Pickpocketing the American Taxpayer

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Dark Angel
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Pickpocketing the American Taxpayer

Post by Dark Angel » Wed Jan 28, 2009 5:36 am

"Bankers Behaving Badly": A Needed Remedy for a Financial Industry Gone Off The Rails


The headline on Huffington Post yesterday was "Bankers Behaving Badly," referring to Citigroup's ill-timed purchase of a $50 million Dassault 12 seater private jet. (Yes, I know the jet was ordered some two years ago, but I can't imagine a purchase contract of this nature without a cancellation/penalty clause). Citi is but a sad example of an entire industry that has gone off the rails and taken the nation and the world economy with it. Citigroup, by a far cry, is not alone.

Consider this: Lehman Brothers was once viewed as a pillar of the finance and banking industry, to be emulated and celebrated by its peers in the finance world. Now in bankruptcy, the law firm Alvarez and Marsal, LLC, engaged to facilitate Lehman's restructuring, is arranging for the sale of Lehman's erstwhile air fleet. Seated please? It comprises the following:

1 Boeing 767
4 Boeings 737's
1 2008 G550
3 Bombadier CRJ 200's
A couple of smaller jets, and participation in NetJet shares
1 Helicopter

For Lehman's in-house use, or the hard assets of an aircraft leasing business? Hard to say, but cursory examination of the law firm's "State of the Estate" public documents has not found confirmation that these assets were integral to an aircraft leasing venture.

A company's public conduct and public image should be a determinant of which companies get taxpayer monies, or at the very least, on what limitations taxpayer's money can be put to use. Perhaps the perception of Lehman was ultimately its undoing, exhibiting a degree of hubris that made it unsalvageable by a public bailout.

But much too often that yardstick has gone by the wayside, especially so when you have Wall Street Club Member like Hank Paulson doling out billions to other Club Members with virtually no restrictions on how this bounty is to be used and virtually no oversight in place.

Aberration piles on aberration. Money meant to ease the housing and liquidity crunch goes into oil speculation by financing the purchase of hundreds of millions of dollars of crude, storing it in tankers and having it stay at anchor at sea day after day, months at a time (please see "Your TARP Money Is Being Used To Prop Up The Price Of Oil" 1-23-09).

Or the likes of PIMCO with their direct access to Hank Paulson, cashing in $1.8 billion on the bailout of Fannie Mae and Freddie Mac, and then selected as one of the entities monitoring and distributing TARP funds (please see "Bailout Ballet: New York Times on Hank Paulson/Pimco's Bill Gross Pas De Deux" 9.26.08) Talk about putting the fox in the hen house.

It seems to go on endlessly, and with no public shame and little accountability. There is John Thain's million-dollar-plus office decor concurrent to Merrill Lynch posting a $15 billion quarterly loss. But worse, much worse handing out $4 billion in bonuses a week before Merrill Lynch's official takeover by Bank of America. And when asked how he could justify a bonus pool of anywhere near the $4 billion meted out, responding, almost unbelievably that the $15 billion dollar loss was caused by "legacy" investments. This almost as though he was talking about a different company, in a different universe with a different currency. It would seem only a Wall Street mindset could come up with such a dippy rationale. Especially so in this world of retrenchment, job losses and general economic hurt.

But wait, perhaps there is a brighter side to Mr. Thain's misshapen judgment. If losses don't count today, then they should count when they were initiated. And if so, the concept of "clawback", that is the reimbursement of past executive compensation and trading bonuses should be reexamined, and with great seriousness. This especially so on those trades or policies that were presented as profitable but were inherently flawed and proved disastrous.

Billions upon billions were distributed to those who were making bets and managing once solid businesses into the ground as though they were nothing more than casinos. Bets that eventually brought down the economy and in many cases crippling/destroying the companies themselves, losing unfathomable billions for the institutions in whose name the those "bets" were made. These payouts need be recalculated in the light of their ultimate and actual impact.

It is time there was some accountability for this disaster, especially so to a public that is footing the bill. And it is past time that a clear signal is sent that the days of Wall Street rules, Wall Street mindset and Wall Street oversight are at an end.

If you aren't outraged you aren't paying attention.

My personal favorite...was buying up oil then anchoring it at sea to artificially prop up the oil specualation market...so they can make some more money.
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Post by Dark Angel » Wed Jan 28, 2009 6:51 am

Ryan Grim | HuffPost Reporting From DC
Former McCain Adviser, Ex-Merrill Chief, Orders Tap Water To Display Modesty


What a difference a meltdown makes.

Just months ago, John Thain was CEO of Merrill Lynch, a top backer of presidential candidate John McCain, and widely talked of as in line for a top White House economic position should his man win on Election Day.

Instead, Thain has been fired in disgrace after Merrill was taken over by Bank of America and tarred for spending 1.2 million dollars on a Merrill office renovation and $87,000 for a rug in those new digs.

And McCain is again a Senator from the state of Arizona, uninterested in talking about his old friend.

"I haven't had a chance to look into it. I really haven't. I haven't had a chance to absorb it," McCain said when asked by the Huffington Post about Thain's plight.

For his own part, Thain is taking baby-steps to rehabilitate himself. No more fizz for Thain, at least while the economy's in freefall.

Thain "was having dinner at San Pietro last week with BlackRock Chairman Larry Fink. He loudly told the waiter, for all to hear, "under the circumstances with this tough economy, I think I'll have tap water," the New York Post reports.

The giving-back won't stop there. Thain told CNBC Monday that he plans to return the money spent renovating the office, calling it "a mistake in the light of the world we live in today."
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Post by Dark Angel » Wed Jan 28, 2009 6:53 am

Obama Officials Tell Citibank To Ditch Plans For $50 Million Private Jet


According to a report from ABC News, President Obama is not taking kindly to corporate greed, especially when it's funded by taxpayer money. Read more from ABC here:

The high-flying execs at Citigroup caved under pressure from President Obama and decided today to abandon plans for a luxurious new $50 million corporate jet from France...

ABC News has learned that Monday officials of the Obama administration called Citigroup about the company's new $50 million corporate jet and told execs to "fix it."

On Monday, the news broke that bailed out bank was going through with its $50 million private jet purchase even though it had recieved $45 billion in government funds:

The New York Post's Jennifer Keil and Chuck Bennett reported in Monday's paper that Citigroup, which has received $45 billion in government bailout funds, is about to upgrade to a new $50 million, twelve-seat corporate jet.

The plane, the Dassault Falcon 7X, is a luxurious jet with a range of 5,950 nautical miles (meaning it can fly from New York to all of Europe and South America, as far east as Riyadh, and as far west as Honolulu or Petropavlovsk, Russia). The Post reports it has "plush interior with leather seats, sofas and a customizable entertainment center."
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Post by Enigma » Wed Jan 28, 2009 9:19 am

Some ethics would be nice.
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Post by Dark Angel » Thu Jan 29, 2009 12:06 pm

Enigma wrote:Some ethics would be nice.


Ya maybe a little humility too oh and lets not forget honor and responsibility
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Post by Labbie » Sun Feb 01, 2009 8:26 pm

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Post by Gavin Shaw » Sun Feb 01, 2009 11:12 pm

$8.5 trillion????

Last I heard it was only going to top at $1, maybe $1.5 trillion.

What the hell happened???

And where the f*** is that money going to come from???

Or is the U.S. just going to print a s*** load more and flood the world markets with, causing other currencies to crash? (Which is what some nut jobs think is going to happen). And if that is true how does that ultimately help the world economy and the U.S. economy?
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Post by Labbie » Sun Feb 01, 2009 11:50 pm

Probably most of it is the interest that will be paid on the massive loans.

something the politicians always forget about. :smt011
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Post by Gavin Shaw » Sun Feb 01, 2009 11:58 pm

And they all want us to stay positive and spend money to keep the economy going.

As much as I want to upgrade replace the computer system at home (partial reason is in case Lin needs it for data processing when she starts on her PhD, instead of relying completely on the HPC at uni) I am starting to think I won't spend the money and hold on to it for the future since we have no idea what is going to happen.

Of course maybe I wait a little while and maybe, just maybe there will be another drop in prices for some of the parts...
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Post by Labbie » Mon Feb 02, 2009 12:26 am

IM(ns)HO,

If they really wanted to get the economy going (in the US at least) they would cut the income taxes to ZERO for the first 6 - 9 months of this year and remove (or give a credit for) income taxes for the last 3 months of 2008. No withholding taxes during this time, so you take home practically everything you earn.

Then, give tax credits for buying US manufactured goods (cars, trucks, homes, etc.) and lower the capital gains tax another 5 points or so.

The first gives the populace a chance to get what they feel like is a good nestegg for themselves and the second gives incentive to purchase US goods to stimulate the business of US manufacturers and provides incentive for the stock market investors to hopefully make a buck or two.

The government doesn't do anything well, much less think intelligently. This is one time when the trickle down theory doesn't really work. With the almost trillion dollars that have already been sent out (or at least legislated to be available) were given to the people instead of the businesses, EVERY person in the US would have received ~$3000.

That means a family of 4 would receive ~$12,000. that's a healthy down payment on a starter home or a outright purchase of a 1 - 3 year old car.

Or, to put it in terms that might be better understood here, a family of 4 could purchase the equipment to build 12 or 13 Core i7 crunching machines, or an individual could build 3 of them and have some money left over for electricity. :smt023
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Post by Gavin Shaw » Mon Feb 02, 2009 12:37 am

You and computers. Lol...

In Dec just before Xmas, the Aus government did a $10 billion AUD stimulas package thing. It went to those that received government payments (welfare etc).

Except not students or those on government funded scholarships. So Lin and I got nothing.

Now there is talk of other package. And I can bet you that whatever comes out, Lin & I will still get nothing.
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Post by Dark Angel » Mon Feb 02, 2009 6:25 am

Labbie wrote:IM(ns)HO,

If they really wanted to get the economy going (in the US at least) they would cut the income taxes to ZERO for the first 6 - 9 months of this year and remove (or give a credit for) income taxes for the last 3 months of 2008. No withholding taxes during this time, so you take home practically everything you earn.

Then, give tax credits for buying US manufactured goods (cars, trucks, homes, etc.) and lower the capital gains tax another 5 points or so.

The first gives the populace a chance to get what they feel like is a good nestegg for themselves and the second gives incentive to purchase US goods to stimulate the business of US manufacturers and provides incentive for the stock market investors to hopefully make a buck or two.

The government doesn't do anything well, much less think intelligently. This is one time when the trickle down theory doesn't really work. With the almost trillion dollars that have already been sent out (or at least legislated to be available) were given to the people instead of the businesses, EVERY person in the US would have received ~$3000.

That means a family of 4 would receive ~$12,000. that's a healthy down payment on a starter home or a outright purchase of a 1 - 3 year old car.

Or, to put it in terms that might be better understood here, a family of 4 could purchase the equipment to build 12 or 13 Core i7 crunching machines, or an individual could build 3 of them and have some money left over for electricity. :smt023
While that all sounds good on the surface and while I do agree with what you stated about the macro economics of trickle down theory which has always been a recipe for disaster and financial instability in the market I see it for what it is. Here's the thing...if we take your idea for giving everyone 6-9 months of their taxes waived (no income tax) then were does the government get it's money to operate and that money is directly tied to services so were does that money come from...either we do like Gavin thought was going to happen and we print money dooming ourselves and the world or we borrow...so how is that different then the current situation...

Simply put if you give everyone a tax break that large what is most likely to happen in this day and age. Macro economics meets social economics...people in hurt will spend it and then what happens after 6-9 months when they no longer have it?

Those like myself that aren't hurting yet but feel the weight of it as many of us do will hoard it. If someone handed me a check for between $8-12K I'd sit on it in this economy...I don't trust the markets to invest it...I don't trust the banking system all that much right now and I don't trust that the economy is gonna pull out in the short term.

We would still be just as far in debt if not farther and though I understand the concept of it I think that they are currently trying to control distribution in order to steer it rather then have these rapid changes in the economy...there is no quick fix for this! That's the first thing for people to realize...once they let reality sink in the second thing that they need to realize is that much of the state of the economy is due to market fluctuations but what truly turns it worse then it is...is the collective belief that we are in a world of hurt...it's insecurity in the economy that drives many of the forces at work.
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Post by Gavin Shaw » Mon Feb 02, 2009 6:47 am

So that settles it then.

I think I will hold off on a upgrade/replacement plan for the computer. I had budgeted it out to $1,200 AUD for a good Q9400 based system that would upgrade well for the future (i7 was too expensive as the cheapest I could get it down to was around $1,600 for a 920 based system).

Hold the money and see what happens. Maybe in a few months time reassess the situation and re-budget. Maybe some parts will be cheaper as manufacturers get more determined to sale.
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Post by Enigma » Mon Feb 02, 2009 10:30 am

Dark Angel wrote:
Labbie wrote:IM(ns)HO,

If they really wanted to get the economy going (in the US at least) they would cut the income taxes to ZERO for the first 6 - 9 months of this year and remove (or give a credit for) income taxes for the last 3 months of 2008. No withholding taxes during this time, so you take home practically everything you earn.

Then, give tax credits for buying US manufactured goods (cars, trucks, homes, etc.) and lower the capital gains tax another 5 points or so.

The first gives the populace a chance to get what they feel like is a good nestegg for themselves and the second gives incentive to purchase US goods to stimulate the business of US manufacturers and provides incentive for the stock market investors to hopefully make a buck or two.

The government doesn't do anything well, much less think intelligently. This is one time when the trickle down theory doesn't really work. With the almost trillion dollars that have already been sent out (or at least legislated to be available) were given to the people instead of the businesses, EVERY person in the US would have received ~$3000.

That means a family of 4 would receive ~$12,000. that's a healthy down payment on a starter home or a outright purchase of a 1 - 3 year old car.

Or, to put it in terms that might be better understood here, a family of 4 could purchase the equipment to build 12 or 13 Core i7 crunching machines, or an individual could build 3 of them and have some money left over for electricity. :smt023
While that all sounds good on the surface and while I do agree with what you stated about the macro economics of trickle down theory which has always been a recipe for disaster and financial instability in the market I see it for what it is. Here's the thing...if we take your idea for giving everyone 6-9 months of their taxes waived (no income tax) then were does the government get it's money to operate and that money is directly tied to services so were does that money come from...either we do like Gavin thought was going to happen and we print money dooming ourselves and the world or we borrow...so how is that different then the current situation...

Simply put if you give everyone a tax break that large what is most likely to happen in this day and age. Macro economics meets social economics...people in hurt will spend it and then what happens after 6-9 months when they no longer have it?

Those like myself that aren't hurting yet but feel the weight of it as many of us do will hoard it. If someone handed me a check for between $8-12K I'd sit on it in this economy...I don't trust the markets to invest it...I don't trust the banking system all that much right now and I don't trust that the economy is gonna pull out in the short term.

We would still be just as far in debt if not farther and though I understand the concept of it I think that they are currently trying to control distribution in order to steer it rather then have these rapid changes in the economy...there is no quick fix for this! That's the first thing for people to realize...once they let reality sink in the second thing that they need to realize is that much of the state of the economy is due to market fluctuations but what truly turns it worse then it is...is the collective belief that we are in a world of hurt...it's insecurity in the economy that drives many of the forces at work.
1. Tax the WEALTHY (and not the middle class)

2. Tax the SUPER WEALTHY even more and do it before they can leave the country cause when things get really bad, that's what the wealthy do.

I think you will find that 80% of the wealth is held by 20% of the people.

Here is an interesting quote

While 90% of Americans took a pay cut in 2005, the top 1% saw their average income increase by $4.4 million in one year. The top 1% have a higher income than 150,000,000 Americans combined.

What do you think the net worth of the top# 150 people in the U.S.A. would be?

http://www.ickypeople.com/2008/08/top-1 ... llion.html

The U.S. is not alone.

Give tax breaks to the poor and even the middle class is pretty useless because a fair number will hoard it. Or if they have lost there job will spend it on essentials like food and power.

This will solve state funding issues (for the moment)

What about corporate responsibility? Microsoft has 25B in cash and fires 5000 employees! What?! [they are not alone]

3. Return the profits from banks into public coffers for 10 years as penance for the screwup that they created.

4. Rebuild local manufacturing (some of that government $$ revenue?) keeps people in jobs and keeps consumer demand moderate.

Most 1st world economies are now suffering from consumer SHOCK. People are not consuming which is fueling unemployment in sectors that dont produce anything locally (like retail and some service sectors [finance]). Where do these displaced people go?
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Post by Labbie » Mon Feb 02, 2009 3:09 pm

You're worried that if we cut everyone's taxes to zero the gov't won't have any money?

Where are they getting the money they're giving away to the banks and auto mfg's? They're borrowing it from the people in the form of debt, to be repaid with the sweat from our brows. Or they're just printing it, which will cause severe inflation within the year.

And you think the people will hoard it? What do you think the banks are doing with it? I'm sure some will, and I stated that in my post, although I didn't use that exact word. I used nestegg.

If you put that money in the hands of the people, at least the people get to decide what to do with it, instead of a bunch of politicians deciding where it goes. Because a bunch of politicians is only capable of doing one thing, and that is to screw things up even more.

Isn't "Power to the People" the mantra the Dem's have been spouting for years? Then let's do it, give the money back to the people and let them decide where it should go.
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Post by Enigma » Tue Feb 03, 2009 8:54 am

They have put the money in the hands of people in Japan, US, UK and Australia. The result. ZIP. It doesn't work.


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Post by Dark Angel » Tue Feb 03, 2009 1:45 pm

Labbie wrote:You're worried that if we cut everyone's taxes to zero the gov't won't have any money?

Where are they getting the money they're giving away to the banks and auto mfg's? They're borrowing it from the people in the form of debt, to be repaid with the sweat from our brows. Or they're just printing it, which will cause severe inflation within the year.

And you think the people will hoard it? What do you think the banks are doing with it? I'm sure some will, and I stated that in my post, although I didn't use that exact word. I used nestegg.

If you put that money in the hands of the people, at least the people get to decide what to do with it, instead of a bunch of politicians deciding where it goes. Because a bunch of politicians is only capable of doing one thing, and that is to screw things up even more.

Isn't "Power to the People" the mantra the Dem's have been spouting for years? Then let's do it, give the money back to the people and let them decide where it should go.
Nice one Labbie...take the perceived Democrat mantra and put a severe Republican twist on it to turn it into the Republican mantra of "tax cut"...Lets get real for a moment...with all due respect the economy is not taxes alone...it's a very intricate network of purchasing and selling, and yes while putting money back in the pockets of the people will certainly see some of it or even much of it spent what everyone is failing to look at is that a jump start does no long term good unless you get the engine running again.

Tax cuts do nothing to change the current condition of the consumer though they do have an effect on the very short term purchasing ability of the consumer. A tax cut does not give a person their home back it does not allow them to continue to make the balloon payment on their home...it does not give them their job back or make their care payment for them. It does not provide them with the general continued betterment that a simple job paying them a simple but good wage is capable of doing because at the end of the day when the American tax payer gets a tax cut it does nothing to change the basic long term status that they find themselves in. Simply put it's like turning over the economic engine but having a bad starter and no fuel...in the end it still isn't going to run.

What the country really does need and what Obama is trying to provide which the Republicans seem hell bent on not understanding and trying to stand in the way of is progress. What I mean by that is this...the economy is not going to pull out of this nose dive overnight and tax cuts are a continued short sighted approach to the long term...the investments in infrastructure while people look at it right now and say it does nothing for the state of the economy actually does far more in the long run then a tax cut of an equal amount does in the short term. What those expenditures do is create the jobs that fuel the economy that get it back on track to recovery that put money in the pockets of the people and give them a sense of purpose, stability, and control that a simple tax cut can never give them. Now don't get me wrong we still need the tax cuts however if we are going to get the economy to start to correct we can't just flood the nation with it and blow it all in one shot. We need to do controlled injections of part of this money in the form of tax cuts back into the economy over the short to mid term...not all at once which will only cause the engine to flood out...again not restarting the economic engine...but rather in a controlled manner which slowly steers the economy away from a steep dive toward a more shallow one till the long term investments start to take hold and the economy again finds equilibrium in the job market creating a slow but steady climb back up out of this mess.

Then and only then will we find our selves on the true path to economic recovery.

What I don't believe in is throwing money at a problem with no long term benefit to the nation or the taxpayer (ie "no plan") and I'm still yet to hear a single Republican lay down a long term plan to change were we are at right now. All I hear is market buzzwords that they use with great prowess to create the illusion that they understand it all and by their illusion of understanding and their continued supression of real understanding that what is really wrong with the economy will just go away...lest we forget that these are the same people that brought us deregulation that led to this mess and now want us to belive that it's self correcting...that's the best snake oil sales speach I've ever heard in my life...a single sided approach of tax cuts is the preverbal act of shooting a bb gun at a freight train in an attempt to change it's path rather then to throw the switch in the tracks and gradually steer it in the direction it needs to go.

What I hear is a continued call by the Republicans to shoot ourselves in our good foot in an effort to make us forget that we are already lame due to their first shot blowing off our other foot. In this case as in many others, two wrongs don't make a right. We must change the paradigm if we are to change the future.

Two often to count I see people, some very well educated take only either a macro or micro look at the economy and declare a solution...look no further then the Republican "tax cut" ideology...the solution to all problems big and small...the savior of the economy...the all powerful "tax cut" which to date had failed miserably to correct the market, which has failed miserably to restart the economy, and which has failed miserably to put people back to work rolled out, repackaged, renamed, and touted at just that "the solution". I don't know about you but I'm tired of being sold the Republican "snake oil" and realize all to well when we are in serious state of economic sickness that we need real medicine. It never ceases to amaze me that people always run to what they think they know and away from what they don't understand in a time of panic and believe that they are safe, that it will just go away on it's own...it doesn't and can only be countered by facing the issue head on and completely doing something "different" because to break a cycle one must do something "different". To right this economy we must do what hasn't been done since the very beginning put people back to work, but hey what do I know, right.
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Post by Labbie » Tue Feb 03, 2009 2:16 pm

Thanks Enigma and DA, I needed a laugh this morning. :smt023

And I also heard that popular support (i.e., the people) of the Dems so-called stimulus bill has dropped to 38%. 54% say it should be rejected or have major changes. No, I don't blame Obama for this ridiculous bill, I blame Pelosi and Reid for it.

The only blame that can be placed on Obama at this point is his not sitting down with those two idiots and slapping them around a bit.
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Post by Labbie » Tue Feb 03, 2009 10:42 pm

Senate approves tax breaks for new car buyers

WASHINGTON – The Senate has voted to give a tax break to new car buyers, setting aside bipartisan concern over the size of an economic stimulus bill costing nearly $900 billion.

The vote was 71-26 to allow many car buyers to claim an income tax deduction for the cost of automobile sales taxes and interest payments on car loans.

Sen. Barbara Mikulski proposed the tax break, which would go to individuals earning up to $125,000 and couples with incomes of as much as $250,000. Mikulski is a Democrat from Maryland.

The proposal was added to the stimulus bill making its way through Congress.
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Post by Labbie » Tue Feb 03, 2009 10:59 pm

Senate GOP blocks extra $25B in stimulus package

WASHINGTON – Senate Republicans on Tuesday blocked Democrats from adding $25 billion for highways, mass transit, and water projects to President Barack Obama's economic recovery program. Already unhappy over the size of the measure, Republicans insisted additional infrastructure projects be paid for with cuts elsewhere in the bill.

But the Democratic amendment garnered 58 votes, just shy of the supermajority needed under Senate budget rules, and many more efforts to increase the measure's size are sure to follow.

"We can't add to the size of this bill," said Sen. Jim Inhofe, R-Okla. "The amount is just inconceivable to most people."

At issue was a plan by Sens. Patty Murray, D-Wash., and Dianne Feinstein, D-Calif., to increase the highway funding in the bill to $40 billion, which reflected complaints from lawmakers in both parties that Obama's plan doesn't do enough to relieve a backlog of unfinished projects. The duo also wanted to increase mass transit programs by $5 billion boost and water projects by $7 billion.

"Our highways are jammed. People go to work in gridlock," Feinstein said Tuesday.

Just two Republicans supported the move, Arlen Specter of Pennsylvania and Christopher Bond of Missouri. Edward Kennedy, D-Mass., and Judd Gregg, R-N.H., named Tuesday morning to become Commerce secretary, did not vote.

Senate debate unfolded as Obama issued another call for swift action on the measure, urging lawmakers to act "with the same sense of urgency Americans feel every day."

Republicans, for their part, readied a plan to lower mortgage costs to try to jolt the housing market out of its slump.

The $885 billion Senate economic plan faces assaults from both Democrats and Republicans during debate this week, as lawmakers in both parties aim to kill ideas that won't jolt the economy right away.

"The goal is to shape a package that is more targeted, that would be smaller in size and that would be truly focused on saving or creating jobs and turning the economy around," said Sen. Susan Collins, R-Maine. She said ideas like $870 million to combat bird flu should be dumped.

Others, such as Sen. Ben Nelson, D-Neb., have complained about items such as health research being in the bill. But Specter — a moderate whose vote is sought by Obama — is instead proposing to add $6.5 billion for the National Institutes of Health.

Democrats already are under pressure from moderates in their own party to scale back spending in the $885 billion bill, and Obama met with party leaders at the White House late Monday to discuss strategy.

"What we can't do is let very modest differences get in the way" of swift enactment of the legislation, Obama said several hours earlier as new layoffs rippled through the economy and the Commerce Department reported an unexpectedly large sixth straight drop in personal spending.

In the Capitol, Republicans said their goal was to change the bill, not to block it. "Nobody that I know of is trying to keep a package from passing," said Sen. Mitch McConnell of Kentucky, the Republican leader.

"We need to fix housing first," he said. Republicans are expected to seek a vote on their proposals this week as part of the debate on the overall stimulus measure.

Officials said the GOP was uniting behind a proposal designed to give banks an incentive to make loans at rates currently estimated at 4 percent to 4.5 percent. Fannie Mae and Freddie Mac, which were seized by the federal government in September, would be required to purchase the mortgages once banks have made them to consumers.

Officials said loans to creditworthy borrowers on primary residences with a mortgage of up to $625,000 would qualify, including those seeking to refinance their current loans.

Separately, Republican officials said they intended to press for a $15,000 tax credit for home buyers through the end of the year. Current law permits a $7,500 tax break and limits it to first-time home buyers.

Nineteen Democratic and Republican governors, meanwhile, cited frozen credit markets and rising unemployment in urging lawmakers to resolve their differences and asking Obama to sign the bill as soon as it reaches his desk. The governors said the money it provides for public education, health care and rebuilding the nation's infrastructure will create and preserve jobs while making a sound investment in the country's long-term economic interests.

"While we all believe in the importance of free markets, we believe that the markets today need stimulating," the governors told Obama in a letter dated Monday. Among the signers are Democrats Deval Patrick of Massachusetts and Tim Kaine of Virginia, and Republicans Arnold Schwarzenegger of California and Charlie Crist of Florida.
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Post by Labbie » Wed Feb 04, 2009 3:41 am

No Budget = No Tax Refunds

Sacramento -- Taxpayer groups and Republican lawmakers today criticized state Controller John Chiang's decision to delay income tax refund payments this month, a move that he's said is necessary to prevent the state from insolvency.

Last month, Chiang warned that the state, which is facing a $42 billion budget gap over 18 months, would run out of cash sometime in February. And unless Gov. Arnold Schwarzenegger and the Legislature agree on a solution by Feb. 1, the controller would have to delay nearly $3.7 billion in payments scheduled to go out this month. Tax refunds would make up the bulk of those delays, at $1.9 billion.

With the Feb. 1 deadline already passed, taxpayers who have filed their returns and were expecting refunds are out of luck.

"This is the ultimate injustice ... this is taxpayers' money," said Assemblyman Roger Niello, R-Fair Oaks (Sacramento County).

Assemblyman Ted Gaines, R-Roseville (Placer County), likened the tax refund delay to consumers not getting their change back after making a purchase at a retail store.

But what they didn't mention was that according to California law, the state has until May 30 to send refund checks. It's just that in previous years, the state had enough cash on hand, so the controller's office typically would send out refund checks as soon as the paperwork was processed.

This year, with the deepening recession drying up tax receipts, the Golden State's finances have fallen into crisis mode and the state simply doesn't have enough cash on hand in its general fund or other special funds to make all payments.

Jon Coupal, president of Howard Jarvis Taxpayers Association, said he realizes the state doesn't have to send out refund checks until end of May. However, he argued that getting tax refund money into the hands of taxpayers would help stimulate the economy.

So how much do California taxpayers receive in tax refunds?

According to the Franchise Tax Board, in 2008, California taxpayers received about $10 million in tax refunds from the state with the average refund check at $853. Last month, the state returned about $290,000 to taxpayers as refunds. The average check was $461.

Refund checks tend to get larger as the year progresses because wealthier taxpayers who typically get much larger refund checks file their taxes later, said John Barrett, a spokesman for the Franchise Tax Board.
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Post by Enigma » Wed Feb 04, 2009 8:43 am

Top tax rate at 90% but guess what, that wouldn't even touch the wealthy..... can you spot any patterns in this timeline??

TIMELINES OF THE GREAT DEPRESSION:

1920s (Decade)

* During World War I, federal spending grows three times larger than tax collections. When the government cuts back spending to balance the budget in 1920, a severe recession results. However, the war economy invested heavily in the manufacturing sector, and the next decade will see an explosion of productivity... although only for certain sectors of the economy.

* An average of 600 banks fail each year.

* Organized labor declines throughout the decade. The United Mine Workers Union will see its membership fall from 500,000 in 1920 to 75,000 in 1928. The American Federation of Labor would fall from 5.1 million in 1920 to 3.4 million in 1929.

* Over the decade, about 1,200 mergers will swallow up more than 6,000 previously independent companies; by 1929, only 200 corporations will control over half of all American industry.

* By the end of the decade, the bottom 80 percent of all income-earners will be removed from the tax rolls completely. Taxes on the rich will fall throughout the decade.
* By 1929, the richest 1 percent will own 40 percent of the nation's wealth. The bottom 93 percent will have experienced a 4 percent drop in real disposable per-capita income between 1923 and 1929.

* Individual worker productivity rises an astonishing 43 percent from 1919 to 1929. But the rewards are being funneled to the top: the number of people reporting half-million dollar incomes grows from 156 to 1,489 between 1920 and 1929, a phenomenal rise compared to other decades. But that is still less than 1 percent of all income-earners.

1922

* The conservative Supreme Court strikes down federal child labor legislation.

1923

* President Warren Harding dies in office. Calvin Coolidge, becomes president. Coolidge is no less committed to laissez-faire and a non-interventionist government.
* Supreme Court nullifies minimum wage for women in District of Columbia.

1924

* The stock market begins its spectacular rise. Bears little relation to the rest of the economy.

1925

* The top tax rate is lowered to 25 percent - the lowest top rate in the eight decades since World War I.

1928

* Between May 1928 and September 1929, the average prices of stocks will rise 40 percent. The boom is largely artificial.

1929

* Herbert Hoover becomes President.

* Annual per-capita income is $750. More than half of all Americans are living below a minimum subsistence level.

* Backlog of business inventories grows three times larger than the year before.

* Recession begins in August, two months before the stock market crash. During this two month period, production will decline at an annual rate of 20 percent, wholesale prices at 7.5 percent, and personal income at 5 percent.

* Stock market crash begins October 24. Investors call October 29 Black Tuesday. Losses for the month will total $16 billion, an astronomical sum in those days.

1930

* By February, the Federal Reserve has cut the prime interest rate from 6 to 4 percent. Treasury Secretary Andrew Mellon announces that the Fed will stand by as the market works itself out: 'Liquidate labor, liquidate real estate... values will be adjusted, and enterprising people will pick up the wreck from less-competent people'.

* The Smoot-Hawley Tariff passes on June 17. With imports forming only 6 percent of the GNP, the 40 percent tariffs work out to an effective tax of only 2.4 percent per citizen. Even this is compensated for by the fact that American businesses are no longer investing in Europe, but keeping their money stateside. The consensus of modern economists is that the tariff made only a minor contribution to the Great Depression in the U.S., but a major one in Europe.

* Supreme Court rules that the monopoly U.S. Steel does not violate anti-trust laws as long as competition exists, no matter how negligible.

* The GNP falls 9.4 percent from the year before. The unemployment rate climbs from 3.2 to 8.7 percent.

1931

* No major legislation is passed addressing the Depression.

* The GNP falls another 8.5 percent; unemployment rises to 15.9 percent.

1932

* This and the next year are the worst years of the Great Depression. For 1932, GNP falls a record 13.4 percent; unemployment rises to 23.6 percent.

* Industrial stocks have lost 80 percent of their value since 1930.

* 10,000 banks have failed since 1929, or 40 percent of the 1929 total.

* GNP has also fallen 31 percent since 1929.

* Over 13 million Americans have lost their jobs since 1929.

* International trade has fallen by two-thirds since 1929.

Congress passes the Federal Home Loan Bank Act and the Glass-Steagall Act of 1932.

* Top tax rate is raised from 25 to 63 percent.

* Popular opinion considers Hoover's measures too little too late. Franklin Roosevelt easily defeats Hoover in the fall election. Democrats win control of Congress.

1933

* Roosevelt inaugurated; begins 'First 100 Days'; of intensive legislative activity.

* A third banking panic occurs in March. Roosevelt declares a Bank Holiday; closes financial institutions to stop a run on banks.

* Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini's regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.

* Congress authorizes creation of the Agricultural Adjustment Administration, the Civilian Conservation Corps, the Farm Credit Administration, the Federal Deposit Insurance Corporation, the Federal Emergency Relief Administration, the National Recovery Administration, the Public Works Administration and the Tennessee Valley Authority.

* Congress passes the Emergency Banking Bill, the Glass-Steagall Act of 1933, the Farm Credit Act, the National Industrial Recovery Act and the Truth-in-Securities Act.
* Roosevelt does much to redistribute wealth from the rich to the poor, but is concerned with a balanced budget. He later rejects Keynes' advice to begin heavy deficit spending.

* The free fall of the GNP is significantly slowed; it dips only 2.1 percent this year. Unemployment rises slightly, to 24.9 percent.

1934

* Congress authorizes creation of the Federal Communications Commission, the National Mediation Board and the Securities and Exchange Commission.

* The economy turns around: GNP rises 7.7 percent, and unemployment falls to 21.7 percent. A long road to recovery begins.

* Sweden becomes the first nation to recover fully from the Great Depression. It has followed a policy of Keynesian deficit spending.

1935

* The Supreme Court declares the National Recovery Administration to be unconstitutional.

* Congress authorizes creation of the Works Progress Administration, the National Labor Relations Board and the Rural Electrification Administration.

* Congress passes the Banking Act of 1935, the Emergency Relief Appropriation Act, the National Labor Relations Act, and the Social Security Act.

* Economic recovery continues: the GNP grows another 8.1 percent, and unemployment falls to 20.1 percent.

1936

* Top tax rate raised to 79 percent.

* Economic recovery continues: GNP grows a record 14.1 percent; unemployment falls to 16.9 percent.

1937

* The Supreme Court declares the National Labor Relations Board to be unconstitutional.

* Roosevelt seeks to enlarge and therefore liberalize the Supreme Court. This attempt not only fails, but outrages the public.
* Economists attribute economic growth so far to heavy government spending that is somewhat deficit. Roosevelt, however, fears an unbalanced budget and cuts spending for 1937. That summer, the nation plunges into another recession. Despite this, the yearly GNP rises 5.0 percent, and unemployment falls to 14.3 percent.

1938

* No major New Deal legislation is passed after this date, due to Roosevelt's weakened political power.

* The year-long recession makes itself felt: the GNP falls 4.5 percent, and unemployment rises to 19.0 percent.

1939

* The United States will begin emerging from the Depression as it borrows and spends $1 billion to build its armed forces. From 1939 to 1941, when the Japanese attack Pearl Harbor, U.S. manufacturing will have shot up a phenomenal 50 percent!

* The Depression is ending worldwide as nations prepare for the coming hostilities.

Roosevelt began relatively modest deficit spending that arrested the slide of the economy and resulted in some astonishing growth numbers. (Roosevelt's average growth of 5.2 percent during the Great Depression is even higher than Reagan's 3.7 percent growth during his so-called 'Seven Fat Years!') When 1936 saw a phenomenal record of 14 percent growth, Roosevelt eased back on the deficit spending, worried about balancing the budget. But this only caused the economy to slip back into a recession in 1938.

* World War II starts with Hitler's invasion of Poland.

1945

* Although the war is the largest tragedy in human history, the United States emerges as the world's only economic superpower. Deficit spending has resulted in a national debt 123 percent the size of the GDP. By contrast, in 1994, the $4.7 trillion national debt will be only 70 percent of the GDP!

* The top tax rate is 91 percent. It will stay at least 88 percent until 1963, when it is lowered to 70 percent. During this time, America will experience the greatest economic boom it had ever known until that time.
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Post by Gavin Shaw » Wed Feb 04, 2009 10:12 am

Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini's regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.
Could something like this happen this time around? And if the attempt is made will it be successful?

Some people refuse to share anything, no matter how little the amount is. Even though in the end it may benefit them later on...
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Post by Enigma » Thu Feb 05, 2009 7:39 am

Gavin Shaw wrote:
Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini's regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.
Could something like this happen this time around? And if the attempt is made will it be successful?

Some people refuse to share anything, no matter how little the amount is. Even though in the end it may benefit them later on...
Its possible, but it may look a little different.

The effort being exerted by many governments at the moment (printing lots of money) is trying to combat massive deflationary pressure (the basket of goods CPI gets cheaper). They are intervening in natural market forces (the massive correction) trying to prop up inflation.

This is quite the opposite of what went down during the great depression as the policy then was non inflationary (don't print lots of money).

The argument (for printing money) is that what was applied during the great depression didn't work very well. However the recovery depending how you look at it was about 5 years (things were quite a bit better by 1934-35 compared to what was 1929-30).

However I don't know of any precedent in history that indicates printing money will get you out of deflation WITHOUT creating hyper or massive inflation or stagnation. In the future all that money has to go somewhere. If it is hoarded initially, later it gets back in circulation and then BAM inflation unless it is pulled back out (deflation again)... perhaps very gradually but our guys (fed, gov etc) imo do not have the means to orchestrate this...

So which is worse.

1. Take it on the chin and use a method which is tried and true. Perhaps not on the scale of the problem now but it did work.

Downside, 4-5 years of difficult times, massive social unrest.

2. Print lots of money and hope that it works. Its basically untested (quite a risk IMO).

Downside, currency values plument, buying power evaporates and wealth is redistributed massive (middle class shrinks). Have a society like Argentina or Peru perhaps??
Last edited by Enigma on Thu Feb 05, 2009 11:56 am, edited 1 time in total.
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Post by Dark Angel » Thu Feb 05, 2009 8:08 am

Labbie wrote:No Budget = No Tax Refunds

Sacramento -- Taxpayer groups and Republican lawmakers today criticized state Controller John Chiang's decision to delay income tax refund payments this month, a move that he's said is necessary to prevent the state from insolvency.

Last month, Chiang warned that the state, which is facing a $42 billion budget gap over 18 months, would run out of cash sometime in February. And unless Gov. Arnold Schwarzenegger and the Legislature agree on a solution by Feb. 1, the controller would have to delay nearly $3.7 billion in payments scheduled to go out this month. Tax refunds would make up the bulk of those delays, at $1.9 billion.

With the Feb. 1 deadline already passed, taxpayers who have filed their returns and were expecting refunds are out of luck.

"This is the ultimate injustice ... this is taxpayers' money," said Assemblyman Roger Niello, R-Fair Oaks (Sacramento County).

Assemblyman Ted Gaines, R-Roseville (Placer County), likened the tax refund delay to consumers not getting their change back after making a purchase at a retail store.

But what they didn't mention was that according to California law, the state has until May 30 to send refund checks. It's just that in previous years, the state had enough cash on hand, so the controller's office typically would send out refund checks as soon as the paperwork was processed.

This year, with the deepening recession drying up tax receipts, the Golden State's finances have fallen into crisis mode and the state simply doesn't have enough cash on hand in its general fund or other special funds to make all payments.

Jon Coupal, president of Howard Jarvis Taxpayers Association, said he realizes the state doesn't have to send out refund checks until end of May. However, he argued that getting tax refund money into the hands of taxpayers would help stimulate the economy.

So how much do California taxpayers receive in tax refunds?

According to the Franchise Tax Board, in 2008, California taxpayers received about $10 million in tax refunds from the state with the average refund check at $853. Last month, the state returned about $290,000 to taxpayers as refunds. The average check was $461.

Refund checks tend to get larger as the year progresses because wealthier taxpayers who typically get much larger refund checks file their taxes later, said John Barrett, a spokesman for the Franchise Tax Board.
Ya but it's what they aren't saying that really kills us here in Cali...see there is a small minority group of Republicans who are doing everything they can to obstruct the budget from getting passed and balanced they don't want to raise taxes but they aren't putting forth anything constructive other then cut nearly every social program known to man and a ton of money for schools education colleges and various other medical programs...sounding familiar...ya it's basically the same thing thats happening in the federal government right now least with the minority group of Republicans holding the bill hostage in the name of ideology...see here in Cali we need a super majority to pass a budget...and people are growing tired of the antics by the select few in the minority...it's likely to go before the state as a constitutional amendment that will pull their power to hold the state hostage.
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Post by Dark Angel » Thu Feb 05, 2009 8:14 am

Gavin Shaw wrote:
Alarmed by Roosevelt's plan to redistribute wealth from the rich to the poor, a group of millionaire businessmen, led by the Du Pont and J.P. Morgan empires, plans to overthrow Roosevelt with a military coup and install a fascist government modelled after Mussolini's regime in Italy. The businessmen try to recruit General Smedley Butler, promising him an army of 500,000, unlimited financial backing and generous media spin control. The plot is foiled when Butler reports it to Congress.
Could something like this happen this time around? And if the attempt is made will it be successful?

Some people refuse to share anything, no matter how little the amount is. Even though in the end it may benefit them later on...
Not likely Gavin...first off one must understand the military mindset...it's a bit different then other countries...then one must understand that it would be considered treason and they would face execution quite quickly...that's if they were even able to get further then simply stating it...no it's far more likely that it would take another form...the people would never stand for it and you'd have some explaining to do.
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Post by Enigma » Thu Feb 05, 2009 12:16 pm

just to add to my last comment.

The printing press approach to fixing this problem is called quantitative easing. This was tried in japan and was a complete failure. Japan had near 0% bank interest rates for over 10 years and are still suffering deflation. Some asset classes like property dropped for a decade.

It is believed that one possible cause for this failure was because the Japanese consumer stopped consuming and started saving. They then spent some (rather than all) of their discretionary income [this sounds like something from the 50's or 60's] and generally stopped using CREDIT. [actually it doesn't sound THAT bad]. In effect printing money had no impact because it never made it into the market.

I would be so bold as to say that deflation is not that bad as long as

1. You view your house [for most people the single largest purchase of their life] as a place to build your family (within your means) and prosper (within your means) and not something that is going to make you RICH. If you want to get rich, try building a business.

2. You haven't borrowed heavily to purchase the house. This would probably rule out loans from 110% of value to 70% of value. In fact if houses were bought with 40% down [deposit] there wouldn't be *ANY* property bubbles (there would still be stock market bubbles though). You have enough equity to ride market fluctuations as well (no negative equity problems).

3. I would rather pay $1 / litre for milk instead of $2 with a 50% reduced salary (hang on a minute that's the same thing).

Will there be an impact on jobs, most definitely. Will it correct, most definitely. People are creative and you would probably find with wages and price drops competitiveness would increase and manufacturing could be re-started. New businesses, products and services would emerge from the ashes of the greed driven meltdown

But for this to really occur, people need to consume less and stop using credit. I doubt this would occur for very long in the United States (or Australia or the Uk or ... most of the western world) as we have demonstrated for so long our ferocious appetite for consumption and debt. Which means that all the printing money may work... for a short period of time and then it will unwind.
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Post by Gavin Shaw » Thu Feb 05, 2009 1:35 pm

Australia warns of trade war over U.S. protectionism

CANBERRA (Reuters) - Australia condemned the "Buy American" provisions in the United States stimulus measures on Thursday, warning the move to protect U.S. iron and steel makers would lead to a retaliatory trade war.

The U.S. Senate on Wednesday voted to soften the "Buy American" plan to ensure the provisions of the $900 billion stimulus bill remained consistent with U.S. trade agreements.

But Australian Trade Minister Simon Crean said the U.S. Senate had made the wrong decision by voting to keep the "Buy American" provisions in the stimulus bills.

"This is the wrong course of action, they have got to reverse their decision," Crean said in a statement. "It will result in retaliatory action, it will result in a trade war."

Australia is a major iron and steel producer and a strong advocate of free and open trade. Australia has a standing free trade agreement with the United States, and last year exported A$484 million ($314 million) worth of steel to the U.S.

Crean said other nations would hit back at the U.S. if the "Buy American" clause remained, undermining the benefits of President Barack Obama's stimulus measures.

He said Australia was also examining the "Buy American" to see if it had any impact on the Australia-U.S. free trade agreement.

-------------------------------------------------------------

Could this be the beginning of the end? Remembering that just about every government is saying that global trade must continue and even increase.

While I can understand the view, if it is against trade policies and the free-trade agreement then what was the point of having the free-trade agreement in the first place? Just so the US could get into Aus markets easier but lock Aus out of their markets whenever they felt like it?

How would the US government react if Aus brought in a similar thing here and locked out US business? Would they just accept it? I think not...

But I guess we wait and see what happens...
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Post by Gavin Shaw » Thu Feb 05, 2009 1:39 pm

Enigma wrote: But for this to really occur, people need to consume less and stop using credit. I doubt this would occur for very long in the United States (or Australia or the Uk or ... most of the western world) as we have demonstrated for so long our ferocious appetite for consumption and debt. Which means that all the printing money may work... for a short period of time and then it will unwind.
Well I have already done my bit. Lin and myself do not have credit cards at all. I have a debit card for online stuff, but I have to have the money already in the account in order to spend it.

The only debt I have is HECS. What you get if you go to uni and can not afford to pay the fees up front at the start.

And we don't go out and spend our money on wasteful things.
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Post by Enigma » Fri Feb 06, 2009 8:27 am

Gavin Shaw wrote:Australia warns of trade war over U.S. protectionism

CANBERRA (Reuters) - Australia condemned the "Buy American" provisions in the United States stimulus measures on Thursday, warning the move to protect U.S. iron and steel makers would lead to a retaliatory trade war.

The U.S. Senate on Wednesday voted to soften the "Buy American" plan to ensure the provisions of the $900 billion stimulus bill remained consistent with U.S. trade agreements.

But Australian Trade Minister Simon Crean said the U.S. Senate had made the wrong decision by voting to keep the "Buy American" provisions in the stimulus bills.

"This is the wrong course of action, they have got to reverse their decision," Crean said in a statement. "It will result in retaliatory action, it will result in a trade war."

Australia is a major iron and steel producer and a strong advocate of free and open trade. Australia has a standing free trade agreement with the United States, and last year exported A$484 million ($314 million) worth of steel to the U.S.

Crean said other nations would hit back at the U.S. if the "Buy American" clause remained, undermining the benefits of President Barack Obama's stimulus measures.

He said Australia was also examining the "Buy American" to see if it had any impact on the Australia-U.S. free trade agreement.

-------------------------------------------------------------

Could this be the beginning of the end? Remembering that just about every government is saying that global trade must continue and even increase.

While I can understand the view, if it is against trade policies and the free-trade agreement then what was the point of having the free-trade agreement in the first place? Just so the US could get into Aus markets easier but lock Aus out of their markets whenever they felt like it?

How would the US government react if Aus brought in a similar thing here and locked out US business? Would they just accept it? I think not...

But I guess we wait and see what happens...
Protectionism.... anti-globalisation... but I thought that (globalisation) was going to be so wonderful and efficient and free-market-like?! (see finance thread on Globalisation).
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Post by Enigma » Fri Feb 06, 2009 8:28 am

Labbie wrote:Thanks Enigma and DA, I needed a laugh this morning. :smt023

And I also heard that popular support (i.e., the people) of the Dems so-called stimulus bill has dropped to 38%. 54% say it should be rejected or have major changes. No, I don't blame Obama for this ridiculous bill, I blame Pelosi and Reid for it.

The only blame that can be placed on Obama at this point is his not sitting down with those two idiots and slapping them around a bit.
Laughing is good for the soul ...

So Labbie, you want to enlighten us and explain how lowering taxes is going to fix this mess??
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Post by Labbie » Mon Feb 09, 2009 3:48 pm

This says i much better than I ever could.

Stimulus for Dummies: How We Could Really Get Our Economy Moving Again

By Noel Sheppard
Associate Editor, Newsbusters.org

Imagine for a moment you were more concerned with the economy than politics, and you truly wanted to increase consumer confidence as well as consumer spending. What would you do?

How about putting more money in people’s wallets?

Seems pretty simple, doesn’t it — so simple it’s shocking that’s not exclusively being discussed in Washington right now.

After all, the Congressional Budget Office — the government agency responsible for reporting economic data to our Senators and Representatives as well as rendering opinions on budgets and spending bills — made it clear last Wednesday that the stimulus plans currently being debated on Capitol Hill will have a negative impact in the long run.

As both versions of the stimulus bill dramatically increase the federal debt, and, therefore, the amount of treasury bills, notes, and bonds in circulation, the moneys placed in them are removed from more conventional investment channels –- stocks, corporate bonds, private equity, limited partnerships, real estate development, etc. –- thereby reducing future economic output.

If CBO is correct about this, shouldn’t all deficit spending be off the table right now with Congress exclusively considering tax cuts? If the $800 billion currently thought of as an adequate stimulus were put directly into the consumers’ hands this year rather than politicians’, how might that get the economy going?

Before answering, consider that if you add interest expense to that figure, the real cost is about $1.3 trillion, which just so happens to represent about half the tax receipts taken in by the federal government last year. With this in mind, for the same amount of money, you could give all Americans –- including companies –- a six month tax holiday.

What might happen when John Q. Public opens up his paycheck every two weeks finding a few extra hundred dollars there?

The cynic in Washington says John would just save that money. Or pay down some of his debt.

Sure, this would probably be the case with the first check. Maybe even the second.

But by check number three or four, after some bills had been paid off, and the savings account massaged a tad, the desire to head to the mall would become too great.

After all, John’s an American, and Americans like to spend almost as much as their elected officials do.

But let’s not stop there. Let’s do something to address the current housing crisis and the growing inventory of homes on the market by permanently eliminating the capital gains tax on residential property purchased in 2009.

The present tax code gives each individual a $250,000 exemption on the sale of a primary residence twice every five years. What this means is that if you and your spouse bought a house for $200,000 ten years ago, you could sell it today for $700,000 and not owe any taxes.

Let’s make this exemption unlimited not just for the gain in value, but also for the number of properties.

How quickly would all the houses currently available on the market be gobbled up if investors knew they would never be taxed on the gain, and they only had this year to take advantage of such an opportunity?

Probably just a few months, right?

This would act to immediately stabilize home prices thereby improving appraisals and making it easier for folks currently underwater in their mortgages to refinance them. At the same time, banks would become more aggressive with their lending practices which would also lead to some new construction.

Maybe most important, the end of declining home values would make Americans feel much more comfortable about their long-term finances thereby increasing their willingness to — wait for it! — spend money.

Sounds too simple, doesn’t it?

Of course, the other advantage of stimulating exclusively with tax cuts is the ability to make it temporary.

Despite declarations by elected officials that the proposed stimulus spending is a short-term, one-time fix not intended to represent a permanent increase to the budget, we have absolutely no recent experience as a nation doing this. Since 1948, there have only been two years when federal government outlays declined: once in 1955 by $2.4 billion, and again in 1965 by a scant $300 million.

That’s it.

As such, entrusting the current iteration of the Washington spendaholic to revert back to 2008’s outlays immediately after the last penny of proposed stimulus has been allocated is akin to believing a white-bearded guy in a red suit delivers your Christmas presents every December.

Ironically, one would have to possess a child’s imagination to expect the left to agree to this plan, for if Americans ever received six months worth of paychecks without any taxes taken out there would be a nationwide revolt the moment anybody tried reducing their incomes again.

At that point, much like Santa Claus, there would be no such thing as Democrats.
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Post by MzSnowleopard » Mon Feb 09, 2009 6:05 pm

Source: http://www.cnn.com/2008/US/12/22/bailou ... pstoryview

Citigroup, JPMorgan Chase and Wells Fargo each received $25 billion -- the largest amount given to any bank.

According to a report on yesterday's KTIV noon news-
Executives of Wells Fargo have canceled their annual trip to Las Vegas.

I'm curious- is there a pie chart that shows how this bail out is being distributed- or is it in too much flux?

Let's see we've got:

The Mortgage Bailout
The Automotive Bailout
The Banking Bailout
The Stimulus Package

Budget for the war in Iraq
Budget for international aide

And this is on top of the " normal " national budget.

I'm wondering where all this money is coming from- because the last time I checked- the US was in a serious deficit.
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Post by Dark Angel » Tue Feb 10, 2009 4:50 am

Labbie wrote:This says i much better than I ever could.

Stimulus for Dummies: How We Could Really Get Our Economy Moving Again

By Noel Sheppard
Associate Editor, Newsbusters.org

Imagine for a moment you were more concerned with the economy than politics, and you truly wanted to increase consumer confidence as well as consumer spending. What would you do?

How about putting more money in people’s wallets?

Seems pretty simple, doesn’t it — so simple it’s shocking that’s not exclusively being discussed in Washington right now.

After all, the Congressional Budget Office — the government agency responsible for reporting economic data to our Senators and Representatives as well as rendering opinions on budgets and spending bills — made it clear last Wednesday that the stimulus plans currently being debated on Capitol Hill will have a negative impact in the long run.

As both versions of the stimulus bill dramatically increase the federal debt, and, therefore, the amount of treasury bills, notes, and bonds in circulation, the moneys placed in them are removed from more conventional investment channels –- stocks, corporate bonds, private equity, limited partnerships, real estate development, etc. –- thereby reducing future economic output.

If CBO is correct about this, shouldn’t all deficit spending be off the table right now with Congress exclusively considering tax cuts? If the $800 billion currently thought of as an adequate stimulus were put directly into the consumers’ hands this year rather than politicians’, how might that get the economy going?

Before answering, consider that if you add interest expense to that figure, the real cost is about $1.3 trillion, which just so happens to represent about half the tax receipts taken in by the federal government last year. With this in mind, for the same amount of money, you could give all Americans –- including companies –- a six month tax holiday.

What might happen when John Q. Public opens up his paycheck every two weeks finding a few extra hundred dollars there?

The cynic in Washington says John would just save that money. Or pay down some of his debt.

Sure, this would probably be the case with the first check. Maybe even the second.

But by check number three or four, after some bills had been paid off, and the savings account massaged a tad, the desire to head to the mall would become too great.

After all, John’s an American, and Americans like to spend almost as much as their elected officials do.

But let’s not stop there. Let’s do something to address the current housing crisis and the growing inventory of homes on the market by permanently eliminating the capital gains tax on residential property purchased in 2009.

The present tax code gives each individual a $250,000 exemption on the sale of a primary residence twice every five years. What this means is that if you and your spouse bought a house for $200,000 ten years ago, you could sell it today for $700,000 and not owe any taxes.

Let’s make this exemption unlimited not just for the gain in value, but also for the number of properties.

How quickly would all the houses currently available on the market be gobbled up if investors knew they would never be taxed on the gain, and they only had this year to take advantage of such an opportunity?

Probably just a few months, right?

This would act to immediately stabilize home prices thereby improving appraisals and making it easier for folks currently underwater in their mortgages to refinance them. At the same time, banks would become more aggressive with their lending practices which would also lead to some new construction.

Maybe most important, the end of declining home values would make Americans feel much more comfortable about their long-term finances thereby increasing their willingness to — wait for it! — spend money.

Sounds too simple, doesn’t it?

Of course, the other advantage of stimulating exclusively with tax cuts is the ability to make it temporary.

Despite declarations by elected officials that the proposed stimulus spending is a short-term, one-time fix not intended to represent a permanent increase to the budget, we have absolutely no recent experience as a nation doing this. Since 1948, there have only been two years when federal government outlays declined: once in 1955 by $2.4 billion, and again in 1965 by a scant $300 million.

That’s it.

As such, entrusting the current iteration of the Washington spendaholic to revert back to 2008’s outlays immediately after the last penny of proposed stimulus has been allocated is akin to believing a white-bearded guy in a red suit delivers your Christmas presents every December.

Ironically, one would have to possess a child’s imagination to expect the left to agree to this plan, for if Americans ever received six months worth of paychecks without any taxes taken out there would be a nationwide revolt the moment anybody tried reducing their incomes again.

At that point, much like Santa Claus, there would be no such thing as Democrats.
This is not directed at Labbie but rather the writer of the article that he posted...on the other hand Labbie and I both know we see the world in a different way...ideological differences. That being said I respect Labbie and do read what he posts but personally don't buy into it.

Way to go Sherlock you solved another one...yet it's funny even he admits it's doomed to failure.

Short term is still...um short term and this is an approach that needs serious thought of which I'm seeing very little coming form the Republican leadership or anyone that claims to buy into their voodoo.

I agree with them though there was a lot of pork in the bill (at least some of what they saw as pork) but I do differ from them in the idea that this tax cut BS is gonna re-float the economy...lets put it this way it wasn't taxes that got us into this mess and it's not the lack of taxes that's gonna get us out of this mess.

Simply put 20,000 jobs lost a day does not make an economy strong and the mere thought that a tax cut is gonna put people back to work on it's own it laughable.

Since when was the Republican motto "Trickle up economics"...I find it funny that in a time of crisis they say hey lets give the people at the bottom a whole bunch of money and they will spend it...isn't that directly counter to the ideology that we should give tax breaks to the rich and the large corporations out there and by doing so it will create more jobs and those people will spend their money and all will be well in the land of OZ (not Australia) I mean that is Reagan economics and the bottle fed Republican ideology of trickle down theory in it's purest and most refined form.

Lets pull back the curtain and show this line of BS for what it really is. I'm gonna sum this up very simply...if the consumer can not afford to buy what the corporations are selling then neither the consumer not the corporations will be in harmony and the economy will continue down the same path that it's on (more job cuts because consumer sales are down and more drawback because of the job losses).

Only by putting people to work making money will they spend money and buy what the corporations have to sell which creates growth and jobs and cycles in an upward motion. The idea that cutting payroll taxes will fix the economy would be a fine idea if it wasn't for the simple glossed over fact that there are millions who don't have a job and this does nothing to resolve those peoples reality nor does it change the macro economics of business cycles as well as hiring cycles none of which even figures into their thought process...so how does Sherlock propose we put people back to work anyway...??? I'd love to know.
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Post by Labbie » Tue Feb 10, 2009 5:11 am

I talked to my father today and of course with him, this subject came up. His profession was accounting. He was at the top of his field at one of the biggest professional services companies in the world before he retired. After he retired, he was offered a cabinet post here in New Mexico, which he declined for personal reasons. He understands economic principles very well.

His idea to stimulate the economy is so simple, so out of the box, so crazy, it just might work.

It would allow everyone to pay off their mortgage, get health insurance, buy a new car, get the kids new coats for winter, and stimulate the economy like it has never been stimulated before.

And it would cost us taxpayers less than 1% of the plan Obie wants.

But it will never happen. Neither party would allow it to happen as it would take almost every bit of control the government has over our lives. And they won't let that happen.

His idea? Give every household (whatever number it is that Neilsen uses in their ratings) in the country $1,000,000 to do with as they please.

And the part that will please the Libs is that they can then tax it at the highest rate.

Now, I see some problems with it that my father probably doesn't. It has many more sociological than economic problems.

Now I'll leave it to you, the students, to pick this simple plan apart. Not with mantras from either side, but with thought and logic.
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