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America's Financial Mess

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Wotan

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The wanna be economic regulators are going to be coming out of the closet with the next administration. Obama seems to think he has a mandate to reform the financial sector and other ills of the economy.

He has called for adoption of "new common-sense rules of the road that will protect investors, consumers and our entire economy from fraud and manipulation by an irresponsible few."

The early signals point to "a very new and different and activist era," Ornstein said.

What about a moratorium on government manipulations?

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Obama's going to be even worse for the economy than McCain. At least McCain KNOWS that he doesn't know jack about economics, Obama thinks he knows when he really doesn't know anything, judging from what he's planning.

What does Obama's tax cut proposal look like? I haven't read any of the details.

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What does Obama's tax cut proposal look like? I haven't read any of the details.

It will look like every precept adopted and espoused by the "liberals" and "progressives" of our age. It will look like savages plundering the seed stock of a farm, then demanding that the farmer grow more.

Going by his previous musings on "tax cuts," it will look like "rebates" to the "middle class" (i.e., checks to those earning less than $xxx), so that they can consume more and thereby cause a rise in production.

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It will look like every precept adopted and espoused by the "liberals" and "progressives" of our age. It will look like savages plundering the seed stock of a farm, then demanding that the farmer grow more.

Going by his previous musings on "tax cuts," it will look like "rebates" to the "middle class" (i.e., checks to those earning less than $xxx), so that they can consume more and thereby cause a rise in production.

Except that most people will save the money or use it to pay down debt, which is excactly what they did with the last rebate.

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The CBO projected this years budget deficit to be $1.2 trillion dollars. And that number does not include the stimulus package that Harry Reed said could itself be $1.2 trillion. The idea that in a single year we could have a $2 trillion deficit is sheer madness.

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  • 3 weeks later...

Obama's economic stimulus plan has passed.

The results will be predictable. On the bright side, however, the republicans opposed it entirely, saying that it entails too much wasteful spending and that tax cuts would get the job done (they provided a substitute stimulus that consisted almost entirely of tax cuts, but it got voted against). This will benefit them politically later on.

Hopefully in the future they can ground their objections in principles and morality.

Edit: Minor wording.

Edited by Benpercent
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Obama's economic stimulus plan has passed.

The results will be predictable. On the bright side, however, the republicans opposed it entirely, saying that it entails too much wasteful spending and that tax cuts would get the job done (they provided a substitute stimulus that consisted almost entirely of tax cuts, but it got voted against). This will benefit them politically later on.

Hopefully in the future they can ground their objections in principles and morality.

Edit: Minor wording.

I read in the newspaper that this bill contains provisions that more than DOUBLE the department of education's budget for the next two years. They're investing about 130 billion dollars in education, it seems. And that at a time when we badly need to get the government out of education =(

I thought it was interesting, when I watched CSPAN today some texas republican in the house was opposing it, and gave tons of reasoned arguments for why it was a bad idea. Then the committee leader (a democrat) responded with a series of emotional appeals that didn't address anything that the other guy had brought up, and they repealed the proposed amendment (that would have removed all the extra spending from the bill).

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Rush Limbaugh weighed in on how to best fix the economy. He wants a bipartisan compromise between massive government spending on infrastructure and tax breaks for capital gains. But he doesn't say anything about deregulating and he doesn't say anything about overturning the laws that got us into this mess in the first place, such as the Community Reinvestment Act. There is also no moral stance on a person's right to earn money -- just government spending and tax cuts, which is not enough to fix the economy.
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This economic crisis certainly makes for strange comments from the world's political leaders. Unbelievably, at the Davos conference Russia's Putin criticized too much government involvement in the economy and Bill Clinton poked fun at him:

"This is the first I've heard of Prime Minister Putin coming out for free enterprise," Clinton told an audience at the World Economic Forum on Thursday, a day after the Russian leader warned that too much government involvement in the economy could be "dangerous" and cautioned against "blind faith in the state's omnipotence." Putin has often been criticized for exerting state control over Russia's key industries such as oil and gas. Clinton joked: "I hope it works for him."

http://www.iht.com/articles/ap/2009/01/29/...ill-Clinton.php

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Part of the new infrastructure proposal includes protectionism for American steel and concrete manufacturers, a direct violation of NAFTA, according to some, and Obama is against NAFTA or any other free trade agreements. If protectionism is what lengthened the last depression, we may be in for more of the same. We'll have to see if Obama et al start putting tariffs on foreign goods and services, but if he does, that will mean higher costs for all Americans, lengthening the recovery time period.

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Part of the new infrastructure proposal includes protectionism for American steel and concrete manufacturers,...

I'm reminded of the 2002 steel tariffs that Bush imposed. Not only did these tariffs hurt US consumers and US companies that use large amounts of steel (i.e. the auto companies), but they stirred up resentment among our trading partners. The WTO eventually ruled that these tariffs had to be lifted (under possible sanctions) and Bush backed down. We may see something similar happen after the final stimulus package gets passed by the Senate. However, if our trading partners respond with their own restrictions, that would be bad news indeed.

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In an unusual show of support for businessmen (eh hem!), Obama denounced the fact that Wall Street Bankers go over $18 billion in bonuses.

Said Obama: "That is the height of irresponsibility. It is shameful."

The president said he and new Treasury Secretary Timothy Geithner will have direct conversations with corporate leaders to make the point.

Obama said there is a time for corporate leaders to make profits and get paid bonuses but now is "not that time."

You are only permitted to make money once everyone else is up to par! Don't you know that? :)

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Going by his previous musings on "tax cuts," it will look like "rebates" to the "middle class" (i.e., checks to those earning less than $xxx), so that they can consume more and thereby cause a rise in production.

The last thing we need at this point in time is tax cuts. We should have tax hikes, until government pays off the entire debt, at which point they can cut taxes and get the hell out of the way.

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The last thing we need at this point in time is tax cuts. We should have tax hikes, until government pays off the entire debt, at which point they can cut taxes and get the hell out of the way.

Raising taxes would be disastrous; what they need to do is to cut projects and cut spending while lowering taxes. Economic numbers came out this morning and it doesn't look good. The economy shrug by the largest amount in 27 years, so the government needs to stop messing with the economy, including stop doing massive spending bills that take money out of the economy via taxation.

That would be the easiest thing to do, but cutting regulations would be very helpful, though since no one is advocating that in Congress, it ain't going to happen.

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Raising taxes would be disastrous; what they need to do is to cut projects and cut spending while lowering taxes.

Economic numbers came out this morning and it doesn't look good.

Wait, what's so bad about these numbers? So what, GDP shrank a few percentage points. It needs to shrink a lot more. You've been listening to too many economist's on TV talk shows. Real economic growth is not driven by consumption. We shouldn't be trying to get back to a pre-August 2007 level, where everyone is consuming recklessly. This recession is exactly what America needs to get back into shape. Millions of jobs should be lost, credit should be cut off, and housing values should plummet. Moreover, your statement "the economy shrug by the largest amount in 27 years, so the government needs to stop messing with the economy" is a non sequitur that requires much more thought between the statement of fact and the conclusion.

"Cut projects and cut spending while lowering taxes" is equally ridiculous. American government owes the world large amounts of debt. If it doesn't increase taxes and honestly pay for that debt, it will increase inflation and dishonestly pay it. Since inflation eats away at current savings, and since savings is the engine of real economic growth, more inflation is the wrong prescription. Your assertion amounts to nothing more than recommending an increase in inflation.

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Wait, what's so bad about these numbers? So what, GDP shrank a few percentage points.

I think you are confusing me with someone who is a consumerist. I don't think consumers drive the economy. An economy shrinking or growing should not even be a concern of the government, and I agree with you that what the government is most likely to do is to spend, spend, spend after borrowing, borrowing and printing more dollars. It's a vicious cycle that needs to stop, and the way to stop it is to reign in governmental interference into the economy -- get rid of the Federal Reserve, roll back regulations, and get the government out of the economy. Yes, we have a huge debt, and it will only grow larger as all the special projects spending and welfare continues. At some point, we need to tell the government to stop, pay our debts, and get back to sound fiscal and economic policies; which means getting the government back to upholding individual rights and nothing more.

I agree that unprofitable businesses need to go out of business and that the government ought not to try to support the housing market; and there is a big difference with trying to predict what the Feds are going to be doing to "correct" the problems versus what they ought to be doing. I'm advocating for capitalism, not governmental fixes for problems they created. In a capitalist system, whether the economy goes up or down would be no business for the government to get involved in; it is their attempts to manipulate the markets that got us into the fix, and the only real fix is to get the government out. But raising taxes at this point is ludicrous -- they really ought to leave it alone, and let the markets operate. Of course, you and I both know they aren't going to do this, but I'm still fighting for capitalism and not for governmental interference one way or the other.

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Part of the new infrastructure proposal includes protectionism for American steel and concrete manufacturers, a direct violation of NAFTA, according to some, and Obama is against NAFTA or any other free trade agreements. If protectionism is what lengthened the last depression, we may be in for more of the same. We'll have to see if Obama et al start putting tariffs on foreign goods and services, but if he does, that will mean higher costs for all Americans, lengthening the recovery time period.

This is definitely getting some notice in foreign capitals. For example in Canada:

OTTAWA, WASHINGTON — Fears of U.S. protectionism shot to the top of the agenda for President Barack Obama's Feb. 19 visit to Canada, as "buy American" provisions in a Washington bill set off alarms in Ottawa. The U.S. House of Representatives passed legislation yesterday that includes a controversial provision barring virtually all foreign iron and steel from the $820-billion (U.S.) stimulus package's infrastructure projects. A Senate version of the bill, which hasn't yet been voted on, goes a step further, extending the U.S.-only requirement to all goods and equipment paid for with government stimulus cash. "This is obviously a serious matter and a serious concern to us," Mr. Harper said in the Commons, adding later: "We will be having these discussions with our friends in the United States and we expect the United States to respect its international obligations."

http://www.theglobeandmail.com/servlet/sto...y/National/home

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Not only that, but the government has no means of tracking what the $700 billion did for the economy!

WASHINGTON – We may never know whether the government's $700 billion bailout of the financial industry worked, according to a new report from congressional auditors.

That's because it will be impossible to sort out which of the recent rule changes and spending programs have made a difference, according to the report released Friday by the Government Accountability Office.

But hey, that's OK, once the economy begins to go up again, they'll take credit anyhow, and foster more and more governmental interference. And when that goes belly-up, they'll say, "We didn't do it! You can't prove anything!" :dough:

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This is definitely getting some notice in foreign capitals. For example in Canada:

OTTAWA, WASHINGTON — Fears of U.S. protectionism shot to the top of the agenda for President Barack Obama's Feb. 19 visit to Canada, as "buy American" provisions in a Washington bill set off alarms in Ottawa. The U.S. House of Representatives passed legislation yesterday that includes a controversial provision barring virtually all foreign iron and steel from the $820-billion (U.S.) stimulus package's infrastructure projects. A Senate version of the bill, which hasn't yet been voted on, goes a step further, extending the U.S.-only requirement to all goods and equipment paid for with government stimulus cash. "This is obviously a serious matter and a serious concern to us," Mr. Harper said in the Commons, adding later: "We will be having these discussions with our friends in the United States and we expect the United States to respect its international obligations."

http://www.theglobeandmail.com/servlet/sto...y/National/home

Hmm. Smoot-Hartley anyone? History may not repeat, but it sure does rhyme.

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