America is. All the critics and malcontents should just listen to the inaugural speech. Imagine, a President that values science over religeous fundamentalism, humility over arrogance, unity over division, rule of law over the subversion of our constitution, scrutiny over secrecy, peace over war... I bet Obama even knows how to read! He really, really gets it.
There's work to be done, but at least we can be be proud of our choice of leaders again.
On January 28 Obama announced his $825 billion bailout plan. This comes on top of President Bush’s $700 billion bailout of just a few months ago.
Obama says his plan will be more transparent than Bush’s and will do more good for the economy.
As large as the bailouts are--a total of $1.5 trillion in four months--the amount is small in relation to the reported size of troubled assets that are in the tens of trillions of dollars. How do we know that by June there won’t be another bailout, say $950 billion?
Where will the money come from?
Obama’s bailout plan, added to the FY 2009 budget deficit he has inherited from Bush, opens a gaping expenditure hole of about $3 trillion.
Who is going to purchase $3 trillion of US Treasury bonds?
Not the US consumer. The consumer is out of work and out of money. Private sector credit market debt is 174% of GDP. The personal savings rate is 2 percent. Ten percent of households are in foreclosure or arrears. Household debt-service ratio is at an all-time high. Household net worth has declined at a record rate. Housing inventories are at record highs.
Not America’s foreign creditors. At best, the Chinese, Japanese, and Saudis can recycle their trade surpluses with the US into Treasury bonds, but the combined surplus does not approach the size of the US budget deficit.
Perhaps another drop in the stock market will drive Americans’ remaining wealth into “safe” US Treasury bonds.
If not, there’s only the printing press.
The printing press would turn a deflationary depression into an inflationary depression.
Unemployment combined with rising prices would be a killer.
<<promising the federal deficit would be cut in half by the time he left office...funny how none of that panned out huh? >>
It was cut by more than half by FY 2007. Trying to connect the banking mess with his tax cuts, as though it wouldn't have happened if he hadn't cut taxes, as some Democrats do, is at best dishonest - at worst psychotic.
<<Bush W.'s tax cuts ended up hurting the states>>
I have no idea what you're talking about.
<<Do you not agree that Iraq is a primary reason why the deficit balooned under Bush? >>
It was one factor. I also think that based on what we knew then, invading Iraq was the right thing to do. In any case I have no idea how that serves as a justification for anything Obama does.
There's a long list of things that could be complained about. The income cap on SS taxes is not one. Since benefits are capped the tax should also be capped. There's no logical justification for removing the cap. It's just using SS as a vehicle for wealth redistribution at that point. It would also wreak havoc with small businesses.
Get rid of farm subsidies absolutely. Obama is as likely to do that as he is to back a constitutional amendment banning gay marriage. The Dems have pushed for ever higher farm subsidies for decades. Bush vetoed the huge farm subsidy bill the Democrats passed in 2008. He was overridden. McCain voted against it. Obama voted for it. So I have no idea what your point is here. And while we're at it, get rid of ethanol subsidies, another boondoggle that may actually lose energy, as well as the mandate that gas be 10% ethanol that Democrats enacted quickly after taking control of Congress in 2007. McCain is one of the few Senators who voted against them. You won't find Obama on that list either.
Get rid of oil subsidies too. Maybe Obama will actually do that. It might pay for a half percent of his "stimulus" package or something.
Corporate tax shelters? You mean illegal ones? What's that got to do with Obama's enormous pork laden "stimulus" bill?
What they should do is cut the corporate tax rate and get rid of the "loopholes", most of which were some tax break inserted into the tax code to benefit some industry in some Senator or Congressman's state or to try to micromanage some aspect of how business invests. O won't do either of the above. Again I have no idea what this has to do with Obama's enormous pork laden "stimulus" bill.
Nobody is saying deficits aren't important. And we will have to pay higer taxes bacause of Bush's deficit spending... same with TARP, and same with the Obama's stimulus.
Bush was proud of his deficit spending though... thinking his tax cuts would generate more long term revenue, job growth, and promising the federal deficit would be cut in half by the time he left office... funny how none of that panned out huh? Just like Regan's tax cuts and deficit spending led Bush Sr. to raise taxes, which caused him not to be reellected. (Bush Sr. was a good president.) Bush W.'s tax cuts ended up hurting the states... and the states in turn ended up having to raise more revenue through higher taxes and fees... so the Fed gave with one hand and the state took with the other. The most galling thing about it though is that no country has EVER enacted tax cuts in a time of war. Do you not agree that Iraq is a primary reason why the deficit balooned under Bush?
I don't think enacting TARP was optional, and the same can be said of the Obama stimulus. You might be able to pick at the margins, but most would agree that a stimulus is a necessary evil. Yet you want to blame Obama for the deficits he's basically inherited, all the while forgetting what got us here? You're okay with spending a trillion dollars on Iraq, but want to bitch about a community stabilization program or an earned income tax credit? Why don't you complain about subsidizing big oil, farm subsidies, foreign aid (Israel), etc... instead. Why don't you complain about Republicans stripping oversight (executive compensation) from TARP? Why don't you complain about the income cap on SS taxes? Why don't complain about all the Fortune 500 companies with overseas corporate tax shelters?
With corporate tax receipts at 20-year low, the GAO takes a look through the books and finds 94% of all U.S. companies paid less than 5% -- and 61% paid nothing at all. In 2000 alone, 94% of all U.S. corporations paid less than 5% of their total income in corporate taxes, the GAO said in a report released Friday. Among the largest corporations -- the 1% of all corporations that owns 93% of all corporate assets -- 82% paid less than 5% of their income in taxes.
And it wasnt just American companies avoiding a bill. About 70% of foreign-owned companies doing business in the United States paid no federal tax in the late 1990s, the GAO said. The GAO report covered 2.1 million returns by U.S. companies and 69,000 foreign-owned companies. The federal corporate tax rate is 35%, but tax credits and loopholes can dramatically shrink the tax bill.
Get your priorities straight man... it's not the average Joe that's the problem.
<So a $400 billion deficit at an average of 5% cost taxpayers $20 billion a year. A trillion dollar deficit at 1% costs taxpayers $10 billion a year.>
So Democrat you're saying Obama deficit = good, Bush's = bad. What was that again about how I'm one of those people who says Republican = good Dem = bad?
What makes you think rates are going to stay at 1% forever genius? The 1% is the Federal Funds rate anyway - not the rate of the government's long term financing. They're two different things. The Fed Funds weren't 5% most of the time Bush was in office anyway. When he took office the Fed was pushing short term rates down aggressively as they are now, because we were in a recession. They were around 2% most of his time in office - particularly his first term.
In any case, I was responding to a Dem who said we'll all have to pay higher taxes because of Bush's deficits. Since rates
are 1% (or whatever they actually are) that is also the rate on any of Bush's accumulated deficits. The $400 billion was his highest deficit. So whatever you say for Obama's GOOD deficits goes for Bush's BAD deficits. If we have to pay higher taxes to pay for Bush's then I don't see any non-psychotic way to say it won't be true of Obama's. And if we won't have to pay higher taxes because of Obama's deficits because interest rates are low then we won't have to pay higher taxes on Bush's. Obama's are simply much higher. There is now way around that. If you keep trying to find one then you're another psycho.
<Only a Republican hack would think the federal budget deficit is more important than lower GDP numbers, soaring unemployment, and a crumbling stock market.>
It was a freakin Democrat who was complaining about Bush's deficits. I see hundreds of posts by Dems over and over complaining about that. Bush cut taxes in another recession, when there were lower GDP number etc. SO GO EXPLAIN TO THE OTHER DEM DEFICITS AREN'T THAT IMPORTANT. Oh wait, I forgot, they are important if Bush runs them.
<It's the Dems stimulus package not Obama's >
Ilap, you don't get it. Bush's hundreds of billions in deficits occurred when the government had to pay high interest on its debt.
So a $400 billion deficit at an average of 5% cost taxpayers $20 billion a year. A trillion dollar deficit at 1% costs taxpayers $10 billion a year.
<The enormity of O's huge spending increases is the elephant in the room.> It's the Dems stimulus package not Obama's and 1/3 of the stimulus is in the form of tax cuts. See the link: http://www.voanews.com/english/2009-01-28-voa64.cfm
And elephant in the room? Try mouse in the room. Only a Republican hack would think the federal budget deficit is more important than lower GDP numbers, soaring unemployment, and a crumbling stock market.
re: I could play that game too. Bush had to cut taxes because Clinton left office with the economy in recession. And 9/11 happened because Clinton essentially ignored al-Qaeda despite repeated attacks. So the deficits of the Bush years were really Clintons.
No... wrong again! You can blame the Reagan admin. for training the mujahideen and arming Saddam with chemical weapons. And you can blame the Eisenhower admin. for orchestrating the overthrow of Iran's popular Prime Minister, Mohammed Massadegh, which was the beginning of the end of our relations with Iran.
You can also blame Regan for the bogus "war on drugs", which is really just a proxy for us to guard the Columbian oil pipeline.
I agree with everything you posted. That's a first, but it's no fun to agree.
Here is an incredibly well written post about Peter Schiff, decoupling, the dollar, and foreign economies.
So you see Winny you were 100% wrong about decoupling. Gotta get things back to normal around here:)
Boring is right. I'm totally non partisan. Not many pols that I can respect no matter the party.
The Bush admin was terrible in terms of foreign policy and the nation's finances, there's just no denying it. The Iraq war was unjustified and the Bush admin knew it IMO.
But I have no confidence in an Obama admin either.
While we might get some improvement in foreign policy now(and there are no guarantees we will ), there is now great potential to do great financial damage with misguided domestic policy and the odds are very good that the nation's finances will be put into an even deeper hole now.
Political discussion on this forum are fine because part of investing or shorting PBR has to do with politics. Any discussion with regards to policies that favor a strong/weak dollar or Real are very relevant to PBR's valuation.
But when I read something like this, "Whatever grade I would give Republicans is irrelevant", that means we have a Republican hack whose whole mission is to convince others that Republicans=good and Dems=bad.
Obama has been in office all of two weeks and already you are trying to blame him for the economic mess we are in. Your hero Rush Limbaugh said of Obama one day after his being sworn in, "we are and have been in an Obama economy."
The Dems as demons and Republicans as saints (or vice versa) comments are so predictable that they offer nothing to this board. And the worst part of these types of posts is that not they are obnoxious or closed minded.
No, the worst thing is that they are so FRIGGIN' BORING!!!!!