A disgusting political move

[GeorgiaDon 362]

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Obama is unbelievable!!!!

Did you read the complete article? This device, a temporary suspension of payments into the G-Fund, has been done six times over the past 20 years.

And that makes it right?

Apparently so, but only when a Republican is in the White House. Otherwise it's evil incarnate.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[Andy9o8 2]

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Obama is unbelievable!!!!

Did you read the complete article? This device, a temporary suspension of payments into the G-Fund, has been done six times over the past 20 years.

And that makes it right?

I didn't say that.
I was responding to the previous poster's pinning it on "Obama is unbelievable!!!!", when in fact Administrations of both parties have done it. Some things are best judged as "good or bad policy" regardless of partisan factors. In this forum, if you're going to take a partisan tack in bashing a president for a policy, it's prudent to first check whether a president from the other party has done the same thing. Otherwise you risk getting called on it.

[rushmc 23]

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Obama is unbelievable!!!!

Did you read the complete article? This device, a temporary suspension of payments into the G-Fund, has been done six times over the past 20 years.

And that makes it right?

I didn't say that.
I was responding to the previous poster's pinning it on "Obama is unbelievable!!!!", when in fact Administrations of both parties have done it. Some things are best judged as "good or bad policy" regardless of partisan factors. In this forum, if you're going to take a partisan tack in bashing a president for a policy, it's prudent to first check whether a president from the other party has done the same thing. Otherwise you risk getting called on it.

A person has got to wonder if any president of any party will every have the principals to stop this kind of crap

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[billvon 2,998]

>A person has got to wonder if any president of any party will every have
>the principals to stop this kind of crap

(I assume you meant "principles")

The problem is they'd have to buck the will of the people to do it and thus guarantee their loss in the next election. You'd really need a president in their second term where they don't have to worry about how much people will hate it. (And of course the next president of the other party is guaranteed election running under the slogan of "fix our broken government and vote out the people who broke it!")

[rushmc 23]

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>A person has got to wonder if any president of any party will every have
>the principals to stop this kind of crap

(I assume you meant "principles")

The problem is they'd have to buck the will of the people to do it and thus guarantee their loss in the next election. You'd really need a president in their second term where they don't have to worry about how much people will hate it. (And of course the next president of the other party is guaranteed election running under the slogan of "fix our broken government and vote out the people who broke it!")

Sorry, I did mean principles.

But I dont follow your line

what will of the people are you talking about?

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[billvon 2,998]

>what will of the people are you talking about?

When the government shuts down and people lose schools, garbage collection, passport services, road maintenance etc then they'll get upset. When they can't pay the TSA and have to start shutting down airports they'll get even more upset. And they will all demand that SOMEONE DO SOMETHING! And the person who promises to do something will win the next election.

People all say they want the government to spend less. But if the choice is to have the government spend less or be able to send their kids to school, or visit Aunt Bettie, they'll go with the extra spending almost every time.

[rehmwa 2]

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>they'll go with the extra spending almost every time.

easy choice every time when it's someone else paying for it

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[billvon 2,998]

>easy choice every time when it's someone else paying for it

Exactly. It's the classic prisoner's dilemma. Do they make lots of small decisions that benefit them slightly, and that other people pay for? Or do they make one big, painful decision that hurts them in the short term but might benefit them in the long run?

A president could make that call - veto every budget that comes his way. (Ron Paul is the only candidate I can think of who would try.) But he'd be booted out of office pretty quickly. Would that 3 years be enough to change spending habits? Probably not, but it might be worth a try.

[rehmwa 2]

however, I do think Paul would provide a budget anyway


4 years wouldn't be enough to change spending habits - I think if we got a truly sincere fiscal conservative in office (if any really exist in a system that exercises power through spending) that the congress would just batten down the hatches and weather that storm - rather than actually choose to change behavior

...
Driving is a one dimensional activity - a monkey can do it - being proud of your driving abilities is like being proud of being able to put on pants

[wmw999 2,452]

Yep, only in the face of external crises (e.g. 9/11, WW2) do we as a nation seem to be willing to make big(ish) changes quickly. And even then we're more than willing to revert to our "old" ways.

In an internal crisis such as the recent financial meltdown, those who aren't affected seem to think that it's mostly by virtue of their superior decisions, and those who are, by virtue of their inferior luck (or others' depravity).

Wendy P.

There is nothing more dangerous than breaking a basic safety rule and getting away with it. It removes fear of the consequences and builds false confidence. (tbrown)

[billvon 2,998]

>In an internal crisis such as the recent financial meltdown, those who aren't affected
>seem to think that it's mostly by virtue of their superior decisions, and those who are,
>by virtue of their inferior luck (or others' depravity).

I think I'd go with "other's poor decisions" there. Everyone wants to be the protagonist in their own story.

Mortgage crisis? That wasn't people taking out mortgages who couldn't pay them back, because I took out a mortgage and I don't want to blame "my side" for it. It was the banks.

[skydiver604 0]

Yup, did further research and see your point that past presidents have done the same thing, so I'll retract the Obama is unbelievable statement
After reading the other posts I can understand why this practice is allowed to continue.

It does remind me of my old VISA credit card, when I reached the top end of my credit limit VISA would actually phone me and say " we've noticed your balance is at it's limit and you're a great customer so we've increased your limit by $2000, have a nice day.

"The greater danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it." - Michelangelo

[kelpdiver 2]

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In an internal crisis such as the recent financial meltdown, those who aren't affected seem to think that it's mostly by virtue of their superior decisions, and those who are, by virtue of their inferior luck (or others' depravity).

Indeed. I was on the wrong side of affairs in the 2001-2002 dustup, and on the right side of it in the more recent one. Primary lesson learned is that in troubled times, the big unfriendly company is a safer harbor than an exciting startup.

When you're well employed, there are a lot of economic opportunities in a downturn. When you're not, not only can't you take advantage of them, you have to sell your assets at their worst price.

[ShcShc11 0]

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How high should it be allowed to go?

http://news.yahoo.com/treasury-dips-pension-funds-avoid-debt-limit-202850021.html

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Treasury dips into pension funds to avoid debt

ah rushmc.
A lot of judgment, yet without understanding how a country's economy works.

A country's debt should not and cannot be seen as the equivalent of a family/company debt. Its just not the same.

The U.S has its own currency and should take advantage of it to build the economy.

You know who can't and who are desesperatly trying to dumb down their debt at the expense of their economy? Europe. Tell me which of these country's expansionary austerity actually worked.

Cheers.

[skydiver604 0]

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How high should it be allowed to go?

http://news.yahoo.com/treasury-dips-pension-funds-avoid-debt-limit-202850021.html

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Treasury dips into pension funds to avoid debt

ah rushmc.
A lot of judgment, yet without understanding how a country's economy works.

A country's debt should not and cannot be seen as the equivalent of a family/company debt. Its just not the same.

The U.S has its own currency and should take advantage of it to build the economy.

You know who can't and who are desesperatly trying to dumb down their debt at the expense of their economy? Europe. Tell me which of these country's expansionary austerity actually worked.

Cheers.

I fail to see your logic here, IMHO a country should be run as a business, controls need to be in place to regulate spending so that money going out or being spent is less than or at least equal to money coming in (income tax, personal tax and business / corporate taxes), when you get to the point that spending is greater than cash coming in there are 3 things that can or need to happen, 1) Reduce spending to the point where it is equal or less than cash coming in. 2) Increase taxes to increase cash coming in. 3) Borrow money (increase debt) to cover costs of spending, of course if 1 and 2 remain the same then down the road you need to borrow money again (increase debt again) to cover costs of spending, unless changes are made to 1 and 2 then option 3 becomes cyclic thus causing the debt to spiral out of control, of course as your debt increases the interest charges increase thus increasing your spending, sounds like a vicious cycle leading to financial disaster. Not the type of position any country, business or family or person would want to be in.

"The greater danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it." - Michelangelo

[rushmc 23]

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How high should it be allowed to go?

http://news.yahoo.com/treasury-dips-pension-funds-avoid-debt-limit-202850021.html

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Treasury dips into pension funds to avoid debt

ah rushmc.
A lot of judgment, yet without understanding how a country's economy works.

A country's debt should not and cannot be seen as the equivalent of a family/company debt. Its just not the same.

The U.S has its own currency and should take advantage of it to build the economy.

You know who can't and who are desesperatly trying to dumb down their debt at the expense of their economy? Europe. Tell me which of these country's expansionary austerity actually worked.

Cheers.

I fail to see your logic here, IMHO a country should be run as a business, controls need to be in place to regulate spending so that money going out or being spent is less than or at least equal to money coming in (income tax, personal tax and business / corporate taxes), when you get to the point that spending is greater than cash coming in there are 3 things that can or need to happen, 1) Reduce spending to the point where it is equal or less than cash coming in. 2) Increase taxes to increase cash coming in. 3) Borrow money (increase debt) to cover costs of spending, of course if 1 and 2 remain the same then down the road you need to borrow money again (increase debt again) to cover costs of spending, unless changes are made to 1 and 2 then option 3 becomes cyclic thus causing the debt to spiral out of control, of course as your debt increases the interest charges increase thus increasing your spending, sounds like a vicious cycle leading to financial disaster. Not the type of position any country, business or family or person would want to be in.

thanks for responding to this post

I mean that

Thanks

"America will never be destroyed from the outside,
if we falter and lose our freedoms,
it will be because we destroyed ourselves."
Abraham Lincoln

[ShcShc11 0]

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I fail to see your logic here, IMHO a country should be run as a business, controls need to be in place to regulate spending so that money going out or being spent is less than or at least equal to money coming in (income tax, personal tax and business / corporate taxes), when you get to the point that spending is greater than cash coming in there are 3 things that can or need to happen, 1) Reduce spending to the point where it is equal or less than cash coming in. 2) Increase taxes to increase cash coming in. 3) Borrow money (increase debt) to cover costs of spending, of course if 1 and 2 remain the same then down the road you need to borrow money again (increase debt again) to cover costs of spending, unless changes are made to 1 and 2 then option 3 becomes cyclic thus causing the debt to spiral out of control, of course as your debt increases the interest charges increase thus increasing your spending, sounds like a vicious cycle leading to financial disaster. Not the type of position any country, business or family or person would want to be in.

Thank you for your post.
It is much more elaborate, but your post summarizes exactly a common fallacy.

The whole notion that:
"a country should be run as a business"

Running a business is NOTHING like running a country. Macro-economic policies are nothing like the strategies a business take.

I support Bain Capital and venture capitalists even if they have to cut and slash employees because it make the company "leaner and more competitive". It is however absolutely devastating if you apply that concept to a country.

WHY IS THAT?
A major major point about running a country is that people who work are also consumers. Most of the things we buy also help U.S workers.

NO business sells their products to their worker while even the [B] SMALLEST [/B] countries in the world sell at least 70% of their productions to themselves.

America sells approximately 85-90% to themselves. Even if the product in question "is made in China", it supports other American activities such as transport, retailing, etc...

This whole concept of running a country is like running a business is absolute bull. Austerity (cut & save) sounds sensible, except your cutting your own legs. The investors are worried about low growth and de-flation, but people keep on persisting its the debt.

Anyway, look up Japan 1990's lost decade and see what happens when you cut & slash during a liquidity trap.

Cheers!
Shc

[ShcShc11 0]

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How high should it be allowed to go?

http://news.yahoo.com/treasury-dips-pension-funds-avoid-debt-limit-202850021.html

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Treasury dips into pension funds to avoid debt

ah rushmc.
A lot of judgment, yet without understanding how a country's economy works.

A country's debt should not and cannot be seen as the equivalent of a family/company debt. Its just not the same.

The U.S has its own currency and should take advantage of it to build the economy.

You know who can't and who are desesperatly trying to dumb down their debt at the expense of their economy? Europe. Tell me which of these country's expansionary austerity actually worked.

Cheers.

I fail to see your logic here, IMHO a country should be run as a business, controls need to be in place to regulate spending so that money going out or being spent is less than or at least equal to money coming in (income tax, personal tax and business / corporate taxes), when you get to the point that spending is greater than cash coming in there are 3 things that can or need to happen, 1) Reduce spending to the point where it is equal or less than cash coming in. 2) Increase taxes to increase cash coming in. 3) Borrow money (increase debt) to cover costs of spending, of course if 1 and 2 remain the same then down the road you need to borrow money again (increase debt again) to cover costs of spending, unless changes are made to 1 and 2 then option 3 becomes cyclic thus causing the debt to spiral out of control, of course as your debt increases the interest charges increase thus increasing your spending, sounds like a vicious cycle leading to financial disaster. Not the type of position any country, business or family or person would want to be in.

thanks for responding to this post

I mean that

Thanks

I understand the things I said sounds a bit rude, but it is the truth.

You call this as "disgusting & politics" when you have no clue how the economy works. This is the same league as people from "Occupy Wall Street" who are demanding things that are fatal to the economy (e.g: Banks Money:Lending to 1:1 ratio).

I will be happy to argue with you with the numbers as long as you are willing to do the same.
But yes, I have nothing against you. Just have something against your misconceptions.


Cheers.

[ShcShc11 0]

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Note to all grandkids, now and future:

Drop dead, suckers !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

You know what's funny? Actions speak louder than words. Investors are parking their money into the U.S. The investors still see the U.S as a super-safe haven.

See for yourself:
http://www.bloomberg.com/apps/quote?ticker=USGGT10Y:IND

-0.09 Negative Interest Rate.
The U.S is far from bankruptcy. What matters now is the sluggish economy and they need to get the American economic engine running again.

They can borrow money with little to no repercussions while the additional money will help the U.S get out of its liquidity trap.

Just needed to bury this notion that the "U.S have no money left to borrow/ America is bankrupted / we must cut deficit NOW!".


Cheers.

[ShcShc11 0]

And I hope people will also look back at TARP and the bank bailouts. It is probably one of the most important action taken in the past decade.

Remember, they were both a Republican / Democratic action. Bush-Henry Paulson and Obama-Tim Geithner... so this isin't about politics.

The whole point was to save the banks by essentially throwing money (aka more debt) and prevent a confidence collapse.


What's funny is that some leftists such as Michael Moore said "Bush is a crook. He's stealing American money before the end of his term!". Then Obama does the same thing and says nothing.

Then the extreme-rightists says that "Obama is bankrupting America with big Government helping the banks", but said/says nothing about Bush' TARP.

TARP is still widely unpopular yet it is probably THE legislation that saved the U.S from a complete economic collapse. I hope we remember the times when Citi went from 30$/share to 1$/share , AIG from 1400$/share to 6$/share , Bank of America from 60$/share to 3.50$/share, etc...


So its just funny when I keep seeing "this is a political move! Obama is taking over!". Its nonsense that keep repeating itself over and over again


Anyway...
Hugs & Cheers!

[ShcShc11 0]

Ok I just got bitten by the economic bug ...

I just want to show that "Yes, Government making more debt can be beneficial... VERY beneficial" and that its nothing like a family debt/business debt.

Consider this, from an article titled “Liquidity Crises – Understanding sources and limiting consequences: A theoretical framework,” by Robert E. Lucas, Jr. and Nancy L. Stokey:

In studies conducted by Nancy Stokey and Robert Lucas, the WHOLE banking system held approximately 50 billion $ in cash by August 2008. The banking system was clearing about 2.9 to 3 trillion $ PER DAY. This wouldn’t be so bad if the contracts said “We’l pay IF we have money”. No, most of the trades involved the promise to pay somebody in hard cash based on the contracts given. Banks would therefore have to rely heavily on the repo market to pay them back in these hard cash. If a certain bank or financial institution cannot pay back and this becomes public information, then the bank will go under through a bank run. Having 50 B$ for 3 trillion $, there is no margin for error.

Even the slightest doubt in the quality of the collaterals traded in the repo market could break the system. Guess what? 2008 was it.

SOME GRAPHS/NUMBERS

GRAPH 1
http://av.r.ftdata.co.uk/files/2011/12/NomuraChart1.png

GRAPH 2
http://av.r.ftdata.co.uk/files/2011/12/NomuraChart2.png

The basic summary:

Having basic good capital wasn't the sole problem behind the 2008 crisis. Lehman and Bear Stearns fell because brokers who had the power over their short-term financing started to worry about the collateral that was promised to them.

When confidence over the banks went poof, then financial institutions as old as Lehman will fall easily.
If the whole financial institution is put in doubt then all the large banks will become exposed to bank runs.

Point is, when confidence fell out of flavour, the Obama administration took the major steps necessary to restore this confidence. The Government was the back-stop in the relation. This is debt that is being used for good use. What do you think is going to happen if the Government said "no, we'l step back and cut our way out of this"?

The Government realized this situation and took the appropriate steps with TARP/Stimulus. This is what economists mean when they say the administration stopped the economy from a freefall. Its not big enough to bring unemployment to 4%, but it is big enough to have it stabilized in the 9-11%.


anyway...
cheers again.

[skydiver604 0]

It sounds to me that you misunderstand what I mean by running a country like a business, I am referring to governments / companies keeping their spending under control by eliminating waste within the government itself. Companies practice lean manufacturing eliminating non value added steps in processes, governments can do the same by making each department leaner and more efficient thus cutting costs and saving money, streamline social programs ensuring that abuses of social programs is reduced, by eliminating waste the government can ensure thatthe taxes it does collect from it's citizens is uses wisely and effectively, ensuring taxpayers get the best bang for their buck.

A prime example is the the Province of Ontario, In the 90's Bob Rae and the New Democat Party tried to spend their way out of the recession racking up a huge deficit in the process, then along came Chainsaw Mike Harris who cut spending, health care , social programs etc, declared Ontario open for Business and turned Ontario into Canada's Economic Engine, over time he did make some costly mistakes but as a whole the province was booming, then in 2002 along came Dalton McGuinty (Liberal Party) pandering to the pissed off public service and health care workers unions, promised them the moon and got elected with a majority government, since then spending has been out of control, different government scandals has wasted billions of taxpayer dollars, the unions are extremely happy with the generous raises provide by the Liberal Government, Ontario is not open for business as I do not know any company that will open up shop in a place where electricty costs are skyrocking and predicted by the government to go up by 48% over the next 5 years.

Moody's has told the Ontario Liberal Government to get their spending in check or face a credit downgrade.

When I say a government or a country, state province city whatever needs to be run like a business this is what I mean.

Obviously you and I will never agree on this

"The greater danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it." - Michelangelo

[ShcShc11 0]

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It sounds to me that you misunderstand what I mean by running a country like a business, I am referring to governments / companies keeping their spending under control by eliminating waste within the government itself. Companies practice lean manufacturing eliminating non value added steps in processes, governments can do the same by making each department leaner and more efficient thus cutting costs and saving money, streamline social programs ensuring that abuses of social programs is reduced, by eliminating waste the government can ensure thatthe taxes it does collect from it's citizens is uses wisely and effectively, ensuring taxpayers get the best bang for their buck.

A prime example is the the Province of Ontario, In the 90's Bob Rae and the New Democat Party tried to spend their way out of the recession racking up a huge deficit in the process, then along came Chainsaw Mike Harris who cut spending, health care , social programs etc, declared Ontario open for Business and turned Ontario into Canada's Economic Engine, over time he did make some costly mistakes but as a whole the province was booming, then in 2002 along came Dalton McGuinty (Liberal Party) pandering to the pissed off public service and health care workers unions, promised them the moon and got elected with a majority government, since then spending has been out of control, different government scandals has wasted billions of taxpayer dollars, the unions are extremely happy with the generous raises provide by the Liberal Government, Ontario is not open for business as I do not know any company that will open up shop in a place where electricty costs are skyrocking and predicted by the government to go up by 48% over the next 5 years.

Moody's has told the Ontario Liberal Government to get their spending in check or face a credit downgrade.

When I say a government or a country, state province city whatever needs to be run like a business this is what I mean.

Obviously you and I will never agree on this

I'm perfectly fine that you and I will never agree. Even if I do convince you, then so what? There is 100 million others (maybe more) that won't be convinced.

For me, the discussion is to advance beyond the notion of "debt is bad" (which is wrong).

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It sounds to me that you misunderstand what I mean by running a country like a business

I do understand your point and its a point that I've heard over & over. Making the Government leaner and more efficient is always something to strive for, but only when the time is right.

Let's go back to what I was saying that "America sells 85-90% of their worker's outputs to themselves". Right now, there is an immense human waste with the country's unemployment far exceeding its "normal" unemployment rate of 4%. If the Government cut and slash, then all you are doing is putting a worker out of work and have him do nothing.

The Private sector isin't picking up and won't be picking up until demand ramps up. Demand will only ramp up if there is the income and liquidity necessary to support it. Right now, we are in a liquidity trap where people in all sectors are cutting and slashing.

If you want, I can explain to you about the things that are happening in Ireland and other countries who are trying to achieve this "leaner" Government. It looks ugly.

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A prime example is the the Province of Ontario, In the 90's Bob Rae and the New Democat Party tried to spend their way out of the recession racking up a huge deficit in the process, then along came Chainsaw Mike Harris who cut spending, health care , social programs etc, declared Ontario open for Business and turned Ontario into Canada's Economic Engine, over time he did make some costly mistakes but as a whole the province was booming,

The case with Ontario is the same with Canada as a whole.

The 1990 Canadian economy is summarized here:
http://worthwhile.typepad.com/worthwhile_canadian_initi/2010/06/on-the-lessons-to-be-learned-from-the-elimination-of-the-canadian-federal-deficit-in-the-1990s.html

So again, making Government leaner and better is a worthy cause, but only when the U.S economic engine is back to its normal state. We're making it worse by not taking the right procedures at the right time.

We have been and still are in a major major liquidity trap. Canada (and Ontario) wasn't facing an event where the interest rate was near 0 and had the chance to massively devaluate their currency in relation to their main trading partner. The CND went to 0.60 cnd/1.00 US$ if I remember correctly. With massive devaluation, it is possible to have austerity without hurting the economic engine...but not in a liquidity trap like America is at the moment. Who is America going to devaluate with when the whole world wants to devaluate?

Cheers.

[skydiver604 0]

I can see the logic in spending to stimulate the economy, you've raised some valid points that I was not aware of.

So that takes us back to the OP's original question

How high should it be allowed to go?


How much $$$ do we throw out there to stimulate the economy based on your model?? If the status quo is maintained how much do you increase the debt to get the results you want or expect.???

16.3 Trillion?
20 Trillion?
25 Trillion?
30 Trillion?
35 Trillion?
.
.
.
.
100 Trillion??

At what point does throwing all this cash into stimulating the economy become counterproductive?

And once the economy has stabilized and the economy has nicely recovered what steps do you take to reduce that debt and how long is it going to take to pay the debt off.?

How much is too much and how much is not enough??

"The greater danger for most of us is not that our aim is too high and we miss it, but that it is too low and we reach it." - Michelangelo

[Andy9o8 2]

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How much is too much

$100 trillion.

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and how much is not enough??

$3.7 trillion.