

    “there is no recovery- just like I predicted!”

    no about 1 year ago you predicted economic disaster that did not happen. we’ve added a million or so jobs since then.

    you predicted our government debt would sink us and in fact our interest payments as a percentage of gdp hasn’t been this low since the 1970s. In other words in my whole life our debt service hasn’t been this easy to manage…some disaster!

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  99. 99
    David Losh says:

    RE: Scotsman @ 97

    That’s a pretty funny web site, but I never heard the Head Line in the video. They probably assume that the people looking at the pictures will never read further than the Head Line, and would never be able to figure out how to play the video feed.

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  100. 100
    Blurtman says:

    RE: Scotsman @ 97 – “Obama’s turned into the second coming of Herbert Hoover.” – Krugman.

    Rate this comment: Thumb up 0

  101. 101
    Scotsman says:

    RE: pfft @ 98

    Oh yeah- it’s great! Markets have lost a couple trillion dollars, growth has slowed, lots of talk about the coming double dip, percentage of the population employed is hitting new lows, home prices continue to fall, no solution to the debt crisis in sight, etc. And like I said- even Krugman says it’s bad. That’s bad.

    Rate this comment: Thumb up 0

  102. 102
    pfft says:

    By Blurtman @ 100:

    RE: Scotsman @ 97 – “Obama’s turned into the second coming of Herbert Hoover.” – Krugman.

    while I don’t support obama’s debt ceiling deal he didn’t raise taxes and enact austerity like Hoover did. We are only getting $20 billion of austerity this year. Not Hooveresque.

    Rate this comment: Thumb up 0

  103. 103
    pfft says:

    By Scotsman @ 1:

    RE: pfft @ 98

    Oh yeah- it’s great! Markets have lost a couple trillion dollars, growth has slowed, lots of talk about the coming double dip, percentage of the population employed is hitting new lows, home prices continue to fall, no solution to the debt crisis in sight, etc. And like I said- even Krugman says it’s bad. That’s bad.

    basically it’s just like last year in the Spring when everyone was predicted a double-dip. How did that work out?

    “growth has slowed”

    slowed. exactly.

    that is not bad. this is bad:

    http://seattlebubble.com/blog/2010/06/29/case-shiller-seattle-finally-sees-a-tax-credit-price-boost/comment-page-1/#comment-104372

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  104. 104
    pfft says:

    definitely a tea party/republican downgrade according to standard and piss poors.

    “From the S&P statement: “The political brinkmansh­ip of recent months highlights what we see as America’s governance and policymaki­ng becoming less stable, less effective, and less predictabl­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

    Rate this comment: Thumb up 0

  105. 105
    Scotsman says:

    RE: pfft @ 103

    You’re right- that is bad. Even giving you the benefit of an extra 6 months the picture has significantly deteriorated. Debt is up, growth is non existent, fewer people are employed while unemployment has run out for many, none of the structural problems have been addressed, and now the markets are getting hammered. We’ve seen 20% taken off the markets in the last two weeks- real wealth that people don’t have any more. Tonight’s Dow futures are already off hundreds of points. Obama is quickly proving himself a totally ineffective leader on pretty much all the important issues, so we can’t expect the ship of state to turn anytime soon.

    Rate this comment: Thumb up 0

  106. 106
    Scotsman says:

    RE: pfft @ 104

    It’s too bad you never understood this basic truth:

    “Keynesianism is blind to the black hole of debt: at a certain threshold (event horizon), the ability and/or willingness to borrow more vanishes. No amount of monetary easing or shoveling new money into banks can spark new debt and spending.”

    In other words, nothing will work now:

    http://www.oftwominds.com/blogaug11/liquidity-trap-8-11.html

    Rate this comment: Thumb up 0

  107. 107
    Blurtman says:

    RE: pfft @ 102 – So Krugman is wrong then? OMG!

    Rate this comment: Thumb up 0

  108. 108
    Taco says:

    By pfft @ 104:

    definitely a tea party/republican downgrade according to standard and piss poors.

    â��From the S&P statement: “The political brinkmansh­ip of recent months highlights what we see as Americaâ��s governance and policymaki­ng becoming less stable, less effective, and less predictabl­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

    Huh? The last I checked, the coordinated efforts of 150+ privately-owned central banks had the greatest impact on the global economy.

    The Tea Party does not own a single central bank. Riding the coattails of a paid-for anti-Tea Party blitz that’s circulating the Internet, I see… the communitarians are using central banker fiat money to further taint the Tea Party image, to ensure a communitarian makes it into the oval office in 2012 without a hitch.

    Glad to see you folks are worried. You need more of that. You would think that with so much fiat, this would not be an issue, verdad?

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  109. 109

    RE: Blurtman @ 100 – I would agree, but I wouldn’t necessarily blame President Obama for that. He doesn’t control public perception and doesn’t control Congress. I’ve said all along that the stimulus should have been more concentrated–of shorter duration. The public doesn’t have the appetite for these things long term, and members of Congress react to that.

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  110. 110
    Trigger says:

    It looks like the easy way out again.

    The Fed is bullish and will keep the interest rates VERY LOW! Wow – cool stuff.

    Then there will be more printing.

    And in the end there will be a big rally! We went up more than 400 points. Way to go. We are in a jolly mood.

    So financial engineering wins again.

    See Scotsman – I told you. Nobody will ever out print us. As such the austerity mess can be thrown away to a garbage can. Printing is the solution.

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  111. 111
    Blurtman says:

    RE: Trigger @ 110 – If the USD and Euro race to the bottom and maintain the status quo exchange rate, what happens?

    Rate this comment: Thumb up 0

  112. 112
    Blurtman says:

    RE: Kary L. Krismer @ 9 – Obama’s leadership style is:

    A. Aloof but effective
    B. Aloof to mask general cluelessness
    C. Aloof due to smoking “California tobacco”

    And bonus question: Who might be a better president?

    Rate this comment: Thumb up 0

  113. 113
    Trigger says:

    RE: Blurtman @ 11 – I think we are all in the business of finding quickie, easy solutions. They are the best.

    Printing is easy. No biggie. Just print and you are done.

    The hard part is what Scotsman is proposing. On top of this he requires people to watch the spending and really uncool stuff like this. Printing is easier. Out of cash – go get it from the printing press.

    And then you can relax more and take in the sun rays. You do not have to worry or think too much.

    There is no alternative to EURO and USD. Basically all people have to be happy with the printing. They can also relax knowing that they hold the right currencies.

    Rate this comment: Thumb up 0

  114. 114
    pfft says:

    By Scotsman @ 106:

    RE: pfft @ 104

    It’s too bad you never understood this basic truth:

    “Keynesianism is blind to the black hole of debt: at a certain threshold (event horizon), the ability and/or willingness to borrow more vanishes. No amount of monetary easing or shoveling new money into banks can spark new debt and spending.”

    In other words, nothing will work now:

    http://www.oftwominds.com/blogaug11/liquidity-trap-8-11.html

    1. we’re in a liquidity trap, read up on it.

    2. our borrowing costs(interest payments as a %/GDP are at 30-year lows

    3. “No amount of monetary easing or shoveling new money into banks can spark new debt and spending.”

    ahhhh, that’s why you enact keynesianism…

    Rate this comment: Thumb up 0

  115. 115
    pfft says:

    By Taco @ 8:

    By pfft @ 104:
    definitely a tea party/republican downgrade according to standard and piss poors.

    �From the S&P statement: “The political brinkmanshÃ�­ip of recent months highlights what we see as America�s governance and policymakiÃ�­ng becoming less stable, less effective, and less predictablÃ�­e than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.

    Huh? The last I checked, the coordinated efforts of 150+ privately-owned central banks had the greatest impact on the global economy.

    The Tea Party does not own a single central bank. Riding the coattails of a paid-for anti-Tea Party blitz that’s circulating the Internet, I see… the communitarians are using central banker fiat money to further taint the Tea Party image, to ensure a communitarian makes it into the oval office in 2012 without a hitch.

    Glad to see you folks are worried. You need more of that. You would think that with so much fiat, this would not be an issue, verdad?

    what? this is a tea party downgrade no doubt. S&P put it right in their report. it coudln’t be much clearer. the bankers were the one’s who wanted the tea party to back off.

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  116. 116
    pfft says:

    By Blurtman @ 12:

    RE: Kary L. Krismer @ 9 – Obama’s leadership style is:

    A. Aloof but effective
    B. Aloof to mask general cluelessness
    C. Aloof due to smoking “California tobacco”

    And bonus question: Who might be a better president?

    if you notice he always wins though. even if he doesn’t seem to get much of what he wants the republicans to things in such an awkward and mean-spirited way they always look like the bad guys.

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  117. 117
    pfft says:

    By Trigger @ 13:

    RE: Blurtman @ 11 – I think we are all in the business of finding quickie, easy solutions. They are the best.

    Printing is easy. No biggie. Just print and you are done.

    The hard part is what Scotsman is proposing. On top of this he requires people to watch the spending and really uncool stuff like this. Printing is easier. Out of cash – go get it from the printing press.

    And then you can relax more and take in the sun rays. You do not have to worry or think too much.

    There is no alternative to EURO and USD. Basically all people have to be happy with the printing. They can also relax knowing that they hold the right currencies.

    who is printing? I thought we had gigantic debts? which one is it this week?

    by the way probably no president have ever done more to cut money from the budget than obama. he’s cut probably almost ten trillion.

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  118. 118
    Blurtman says:

    RE: pfft @ 117 – Slowing the rate of increase in spending is not the same as cutting spending.

    Rate this comment: Thumb up 0

  119. 119
    Blurtman says:

    RE: Trigger @ 13

    Those Magnificent Men In Their Flying Machines.

    They Go Up, Tiddly, Up, Up.

    They Go Down, Tiddly, Down, Down.

    Rate this comment: Thumb up 0

  120. 120
    Scotsman says:

    RE: pfft @ 117

    “. he’s cut probably almost ten trillion. ”

    Total B.S. A new low, even for you.

    Rate this comment: Thumb up 0

  121. 121
    Scotsman says:

    “The bond market is telling you that there will be no material economic growth for the next two years and that a deflationary depression is the economic path that will be followed”

    http://market-ticker.org/cgi-ticker/akcs-www?post=191850

    Yeah, but those interest rates are low! (No, no- not the real rates, the nominal rates. Well, OK, all of them.)

    With these low, low rates we should have some more. . .STIMULUS!- we can afford it!

    Rate this comment: Thumb up 0

  122. 122
    pfft says:

    By Blurtman @ 118:

    RE: pfft @ 117 – Slowing the rate of increase in spending is not the same as cutting spending.

    sure it is.

    Rate this comment: Thumb up 0

  123. 123
    pfft says:

    By Scotsman @ 20:

    RE: pfft @ 117

    “. heâ��s cut probably almost ten trillion. ”

    Total B.S. A new low, even for you.

    nope.

    $2 trillion or so from deficit reduction.
    $250 from obamacare in the first ten years
    $1.2 trillion over the next 20 years

    dean baker says healthcare has a trillions in savings in indirect costs. so it’s probably closer to $5-6 trillion dollars saved just from the deficit.

    lower healthcare costs in general save trillions to ordinary people and saves lives.

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  124. 124
    pfft says:

    By Scotsman @ 21:

    “The bond market is telling you that there will be no material economic growth for the next two years and that a deflationary depression is the economic path that will be followed”

    http://market-ticker.org/cgi-ticker/akcs-www?post=191850

    Yeah, but those interest rates are low! (No, no- not the real rates, the nominal rates. Well, OK, all of them.)

    With these low, low rates we should have some more. . .STIMULUS!- we can afford it!

    EXACTLY. the multiplier is positive. it will send people to work.

    you’ve been wrong about that and you know it. you’ve been wrong for over a year!

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  125. 125
    pfft says:

    oh, and of course you’d quote denninger. the guy is a clueless tea partier. he makes hyperbolic statements all the time.

    tea party is all you need to know.

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  126. 126
    Scotsman says:

    RE: pfft @ 123

    Another perfect illustration of just how clueless and/or dishonest you are. First you claim Obama has made the cuts, $10T of them, then you cite $3.5T in federal budget cuts over a 20 year time span, (like those will realy happen) then you claim another $6T in indirect savings ( like those will really happen) and somehow think they are part of the budget. Here’s a clue- 3.5 is not equal to 10. If you can’t do basic math there’s no hope. ‘Nuff said.

    You are a big part of the reason one can’t believe much of what is found on the internet. Maybe you are just a paid troll.

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  127. 127
    Scotsman says:

    RE: pfft @ 24

    “EXACTLY. the multiplier is positive.”

    Um, no- the multiplier is negative. Pesky math- keeps harshing on your trip.

    http://market-ticker.org/uploads/2010/Mar/Diminishing-Prod.jpg

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  128. 128
    Blurtman says:

    RE: pfft @ 122 – No, that is an increase in spending.

    Rate this comment: Thumb up 0

  129. 129

    Reading this, it sounds like 1/4 of the debt panel will be filled with people unlikely to do anything about the real problem–entitlements.

    http://seattletimes.nwsource.com/html/localnews/2015862842_murray10m.html

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  130. 130
    David Losh says:

    Entitlements!!!

    Here’s an article about Social Security: http://www.dailymarkets.com/economy/2011/07/22/the-only-social-security-reform-worth-considering-raising-the-ceiling-on-income-subject-to-it/

    It oulines the basics, but never touches on the actual solution which is to make Social Security universal, like Health Care.

    The United States is so afraid of communism, and socialism that it never looks at the drag poverty has on the economy. We are stuck with the idea that we need serfs to keep cheap labor hungry, and ready for any task, like going to war, or building new castles.

    We have billions of people to provide cheap labor. We don’t really need to keep our own population in poverty, any more.

    All of our budget problems can be addressed with cut’s, and taxes.

    We need taxes that make sense. You can’t tell me that we just had an explosion of wealth, and yet they can’t afford to pay taxes. Some how our economy is declining while the number of people who are considered wealthy is growing. Corporate profits keep growing yet our government can’t balance a budget.

    I’m thinking more about the millions of auto industry, and construction industry standards, and codes that prevent innovation. We call it safety, but it just perpetuates tired design. No one wants to innovate, because the people in government just don’t understand, and we have to get plans approved in order to build, construct, and progress.

    What always gets me is that when we talk cutting government we start with EPA, which is designed for big ticket items. We never talk about those little agencies that are still regulating the buggy whip industry.

    It’s all incremental, but we have the money. Our government can balance the budget, and honor our entitlement obligations.

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  131. 131
    David Losh says:

    RE: Scotsman @ 27

    You’re going to need to explain that graph to me.

    Rate this comment: Thumb up 0

  132. 132
    Blurtman says:

    RE: David Losh @ 130 – It is worthwhile to remind people that SS is quite solvent. It should not have lent its money to a borrower who is not.

    SS “entitlement” reform will be a smokescreen to get an irresponsible borrower off the hook buy reneging on its obligations. It will not be done because SS is in any danger. It has close to a $3 trillion surplus!

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  133. 133

    RE: Blurtman @ 132 – It may be solvent, but wasn’t this last year the first time it didn’t bring in what it paid out? If I’m recalling correctly, that was more due to a poor economy than anything else, but the expected outflows are expected to increase well into the future.

    To use an analogy, I might be solvent now, but that doesn’t mean I have enough set aside to retire at age 65. The question isn’t solvency, but whether there’s enough solvency.

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  134. 134
    Matthew says:

    The Fed is going to keep interest rates at near 0 for the next 2 years or so… LOL… Lost decade anyone?

    Quick, where is Deejayoh with his “WE ARE NOT JAPAN” reply.

    He’s right, we are worse off!

    Wow Bernanke looks like a beaten man!

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  135. 135
    David Losh says:

    RE: Kary L. Krismer @ 133

    You should read the link I posted, it explains that.

    Rate this comment: Thumb up 0

  136. 136
    David Losh says:

    RE: Blurtman @ 32

    No one would have ever expected an attack on United States soil, or the retaliation. In the process we spent more money without any consideration about a future economic down turn.

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  137. 137
    Blurtman says:

    RE: David Losh @ 136 – Who could have expected Iraq to attack the USA? If only we had a competent National Security Advisor at the time. I am sure that person was fired immediately!

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  138. 138
    Blurtman says:

    RE: Kary L. Krismer @ 33 – The $49 billion shortfall in 2010 is approximately 1.8% of the SS fund’s reserves. So if the gov spent $695 billion on SS, it also took in $646 billion.

    Here is a decent link that discusses SS. It will run into problems in the future, but it is OK for now.

    http://www.ssa.gov/oact/trsum/index.html

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  139. 139
    David Losh says:

    RE: Blurtman @ 137

    OK, that was funny.

    Rate this comment: Thumb up 0

  140. 140
    pfft says:

    By Scotsman @ 127:

    RE: pfft @ 24

    “EXACTLY. the multiplier is positive.”

    Um, no- the multiplier is negative. Pesky math- keeps harshing on your trip.

    http://market-ticker.org/uploads/2010/Mar/Diminishing-Prod.jpg

    no. when the government spends money it spends money. hence the positive multiplier.

    Rate this comment: Thumb up 0

  141. 141
    pftt says:

    By Scotsman @ 126:

    RE: pfft @ 123

    Another perfect illustration of just how clueless and/or dishonest you are. First you claim Obama has made the cuts, $10T of them, then you cite $3.5T in federal budget cuts over a 20 year time span, (like those will realy happen) then you claim another $6T in indirect savings ( like those will really happen) and somehow think they are part of the budget. Here’s a clue- 3.5 is not equal to 10. If you can’t do basic math there’s no hope. ‘Nuff said.

    You are a big part of the reason one can’t believe much of what is found on the internet. Maybe you are just a paid troll.

    my source is the Congressional Budget Office.

    Rate this comment: Thumb up 0

  142. 142
    pftt says:

    By Blurtman @ 32:

    RE: David Losh @ 130 – It is worthwhile to remind people that SS is quite solvent. It should not have lent its money to a borrower who is not.

    as a percentage of GDP our interest rate expenses haven’t been this low since the 1970s.

    the of course the yield of the 2-year bond is 0.20% so yes our insolvent government is loaned money at less than 1/2 of a percent. actually it’s less than 1/2 of 1/2 of a percent!

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  143. 143
    pfft says:

    proof that we need another stimulus. One that will close the $900 trillion dollar output gap and put millions to work. the way to get the deficit down is to get people back to work and paying taxes.

    The Waste
    http://krugman.blogs.nytimes.com/2011/08/11/the-waste/

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  144. 144
    pfft says:

    green jobs boom

    Clean energy is now creating more jobs for the energy produced than coal or natural gas, and solar energy is the fastest growing industry in the United States, according to industry and academic sources.

    In the first quarter of this year, the solar industry installed 252 megawatts of electric capacity, an increase of 66 percent from last year. There are now almost 3,000 megawatts of solar electric power in the U.S, enough to power 600,000 homes. Production of panels went up almost a third.

    http://idealab.talkingpointsmemo.com/2011/08/clean-energy-is-booming-and-creating-jobs.php?ref=fpblg

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  145. 145
    pfft says:

    CBO schools us all on the stimulus.

    “When demand for goods and services falls short of the economy’s ability to produce them, as is the case currently, increasing government spending can increase aggregate demand and thereby narrow the gap between the economy’s actual and potential levels of output,” Elmendorf writes.

    Cut And Grow Fail: CBO Schools Tea Party Freshman In Basic Economics
    http://tpmdc.talkingpointsmemo.com/2011/08/cut-and-grow-fail-cbo-schools-tea-party-freshman-in-basic-economics.php?ref=fpb

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  146. 146
    Scotsman says:

    Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007–2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

    What accounts for this mismatch between economic strategy and economic outcome? The old economic and financial models seem to be breaking down. They were designed to work in an economy that was unencumbered by debt. The consumer debt supercycle ended in 2008. We moved on to the government debt supercycle which will also come to an end. We are now entering the final stages of the endgame which will lead to an earth shattering currency crisis centered on the US dollar.

    http://www.financialsense.com/contributors/james-j-puplava/2011/08/09/no-way-out-part-one-financial-risk

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  147. 147
    Scotsman says:

    It is obvious that the US will be unable to “grow” its way out of its debt problems. To do that would take economic growth rates of 10% or more—these growth rates would have to be sustained for several decades.

    The more likely approach is a combination of strategies that will involve spending cuts, tax increases, and a healthy dose of inflation. The US will likely be inclined to use the same strategy that it used to reduce our debt after World War II. Economists refer to this strategy as “financial repression.” Financial repression involves keeping interest rates artificially low and running a higher inflation rate. The artificially low interest rates enable the government to finance its deficits at an artificially low rate of interest. This reduces the size of the deficit and the interest costs the government has to pay its bond holders. At the same time, running higher rates of inflation allows the government to grow the economy in nominal terms (GDP increases as the cost of goods and services rise due to inflation), which reduces the size of the deficit when compared to the nominal value of GDP.

    http://www.financialsense.com/contributors/james-j-puplava/2011/08/09/no-way-out-part-one-financial-risk

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  148. 148
    Blurtman says:

    RE: pfft @ 145 – Amazing! Hasn’t this field progessed beyond Econ 101? Knowledge is definitely not the regurgitation of senseless dogma.

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  149. 149

    The SEC wants to know which S&P employees knew about the downgrade in advance.

    http://www.msnbc.msn.com/id/44121367/ns/business-stocks_and_economy/

    They should probably send in inquiry to the White House too, for there were a number of indications they knew it was coming. :-D

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  150. 150
    whatsmyname says:

    By Scotsman @ 146:

    Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007�2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

    Post hoc, ergo prompter hoc.
    Common fallacy, or the first rule of Scottish economics?

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  151. 151
    David Losh says:

    RE: Scotsman @ 147RE: Scotsman @ 146

    What have you done with Scotsman?

    Those links actually have good information, without the ads for gold, or super seeds.

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  152. 152
    pfft says:

    By Scotsman @ 146:

    Government intrusion into the economy and the markets have actually made things worse, not better. The economic stats confirm this assertion. The unemployment rate is higher, economic growth is lower (2007�2010 real GDP decreased at an annual rate of -0.3 %), and inflation rates have grown since the bottom of the recession. All we have to show for this intrusion into the economy by the government is a higher inflation rate.

    What accounts for this mismatch between economic strategy and economic outcome? The old economic and financial models seem to be breaking down. They were designed to work in an economy that was unencumbered by debt. The consumer debt supercycle ended in 2008. We moved on to the government debt supercycle which will also come to an end. We are now entering the final stages of the endgame which will lead to an earth shattering currency crisis centered on the US dollar.

    http://www.financialsense.com/contributors/james-j-puplava/2011/08/09/no-way-out-part-one-financial-risk

    I like jim alot. I’ve learned a lot from him but he’s wrong.

    you just have to look at yield on government debt to know that. we’re in a liquidity trap. this is 3 year old news to people like krugman.

    “All we have to show for this intrusion into the economy by the government is a higher inflation rate.”

    things would be worse if we hadn’t “intruded” on the economy.

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  153. 153
    pfft says:

    By Scotsman @ 47:

    It is obvious that the US will be unable to “grow” its way out of its debt problems. To do that would take economic growth rates of 10% or moreâ��these growth rates would have to be sustained for several decades.

    The more likely approach is a combination of strategies that will involve spending cuts, tax increases, and a healthy dose of inflation. The US will likely be inclined to use the same strategy that it used to reduce our debt after World War II. Economists refer to this strategy as “financial repression.” Financial repression involves keeping interest rates artificially low and running a higher inflation rate. The artificially low interest rates enable the government to finance its deficits at an artificially low rate of interest. This reduces the size of the deficit and the interest costs the government has to pay its bond holders. At the same time, running higher rates of inflation allows the government to grow the economy in nominal terms (GDP increases as the cost of goods and services rise due to inflation), which reduces the size of the deficit when compared to the nominal value of GDP.

    http://www.financialsense.com/contributors/james-j-puplava/2011/08/09/no-way-out-part-one-financial-risk

    ” Financial repression involves keeping interest rates artificially low and running a higher inflation rate. The artificially low interest rates enable the government to finance its deficits at an artificially low rate of interest.”

    oh god this is so wrong. the government doesn’t keep anything artificially low. we have an oversupply of savings and we are in a liquidity trap. that’s why rates are so low. people are also afraid of the stock market.

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  154. 154
    pfft says:

    By Blurtman @ 48:

    RE: pfft @ 145 – Amazing! Hasn’t this field progessed beyond Econ 101? Knowledge is definitely not the regurgitation of senseless dogma.

    this literally IS econ 101. keynesianism in a liquidity trap is like 60 years old. it worked here as much as it was tried.

    explain to me how spending hundreds of billions of dollars doesn’t have a positive effect on the economy?

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  155. 155
    pfft says:

    By David Losh @ 51:

    RE: Scotsman @ 147RE: Scotsman @ 146

    What have you done with Scotsman?

    Those links actually have good information, without the ads for gold, or super seeds.

    at least he linked to someone who knows something instead of a fiction writer and a crazy tea partier.

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  156. 156
    pfft says:

    by the way let’s look at how much of a burden all this debt is.

    cost of stimulus in 2013:

    $51 billion dollars. OH MY GOD that will sink the economy. morons.

    cost of bush tax cuts that year:

    $385 billion

    cost of bush’s wars.

    $185 billion

    http://www.cbpp.org/images/cms/12-16-09bud-rev6-28-10-t11.jpg

    cost of the extension of the bush tax cuts.

    $3.7 trillion dollars.

    in 2019 if the bush tax cuts weren’t renewed our deficit would go from an estimated $1 trillion down to about $300 billion…

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  157. 157
    David Losh says:

    RE: pfft @ 154

    Because it makes no difference how much the government invests, prints, or spends, that’s the end result of the liquidity trap you’ve mentioned a dozen times, twice here.

    Our government can implement cost cutting, and tax increases to make this the last country standing in the currency wars.

    There is really nothing to it, and the middle class would hardly feel a thing.

    People have allowed me to throw around the word wealth, and single out the wealthy. No one challenges me. Why?

    What is it about that 2% of the global population that we all allow them to run things? There are more of us than there are of them.

    There was a long discussion on the radio about redistribution of wealth. Every body is against that because there is no accomplishment to getting a hand out. Over centuries it’s been proved that the 2% have that feeling of power, because they built wealth, or maintained it. They are the accomplished ones, that we all admire.

    OK? Are you with me so far? That 2% has nothing to do with the governments. That 2% doesn’t need any thing. The government is there to keep the rioting to a minimum.

    That’s where all of your theories go sideways. We have never had so much wealth. There is more than enough money to do everything, we just don’t have a plan.

    I pick on Bill, and Melinda Gates, because they are a perfect example of misdirected wealth. Warren Buffet is another bafoon. The wealthy of the world are ridiculous. There is no leadership where it could do some good.

    There is no military might, so government is a useless set of sabre rattlers.

    So you should come up with some other idea about where the money is coming from to fix the damage that has been done by the politicians.

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  158. 158
    One Eyed Man says:

    RE: Scotsman @ 147

    I concur. IMO that’s the most probable form that our long, slow “recovery” will take.

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  159. 159

    RE: One Eyed Man @ 158 – Don’t be silly. In just over a year the Supreme Court will uphold Obamacare, and that will free the way for Congress to pass all sorts of laws forcing people to buy things to improve the economy! :-D

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  160. 160
    Blurtman says:

    RE: pfft @ 154 – That is a simple question, and as usual, the devil is in the details. If you USG seeks to purchase $1 billion of widgets from my hypothetical business, I might thank them for the order and produce the requested product in China. Sustainability is also an important metric. If I hired a US workforce to make the widgets, perhaps these folks would go out and buy houses. But once the USG order was filled, perhaps they would be laid off, and their homes foreclosed upon.

    Overall, IMHO, it is best if the stimulus is sustainable and not funded through debt. One solution might be a positive trade balance, that is, demand for US goods and services which is sustainable employing US workers.

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  161. 161

    RE: Blurtman @ 160 – I still think the best solution is to repeal the corporate income tax. That would make doing business here more attractive, and I suspect that more would be gained in personal income taxes than lost in corporate taxes, especially after you consider the multiplier effect on spending.

    According to this link it’s only 15% of tax revenues:

    http://askville.amazon.com/percentage-revenue-income-tax/AnswerViewer.do?requestId=6872434

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  162. 162
    David Losh says:

    RE: Kary L. Krismer @ 161

    Ireland is a perfect example of why that doesn’t work.

    Rate this comment: Thumb up 0

  163. 163
    David Losh says:

    RE: Blurtman @ 60

    Yes, trade agreements would be a much better use of our government’s time.

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  164. 164

    RE: David Losh @ 62 – You can’t just look at a country and decide something doesn’t work based on one factor.

    You logic is flawed. Japan has corporate income taxes, therefore corporate income taxes cause tsunamis.

    Repealing the corporate income tax would lead to more corporate activity in this country. More corporate activity would mean more jobs in this country.

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  165. 165
    David Losh says:

    RE: Kary L. Krismer @ 164

    Iceland is another example.

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  166. 166
    David Losh says:

    RE: Kary L. Krismer @ 64

    Actually, you seem to me to have the opinion that corporations can do no wrong.

    What would happen, the same as always happens, is that corporations will run dollars, Yuan, Rubles, or Rupees through the United states, and on to the next place they can make a profit.

    pfft is right about the liqiudity trap, and doing away with the corporate tax, though it sounds like a great idea, won’t help any.

    What we need is trade agreements to get money moving. The days of in country velocity, like China is finding, are going to be very hard to get back. Consumers want more, at a reduced price.

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  167. 167

    By David Losh @ 66:

    RE: Kary L. Krismer @ 64 – Actually, you seem to me to have the opinion that corporations can do no wrong.

    No, I just don’t have the simplistic, naive if not bigoted view that anything a corporation does is evil.

    For example, a lot of people will complain about the profits of insurance companies in health care, when in fact their profits are minimal. Or my favorite was the morons in California complaining about their utilities during the energy crisis there, not realizing that their utility was buying $100 of energy and selling it for $50.

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  168. 168
    David Losh says:

    RE: Kary L. Krismer @ 167

    That’s misdirection. Profits of Health Insurance companies pale in comparison to the number of granite styled entrance ways into hospitals, or the price of medical equipment, or resale of medical equipment to the Third World, or what the cost is of setting up clinics in emerging markets, and the list goes on.

    Then you want to use paper losses, like for Enron, to to mask market manipulation. Friday’s conviction is just a small part in a over all scheme: http://www.lasvegassun.com/news/2011/aug/12/us-enron-merrill-lynch/

    Corporations will only flow through profits to the lowest bidder. There is nothing that says the economy will benefit. If you’re not keeping track corporations are now entities, with rights.

    It’s just my opinion that corporate culture is out of control. It’s a haven, a pirate cove, of under reported profits, and trickery. I don’t think giving corporations more of a tax break will benefit any one.

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  169. 169
  170. 170
    Pegasus says:

    Worth a read to see how the system works to protect the banksters:

    http://www.rollingstone.com/politics/news/is-the-sec-covering-up-wall-street-crimes-20110817

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  171. 171
    Blurtman says:

    RE: Pegasus @ 170 – A CEO of a large investment bank commits massive fraud, enriching himself in the process. In this backwards country, the CEO uses his influence and connections to become the Secretary of the Treasury, where he then demands a blank check to bail out his former employer whose misdeeds have bankrupted the company. He also engineers a no prosecution policy, as if that were at all necessary anyway. He then works with the equally corrupt head of the country’s central bank to dump these bad investments on the general public. And the corrupt Congress mandates that fraudulent accounting practices be enforced, lest the truth become too visible.

    In what backwards banana republic could such outrageous practices occur? Bolivia? No. Ecuador? No. Brazil? Heavens no. Give up? The answer: It is the United States of America.

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  172. 172
    Blurtman says:

    RE: Scotsman @ 69 – Braniac Bernanke bailed out the wrong sector.

    Rate this comment: Thumb up 0

  173. 173
    Scotsman says:

    Is this it? TNX dipped below 2%, within a few points of the all time GD low. Unemployment claims headed back up. Philly Fed index with a huge miss, -31 verses expectations of +3. Markets are diving, Europe is really hurting, especially their banks. Big O is on vacation.

    Gonna be a pretty quiet Fall selling season for the housing markets.

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  174. 174
    Blurtman says:

    The general public is starting to become concerned. The herd is getting spooked. Mooooooo……

    Rate this comment: Thumb up 0

  175. 175
    Blake says:

    By Blurtman @ 171:

    RE: Pegasus @ 170 – A CEO of a large investment bank commits massive fraud, enriching himself in the process. In this backwards country, the CEO uses his influence and connections to become the Secretary of the Treasury, where he then demands a blank check to bail out his former employer whose misdeeds have bankrupted the company. He also engineers a no prosecution policy, as if that were at all necessary anyway. He then works with the equally corrupt head of the country’s central bank to dump these bad investments on the general public. And the corrupt Congress mandates that fraudulent accounting practices be enforced, lest the truth become too visible.

    In what backwards banana republic could such outrageous practices occur? Bolivia? No. Ecuador? No. Brazil? Heavens no. Give up? The answer: It is the United States of America.

    Sounds like Italy with Berlusconi… good role model for the US of A!?
    Reminds me of an old joke:
    In heaven: The French do all the cooking, the Germans fix things, the Brits run the police, the Swiss run the government and the Italians are the lovers.
    In Hell: The Brits do all the cooking, the French fix things, the Germans run the police, the Swiss are the lovers… and the Italians run the government!

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  176. 176
    Scotsman says:

    “If the federal government’s regulatory operation were a business, it would be one of the 50 biggest in the country in terms of revenues, and the third largest in terms of employees, with more people working for it than McDonald’s, Ford, Disney and Boeing combined.
    Under President Obama, while the economy is struggling to grow and create jobs, the federal regulatory business is booming.
    Regulatory agencies have seen their combined budgets grow a healthy 16% since 2008, topping $54 billion, according to the annual “Regulator’s Budget,” compiled by George Washington University and Washington University in St. Louis.
    That’s at a time when the overall economy grew a paltry 5%.
    Meanwhile, employment at these agencies has climbed 13% since Obama took office to more than 281,000, while private-sector jobs shrank by 5.6%.”

    http://www.investors.com/NewsAndAnalysis/Article/581555/201108151901/Regulatory-Agencies-Staffing-Up.htm

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  177. 177
    Blurtman says:

    RE: Blake @ 175 – I had dinner with some old friends in Bezerkeley a few months back, and that was their conclusion, which they did not seem to think was all that bad. That is, that the USA becomes the new Italy.

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  178. 178
    Sweet Pea says:

    This speaks directly to some of the issues raised in a previous discussion on tax rates across income/wealth spectrums. The world is full of self-serving wealthy people, including Warren Buffett. This is not the first time I’ve heard grumblings about his real motivation for leaving it all to a foundation.

    http://www.businessinsider.com/hedge-fund-managers-blast-self-serving-buffett-2011-8

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  179. 179

    Sorry I don’t have a link handy, but California’s unemployment rate is apparently 12% with only 4,500 jobs added last month!

    If that doesn’t improve, I wonder whether President Obama will be able to even carry California. In the P-I I read that an Oregon Democrat is questioning his ability to carry Oregon.

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  180. 180
    david2000 says:

    As far as I know that the US defense budget is equal to the total defense budget of top 50 largest country in the world. Wow!!
    I have heard all kind of theories related to the debts in this forum.
    I am surprised that nobody touch this part. I guess that it’s the untouchable.

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  181. 181
    whatsmyname says:

    Hey, look here. Everything is alright again. You can go ahead and buy that house now.

    http://www.calculatedriskblog.com/2011/08/real-gross-domestic-income-above-pre.html

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  182. 182
    Scotsman says:

    RE: whatsmyname @ 181

    From your source:

    “However, by other measures – like real personal income less transfer payments and employment – the economy is still far below the pre-recession peak”

    Opps. And that GDP just got revised. . . down. Dang! We won’t even discuss how the government keeps moving the goal posts through the magic of statistics.

    Be patient- soon enough the government will be giving away houses.

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  183. 183
    Scotsman says:

    If anyone feels like reading about current economics I highly recommend this new site out of the UK:

    http://azizonomics.com/

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  184. 184
    whatsmyname says:

    By Scotsman @ 182:

    RE: whatsmyname @ 181

    From your source:

    “However, by other measures – like real personal income less transfer payments and employment – the economy is still far below the pre-recession peak”

    Don’t think I missed that, not to mention the crappy situations of people all around us. I just can’t resist a double irony.

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  185. 185
    David Losh says:

    RE: david2000 @ 180RE: Scotsman @ 183

    You’ve brought up a lot of great discussion points this past week. I think you said you did some home work, and this site is a departure for you.

    There are a couple of things that go back to the military budget. Obama was elected because he said he would get us out of Iraq, and Afganistan. I heard a Republican refer to Afganistan as Obama’s war.

    What I know is Osama bin Laden is dead, and another Al Quida leader in Pakistan is dead, as of this week end. The report from the military is that Al Quida is on the ropes. Wasn’t that the goal? There is also a transfer of $2 trillion in hardware from us, to the Iraqis, and Afganies. We need to end our involvement, in a timely manner.

    We can redirect our military presense. The article you linked to is referring to the Panama Canal days. What’s interesting to me is that the transfer of the Panama Canal to Panama never resulted in the catastrophy that was expected. Panama seems to be able to operate the Canal just fine.

    We can cooperate with foriegn governments without taking over. I think, in my opinion, Iraq, and Afganistan showed regime change doesn’t happen. Columbia is another United States military disaster. We can’t take kids, or insurance sales people, no matter how well trained they are, and put them in front of generational killers. A raid like against Osama, OK, but on the ground with people who kill for a living is really dicey.

    We can redirect military. We can redirect our budget.

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  186. 186
    Scotsman says:

    And you thought capitalism was dead. This is what you get when unregulated ( because it’s illegal- oh, the irony) capitalism goes to work:

    “from 1981 to 2002, marijuana’s potency increased by 145% and its price has declined 58% from 1990 to 2007″

    http://articles.cnn.com/2011-06-07/opinion/wood.failed.war.on.drugs_1_drug-war-drug-policy-mexican-drug-trafficking-organizations/2?_s=PM:OPINION

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  187. 187

    Maybe the local T-Mobile jobs are not going away after all!

    http://www.msnbc.msn.com/id/44341803/ns/business-us_business/

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  188. 188

    RE: Scotsman @ 86 – I wonder if the reduced price is due to lower demand or greater supply? With the job testing I would suspect the former.

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  189. 189
    Space Alien Magician says:

    RE: david2000 @ 180

    IMO, the reason for this is that the US dollar comprises 60% of all reserve holdings in the 150+ privately-owned central banks worldwide. This has allowed the US dollar to be diluted/inflated into oblivion and it does not collapse, since it is the world’s reserve currency. The central banks will still hold and transact in US dollars, regardless, lending stability to the system.

    Note that the shift away from the US dollar as the world reserve currency is well underway. the TBTF bailout money was primarily used to purchase infrastructure, land, and commodities overseas, in anticipation of a US dollar crash. This is a main reason why agricultural land and commodities are rising in value, worldwide (supply vs. demand).

    The US-based military industrial complex is dependent on the stability of the US dollar and its status as the world reserve currency in order to continue military spending at the current levels. This status allows for great abuses of the currency — such as creating USD at will and then swapping it for hard assets.

    Economist Michael Hudson has written extensively on this topic. He’s the guy who convinced Iceland’s government to default on their IMF loans. If you never heard of him you should introduce yourself.

    I can guarantee you that the majority of people reading this will sweep it under the carpet because they have not heard about any of this before. Others will form small groups here in which they will work to destroy the perceived value of this information. Such trust in the mainstream media and the mainstream blogs is quite impressive — like a faith-based religion.

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