Market Currents
The sky hasn't fallen, and the Obama administration's persistent warnings that the market would...
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Tuesday, July 26, 2011, 6:15 PM ETThe sky hasn't fallen, and the Obama administration's persistent warnings that the market would react negatively to the debt ceiling crisis may have undercut its negotiating position. “They have lost all credibility,” former TARP chief Neil Barofsky says. “It’s so typical of the way Treasury and the Fed treat everything - always to warn that Armageddon is coming.”
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seekingalpha.com/curre...
I bet you can't tell me when the longest government shutdown in history occurred on this chart.
www.google.com//financ...
Oh, the joy...
But I also think the market to a large extent is not that worried about it - everyone knows there will not be any default, and that any effect will likely be temporary. Basically, so what if the US passes the deadline - how is that going to affect my stocks - which have anywhere from 65-90% of their operations and sales outside the US? There might be a temporary glitch - which is why I am in abut 1/3 cash - to buy longer term bargains. But otherwise, BLEH.
People are unlikely to be fooled again by a bunch of self serving politicians who have made promises to lobbyists and campaign donors which they will be unable to keep unless they find a way to shove the cost down the taxpayer's throats. Yes Neil, it took several votes to get TARP through because the people were strongly against it, and knew exactly what it stood for (hint: It wasn't designed to help the avergae working slob). The crybaby's sold the market off in a temper tantrum until Paulson's cry for the end of the world was self fulfilling. As soon as the fat cats got their money, and the great unwashed got the bill, the market miracuously went back up.
What's the expression? Fool me once, shame on you.....
www.youtube.com/watch?...
Additionally, they should provide him a full time shrink. No offense to psychiatrists meant.
I would agree with you, if it were left to a single martyr.
First of all, the President and the Fed can keep things going well into September without any new legislation. Second of all, if this President can find lawyers to tell him that his Libya adventure was not "war" then should be able to find lawyers to tell him that the debt ceiling is unconstitutional.
Either way, markets at this point seem to be comfortable in thinking that this will get resolved.
Not much else though.
The need to be thrown out as fast as they were brought in.
That's my Marine Corp logic.
Because an assurance the bills will be paid would stabilize the market. It can't happen until the market is de-stabilized, I admit, but ending an ongoing crisis won't be seen as an impeachment offense in the clear light of day. And if the House moves in that direction it seals the majority's doom.
"To borrow Money on the credit of the United States;"
It's Congress not the Executive that is given the power to set the amount borrowed, not the Executive.
Contrast that with the record of the previous Administration.
Government must be big enough to enforce the law against all bad actors. Foreign and domestic. Otherwise the bad actors are the government.
Which means we're both out of luck, because this looks like the second Dimon Administration. <g>
What the 14th doesn't do is strike out or nullify the Article I, Section 8 power to borrow clause, or transfer the power to borrow to the Executive. Nothing in the 14th addresses the power to borrow. The power to borrow (and obviously to set the amount borrowed) lies with Congress.
For many liberals, the Constitution is merely a quaint historical relic to visit with the kids in a big building in Washington. It has nothing to do with modern governance or in any way places any constraints on the assertion of bald-faced power.
And for those who cry "socialism" at every opportunity, they probably don't know there's a word for an ideology that consistently puts the interests of major corporations ahead of those of the people. It starts with the letter f. And the second letter isn't r.
You are welcome to your ideology, sir. But I don't think you're profiting from it.
The Executive doesn't appropriate money, But the executive power includes a requirement to follow the Constitution, to see to it the bills are paid. If the President doesn't pay the bills he's violating his oath to see to it the Constitution isn't violated. He violates the will of Congress in not doing anything to pay the bills, but the choice is pretty clear, IMO.
I know conservatives have created a cottage industry in claiming the President is lost without one, but that was his predecessor.
Obama's own lawyers have told him he'd be out of his mind and that attempting to gerrymander the 14th is a nonstarter. Imagine, if a gaggle of liberal attorneys even think it's a bad idea, how bad it must really be.
The 14th amendment merely iterates that the "validity" of legal debts of the U.S. isn't in question. It says nothing about the terms or timing of payment thereof.
The real clincher, as if it's even needed, is Section 5:
"Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article."
This specifically grants to Congress the enforcement power of this Amendment, not the Executive.
I'll be laughing right through November, 2012.
That the Executive doesn't appropriate money isn't at issue. You've painted yourself into a corner and now you're dissembling. There's more than enough revenue flow to service the debt.
In fact if things were indeed so bad that we needed to borrow on the national credit card just to make the interest payments on the national credit card then we'd have long since been downgraded to junk status and should just recognized the inevitable and default. However I think you well know that we're not at that point yet.
Nobody gets impeached. The Supreme Court, if it considers itself any longer relevant, could assert original jurisdiction over the Constitutional issue and decide whether Obama did or did not hace the power he claimed.
Let's hope the Marines are smarter than your logic.
The Constitution restricts ALL Federal powers, except those specifically enumerated therein. All other powers are "reserved to the People and the States."
Unlike Hugo Chavez, Mr. O would face two big --and rather swift, I'd imagine-- problems:
1) An antipathetic military, unwilling to follow the "Supreme Commander"
2) An armed citizenry (despite the tireless efforts of the left to obviate the Second Amendment)
Frankly, I'd love to see him make that proclamation, just so we could count the remainder of his existence, as President, in minutes or hours, at most.
And you're expecting an armed insurrection against what? The government paying its bills? Really? Really.
No wonder liberals have the better comics. Conservatives give them such great material, only the conservatives are serious.
Comedy Central and "The Daily Show" both surged in the May Nielsen ratings, posting their best numbers yet. "The Daily Show" dominated its time slot across all of television, cable and broadcast, and boasted a very impressive 19 percent increase in viewership in May alone.
Meanwhile, according to Mediabistro's TV Newser, Fox News suffered an overall decline in viewers in the highly sought-after 25-to-54-year old demographic for May, with total ratings down 10 percent. Bill O'Reilly's viewership dropped 9 percent, Sean Hannity's 6 percent, with Greta Van Susteren and Glenn Beck suffering the steepest losses with Van Susteren's "On the Record" losing 12 percent of its audience and Glenn Beck sliding a whopping 17 percent.
FDR's fireside chats were rather effective though.
We foreigners know that you Americans are really frustrated with each other when the "right-wing revanchist fantasies" start to pepper the discourse.
But it's tiresome.
Wait just a minute.
Obama declaring a "national emergency" and "dissolving Congress" isn't a leftwing fantasy?
All you have to be is a proponent of Constititutional law and order to savor what would occur if Obama tried to pull off some half-baked Hugo Chavez imitation. Honestly, as an American, I'd love to see him try because then his ideology would be unmasked unmistakenly.
Are there those on the US political left significant in numbers or public standing actually advocating that Obama declare a "national emergency" and "dissolve Congress" ? I'm observing some loose and somewhat misguided fantasy talk on the left about possible invoking of the 14th Amendment but that really doesn't qualify.
What is needed on all sides, in my humble outsider's opinion, is some serious political thought and discourse leading to the difficult but necessary compromises that will actually begin to address the current challenges facing the US - not coup fantasy.
The emphasis here is on respect for other people's opinions. Try it sometime.
Here is an example of your rendition of the "Truth" and respect for other people's opinions:
"A libertarian is just a Republican who doesn't want to admit he hangs out with wackos."
You're not only highly emotional, you're also very hypocritical - the left-wing authoritarian "do as I say, not as I do" type.
You can do what you want, think what you want. No one is stopping you. But I'm not agreeing with you, either.
Sorry if that bothers you.
True, but only because that is about the only choice they have. If a viable 3rd party ever came along, it might be different (lottsa luck on that).
However, I also think that you and many others here are guilty of lumpng people together based on just one or two factors or opinions. I don't like Obama (I voted for Hillary) for several reasons - but that does not make me either a Pubby or a Libby. I think Obamacare is a disaster in progress, but that does not mean i want to pull the plug on poor folks (I was one of those once).
Not sure if it is Left or Right, but it is a fantasy - mostly (FDR actually considered doing so at one time, and supposedly so did Lincoln). But it is actually as pretty common scenario - it was pretty much what Hitler and several Latin American, Middle East, and Asian countries have done in the past.
Like he will when he responds to my comment here.
I've seen a half dozen different mechanisms that can be invoked to avoid default posted even here on SA. From intentionally writing 'bad' checks to making 'fake' deposits in the Fed gov'ts accounts, to minting coins with exorbitant face values etc.
14th amendment is hardly the only 'imaginable' fallback position, and the it is becoming clearer by the day that the 'debt ceiling' is a mere technicality with no real meaning.
I suspect that Repubs won't let any mechanism interrupt or override the 'debt ceiling' vote by Congress since they would be responsible for losing said authority from Congress, and would not like it if things were reversed (Red Pres Blue Congress).
There are so many layers to this debt ceiling issue.
The first is that the ceiling itself is purely artificial (in the sense that it is a creation of legislation and can be changed at will if the necessary legislation to do so is enacted). The debt ceiling issue has, however, become a proxy whereby the verious factions withing and between the Republican Parties can dook it out to their hearts content over issues about they care deeply (fiscal policy, taxes, the scope and role of government etc.). This isn't going to be resolved quickly.
Regretably, there is no way for the debt ceiling issue and the real issues underlying that issue can be properly addressed through the political process short of a new election but these issues are being brought to the boil now, at great risk to a fragil economic recovery and to US credit standing, in the absence of a context whereunder a consistent public police can be now adopted and implimented. In other words, some cludge temporary patch-up job may happen but the issues will boil on until at least after the next US Federal election results take effect.
Then there are the many expedients that are suggested to somehow delay technically hitting the debt ceiling and avoiding partial default for weeks or months in the absence of a legislative settlement. On further reflection can anyone think that such skirting of the impasse for some brief interval by measures of doubtful validity or practicality would promote efforts to calm the debate and resolve the debt ceiling matter satisfactorily. Rather, such efforts would simply further cloud the fiscal status of the US goverment and inflame further the political passions to no good end.
I have my own strong doubts whether US fiscal austerity, implimented deeply and immediately and in the absence of further effective monetary easing, can do anything but scotch the current fragil recovery and itself worsen the fiscal crisis. My comment above, however, are directed to the following propositions:
(a) If such a course of action is to be seriousely attempted, what needs to be done to give it legitimacy and some prospect that it will be carried out for a continuing period in a consistent manner.
(b) THe political process itself, in the sense of democratic governance of the US, must be made to work better better and not be unduely subordinated to partisan political trench warfare manovering.
It does not matter what is discussed in DC. The downgrade of our credit is inevitable as we are in too deep. This is a number problem not a political problem.
But, as Hendershott says below, the political problem gives rise to the number problem,
But when the numbers get too big the politics become irrelevant. Cuts are going to happen or we are going to drive inflation. Arguing over who pays the dinner bill on the Titanic does not change the fact it is sinking. That is where we are at. Politicians and people like you believe they have control but the evidence is all around that they have lost control. The numbers are dictating the news and the policy.
You and I are going in a semantic circle here. All I'm saying is that the political maneuvering is obscuring serious public discussion discussion of the very real underlying problems (one of which is the very magnitude of the financial and fiscal issues, as you properly suggest). The challenge, therefore, is how to move the national discussion beyond the political gamesmanship and onto finding real solutions to these very real problems.
This is 90% of the problem, not just in the federal government, but state and local also. I would bet that you could gather up a dozen random people here on SA (excluding a couple of fanatics), and come up with a really logical plan that makes sense and would reduce the debt to zero in 12 to 15 years.
But the key word is "logical" - politics and people are seldom logical, but some are much less so, and that is where the problem we have now comes in. This is not really a failure of the Left or Right - it is failure of common sense and self interest.
You speak like a policy wonk and borderline politician. You still are not getting it. All that analysis and discussion and political talk is being washed away by the numbers. Read up on countries that went through severe economic crisis and the politicians lose control and the populace is left to ride out the storm. What they say becomes noise and BS which is what we have now.
Downgrade talks are driving the polemics. Europe is going through bailout after bailout. They don't have control but are trying to feign they do. Forget the talk and just look at the sequence of events. It is all downward and nobody is in control.
We're into one of those chicken and egg sorts of discussions that don't end well. Let's call it a draw.
I don't think they will though. They are to obsessed with making the President look bad to do anything GOOD.
Geez, do you believe in Apple Pie too??? I do!!!
But, you are in "Mammby Pammby Land".
Try asking a question that taxes our deductive reasoning next time.
Glad your a Constitutional Lawyer. However, you a Constitutional Lawyer that doesn't know "diddly s#!+". Smarter people than you can't really determine if it's an option or not. I'd leave it up to the Supreme Court and let them decide.
I'd give them the opportunity though. However it looks like that won't be necessary now.
TOO BAD. I'd have kicked that can in a NY minute.
But, that's the Marine in me. I wouldn't have taken any of their S#!+.
The Constitution says the validity of the U.S. government’s debt “shall not be questioned.”
He doesn't succeed.
It won't be too late to save most positions, because the President will act under the 14th amendment, but this can't end until the threat becomes real.
That's what they're waiting for.
I'm tired of all this compromising crap. Kick 'em in the ass!!!
Barack Obama is not a socialist. Period. If you claim he is then you don't know what socialism really is. He did not pass a single-payer health care system, he did not nationalize any banks. He has done nothing to interfere with our democratic processes. Quite the contrary.
He is either a bank loving Capitalist pig or a pinko socialist. He cannot be both.
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we have seen already many very different kinds of socialism, with very different objectives and ways to achieve these objectives
Arab Socialist Ba'ath Party
French Socialist party
National Socialist German Workers' Party
Note:
Leaders of all parties above were/are sort of pinko pigs with appeal to humans, while never were hateful to power money and other pleasures of old good bank loving Capitalists
In summary
If one able to avoid speaking the truth by any part of own mouth, every combination is possible
Did anyone even bother to watch his last prime time speech?
I pray you're right.
If the answer is blowing in the wind, then he is the pure defintion why we should outlaw wind...
I looked back over weeks of your posts, and not once have you offered up any kind of data, investment advice, facts, or anything at all pertinent to the discussion at hand. Almost everything you say is some bumper sticker slogan taken from the pages of Media Matters, with no substance and nothing to offer.
I agree. He is more of a cipher, a moving target with no core at all except playing to his base.
For instance, just look at your last post.
How can you say s#!+ like that to me after posting crap like that.
P.S. I love bumper stickers
But the idea of paying 11% of GDP to cover everyone instead of 17% to cover just two thirds sounds attractive when you describe it.
And in the 2008 debates the President never said he supported VA care for everyone. So you're projecting.
I know that in your world everything would have been hunky-dory, but in the real world things weren't that way.
Problem is, once the default happens the damage is done. Where do we go then to get our credit-worthiness back?
Pay your bills, and then we can talk about socialism.
Compare that to the $787 billion of the stimulus and you can do the math yourself. Or are you now blaming Obama for trying to wind down the Bush wars and for keeping the tax cuts through to their 10-year sunset?
Yeah, I know. Math has a liberal bias.
Thank God for markets, which tend to see things clearly. The descent into hell has begun, and it will accelerate until someone does something rational.
(Oooo, I had a real nasty thought on that last sentence. If I changed the word God to Allah (which is literally, God in Arabic) I'd bet the Tea Party people here would have a fit and fall in it. Glad I didn't do that.)
Much appreciated!
Obama has added $4.5 trillion (a 45% increase since Obama took office) to the national debt in but 2 1/2 years. Bush was bad, and Obama is much worse, and his recent whining in front of the cameras indicates he has his foot firmly planted on the ineptitude accelerator. That you won't acknowledge that is due to you being an extreme left-winger with a hard-on for the child King in the Oval office.
Both Christians and Muslims had participated in the slave trade. But Christian church never took a stance regarding slavery while Muhammad had captured and traded slaves himself. There are written instructions in the Koran regarding proper conducts of slave masters.
Arabic Muslims used to capture slaves from all over Europe and Africa and profit hugely from it. I wonder why they called the captured white slaves as "white gold" but they never called the African slaves "black gold".
I love the way this "heads I win tails you lose" mind works. It's quite funny.
And when worse comes to worse, call the other person gay. Is that the worst thing you can say about someone? Really?
And no, that $4.5 trillion in new debt isn't attributable to Iraq and Afghanistan. If that were so then the debt created under Bush would have been much greater than under Obama. Iraq was the major defense expenditure and the Iraq war was over and winding down well before Obama came into office. The vast majority of Obama's spending binge has been on various stimulus with the help of the Pelosi/Reid Congress. That tingle you get down your leg when you see Obama is blinding you to reality. I suggest spending less time in front of the boob tube watching comics and more reading up on current events.
I would have no problem if we cancelled the 2001 tax cuts on multi-national companies such as GE, GM, Whirlpool ...... which had taken the tax cut savings and invested it oversea. I do have a problem if we cancelled the 2001 tax cuts on small businesses barely making over $250,000.
When are you children going to learn that if you disagree with someone, just say so and move on? Probably at the same time you take responsibility for things like $2 trillion deficit of the last 10 years and its true cause.
Also, if you want to be taken seriously by anyone who disagrees with you, you might stop the sexual fetish-ization of the President, and of his supporters. Just because we agree with someone's position doesn't mean we want to have sex with them. Did you Monica-ize Bush? No. It's equally silly, and equally offensive.
It's also completely over your head as to why we debate. I have no expectation of you taking anything seriously - you're far too much of an ideologue to expect that in any case. A public debate is about swaying the audience to your position, so you can stop whining about the "please try to please me" nonsense. Ain't gonna happen.
$250K/year is not a whole lot of money if you are running a small business or living in NYC.
I can't wait to see you tell the Defense Department they're going to be downsized 50%.
More important, all that fiscal retrenchment on that scale does is drop a torpedo into the economy. Spending is spending, whoever does it. And eliminating trillions from the economy, all at once, kills it.
Try looking up Andrew Mellon sometime. You and he would get along famously.
Downsizing military!!!! I guess you don't know much about right wingers' philosophy. However, I would scrutinize their purchasing system.
Iceland and Ireland are both tightening their belt and they are heading toward the right direction. What you don't understand about the trillions that would be eliminating from the economy is that it has to be first taken from the real private sector economy, or borrow from the future causing inflation and mal-investments, to be redistributed by the government. What is the multiplier of Obama's disastrous stimulus? He saved uncompetitive union jobs and prevented Boeing from creating more competitive non-union jobs. The worst is that he created more public sector jobs which are draining precious resource from the economy for the next 2-3 decades - federal employees don't get fire once they are hired.
We are becoming more like the Greek - 40% of Greece's GDP is from public sector. They will eventually drag down the whole EU. We will drag down the entire world.
Not true.
Spending dependent on theft(taxes) from the creator/earner class to the parasitical recipient class is a misdirection of resources and usually encourages poor future choices. "Hey, its not my money right? I can do whatever the hell I want with it!" And while demand is artificially pushed in, capital creation is further disincentivized in the form of zero hiring. Translation: its not organic. Thus, productivity goes down. Waste goes into the system as well as fraud plus there's no carrot to want to hire since further profit has zero additive value to the creator class as it will just continue to be taken away to fund more and more lard.
Its about earnings, always has been. Production. Freedom to choose. Making things. Creating things. Investment.
Its not about putting more Thunderbird into a hobo's bloodstream by political graft/theft(taking from someone else, an inventor/job creator) and calling that economic growth. Its not growth. Its static subsistency.
Let people have their own money. Shrink the size of government. Let people have the freedom to create, buy and sell, generally be left alone. Let them keep their own personal property. Lower regulations on businesses. Break up unions. This is what creates jobs. Period.
And we don't have a debt problem. We have a growth problem.
Defense will have to be downsized. Pretty much every federal outlay will have to be downsized or we do it through the backdoor by driving inflation.
Put aside the emotion, look at the numbers, study some economic history and not in Rolling Stone and you will find a lot of this political discourse does not matter.
It is pathetic you even have to explain this concept but highlights why we have the problems we do.
We get most of our oil imports from Canada and Mexico. Why do we need to be in the Middle East so heavily?
Printed or borrowed money resulted in mal-investments and inflation. Under Bush, we had mal-investments in housing, gold.... Under Obama, we have more mal-investments in commodities, gold.... These are facts.
Obama has the benefit to see what easy money had done under Bush's term, but Obama learn nothing from that and triple down on more debt and easy money. Debt can indeed boost temporary growth but it cannot last more than 2-3 years. Bush had overplayed this hand and it blew up on him and us big time. Obama is too dumb to reverse course.
2nd, OPEC demands dollar for all transactions which means they support the global reserve currency status of the dollar. It means we can get away with printing a lot of money - we have been abusing this privilege lately. That is why we are wise to give them protection along with Japan and UK.
Get it.
As far as Libya goes, every time we drop a bomb there, it costs us a few million dollar. Our primary objective there should be keeping the region stablized in order not to cause any disruption in oil production.
If you turn stimulus to austerity too quickly you crack the economy. The UK has already seen that. Growth has stopped dead in its tracks.
The boat has to be turned slowly, and it has to be done in a balanced fashion. That's what the President has suggested, and it's what economists are saying is the right way to do it.
Imagine that oil was not transacted in US$. How are we going to pay for those tanker loads that come from the rest of the world, or Canada and Mexico? Hummmm, might be a problem.
Cramer, and I know Cramer is not perfect, looked into the camera Tuesday morning and said "buy gold, not GLD, real physical gold coins." What is he worried about?
wars - $130 billion
deficit - $1.4 trillion or $ 14,000 billion
$14,000 - $ 430 or 630 = $ 13,570 or 13,370 billion
That is $ 1.3 trillion deficit remaining without the wars and Bush tax cut.
Facts and numbers. Hmmm.....................
BTW, what has Obama done to turn the boat around slowly?
Neither has been rescinded. You want to blame the President for not raising taxes at the bottom of the worst crisis since the Great Depression. You want to blame him for not cutting-and-running from Iraq and Afghanistan immediately upon entering office.
You want to blame him for not immediately turning from the Bush policies when the problem was the economy was collapsing and it was all anyone could do to prevent it?
I fault the President for not seeing that the recession was worse than it was. I fault him for not doing enough to stimulate growth before going all-austerity. The numbers he was seeing have since been steadily adjusted downwards - growth in 2009 was -3.5%.
But by the time any sort of mending had begun, he faced a determined Republican Congressional opposition, one that would not (and still won't) countenance any revenue enhancement, and one determined (apparently) to destroy the social safety net the majority of our people have built over 50-80 years of hard work, in order to cut more taxes and destroy law enforcement on business excesses.
That's the way it is. The boat is tough to turn. And the most important thing that must change for the boat to turn is the minds of the people. So long as people think crazy is sane and sane crazy, the boat won't turn.
Which really what this week is about.
14th Amendment.
A total dictator move.
You want to raise tax amid a recession and believe that will somehow stimulate the economy. Hmmm. You don't understand the responsibilities attach to the privilege for having the global reserve currency status. The Iraq war was necessary to maintain that status on top of few other things. I don't blame Obama for not leaving Iraq. I blame him for not only staying but expanded the war in Afghanistan, especially after we killed bin Laden. I also blame Bush for not installing another strongman in Iraq and leave the Baath Party intact, but then what do you expect from a dummy.
I also fault the smartest president we ever have for not seeing that the recession was worse than it was. I saw it and I don't think I am smart. I fault him for not using the stimulus properly to stimulate growth. He used whatever little precious credibility we had and squandered it on saving uncompetitive union jobs, creating more government jobs, allowing multinational using tax payer money and invest in factories oversea - Obama's job czar is doing a fantastic job creating jobs in China. He shot the last few economic ammo we desperately needed into the ground. I would be a lot more supportive of this loser if he had actually created shovel ready jobs - I almost leap over into the TV and strangle him when I saw him jokingly said that "oh, I guess shovel ready is not really shovel ready, hahahaha."
I don't even want to go into how many jobs he destroyed via EPA, Frank-Dodd bill, Gulf moritorium, class warfare........... I WOULD HAVE TO WRITE A BOOK.
Old school republicans are not Obama's enemies, they are his friends and the enemies of the people. Tea Party republicans are the only ones who are doing something to turn this boat around at the peril of their own political future.
Can you see that "the social safety net the majority of our people have built over 50-80 years of hard work" is what is destroying Greece. Why stop at 40% of Greece GDP is from the public sector? Lets make it 100%. That didn't work out too well for USSR or Cuba - Cuba just laid off more than half of its civil servants, gee, I wonder why. Ireland and Iceland had cut public servants salary by 10-15%. I think Iceland cut retiree's pension by 20%. Greece think they can keep all their benefits by burning buildings and riots. They would rather burn the boat down then to turn it around.
What is this week about? I would make a few predictions. Tea Party lost. Hyperinflation. Total collapse.
Well, at least we don't have to worry about recession anymore. BTW, you will still have your social security check but I doubt if you would be able to buy anything with it.
Yeah, that's is the way it is. The boat is indeed tough to turn. So long as people think crazy is sane and sane crazy, the boat won't turn.
'It has to be seen as necessary...'
'... and those who criticize it be seen as idiots, or it will fail.'
And the perverse plotting....
'Otherwise the power grab will be seen negatively by voters.'
This is quite literally a conversation the Wicked Witch of the West had with her flying monkeys concerning Dorothy the moment they turned over the sand dial.
Thanks for outing yourself fella.
>3
Problem is that Obama has not even found the rudder yet, much less the right map. Not even sure he knows which boat he is on. While Obama has been using a map of Oz for the first 3 years, the country was on the Island of Doctor Moreau, and congress is off in some map of Fantasy Island.
The administration did the same lying to get the stimulus and health care bills passed.
Next will be the same lies to get immigration reform passed so Obama can get votes in 2012.
Perhaps we should pass immigration laws that mirror those of our North American neighbors. Oh wait, they don't want poor immigrants.
Neil Barofsky is great. If he, Volcker, and other conservative Democrats were in charge of that party, they would be again worth looking at.
There is really no reason to have it, and it should be repealed.
And, it could almost fit on a bumper sticker:-)
The "CHANGE" has worked oh so well!
Any migration away from the dollar will either be slow or cataclysmic.
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Neil Barofsky forgot that on August 3 we have the same trinity as on August 1.
If they say it is coming, it is coming
The investing public along with the public generally (in part through cynicism, in part through hope and in part because there hasn’t been a situation like the one in question within living memory) is hopeful that some solution will be cobbled together and unsure what failure to strike a deal in early August would really entail. It all seems so contrived (although the associated issues of government deficits and scope of programs are viewed as both real and important) and how it really relates to issues like jobs and economic recovery unclear in timing and detail. People hear that August 2nd or shortly thereafter is when this all become really important and are prepared to wait and see; having no precedents to guide them in these matters. This is equally so for the deemed sophisticated investor as much as laymen in financial matters.
All concerned are holding their collective breath but it’s a bit early metaphorically to break out a brewski and settle down under the sun and into a lawn chair on this one. With both the Republican and Democratic Parties now experiencing incipient revolts against their leaders efforts to compromise and with the toxicity developing in these negotiations, the path to settlement is becoming increasingly murky and time for settlement increasingly short. August 2nd may well pass without settlement and the markets may initially respond with unexpected calm but both the public mood and the markets may well be roiled at any time if negotiations truly stall of some unexpected event occur.
If there were better investment alternatives in the world then we would be in big trouble. Those alternatives may emerge in the next decade in enough volume to move capital from the US but they are not here today. We are better off than many of the European countries although we could spend our way into the same condition in very short order.
And nobody believes that the US will not ultimately pay its bills. Whether we pay them a bit late with extra interest it really does not matter because we have the largest economy in the world and the ability to pay if we really put our minds to it.
The issue is serious but not end of the world. This is just another episode to get us all riled up and get us watching the drama on TV. I have lived through Y2K, Octomom, the OJ trial, Casey Anthony, reporters tapping cell phones, Monica Lewinsky, etc, etc, etc, etc and there are more on the way.
The federal government collects more than enough tax revenue to pay interest on the outstanding Treasury bonds, bills and notes. All it has to do is prioritize paying them first.
The chicken little routine is wearing thin on this. Too many people know the actual facts and are saying so know despite the attempts of the slavishly sycophantic steno pool press constant regurgitation of the adminstration's hysterics.
Last go around Boehner wanted a ceiling increase and Obama was fighting against it. But with a republican president.
Should there really be any surprise that the political system in the US accomplishes nothing?
I think anyone in the USA who thinks their political party is "better" is delusional. Each without a distinct ideology or guiding principle.. aside from politics of obstruction and denial.
You're right. Tea Partiers have asked Boehner for more debt.
The point I was trying to make was that they were on different sides of the table this time than they were last time. Look it up.
The rest of what I said is perfectly correct. The parties in the US benefit more by allowing the party in power to fail than to succeed. The beauty of a perversely flawed political system.
I think this sums up the direction of the USA:
gwynnedyer.com/2011/th.../
"When President Obama cancelled the “Constellation” project in 2010, he talked about doing things in a “smarter way,” and how private enterprise would develop “space taxis” that would put people into orbit more cheaply. In reality, however, he was ending federal government support for manned space flight – though he did promise to invest a little more than a billion dollars a year in those “clever” private companies.
That is not serious money: the US defence budget gets through that much every twelve hours."
This is fairly representative of the direction of the US.
The actual difference is one wants a blank check. If the Republicans really wanted Obama to fail as you claim, they'd go along with his request. The ratings agencies have made it clear the issue is not raising the debt ceiling which is a given. It's that the reduction in spending increases proposed isn't sufficient to retain the current US rating, and that the growth in the debt (and debt servicing) must be brought down below GDP growth. The consequence of giving Obama what he wants is rates rise, the cost of servicing the debt rockets, the economy stalls and falls, and Obama faces an angry electorate in 2012.
I say go for it if that's what you want. The pain would probably be worth getting rid of the child King.
Meanwhile, the rating agencies have already said that unless there is a minimum cut of $4 trillion in the next decade, a downgrade will be inevitable. Right now, we're only at $2 trillion, so the downgrade is coming. Book it.
And that alone will spike rates a minimum of 50 bips which will make all Obama's wonderful 'investments'(or should I say 'borrowings' of the future taxpayer) that much more expensive to service.
The guy in the white house is very close to an emotional white lab coat crack up. There never was any logic here since 2009. His prompter feed writer is a damn twentysomething year old. Meet the 'leader of the free world', some white frat boy reject scribbling boring Hallmark drivel. Its no wonder we are where we are.
Shorted some oil today going into the close (USO puts) tempted to go long the dollar, (i think a deal gets done before the weekend) and if we get a nice drop over the next few anxious days might be a good time to go long the s&p on friday.
That aside...if the risk free rate gets downgraded, that means (according to theory) that all other securities that are priced based off of the risk free rate will have to be re-rated. If you don't think that alone will have major reprucussions for global financial markets, which we have seen are increasingly interconnected, and thus more risky...well, then, I dont know what to tell you. But it will be a major credit event.
I hope I'm wrong, but regardless, the clowns in DC will make a deal anyway.
I continue to think that we suck less. At least for now.
Regrettably, it may be wasted here, but, you might make 'em twitch a little bit. I love it when they twitch.
A true communist country would not be reporting national statistics as the factors of production and land would be communally owned by the people. They would be happy little farmers growing potatoes and living happily every after.
We do suck less than any other country that is borrowing money. We are talking about credit worthiness here.
discardedlies.com/entr...
Those damned socialists think they're so special with their stable economies, free university and free health care.
Why can't they be more like Ireland and Iceland..
Its what all the failed nations have done. Canada, almost went bankrupt before they got a clue and Can Royed up, then sold their energy to us. Smart. Russia's been siphoning oil ever since they imploded. Lazy, uncreative yet smart. Hey, its all they got.
Saudi Arabia, Iran, Venezuela... dictators, thugs, failed theocratic societies all in their crappy sandboxes sucking out oil and selling it to us.
Meanwhile, we prop up all those failed societies and buy it. We sponsor terrorism, dictators and failed lazy dynasties like the HOS in KSA. Crappy little hellholes with zero innovation and zero creativity. They can even fund their own socialism using natural resources.
But not here in the Good Old. We have the EPA keeping us dependent slaves. We have the EPA running up our trade deficit. Gee, thanks EPA! We have the EPA forcing us to fund terrorism by purchasing Iranian and KSA oil. Its utterly insane.
And Norway. Quaint, pure, xenophobic Norway. The trust fund kiddies who make Paris Hilton look like a damn entrepreneur.
The only thing you have working for you is doom metal and those little knives for your cheeses.
And Sweden? Really? Highest corporate taxes in the world. It funds their socialism. Plus, none of these wonderful societies have any militaries. That's what we're for I guess. To bail out their sorry asses. Great. The American taxpayer always on the hook, never given a rest. Meanwhile, they get to pretend to be socialists because our wonderful taxpayers(and increasingly Chinese debt holders) prop up their lovely 'free' dental plans.
LOL.
You do have a bitter take on the world out there.
BTW if you think that Canada saved its bacon because it "got a clue and Can Royed up" you don't have a clue what happened there over the past15 years.
Now talk to me about Kuwait.
If only the US had as much common sense. But, we don't. Instead we have the EPA and proto-marxist skum in Congress.
We in Canada have been tapping our natural resources since day one. Our fiscal austerity initiative included significant tax increases as well as significant monetary easing and was undertaken in the context of a buoyant international market for thing Canada produced. Timing is everything and you use all avenues in a coordinated non-ideological way to get through a restructuring as difficult as that.
Canada also ended the tax breaks related to the Can Roys.
The ME, OTOH, is entirely different. We helped them & turned them into oil welfare states.
But for the hardscrabble Odin wannabes, I'll give Norway credit for not needing a hand and have held STO off and on for years. But that's all they have. Stick straws in the ground. Pull up liquid money. Besides that, not much. Nat. resources are all that's left, & its a good thing there's that, eh?
Instead, you want to call anyone who won't let you steal the Earth a socialist and anti-freedom. It's not silly. It's dangerous.
And no, you're not a socialist. Socialists are just communists in drag. You're a marxist. Use the word.
Calling me a right winger - you really know how to hurt a guy!
For what it's worth,
(a) It was the Liberal Party that brought of fiscal austerity in mid 1990s Canada (and they did a fairly good job of it without a lot of anti-tax baggage).
(b) At the time I thought the Liberal Party went too far too fast at unnecessary cost to our social programs like universal health care funding (I'm a social democrat and not a liberal you see).
(c) While not convinced that my 1995 concerns were misplaced, I'll grant that the Liberal Government, on balance, took the correct move at an appropriate time.
(d) Political figures of what is now Canada's Conservative Party were in the mid 1990s advocating that Canada radically deregulate its financial sector and otherwise 'free the markets' in ways that the US under Presidents Clinton and later Bush II were adopting and which, I would suggest, have not worked out (to put it mildly).
(e) The Conservative Party, after coming to power, was constrained by circumstances from really pursuing their radical version of free market public policy and may have mellowed somewhat. In any event they have essentially followed in the policy footsteps of the pro-business wing of the Liberal Party.
Yes Canada has some Tea Party types but we keep them on the margins of power where they can make sometimes useful criticism but do little real harm.
You think Canada got "Tea Party Religion" and that saved Canada??
I can now discount everything out of your mouth as utter idiocy. Thanks for clarifying.
The tea party is nothing more than a group of angry individuals that see the death of government and taxation as necessary. If it weren't for the support of nuts like Hannity, Beck, Limbaugh and every Neo-con on conservative radio it would have already died. Ideologically they are empty. Every interview I have seen done by any media with these people shows they know almost nothing about economics, politics or world affairs.
I hope Ron Paul can shake some sense in to this group.... currently there is none.
WRT the EPA.... I'm guessing you want to drive cars with leaded gas?? Comical.
Low taxes. High growth(natch resource exploitation). And shrinking government.
Tea Party by every definition of the movement.
The exact opposite of lefty bullcrap.
And what happened to Canada?
I'll let you guess.
I love this gem though.
"d) Political figures of what is now Canada's Conservative Party were in the mid 1990s advocating that Canada radically deregulate its financial sector and otherwise 'free the markets' in ways that the US under Presidents Clinton and later Bush II were adopting and which, I would suggest, have not worked out (to put it mildly)."
Canada never was pushed into subprime like our ridiculous government here. They always demanded 20% minimums down. The Canadian government never felt like they owed it to their voters to provide them with housing. So, they kept out of coercion of the financial sector. Unlike here in the States where regulation has been rampant.
We draw the same conclusions. You're just messed up in the head as to the source. Its not government that's your savior. If anything, our saving grace comes from the freedom to succeed or to fail. That is what our government here has increasingly removed which will only encourage far worse problems.
I didn't know you were a tea partier Bob. Its good to know. I'm not one, but may check them out now. Thanks.
You don't know much about Canada's residential housing market. The Federal Government here is heavily involved through the Central Mortgage and Housing Corporation that insures most residential mortgages and has done so since shortly after WW II. We also had an equivalent to the US TARP program whereby in early 2009 the Federal Government purchased residential mortgage portfolios from our Chartered Banks to the tune of about $66 billion dollars (remember that the US population and economy is about 10 times the size of those of Canada) to maintain domestic credit liquidity in face of the global credit freeze or crunch following the 2008 global meltdown.
The difference was that both the banks and the terms for insuring these mortgages were better regulated and secured than had been the case in the US and, because the borrowers generally could service their mortgages and had every incentive to do so, the system worked. Because the system worked, the housing market did not collapse, Canada suffered only a mild and short recession and our banking system and fiscal situation remain reasonably sound.
That said, the credit for all this from a political and public policy standpoint rests with Canada's Federal Liberal Party. The Conservative Party which succeeded it as Government was in the course of dismantling some of the very safeguards to which I allude above (because they thought that US style deregulation was the way to make the economy roar) but they were in office only for a couple of years when the US excesses were becoming obviously problematic as 2006 wore on and, wisely, the Conservatives slowed and somewhat reversed their deregulation efforts. Thus the system worked throughout the recession.
The Conservatives did encourage consumers to mortgage and borrow heavily as a domestic antidote to the global recession (this was also politically popular and helped them finally win a majority in the Federal Parliament earlier this year after over 8 years as a minority government. The question now is whether the Conservatives went too far in encouraging consumer indebtedness and a residential housing price boom and, consequently, whether,this will cause problems if the global economy softens.
In short Wyatt, the Canadian Government has always played a big roll in the financial industry and housing market and the timing and effect of efforts by the Liberals and the Conservatives to change the exercise of that role differs considerably (as does the effects of these shifts in policy) than you appear to believe.
I should add that I belong to and support a third Party, the NDP, which is generally to the left of the Liberal Party so I don't make the observations about the Liberals or Conservatives out of loyalty to either.
I don't care if you call it the Tea Party, the John Birch Society or the Boy Scouts of America. Call it the Maoist insurgent guerrilla organization of the Shining Path. I don't care. I'm not into labels. Just actions.
You however are a political lapdog cheerleader and define things given to you in media soundbites, clichés and easy to remember 4Chan memes. You repeat stupidities.
Face it. Austerity works. Say it. Austerity shores up currencies. Repeat a new meme, from your liberal Canadian tea partiers like Paul Martin, that shrinking the size of government is good. Its okay turbo-lefty. You can admit it tea party poster boy.
Increasing the size of government slows growth, expands corruption and fraud, creates high unemployment and ruins the currency.
Decreasing the size of government overreach expands GDP and employment, lowers bubble formation, hardens the currency and attracts global capital.
Right now, we have low interest rates because the Helicopter is married to WDC's fiscal debt load and is floating it. WDC in turn uses that cheap credit to promise more free crap to stupid people. The cycle entrenches itself. Meanwhile, granny on fixed income starves. Big government is, quite literally, starving grandma on fixed income in order to buy votes from dumb people and eventually ruin our credit rating.
Yeah, you're for all that. Big Goobermint is great, eh cheerleader?
Print up this post, then go sit in your tea party pews and recite it until it sinks in beyond your lazy Jon Stewart rhetorical diarrhea. Sound good?
I should have added to my earlier comments that while the efforts of Paul Martin and Jean Chretien did slow the growth of the public sector somewhat during the 1990s, the Canadian public sector remains an important and large component of the Canadian economy. This also has helped balance the brief downturn in the private sector during 2009.
The concern now is that the Federal and Provincial Governments will embark on significant downsizing of the public sector now and over do this.
Andrew Mellon was wrong. en.wikipedia.org/wiki/...
Politicians believe in what gets them votes. Period.
"Mellon's policy reduced the public debt (largely inherited from World War I obligations) from almost $26 billion in 1921 to about $16 billion in 1930, but then the Depression caused it to rise again. By 1935, Franklin Roosevelt had gone back to high tax rates and wiped out Andrew Mellon's initiatives. The top tax rate went to 80% by 1935 and the federal government increased excise taxes in an attempt to make up for the lost revenue"
That's from your link....
Yes the debt to GDP ratio was reduced by around 40% over the period in question. The important point, however, is that it was done
(a) in steady increments over an extended period
(b) by significant tax increases as well as program reductions,
(c) aided by expansionary monetary policy and resulting domestic currency devaluation to cushion the otherwise deflationary impact of the fiscal austerity, and
(d) in global economic circumstances where growing foreign demand for Canadian products counterbalanced reductions in domestic demand caused by fiscal austerity.
While some social programs were curtailed (squeezing public housing and funding for universal health coverage being two areas that caused unnecessary reductions in social benefits), you wildly overstate the negative impact (which you with your usual perversity see as positive) that occurred.
As a Canadian I have mixed views about the nature and extent of the austerity policies adopted by our Federal Government under the Liberal Party in the decade following 1994. On the other hand, I must allow that it did achieve several of the goals for which it was launched. Further, the fact that these goals were achieved made it possible for ambitious domestic expansion policies to be adopted following the 2008 global meltdown thereby making the domestic recession relatively mild and short.
Why do you believe the policy failed? Wouldn't the answer to that question depend in part on what one expected from such a program?
www.fin.gov.on.ca/en/b...
This guy below is hysterical, but my mouth begins to water starting on page 10.
Enjoy.
auspace.athabascau.ca:...
The author is ridiculous, but hey he's entitled to be a typically foolish liberal.
Check this one out, from the archives, 1990 NYT.
www.nytimes.com/1990/0...
Shows you how the roles were reversed back in the day, but it also shows you what we're headed towards here in the States over the next 5 years.
Higher taxes aren't the answer.
en.wikipedia.org/wiki/...
The CMHC definitely protected Canada from the US housing bubble. Socialist sure... but it definitely worked. Canada housing price average in feb 2011 at 365K.
www.livingin-canada.co...
www.realestateabc.com/...
In the US it appears it's closer to 200K....
Thats quite a difference. Definitely easier to get a loan for a car... or retire securely with that backing you. Free health care is a nice kicker.
Anyways drunken sailor spending does not work as that is a train wreck. Severe austerity is not helpful but knowing this country we can only go from one extreme to the other. We have a hard time settling in the middle.
You have been busy!
Turning to your third link first. It is true that the Federal Progressive Conservative Party Government under Prime Minister Brian Mulroney was faced with two great challenges: (a) structural fiscal deficit, and (b) strong regional resistance to the scope of Federal Government power under the Canadian constitution (most seriously a very strong separatist movement in Quebec). Essentially, they failed to adequately address either of these challenges and, under Mulroney's successor as PM, Kim Campbell, the Progressive Conservatives under lost all but two of their seats in Parliament (the Canadian electoral system allows for dramatic swings from election to election.
The 1990s were a particularly difficult time economically and fiscally in Ontario, Canada's industrial heartland, and the struggles of that period are discussed in your second link. The fact that the hard line Progressive conservative Party came to power in 1995 opened the way politically for the Federal Liberal Party to adopt austerity as the new Ontario Government would not oppose this initiative. Further, the rise of the new more right of centre Reform Party out of the wreckage of the old Federal Progressive Conservatives also served to create political room for the Liberal National Government to adopt austerity as only the Quebec