Then what is it?
What I think the S&P thing did was to hit a nerve that there's something basically bad going on, and it's hit the self-esteem of the United States, the psyche. And it's having a much profounder effect than I conceived could happen because the economics of what they're talking about is very clear, and you cannot see any way in which we can go as we were on Friday for a vast movement of international funds into the dollar at very low interest rates and then turn on a dime. That is not going to happen. And so this is not the issue that they make it.
Posts
152 comments:
If all we have to do is print money, why do we borrow any? Just print up what we need and off we go!
Greespan's comment emphasizes why S&P did what they did.
S&P is rating exactly that ability to print money and its effect on the value you get back from the mature bonds, which will be in much cheaper dollars than you paid.
The instability is that bond buyers demand a higher interest rate to compensate for that inflation on new bonds, and so you have to pay out even more by printing yet more money.
That's a hyperinflation cycle.
Lesson: don't spend more than you can repay without printing money for it.
It's okay to print money to accommodate an expansion of the economy, but not to accomodate government operations.
Translation: "What's the big deal if a six pack of beer costs $10,000? Just buy a wheelbarrow - we've got lost of them in America."
"Besides, the Chinese won't care if we pay them back 30 cents on the dollar, will they?"
"...we can always print money..."
Someone is trying to talk down the dollar.
It takes real intellect to say something as stupid as Greenspan did.
S&P is saying the jig is up, and no one really believes in the homeopathy of diluted dollars.
This has happened to every other nation so inclined to debase their own currency. First it is worth less, then it becomes worthless.
He apparently thinks S&P and the like are not very bright. If I were in the business of rating credit-worthiness of governments you'd better believe I'd factor in the possibility of such an idiotic move. Makes you wonder to what extent S&P are concerned about just such a "solution."
Greenspan is right unless China and Russia can replace the dollars with a UN Monetary exchange Unit.
So can they?
That is the question.
If we make the dollar "unsafe money" , then they can
When the only tool you have is quantitative easing, soon every problem looks like the world under-values your credit worthiness.
Gee Greenspan, isn't it sad when the virgin whore realizes the men aren't coming round like they used to, and that you haven't, in fact, been a virgin for over 25 years.
The reason why S and P did this is because they see instability in the fact that debt reduction is being hamstrung by the Tealiban.The adherence to the oath of" no tax increases" has essentially created a scenario in which we make the poor and middle class pay for the Bush tax cuts, which will not cure our debt problem, DESPITE severe cutting of social programs. The rich want their tax breaks , damn the poor and middle class, damn the economy, damn the country, they will move to Singapore after they have defiled their nest. Greed is soooooo good.
Oh sure. Credit rating is unaffected by printing more money just to meet government obligations.
Stupid.
It's all so confusing....
Luckily, we have President Obama; i.e. the adult in the room-to bring clarity and focus to an insecure nation.
As to the downgrade, it's reprocussions, and way forward, I defer to the President.
He said:
, following his initial remarks Saturday during his Weekly Radio address, in which he characterized the loss of our AAA rating as-"
".
There is really nothing more to say.The President has been clear, and is too busy to keep kicking the same dead horse.
Gosh, I remember my mom's advice. She said that you don't sell your diamonds for nickels.
My mom, just like lots of folks her age, went through the Great Depression. There really were no social safety nets. She kept $500 in the house, in case someone had a heart attack. And, needed to go to the hospital.
My grandpa had been turned away from a hospital (back around 1932) for "lack of funds."
My mom also drove me crazy, when I'd ask for a quarter to go to the local candy store to buy an ice-cream cone. She said "she remembered when those cones cost a nickel."
My mom also said, way back around 1972, that minimum wage would put teenagers out of work. Since who would pay a teenager more than $1 and hour?
She also said businesses would hire fewer people, because of all the paperwork involved in hiring anybody.
And, yes. I remember back to the 1940's. When once-a-month the accountant stopped by to check the books.
If I had to guess? When America gets spunky, again, lots of people will turn their backs on jobs at Walmart's. And, if we're very, very lucky ... the mom and pop operations will have a rebirth.
Without this we're gonna be financially bedridden. If not doomed.
It's funny to me that people can't picture what goes on every place else around the globe. It's as if we believe Disney the myth. Instead of the American man. Who was forever practical.
Hell. The Bob Mugabe School of Economics.
We need a National Commission of Self-Esteem, by the way.
QE and QE II were nothing more than printing money on the part of the government. How can you run out of dollars when you print them and then loan what you just printed to yourself?
Of course it will end badly. But it won't end in default. That's the hazard of lending money in a currency controlled by the borrower. It's why the Chinese are so upset right now - we're robbing them of their savings.
So print money to cover all debts?
THEN WHY DO I HAVE TO PAY TAXES??
IN FACT WHY TAX ANYTHING?
Does anyone here remember what happened to Germany in the 1920s??? 1000 percent inflation?
If you fail to learn from history you will repeat it. And like Carl Marx said, second time will be a farce.
"The adherence to the oath of" no tax increases" has essentially created a scenario in which we make the poor and middle class pay for the Bush tax cuts, which will not cure our debt problem, DESPITE severe cutting of social programs. "
Hey, guys, can you believe it?
Someone here is for raising taxes in a jobs recession.
(Nice trick, btw. Double spending, then say we absolutely, positively have to raise taxes. Really? So we can pay for all your new spending?)
How about we just to back to the spending and tax levels of Clinton? That's a deal I believe any tea partier would take.
We've got to get our fiscal house in order. The whole financial problem boils down to too many people with too many benefits provided by the government in stupid ways (e.g., Social Security that is not means tested and not enough incentives or ways for people to provide for their own retirement).
That said, and I think Tea Parties absolutely must understand this: you don't muck up the financial sector in a recession. You free it up like crazy.
Finally, as Greenspan seems to allude, we are in a much better position than the EU long term because we can control our monetary policy far better. I don't see the Euro lasting.
If I had to guess? When America gets spunky, again, lots of people will turn their backs on jobs at Walmart's. And, if we're very, very lucky ... the mom and pop operations will have a rebirth.
Count me in Carol.
The cheap electronic at Walmart is to me no longer worth my unemployed neighbor.
I'm happy to wait a few more months for the new flat panel TV if he can go to work each day.
Who is Carl Marx, Paul?
"The reason why S and P did this is because they see instability in the fact that debt reduction is being hamstrung by the Tealiban.The adherence to the oath of" no tax increases" has essentially created a scenario in which we make the poor and middle class pay for the Bush tax cuts, which will not cure our debt problem, DESPITE severe cutting of social programs. The rich want their tax breaks , damn the poor and middle class, damn the economy, damn the country, they will move to Singapore after they have defiled their nest. Greed is soooooo good."
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This statement shows you have no idea how the federal tax code works, and who it affects.
Roughly half of this country DOES NOT PAY FEDERAL INCOME TAX. The "poor" and "middle class" you talk about are the people that have the smallest tax burden of anybody in this country.
The biggest reason we are in the mess we are in right now is because of the social welfare programs you and other lefties seem to think are untouchable and should increase every year. Government dependency - not "greed", as you put it - is the sickness currently infecting this country. From record numbers of people on food stamps, to unemployment benefits that are equivalent to a $9/hr job, to health care that more and more employers are forced to pay for...its easy to see why this country is going broke.
But yeah, its all the "rich guys" fault...the "rich guys" only support about 50% of the tax revenue in this nation right now as it is. How much is needed to make you happy? 60%? 70%? In a few short years, there will be no incentive for success anymore in this nation...because once you have anything, you will be expected to give it to the government so they can piss it away to people that have no business in having it, nor have done nothing to earn it.
debt reduction is being hamstrung by the Tealiban
This is fundamentally untrue. Tea Partiers, as I understand them, want to cut government. Nutball leftists, like you, do not. Until one side wins the argument, we are stuck in a rut.
By the way, since the federal government is unsustainable, the cutters must win.
One thing to remember: government will be able to collect a maximum of about 20 percent of GDP no matter what the tax scheme. This has been amply demonstrated. Therefore, any tax scheme that assumes to collect, say, 21 percent or 30 percent is doomed to failure.
Apfelkuchen said...
The reason why S and P did this is because they see instability in the fact that debt reduction is being hamstrung by the Tealiban.
That's a interesting perspective. And if there was no tea party, how much debt reduction would we have gotten? Oh that's right, zero, since before the tea party the standard was a clean debt ceiling increase.
DESPITE severe cutting of social programs
Which programs were cut? Please name names. Thank you.
Otherwise, kindly shut up and move along to the fantasyland board.
What wood Bretton do...reconvene in New Hampshire?
Will S&P (and who she represents) have a say?
(Probably...like last time...not)
I agree, go back to the Clinton levels. Don't extend the Bush tax cuts. Since the "job creators" haven't created any jobs, why not?
go back to the Clinton levels
What makes you think that more taxes were collected then?
You are an idiot. You do not understand that economic growth is the only way out of economic calamity. Raising taxes will not encourage such growth. It will reduce the economy further.
"I agree, go back to the Clinton levels. Don't extend the Bush tax cuts. Since the "job creators" haven't created any jobs, why not?"
------------
Ask your precious President Messiah Obama why he extended them, then. He had a chance to let them expire.
And "job creators" arent going to create jobs if they cant make any money. If they cant sell their product - and better yet, even if they can sell their product but have their profits taxed to the hilt by the US Government - why the hell would they hire anybody?
My word...the drivel coming off your keyboard is priceless.
I agree, go back to the Clinton levels. Don't extend the Bush tax cuts. Since the "job creators" haven't created any jobs, why not?
I would be perfectly willing to go back to Clinton level tax rates as long as we also go back to Clinton level government spending.
Greenspan is way behind the times, no one actually prints money anymore, that's just old fashioned.
Now a days we just add zeros on a computer screen. Why it's so easy any fool can do it.
Pray tell Seven Machos , just HOW will economic growth happen? WHY hasn't It happened yet, with the tax breaks companies are enjoying? Will the economic growth fairy just wave her magic wand and make it happen. it won't happen until people go back to work and have money to spend, since no jobs are coming back into this country, that isn't about to happen, UNLESS some of those tax breaks for companies shipping jobs overseas STOPS. why is this so difficult to understand?
"I would be perfectly willing to go back to Clinton level tax rates as long as we also go back to Clinton level government spending."
This.
Im reminded of a great piece by Larry Kudlow of CNBC, where he says this:
"Think of it this way: You’re out car shopping and thinking about buying a $100,000 Mercedes. That’s your target. But then you decide to forego the Mercedes and opt for a $20,000 Chevy instead. Well, guess what? Congress would score that as an $80,000 budget cut. Huh? We all know that it’s actually a $20,000 budget increase.
Let’s be honest here. This budgetary game remains one big taxpayer scam. Look, I used to work in the federal budget office. I know the game."
Walmart found a way to make marginal labor employable.
That raises everybody's standard of living.
They're opposed by crony capitalists, eg. mom and pop operations.
Curiously, mom and pop operations then open up near anchor stores because of the traffic, and sell things Walmart doesn't.
job creators
I lose this term. It's as if it's some mysterious cult, not Joe down at the hardware store who might need another guy or someone thinking about starting a small business.
These tools probably think we need a government program to for job creation. Alpha Liberal actually said this once. It boggles the mind.
Maguro, I agree with you completely!
WHY hasn't It happened yet, with the tax breaks companies are enjoying?
Because companies are not enjoying tax breaks. They are, in fact, hesitant to hire due to a morass of changing regulation. Also, banks aren't lending. Also, institutions are hoarding cash. All for the same reasons.
You are a befuddled loser. But go vote for Obama again. Hope and change.
"WHY hasn't It happened yet, with the tax breaks companies are enjoying? "
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Good grief.
Companies arent "enjoying" tax breaks. They are paying less in tax (or no tax, for that matter) because the majority of businesses ARENT MAKING MONEY.
News flash for you: most businesses dont pay taxes unless they turn a profit. The big reason tax revenues are down is not because of "tax breaks"...its because the large majority of businesses arent making any money to tax.
This is high-school level economics here. The fact that you cant understand that is mind-boggling.
These tools probably think we need a government program to for job creation. Alpha Liberal actually said this once.
Didn't Obama have a Jobs Czar? Bush may have had one too.
Seven Machos , you are losing some of your machiso, name calling when losing an argument is always in such poor taste, hmmmm reminds me of something a loser does.
This is high-school level economics here.
Not even. It's things your common sense should alert you to. Don't touch a hot stove. Businesses that are spending more than they make are not paying income taxes because there is no income to tax.
The lack of understanding on the left is crazy. The stupidity is laughable.
I think Greenspan's been waking up next to Andrea Mitchell for too long. He needs to get his mind clear.
name calling when losing an argument
Dude, you are a moron, and I am telling you that you are a moron.
Incidentally, if I'm losing the argument, why are your ideas -- such as they are -- so wildly unpopular?
The look on Goolsbee's face when Greenspan said we could just print more money is priceless.
Yes, we can just print more money. Worked great for Zimbabwe and Germany.
The only surprise with the S&P downgrade is the fact it took so long to happen (and that Fitch and Moodys are sitting on the sidelines).
Does anyone really think a $15T national debt (and growing at $1+T annually) is payable (without Greenspan's idiotic and self-defeating notion of devaluing the currency) without significant SPENDING cuts?
O.k., I mean anyone outside of the permanently stupid Democrat base?
"WHY hasn't It happened yet, with the tax breaks companies are enjoying? "
I can't think of one single reason why business should be taxed at all.
Except that it is easier on the politicians.
Eric said: "Of course it will end badly. But it won't end in default. That's the hazard of lending money in a currency controlled by the borrower."
Inflating the currency may not be a technical default, but from an economics standpoint, it's as much a default as refusing to pay at all. I don't understand why our credit rating isn't much, much lower. No one believes the U.S. can pay back its debt at the same value it received.
there have been some comments about hyper inflation, Germany, and wheel barrels full of money, well you needn't worry about that since your "E-wallet" will weigh the same no matter what quantity of money it contains. modern technology has made it possible to carry around a whole trainload of money and never risk straining your back.
Gold on the other hand........
The funny thing is: the Democrats all complain about the "rich" not doing their part, and then out of the other side of their mouth have their hand out asking for political contributions.
Obama didnt charge $10 per plate for his big fundraiser last week, so the "middle class" man could enjoy a good meal.
They might have been more lenient in their assessment if the rest of the world were not on the ropes, too. Even China cannot and will not borrow from us forever. Germany cannot bail out Europe AND the US.
It's just all not sustainable, to borrow a popular word. They're fighting over details while the global bubble is bursting.
WV: costlasm, a financial chasm caused by high costs!
The adherence to the oath of" no tax increases" has essentially created a scenario in which we make the poor and middle class pay for the Bush tax cuts, which will not cure our debt problem, DESPITE severe cutting of social programs. The rich want their tax breaks , damn the poor and middle class, damn the economy, damn the country, they will move to Singapore after they have defiled their nest. Greed is soooooo good.
Yes, because rich people who can afford to "move to Singapore" are really worried about a 2% reduction on income over $250,000.
Really.
They are.
Where do you idiots come from?
And to all the conservatives on this board, I'm surprised you don't know that it's a gift that the government allows you to keep any of the wealth you think is yours. In our socialist future which no one believes can happen you may very well see a confiscation of wealth from citizens that are deemed to have more than their fair share. I mean it's only fair after all.
I would be perfectly willing to go back to Clinton level tax rates as long as we also go back to Clinton level government spending.
And perhaps Clinton level regulation.
It's simple really, spending cuts and revenue, equaling at least 4 Trillion in debt reduction.THIS is what did not happen BECAUSE of the Teahadists. THAT is why we were downgraded, S and P said so clearly, the writing was on the wall, but the tea was laced with something, so the writing was all blurry.
China's just pissed because they bought US treasuries relying on our perpetual ability to maintain a working free economy. China certainly cannot do so, and China's ghost cities and strange things like so many more cars but no corresponding rise in gasoline use there attest to a looming bubble that will make ours look like a wisp in the wind.
What's China going to do? Buy Greek treasuries?
Interesting....
the left wants to turn Obama into Ronald Reagan. and the right would be happy with Clinton
and so you have to pay out even more by printing yet more money.
That's a hyperinflation cycle.
I told you so.
spending cuts and revenue, equaling at least 4 Trillion in debt reduction.THIS is what did not happen BECAUSE of the Teahadists
Which are the Tea Partiers that don't want debt reduction? Debt reduction means cuts in government spending. Tax hikes on an economy that does not grow mean lower tax revenues collected.
Truly, you are a foolish tool. I didn't think people like you existed.
If want to get the rating back to AAA you need to rescind the Bush tax cuts, control Health care costs and get rid of the payroll cap on SS taxes.
Of course, the "Job Creators" won't like it but they always whine about paying taxes. Their script goes like this:
-We're in a recession, we must cut taxes.
-We're in a boom, to keep it going, we must cut taxes.
-Oops, we're in another recession, we must cut taxes
Further, (1) get rid of the minimum wage so teen-agers will do the jobs that illegal aliens won't do AND (2) the surest way to reduce unemployment is to allow in millions of immigrants in every year.
This has to have been something out of context. When he was Fed Chairman, Greenspan was a sound money man who kept a close watch on the price of gold as a guide to Fed decision making. He was an early follower of Ayn Rand and once supported a return to the gold standard. In those days he would have never favored expanding the money supply so irresponsibly.
Unbelievable. This was the solution to the debt problem that a girl in my high school economics class came up with 20 years ago. And we all laughed at her then.
"It's simple really, spending cuts and revenue, equaling at least 4 Trillion in debt reduction."
It's simple really, spending cuts equally at least 8 Trillion in debt reduction. This is what didn't happened because of Obama and Reid.
Greenspan is merely pointing out that there is no way that the US government cannot pay its debts. That's obviously true.
Accounts Receivable Tax
Building Permit Tax
CDL license Tax
Cigarette Tax
Corporate Income Tax
Dog License Tax
Excise Taxes
Federal Income Tax
Federal Unemployment Tax (FUTA)
Fishing License Tax
Food License Tax
Fuel Permit Tax
Gasoline Tax (currently 44.75 cents per gallon)
Gross Receipts Tax
Hunting License Tax
Inheritance Tax
Inventory Tax
IRS Interest Charges IRS Penalties (tax on top of tax)
Liquor Tax
Luxury Taxes
Marriage License Tax
Medicare Tax
Personal Property Tax
Property Tax
Real Estate Tax
Service Charge Tax
Social Security Tax
Road Usage Tax
Recreational Vehicle Tax
Sales Tax
School Tax
State Income Tax
State Unemployment Tax (SUTA)
Telephone Federal Excise Tax
Telephone Federal Universal Service Fee Tax
Telephone Federal, State and Local Surcharge Taxes
Telephone Minimum Usage Surcharge Tax
Telephone Recurring and Nonrecurring Charges Tax
Telephone State and Local Tax
Telephone Usage Charge Tax
Utility Taxes
Vehicle License Registration Tax
Vehicle Sales Tax
Watercraft Registration Tax
Well Permit Tax
Workers Compensation Tax
Jeebus, how was that guy in charge of anything?
Eisenhower added about 12 cabinet posts to his executive table. (Okay. I plucked that number out of thin air.) But I know he gave us HUD. I know he added to our costs, galore. And, I know he had LBJ, the Majority Leader in the sentate ... always giving him the inside scoop.
Eisenhower knew what would pass. And, what would not.
If you go there ... you see how the Feds grew their roles in our lives.
And, before we lift a single dollar more in taxes ... we need to cut out the BLOAT.
From medicare. Medical. Food stamps. Welfare. MILITARY, too! A few less dandy projects. And, limit outselves to what we need to protect our borders. AND, our ships at sea.
Heck, remember the guy who said "Guam could tip?" Maybe, we should announce that not only could it ... but we cut the budget going there, too.
We'd scare the pants off all the Euros if we just took a hatchet to "foreign aid." Whatever that means.
And, we do a "scorched earth" on the UN ... which means one bulding ... near the east river in NYC ... gets blasted to smitherines. Okay. First I'd allow in the scavengers. And, I'd let them have a garage sale.
I'd eliminate STATE. Sell off all their assets.
And, I'd leave tax paying Americans alone. You want to add an estate tax? Okey dokey. NO AMERICAN DOLLARS TRAVEL INTO FOREIGN BANKS! If it's yours? You come here to get it. But you can't pass go if your not a citizen. I'd hold customs accountable. And, I'd deduct money from their budgets, too. For every foreigner they let in ... whose not just traveling to Disney.
Disney can attract customers. Because Disney hires locals.
Oh, and I'd fire Boehner. I'd make him move out of the Speaker's office. And, I'd plaster NO SMOKING SIGNS ALL OVER THE PLACE ... Including the parking lots. Let him smoke at home.
As to the chinless wonder, what can you do? He sits with gigolos in a rarified environment. Our egotistical doozies on parade.
But I wouldn't cover them well. I'd make them pay the "painter" for raising the debt ceiling.
And, I'd be like Harry Truman. Daily. I'd give them Holy Hell!
I'd also budget the White House ... they can either throw "state dinners" ... or order liquor. But they can't have both.
Until most Americans can come out from under water ... and breathe some air.
While I'm at it, I'd add "NONE OF THE ABOVE" to every ballot choice. "Just to make things interesting."
And, ya know what? I don't blame the tea party. I think, though, we're a large army of David's. We don't need no stinking orders to show our will.
I am so grateful to Ann. And, to Glenn Reynolds. You have no idea!
Seven Machos, don't drink the tea, it full of shit.
Apel -- You don't know anything about economics. It's very sad. Go take a class at your local community college. Don't come back until you do. Thanks.
rcocean said...
If want to get the rating back to AAA you need to rescind the Bush tax cuts, control Health care costs and get rid of the payroll cap on SS taxes.
Actually you don't need to control health care costs. You need to control how much the government spends on healthcare. That can be done by controlling costs, or limiting treatments, or limiting people covered.
Also, you don't actually need to rescind the Bush tax cuts, since they expire on their own. Which makes the S&P analysis seem very strange to me. They state the Republican's unwillingness to raise taxes as a reason to change their assumption that the Bush cuts will expire. But the Bush cuts will expire without the Republican's cooperation anyway.
Seven Machos, it's obvious that you won't listen to reason and will remain intransigent, oh isn't it this the VERY thing that caused a watered down debt ceiling agreement, which in turn has caused the downgrade, you can lead a horse to water, but ya can't make him drink, oh well.
Markets grade on a curve. For the moment at least, the USA is still at the top of the grading curve. There's going to be a lot of pissing and moaning, blaming, excuse making, pontificating and gnashing of teeth. But for the short and perhaps intermediate term, American assets, including bonds of the federal government, will retain popularity.
You will know things have changed when you see American interest rates going up while the Fed tries to hold them down. That's disaster, since it will increase the carrying cost of the debt, and put all the deficit reduction models into the crapper.
That could come through an actual rise in rates, or a severe deflation, which would be in effect an interest rate increase.
That is also the point at which gold will really start to soar. So far we have had just a fairly orderly bull market in gold. You ain't seen nothing yet.
S&P's central point was not that our economic system is broken. They think our political system is broken. For the moment they are right, and the political system is even harder to fix than the economic one.
Buy gold.
And say "Fuck You," to the pontificating Chinese, who have the least transparent important economy in the world by far. Their problems are presently worse (and quite different) than ours. The economic asteroid strike, if it comes anytime soon, is more likely to emerge from China than the US.
Seven Machos, it's obvious that you won't listen to reason and will remain intransigent, oh isn't it this the VERY thing that caused a watered down debt ceiling agreement, which in turn has caused the downgrade, you can lead a horse to water, but ya can't make him drink, oh well.
---------------------
Listen to reason? You havent responded to any of the rebuttals he or I have given you regarding your posts.
Obama and the Dems could have prevented this at ANY TIME when they had control of 2 houses by simply passing a budget. They havent even tried to do it.
Think about that for a second. The current president of the United States still hasnt submitted a budget capable of passing. And we are now 2 1/2 years into his term.
The reason our credit rating was downgrading is that our president is an idiot. Thats about as clear as I can cut it.
Also, you don't actually need to rescind the Bush tax cuts, since they expire on their own.
You do if want to get rid of them right now, while the Democrats have the white house and the Senate.
Besides they were supposed to expire in December 2010 but mysteriously didn't.
You do if want to get rid of them right now, while the Democrats have the white house and the Senate.
Besides they were supposed to expire in December 2010 but mysteriously didn't.
Read Obama's comments as to why he didnt let them expire. And compare them to his recent comments about this whole economic situation.
Apfel -- If the tax rate is zero, the government gets zero revenue. If the tax rate is 100 percent, what does the government get? Think hard.
Further, do you suggest that the empirical data demonstrating that taxes can generate revenue equal to about 20 percent of GDP is wrong? Why?
Further, you don't raise taxes in a depression. This is a serious time. Fools like you only make it harder.
Thankfully, Obama will not be reelected in 2012, and we will have a budget, and we will have cuts in the gargantuan welfare state, and the problem will dissipate. Your tale of sound and fury will not matter.
"If want to get the rating back to AAA you need to rescind the Bush tax cuts, control Health care costs and get rid of the payroll cap on SS taxes."
Yeah--that should do it nicely. An increase in income taxation at all levels (except for the half of the population that pays no federal income tax), a payroll tax that further takes money out of the hands of productive citizens and price fixing government market regulation in one of our largest and most innovative economic sectors.
The Federal government has done such a bang up job in the past 40 years that we should give them more money and more power, right?
The Federal government has done such a bang up job in the past 40 years that we should give them more money and more power, right?
Yes, if we want to balance the budget and pay for SS and medicare, taxes rates on the wealthy and well-to-do will have to those existing in the Clinton years, y'know the boom years.
I think we need to stop calling rich people 'rich' and call them 'job creators'. For example, Bernie Madoff was a "job creator".
And those on SSI or unemployment or working for DoD we can call "looters".
should be 'will have to revert to those existing during the Clinton era'.
You people who are suggesting that taxes should be raised right now are batshit crazy.
Clinton could raise taxes precisely because we were in the middle of a boom. Greenspan could raise interest rates for the same reason. Remember all the shit he got for raising rates?
Cut government. If states or municipalities want to have generous welfare, they are free to so provide. Let industry flee them.
I think we need to stop calling rich people 'rich' and call them 'job creators'. For example, Bernie Madoff was a "job creator".
Yes, I love being lumped in with a convicted felon.
Just because some of us are rich and/or run a business and employ people (like me) doesnt mean we are all fraudulent bastards. Ive lost more money in the past 5 years keeping my business afloat and keeping as many employees as I can that you would ever think. Profits my company made over many years in the 90's have been erased in the past 3 years...and I have pumped 7 figures of my own money in the same time frame into my business just to keep it running.
But yes, lump me in with a felon. Asshole.
An economics blog I visit linked to this blog posting at super-economy.blogspot.com (the title is The Obama Hockey Stick) Don't miss the comment section.
Now to try making a link,
Obama Hockey Stick
Ann, I ask you to start a meme, please. A disparaging and "uncivil" label must be applied to any government bureaucrat or common citizen whose position on our current financial woes is that government must borrow, print, spend, or take (in the form of taxes) more money. Our government(s) have borrowed, printed, spent, and taken enough already. That's not a solution leading anywhere but where we are now. Those who cling to such solutions - including the president and most members of Congress - are "spending deniers" or "debt deniers" or "Congressocentric national default deniers". Or some such label I will trust you to quickly craft and apply. Please do us proud and make the label stick :>) Thanks!
well it seems I still don't know how to make a link. would someone please fix it? thanks
In our socialist future which no one believes can happen you may very well see a confiscation of wealth from citizens that are deemed to have more than their fair share
No. We'll shoot the socialists in the streets first.
Socialism is all about slavery, and slavers deserve a bullet in the brain.
And those on SSI or unemployment or working for DoD we can call "looters".
The Right is too much in love with the DoD. I worked there for 20 years (thanks!). They use $100 bills as toilet paper (figuratively, of course).
We can slash the DoD significantly, while maintaining readiness, in exchange for eliminating HUD and the Dept. of Education.
Next time I'm a little short, I'll tell the creditor that I'll be printing up a payment right away. Let's see how well that works.
Levi Starks - where can one get a wheel barrel?
WV: diticcus - you bet I did!
Really Jason? For all I know you're that asshole Law Professor who (in Dec 2010) made $300,000/year and claimed he was 'poor' - so don't raise HIS taxes by 3 percent.
Maybe, you and all the other "job creators" need to distinguish between people who ACTUALLY create jobs and people who just earn a lot of money.
Just like you need to distinguish between what the US Government needs to do & stuff that is actually waste.
Skipper -- But you don't have a money supply that fluctuates or a printing press. The government does.
Are you suggesting that Greenspan is wrong?
RC -- Can you really not differentiate between a corporation and its income and a person's income?
Life is hard, son. It's harder when you are stupid.
Life is hard, son. It's harder when you are stupid.
We have a winner for line of the evening.
"RC -- Can you really not differentiate between a corporation and its income and a person's income?"
Where did I use the word "Corporation"?
I've dealt with you before 7N & your reading comp skills are on par with "LOS" and "Alpaliberal".
Maguro said...
I agree, go back to the Clinton levels. Don't extend the Bush tax cuts. Since the "job creators" haven't created any jobs, why not?
I would be perfectly willing to go back to Clinton level tax rates as long as we also go back to Clinton level government spending.
===========================
The wealthy "jobs creators" benefiting from the Bush taxes cuts did not create new jobs under Obama OR - OR!!! Bush. (Unless you count all the jobs they outsourced to China).
The problem with just going back to a less reckless Clinton level era of taxes and spending...is it isn't enough.
It is like someone that owes the IRS 50,000 dollars and is in hock up to their eyeballs to the bank and credit card agency swearing they will pay all taxes going forward and live within their means elsewhere, going forward. But that does not address the need to repay past debts.
So just going back to pre-Bush levels of taxation and spending will not be enough. You have 4 trillion in Bush wars and nation-building to pay off, his unfunded prescription drug plan, the debt China wrote to pay for TARP, pork barrel spending that DeLAy and Hastert wanted. Then all Obama's squandered loaned money for "stimulus".
The taxes have to end up higher, spending lower than Clinton's time - in order to payback the massive debts of the carefree, easy, unlimited credit of the Double-Oughts..
The Dems are crazy to think otherwise...same with the the nutball Tea Party notions of lowered taxes on the rich creates jobs.
BTW, taxes above 20% are quite managable as other nations have done...and were in fact much higher on the "jobs creators" during the huge job creation days of the 50s, 60s, 80s, and 90s.
RC -- Let me try to put this another way for you. I will use small words:
My household income is quite high. I spend all the money. I buy goods and services. In your world, such expenditure apparently does not "create jobs."
You are weirdly wrong.
Try this experiment. Pretend you and 100 other people are marooned on an uninhabited desert island. How do you start an economy? How will you 101 people create wealth?
Amazing how government programs develop "mission creep". Food stamps are through the Department of Agriculture, and started out as a way to get rid of surplus food. We had surplus food because we were paying farmers for food they couldn't sell on the open market, because there was a surplus.
The problem with just going back to a less reckless Clinton level era of taxes and spending...is it isn't enough.
Probably not. But it would be a start, at least.
traditionalguy said...
Greenspan is right unless China and Russia can replace the dollars with a UN Monetary exchange Unit.
So can they?
That is the question.
If we make the dollar "unsafe money" , then they can
Hunker down, buddy. No only "can" they, but they will feel they must, for self-defense. The mess we have right now, with next to nothing for interest on savings accounts, is punishing savers. This screwing with the economy is doing a great deal of damage. The Chinese have every right to be pissed. Devaluing the dollar will cost them plenty, and they will get sore about it. (Except of course, they have plenty of their own domestic problems related to their economy!)
Yeah, we can just print more money. It's not like hyperinflation is ever a problem.
Holy crap.
Is he senile? How old is he? That is insane.
Wait a minute. You guys think that China and the United Nations are going to somehow start a new currency?
You have no understanding of economics, do you? Certainly, you have no idea about how the United Nations works.
n.b.: I represented the United States there.
The Chinese have every right to be pissed.
I think they'll take California as collateral. Can't say that I would try to stop them.
What kind of moron thinks our debt is no big deal?
He literally is thinking like a criminal. We'll just counterfeit our way to prosperity. No problem!
I guess he thinks he is calming the markets. Calming the markets? All he did was get me excited. Now I can't believe this fuckwit was chairman of the fucking fed.
Holy crap, we're doomed. That's my reaction to his calm assertion that our debt is no problem at all. We'll just print more money.
Of course! It's all so easy!
I think they'll take California as collateral.
Silver lining.
Fen said...
The Chinese have every right to be pissed.
I think they'll take California as collateral. Can't say that I would try to stop them.
====================
I could care less about half the people living there...but it is truly some of the finest land with the most resources and best geography/climate/location in the world.
Now, if China would just accept Detroit, Philly, and all the Elites that sold out America to them in the name of free trade - I'd be happy.
===================
Seven Machos - Try this experiment. Pretend you and 100 other people are marooned on an uninhabited desert island. How do you start an economy? How will you 101 people create wealth?
1. Take 5 of the 101 that call themselves the "jobs creating Elite". They form the controlling element of your Island society. They flag down a passing Chinese ship to borrow money to "help everyone".
2. While keeping most of the borrowed money, the 5 dole out enough to 50 other Islanders to make them support what 3 of the 5 ELites want, while the other 2 have enough power to get much of what they want.
3. THe islanders are thus able to by tons of cheap China stuff. Eventually, even harvesting coconuts on the Island is deemed "not necessary under globalization".
4. 20 years later, the Chinese get sick of the welfare queens and force them to scrap hulls on Chinese ships to pay for all that past free stuff and tax the population...which is opposed by 3 of the 5 Elites...who scream to the populace that given most the island is jobless outside selling Chinastuff and scraping rot off Chinese hulls...will cause the "Jobs Creators" not to create any jobs.
The great paradox in all this is that, with all our (justifiable) worries about the current and future debt, yields on Treasury securities are staggeringly low--practically zero on anything with maturity < 1 year. Not exactly the sort of thing you'd expect to see happening in the market for an asset that's been downgraded.
Obviously the dollar remains the world's reserve currency, for now, and it looks like we're benefitting from a global flight to safety. This doesn't mean we don't have to worry about our debt. It's simply the reason we haven't fallen off the tightrope.
Oh man...they just said the line....the teachers union was holding the city hostage. This is priceless. NYC in 1975 = what Wisconsin could be in 2011.
Am I the only one who is upset about Fen's desire to see blood flowing in the streets? Or do most of the other commentators agree with his violent viewpoint?
Cedarford, you Jew-hating Tom Buchanan, China isn't going to do anything to the United States.
You are such an asinine fool. Go back to Brothers Judd and all the other sorry sites you got your sorry ass kicked off for spouting racist inanity.
Fen's an insightful poster but his hyperbole is goofy sometimes. The same goes for too many people here.
I don't get it. It is definitely annoying.
Or do most of the other commentators agree with his violent viewpoint?
There isn't enough time to condemn every nutty thing posted here. I think you should presume that silence =/= agreement.
Chip -- What's really amazing about the currency markets is that every country is having currency problems. So it's bad news compared to bad news.
And this reminds me of something vital about China: it doesn't float its currency. China pegs its currency to...the U.S. dollar. So fuck China. Live by the peg. Die by the peg.
I'm still flabbergasted. It's such a stupid thing to say.
Maybe QE1 and QE2 has just gotten us all used to the idea of the Fed printing more money like a bunch of counterfeiters. But this has to be the first time any fuckwit has ever suggested that this is how we should take care of our debts.
I mean, how does that work? Did QE1 and QE2 make our debts go away? Did it make them easier to pay?
He's not just saying, "print more money to cause inflation to spur economic growth." That's dubious enough.
What he's saying is, "Print more money in order to avoid our financial obligations. Print more money to lie, and cheat, and steal from our creditors."
And it's not some fuckwit on a message board, it's Alan Fucking Greenspan.
Holy shit.
And if we're not the world's currency in the near future, our practice of "just printing money" will have very little value.
Creating money doesn't even have that much value to us now. It works when it's a surprise move, since the ensuing inflation devalues all outstanding debt that's not indexed. However, once it's realized that we're following this strategy, bond prices fall (so that interest rates rise) until the expected inflation is covered by higher yields.
Croix -- You utterly miss the point because you wish to hear yourself rant.
Greenspan is merely saying that there is no way the United States can default on its debts because all the United States has to do to pay its debts is print more money. There is no way to default.
Greenspan does not say that this is a wise policy or something that we should do.
What part of that do you not understand? Or do you just wish to rant without bothering to understand?
Every commenter on this blog is smarter than this senile dumbass former Treasury Secretary who, for some reason, is still respected inside the Belway. Is it any wonder we are doomed?
Seven, I'd like to suggest a route to an entente cordiale b/w you and St. Croix.
I think it's fair to call inflating away part of our debt a partial default. Sovereign debt denominated in the issuer's currency carries the risk that the issuer can subsequently reduce the value of the currency it uses to repay its debts. That's why many countries with dodgy fiscal histories must issue their sovereign debt as dollar-denominated instruments.
What ought to be logically true (although S&P doesn't seem to agree, for some reason) is that Treasuries can never be rated lower than any other asset that pays its earnings in dollars. The reason is that whenever the Fed enables a partial default via inflation, it induces an equivalent default by issuers of all other dollar-denominated securities. So, e.g., Exxon debt carries the same inflation risk as US bonds, but it also carries some slight additional risk that is unique to Exxon.
Nachos, it's obvious to me you don't know anything about finance. Greenspan knows way more about finance than I will ever know. But that was a completely retarded statement.
What's amazing is that nobody on that show called him on it. It's outrageous to fucking say that we don't have a debt problem, we can't default, because we print money. Every country prints money, yes?
If you go on to read the rest of his commentary, he goes on to worry about Italy. Well, why is he worried about Italy? They can't default. All they have to do is print more money.
It's an insane, idiotic thing to say. If you don't believe me, ask anybody who knows what they're talking about. Ask Greenspan. He'll fucking tell you. You can't hyperinflate your currency to avoid a default.
Do you know what a default is? What kind of credit do you think we'll have, anyway, if we print $100 trillion extra dollars to solve our debt non-crisis?
What's worrisome is not that Greenspan said something moronic. Obama said we have 57 states. What's worrisome is that nobody in the media challenged Greenspan. It's Meet the Fucking Press and that statement, which is utterly irresponsible and outrageous, just goes right by.
There are way too many in the media who are impressed with authority and credentials. Including you, apparently.
But please tell us how default isn't a problem for any country that prints money.
I am taking bets that C-ford is a future [perhaps already is] serial killer. Anyone want to bet against me?
Well, why is he worried about Italy? They can't default. All they have to do is print more money.
Not since 1999, when they adopted the Euro as their currency. If they still had their own currencies, then for sure Italy and Greece would be printing lire and drachmas furiously.
Rcocean:
How about this tax plan? 15% minimum federal tax rate progressively scaling up to 25% and we totally eliminate the earned income tax credit? Oh and all soc sec income is exempt from taxes? And we include govt welfare benefits as taxable income including food stamps, medicaid benefits, housing allowances, free cell phones, free daycare, college grants including Pell grants and other college scholarships?
A wonderful laying out of the facts, Chip. I do dispute the part about the partial default. Inflating yourself out of debt is not a default. Not paying your debts is a default. But it's all semantics really. We can all agree that, whatever it is, it's not something we should do.
The problem here is the sky-is-falling bombast at Greenspan for stating the fact that the United States cannot default.
As an aside, as we've been around a bit about, I argue that inflation is not the problem at all. It's deflation. There's a depression going on, which means that assets are deflating in price. Some things may be going up in price but most things are going down. This is because there are fewer buyers for the same amount of stuff, so prices go down.
If they still had their own currencies, then for sure Italy and Greece would be printing lire and drachmas furiously.
This! And it's why, long-term, the United States is in substantially better shape than the Euro countries. That regime is simply not sustainable precisely because the countries cannot adjust monetary policy the way the United States can. That's why Greece actually might default but the United States cannot.
Croix -- Every country does not print money. All the Euro countries don't. Many countries peg to the dollar, which means they are highly restricted in their monetary policy, and which is why, for example, you see countries occasionally have economic tumults that they decide to have. They choose to un-peg.
By your own statements trying to show that I am wrong, you demonstrate your utter lack of knowledge.
To review:
1. The United States can inflate its way out of treasury debt.
2. Greenspan noted this.
3. No one, including Greenspan, is saying it's a good idea.
But spout on, dude. Spout on.
I've decided to focus on the silver lining in the European fiscal crisis--it seems quite possible that the basket-case countries will drop the Euro as their currencies. If that led to a splintering of the EU itself, I'd be happy.
Wrongheaded?
Nachos, you don't get points for repeating what Chip says. He knows more about economics than I do. You know less about economics than anybody I've ever met.
I am pretty sure that Italy and/or Greece could drop out of the Euro any time they wanted to. They are still sovereign. Nobody is going to go to war to keep them in.
In fact they are using this threat to try to get more money from Germany.
I agree with Greenspan (and you) that Europe is in a lot of trouble. But I think it's idiotic to ignore or make light of our own debt problems. And it's absolutely idiotic to say that we can just print more money, like that's a fucking option. That's what you say when you're drunk in a bar, for shits and giggles. You don't say it on Face the Nation, the day before the markets open after our fucking debt was downgraded.
It's a really stupid thing to say.
I just think the whole Euro enterprise is doomed. I worked at the State Department, and I'd say that, and my fellow American technocrats would look at me like I was crazy. I learned quickly to shut up.
These are countries that hate each other. They have different languages and different cultures. Is anybody more different than Greeks and Germans? The Euro project has been voted down in every country where people have had the opportunity to vote it down. Yet the countries have tied themselves into this union that allows no monetary flexibility and, in ways I won't go into here, guarantees problem after problem.
The one thing I will say is that they've held the thing together admirably. But it's all smoke and mirrors and, ultimately, it's going to fail. I just hope it's not a disaster for all the regular people.
I'm also puzzled as to why Greenspan said what he did. Maybe he thought it would be a useful antidote to the downgrade. Maybe he thinks that, with yields near zero right now, there's lots of room for the Fed to buy up Treasuries without causing any inflation.
Or maybe Andrea Mitchell's been reading Lysistrata and is demanding that her hubby throw a lifeline to Obama.
I am pretty sure that Italy and/or Greece could drop out of the Euro any time they wanted to.
You are pretty sure of that, are you? What is the method for exiting the Euro?
And it's absolutely idiotic to say that we can just print more money, like that's a fucking option.
Why? It's perfectly true.
Anyway, Chip, see what I'm saying about the ridiculous bombast?
I think Greenspan said it because it's true. He's not the Fed. He's not a policymaker. He's just Alan Greenspan, pointing out that there is simply no way the United States can fail to pay its debts.
Maybe he said it so people like Croix wouldn't freak out. But I guess he failed in that regard.
You are pretty sure of that, are you? What is the method for exiting the Euro?
1. You announce that you are out.
2. You start printing money again.
I'm also puzzled as to why Greenspan said what he did.
I'm going with "brain fart."
And another thing! The Euro countries you allude to, Chip, were able to have their own inflation when they adopted the Euro when prices became denominated in Euros. So something that was priced at whatever drachmas was repriced in Euros, and there was a 20 percent increase in that exchange.
But that one-time massive inflation is gone now and can never be replicated.
Getting back to the question of defaults, I'll mention a very clever method of partial default that one or more of the Latin American countries used to deal with one of their debt crises.
Every analyst knew that there was simply no way they could continue to service all their debt, so the stuff they had previously sold traded at a deep discount. What came next was that the government in question just started buying back its debt in the secondary market at the discount. Voila! They wound up reducing their debt service by some huge fraction, without ever formally defaulting.
Of course, the poor saps who bought the stuff originally took a big loss, so this risk presumably got priced the next time the country tried to borrow.
1. You announce that you are out.
2. You start printing money again.
3. Your currency is worthless from the get-go and you must have a crazy combination of ridiculous interest rates to attract treasury bond purchases while suffering staggering inflation of your crappy little currency.
4. Your people suffer immeasurably.
He's just Alan Greenspan, pointing out that there is simply no way the United States can fail to pay its debts.
Well, that's what he should have said. That's not actually what he said, though.
"We will pay our debts." Good thing to say before the markets open.
"We can always pay our debts by hyperinflating our currency." Not so good.
I mean, nuking our creditors is an option, too, but I wouldn't expect Alan Greenspan to suggest it.
"We can always pay our debts by hyperinflating our currency."
Greenspan did not say that. He said:
"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default"
Cut it out with the goofy bombast. The only person guilty of hyperinflation is you.
"We can always pay our debts by hyperinflating our currency." Not so good.
Here's a partial list of some other problems that could be "solved" by inflation:
Housing market collapse
Student-loan debt
Cash hoarding
Given these incentives, I'm amazed that interest rates are so low. These are interesting times, unfortunately.
Given these incentives, I'm amazed that interest rates are so low.
It's because, for all the bullshit bombast by people like Croix and fundamental failure to lead by our political class, policymakers thus far continue to remember the lesson of the Great Depression: you don't make it even harder for people to do business. So, you don't raise taxes. You don't raise interest rates (if you can avoid it). You don't have a tariff war.
Obama doesn't seem to understand any of this, as he seems to want to add bureaucracy. But he also seems powerless and rudderless. He doesn't appear to me to be a policymaker at this point.
He doesn't appear to me to be a policymaker at this point.
Complete agreement.
Now: Bug or feature?
Who the hell is making policy now, anyway? Anybody besides Bernanke? It doesn't feel that way.
I say feature. My experience as an employee of the United States taught me that the country is analogous to a huge battleship. It's really hard to destroy but it also takes it a long time to turn or get anywhere.
We'll survive the Obama presidency. We'll get our fiscal house in order. It's just taking awhile. The Wisconsin goofiness we've seen play out here on Althouse is instructive. There are a lot of people who are wedded to a big-government paradigm that is simply not sustainable. They went a little crazy in Wisconsin, and we'll see more craziness.
The good news is that, like in Wisconsin, the changes that must be made are simple ones, and they won't be nearly as painful as these loons make them out to be. They will, in fact, help everyone concerned.
" Go back to Brothers Judd and all the other sorry sites you got your sorry ass kicked off for spouting racist inanity."
You forgot
Ace of Spades
(scroll down to #51)
Cedarford is a vile fuck. It's a testament to Althouse's commitment to her principles that she lets him post here.
I ignore him unless he responds directly to me. Then I feel compelled to fire back. I shouldn't. But we have to fight against this bastard.
Greenspan is an idiot. I am sure it will thrill the market to know that rather than being like an individual that cannot repay his debts and either has to go into foreclosure or bankruptcy court, we are like a Banana Republic and can just inflate our currency so the debtors get paper money that is worthless.
I suspect Obama loved to hear what Greenspan said, because it offers him a way of continuing to spend money we don't have. Don't borrow from the Chinese, just have QE3, QE4, QE5,... QE2000.
Printing money is harmless today when nobody's spending it.
The problem is it creates a huge overhang of hoarded money that the Fed will have to sop up very fast when spending starts again.
This will be politically impossible to do, and that's when inflation kicks in.
The Fed will be taking away the punch bowl, as the saying goes, just when the party is starting, and on the backs of the poor or whatever the victim class is then.
I'm also puzzled as to why Greenspan said what he did.
I said "brain fart," but if you watch the tape carefully, that's not it at all.
He hesitates, right before he says it. He stops. There is a definite pause. His eyes shift. And then he says it. There's a bit of an awkward moment right before he says it, like he knows this is going to sound crazy.
The look on Goolsbee's face when Greenspan said we could just print more money is priceless.
Yeah, exactly. That's why the news editor cut to Goolsbee. It's an insane thing to say. And his eyes are bugging out.
Here's my theory.
Obama, or somebody from the Fed, asked Greenspan to go on the talk shows and calm the markets.
I vote for Obama, or somebody from the Administration. Maybe this was Biden's idea. I don't know, it's just so stupid. And it's just like Obama to call on Greenspan, like he's a superstar. And whatever he says, we will follow.
And Greenspan is like, what do you want me to say? And that was the line he was given to say.
So he said it.
Wow.
Markets open in 3 hours.
Dear Mr. Greenspan,
Could you print up a bunch of money, and send it to me?
Thanks.
Your friend, AllenS
I expect the next week to be a bumpy ride.
Hold onto your hats, everybody.
@Apfelkuchen:
The adherence to the oath of" no tax increases" has essentially created a scenario in which we make the poor and middle class pay for the Bush tax cuts, which will not cure our debt problem, DESPITE severe cutting of social programs.
Please humor me in my ignorance. Precisely which social programs were cut? What the spending last year, the year before, this year, next year?
Thanks in advance.
Does anyone here remember what happened to Germany in the 1920s??? 1000 percent inflation?
The Germans should have been so lucky. The inflation rate in Germany in 1923 “hit 3.25 × 10^6 percent per month (prices double every two days).”
These people are out of their fucking minds. We have lunatics running this country and taking us into the asylum with them. This is insanity. Literal insanity.
I want to buy summer clothes and from long time I am looking for stylish and latest design. Have anyone here any idea about Greenspan company profile.
Greenspan company profile
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