Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
What a farce. The fact is that the Republicans control the House. That means that under the Constitution they control the expenditures of the federal government.
If they want to cut the budget they have the means to do so.
Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
The debt ceiling is a wonderful political talking point which provides employment for legions of talking heads and political comedians. Aside from that it isn't worth a hill of beans.
Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
The problem is that if you don't raise taxes and insist on a balanced budget (which is what forcing no debt increase without default) there is the stark gap between revenues of 2.6 T and a budget of 4.0 T.
1.4/4.0 = .35
This means a 35% cut across the board in federal government expenditures is needed. But wait, it is worse than that because we are not cutting debt payments. Those are currently about 0.2T per year not counting the accrual of debt from the rape of the Social Security trust fund.
So really we would need about a 40% across the board cut. 40% cut in grandma's SS check. 40% cut in defense spending. 40% cut in medicare.
Etc.
Anyone who tells you that this is possible in a period of one month without causing rioting in the streets ala Greece and a crushing depression is stark raving mad. To me the fact the Republican leadership is floating this idea just shows that they have lost any perspective on what is necessarily to operate the USA going forward.
If a CEO was running the show in the U.S., the option on the table would be to raise taxes and cut spending at the same time, Buttonwood writes. It's not only the rapid pace of government spending that has led to ballooning deficits, but tax receipts have fallen off since 2000. Will anyone in Congress dare suggest the idea? [View news story]
Tax rates have been on the decline since 2000. Now how has that worked out?
Proponents say a repatriation tax break could be "the next stimulus," inducing multinational corporations to inject at least $1T into the economy. But that’s not how it worked in 2005, when the U.S. offered companies a similar tax incentive. Though they brought $312B back to the U.S., 92% of the money was returned to shareholders in the form of dividends and stock buybacks. [View news story]
Returning money to me would be pretty stimulating.
The potential for a persistent slowdown in hiring is the biggest threat to the U.S. recovery, according to economists in the latest WSJ forecasting survey. On average, the economists expect the economy to add ~2.2M jobs over the next 12 months - down from last month's forecast of 2.5M, and the first time the forecast has been lowered since October. [View news story]
This is the fundamental weakness in capitalism. Efficiency through automation means fewer workers are needed to supply the material goods needed for civilized life. The US has the world's largest manufacturing and food production levels, yet these economic activities employ a mere 12% of the work force. The rest is kerfluffle redundancy and yes waste. Services, government etc. which can be cut without affecting much of anything.
RealD Inc. (RLD -12.5%) takes a hit after CEO Michael Lewis fails to ease analysts concerns over volatility in 3-D movie viewer percentages and steep declines in ticket sales for recent blockbuster releases Kung Fu Panda and Pirates of the Caribbean. [View news story]
Movies are about having a compelling story and showing a quality image on a screen.
3D does not make the story better and actually degrades the quality of the image. It's a fad that comes and goes every 20 years (generation of moviegoers). We are in the goes phase now.
May Payroll Weakness: Soft Patch, Or Something More Serious? [View article]
The scary thing to me is that I think energy prices are the thing that is putting the cap on growth. As soon as things look like they are gathering momentum oil shoots up and then everything goes to hell. This is going to be a big issue for a while because nobody is going to invest in more efficient infrastructure when capacity utilization is so low.
Greeks Grab Their Money From the Banks: Time Is Running Out [View article]
Exactly what is Greece's incentive to not restructure? If they don't restructure they won't be able to borrow, if they do, they won't be able to borrow.
"Year-on-year growth of Greek exports – one of the bright spots in the economy in recent quarters – the current account deficit is shrinking accordingly. This is a sign that competitiveness has improved – click for higher resolution."
This article is full of post hoc ergo propter hoc errors such as the above. There is no direct evidence that Greece is becoming more competitive, just silly attempts at correlation that do not imply causation like the above. The fact is that consumption and wage costs in Greece has fallen through the floor due to austerity, and the world economy is improving. Those two factors, NOT Greek competitiveness account for improvement in exports and the decline in the current account deficit.
Long Weekend Roundup: Barron's Is Dead Wrong on Oil [View article]
Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
If they want to cut the budget they have the means to do so.
What are they waiting for?
Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
Pres. Obama's biggest challenge in reaching a debt ceiling deal is staring down Republicans intent on "distortion pure and simple," Paul Krugman writes. GOP leaders don't really care about the debt; they're out to destroy Obama. "Failure to reach a debt deal would have very bad consequences, [but he] must be prepared to face those consequences if he wants his presidency to survive." [View news story]
1.4/4.0 = .35
This means a 35% cut across the board in federal government expenditures is needed. But wait, it is worse than that because we are not cutting debt payments. Those are currently about 0.2T per year not counting the accrual of debt from the rape of the Social Security trust fund.
So really we would need about a 40% across the board cut. 40% cut in grandma's SS check. 40% cut in defense spending. 40% cut in medicare.
Etc.
Anyone who tells you that this is possible in a period of one month without causing rioting in the streets ala Greece and a crushing depression is stark raving mad. To me the fact the Republican leadership is floating this idea just shows that they have lost any perspective on what is necessarily to operate the USA going forward.
If a CEO was running the show in the U.S., the option on the table would be to raise taxes and cut spending at the same time, Buttonwood writes. It's not only the rapid pace of government spending that has led to ballooning deficits, but tax receipts have fallen off since 2000. Will anyone in Congress dare suggest the idea? [View news story]
Market recap: It was all about relief over Greece's austerity vote, as investors exhaled to push stocks higher for a third straight session. Banks bounced back on BofA's mortgage settlement. Visa and Mastercard surged after the Fed raised the swipe fee cap. Treasurys tumbled, and crude oil rallied on falling inventories. NYSE advancers led decliners seven to six. [View news story]
Proponents say a repatriation tax break could be "the next stimulus," inducing multinational corporations to inject at least $1T into the economy. But that’s not how it worked in 2005, when the U.S. offered companies a similar tax incentive. Though they brought $312B back to the U.S., 92% of the money was returned to shareholders in the form of dividends and stock buybacks. [View news story]
Want to Become a Successful Investor (Even in This Environment)? Here's What It Takes [View article]
The potential for a persistent slowdown in hiring is the biggest threat to the U.S. recovery, according to economists in the latest WSJ forecasting survey. On average, the economists expect the economy to add ~2.2M jobs over the next 12 months - down from last month's forecast of 2.5M, and the first time the forecast has been lowered since October. [View news story]
Procter & Gamble Still a Strong Buy After All This Time [View article]
As Albert Einstein once said, the most powerful force in the universe is compound interest.
RealD Inc. (RLD -12.5%) takes a hit after CEO Michael Lewis fails to ease analysts concerns over volatility in 3-D movie viewer percentages and steep declines in ticket sales for recent blockbuster releases Kung Fu Panda and Pirates of the Caribbean. [View news story]
3D does not make the story better and actually degrades the quality of the image. It's a fad that comes and goes every 20 years (generation of moviegoers). We are in the goes phase now.
RLD is a great short.
May Payroll Weakness: Soft Patch, Or Something More Serious? [View article]
Very worrying stuff.
Greeks Grab Their Money From the Banks: Time Is Running Out [View article]
Krugman Is Wrong About Austerity [View article]
This article is full of post hoc ergo propter hoc errors such as the above. There is no direct evidence that Greece is becoming more competitive, just silly attempts at correlation that do not imply causation like the above. The fact is that consumption and wage costs in Greece has fallen through the floor due to austerity, and the world economy is improving. Those two factors, NOT Greek competitiveness account for improvement in exports and the decline in the current account deficit.
Better Real Estate Investing: 4 High Yield REITs (For the Short- to Medium-Term) [View article]