demagogue on 2/1/2013 at 09:44
The poster you want to hear from on the topic is RBJ. He's given many posts on all the theory on raising taxes and the deficit. Some punchlines were that the deficit "problem" is something of a bogey, not a real problem in the long run if it doesn't shrink, and that the fear of inflation is imaginary and keeps not happening despite the doomsayers (or has been in the last few years). But you'll have to track down his posts to let him explain.
Re: entitlement reform. Obama could suggest cutting Social Security for the same reason Clinton could suggest welfare reform, and for that matter Nixon and Reagan could open up with Mao's China & Gorbachev's USSR respectively. No one would accuse them of being too soft on their core (although of that list, Obama is accused of being the softest on his base's principles).
CCCToad on 2/1/2013 at 17:05
Martin Armstrong (look him up) says about the same thing. That there isn't going to be any runaway inflation, but instead a case of sever STAGflation (cost of living goes up dramatically while wages stay stagnant)
Here's his take on the "cliff"
(
http://armstrongeconomics.com/2012/12/26/fiscal-cliff-of-tax-increases-ahead-the-end-if-near/)
What's interesting is that if you read a bit more of his articles, he does a good job of painting the case that Obama's economic "plan" is just to copy what
the French did.
A bigger concern is this:
Quote:
In other words, capital will start to shift from PUBLIC to PRIVATE. Keep debt investment as short as possible. US will be the last to go, but still be careful with MUNIs. Interest Rates should start to rise in 2013. Once this takes place it will reveal that the emperor has no clothes. The Fed will be unable to keep rates low. The banks have been enjoying a huge spread paying nothing to depositors - 0.5% for 3 years while demanding 4% for 3 years fully collateralized loans..
We will report after Year-end what buy and sell signals we have for the upcoming year. It looks like the August 7th ECM date will be important.
The big risk is that if interest rates rise (and it seems like they will), that's going to expose that most banks are still massively insolvent because contrary to all common sense, the bank's behavior has only gotten more risky since 2008(Thanks to CDS's and REPOs). Eurozone in particular could be a disaster with some banks leveraged over 400 times what their actual assets are......and their derivatives are owned to nations all over the continent. That part of the world is set up for a chain reaction which could destroy their entire financial markets, and this time there isn't enough cash to bail them out: the amounts owed would be in the Trillions.
june gloom on 2/1/2013 at 21:47
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jay pettitt on 2/1/2013 at 22:29
Quote:
In the current form of the bill, there are little to no spending cuts. It seems that the assumption is that the deficit can be taxed away by increasing tax rates on the rich, when this doesn't seem to be realistically practical. The only way that it seems possible to truly fight back the deficit is through entitlement reform, yet that is shunned.
Err, no.
Fiscal Cliff has got very little to do with deficit. At least not in a direct sort of way.
Loosely speaking deficits go up and down over time. Highlighting a deficit figure from a short time frame and screaming OMGLOOKISBIG is dumb. Get some growth back and that deficit will be back to normal in no time. It's a symptom, not the cause. Everything you do to try and cut the deficit is time and energy you could have spent on sustainable economic recovery.
Not resolving the fiscal cliff in a good way could have hurt the US economy's recovery from its current depressed state by cutting programmes and raising taxes. It could have introduced a more regressive taxation regime and it would have sunk US politics’s reputation further than it already is. And the rest of the world are noticing that congress as is would rather wet itself than make a grown up decision to go to the toilet.
As noted by others, the US (and elsewhere) do need to get to grips with their health spends, because folk are living longer and needing more treatment. Probably need to do more healthy stuff like walking and cycling and eating vegetables I'm afraid.
scarykitties on 2/1/2013 at 23:24
Thanks for the link! I read the article and bookmarked the blog.
It seems counter-intuitive that, in spite of the Federal Reserve pumping money into the economy to keep interest rates low, we'll get the opposite of inflation. I guess this guy knows what he's talking about, though, having predicted more than a few financial collapses in his day (fraud charges notwithstanding).
Quote Posted by CCCToad
A bigger concern is this:
The big risk is that if interest rates rise (and it seems like they will), that's going to expose that most banks are still massively insolvent because contrary to all common sense, the bank's behavior has only gotten more risky since 2008(Thanks to CDS's and REPOs). Eurozone in particular could be a disaster with some banks leveraged over 400 times what their actual assets are......and their derivatives are owned to nations all over the continent. That part of the world is set up for a chain reaction which could destroy their entire financial markets,
Well, it's not like much was done to hold banks responsible for the 2008 collapse. Though, from what I'd heard, it was a combination of banks giving out loans to those who could never hope to pay them back and politicians leveraging banks to do just that. I'm not sure what Wall Street's part in the whole ordeal was, though.
Quote Posted by CCCToad
and this time there isn't enough cash to bail them out: the amounts owed would be in the Trillions.
That sounds like a big deal, though the USA's debt alone is "in the Trillions," so I'm not sure what the real risk is.
CCCToad on 3/1/2013 at 03:09
Quote Posted by scarykitties
Well, it's not like much was done to hold banks responsible for the 2008 collapse. Though, from what I'd heard, it was a combination of banks giving out loans to those who could never hope to pay them back and politicians leveraging banks to do just that. I'm not sure what Wall Street's part in the whole ordeal was, though.
.
The first point: very true. Obama's' DOJ even issued a directive that financial crimes were NOT to be prosecuted.
On the second point...RBJ had an old post that described it. That was part of it, but it's also more complex than that. Derivatives of derivatives of derivatives......to the point that the banks couldn't pay them back without collapsing. Due to the lack of accountability that's only gotten worse as scumbags like Corzine put their clients, their banks, and the economy down the tubes for the sake of short term profits.
karmaKGB on 3/1/2013 at 05:30
Some of the misinformation out there about the deal that Congress just struck is... hilarious? Stunning? I really shouldn't be surprised since Fox has always been the network of epic trolls.
Anyways, Sean Hannity is telling all of his viewers that this deal "adds $4 trillion in new debt over 10 years and the CBO says so". Which is true... if you view the deal's tax structure as "tax cuts". Two days ago, every Republican was fighting to keep even MORE of the very same Bush tax cuts and all this deal does is keep most of them in place. Suddenly, that's "new debt" instead of being generally neutral while actually raising $620 billion on the top end.
Ridiculous. :wot::joke:
june gloom on 3/1/2013 at 09:14
Not quite as awe-inspiring as that first one but mostly because it's a continuation of the same joke.
Still making me laugh though.
