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fxramper
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President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:01 pm




President Bush on Friday urged that an economic stimulus package worth nearly $150 billion be passed immediately to head off a nationwide slump, while expressing confidence that the sagging economy will rebound.

Under a White House plan, rebates of up to $800 for individuals and $1,600 for married couples are being considered as one-time tax rebates.


All relevent comments welcome.

article


Disclaimer: This thread isn't intended to discuss the Presidency or lack thereof, but rather the current economic situation.
 
seb146
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:11 pm

So what are the nuts and bolts of this plan? Is there somewhere to view it besides foxnews.com? Will Americans have to repay the rebates like before?
Life in the wall is a drag.
 
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fxramper
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:21 pm



Bernanke: Juice the economy 'quickly'!





article

 
AGM100
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:23 pm

We have been enjoying one of the best economies ever over the past several years. I do not give allot of credit to the administration or the federal government for this. Although some experts point to tax cuts , I believe it is more than that . The good economy has more to do with the American people and the people around the world who invent , invest and work hard to buy ,sell and market goods. The current down turn can be blamed on some bad judgements by bankers and the over-hyping by the press for political reasons. If you say recession enough ..it is going to happen and frankly the Dems need it to happen .

I for one am taking advantage of the down turn , buying a second house (cheap) and picking up stocks that were over priced. I guess I am optimistic even though I see clearly some real bad signs. The US economy may not rebound like it did in the 90's. I am worried about the world economies decoupling from ours , this may well effect the ability of the US economy to rebound like before.

The economy must go up and down ... thats it.

Quoting FXramper (Thread starter):
This thread isn't intended to discuss the Presidency or lack thereof

good luck
You dig the hole .. I fill the hole . 100% employment !
 
cfalk
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:42 pm



Quoting Seb146 (Reply 1):
So what are the nuts and bolts of this plan?

Sounds pretty simple to me.

Quoting Seb146 (Reply 1):
Will Americans have to repay the rebates like before?

Hmmm. I don't recall that. When did that happen?
The only thing you should feel when shooting a terrorist: Recoil.
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:45 pm

This is a band-aid to a severed limb.

The economy is about to tank because of a negative savings rates and rampant consumer spending brought about by credit that was too easy to get and too cheaply priced.

The single best way to rest the economy is to bust the bubble that exists in the housing market so that the middle class can again go out and buy houses they can afford. The quickest way to do this is to raise interest rate NOT CUT THEM. Higher rates will force housing prices to fall as a new equilibrium is establish as the demand drops quickly in the short run and the supply grows.

As housing becomes more affordable people will buy home and as the housing market improves, the rest of the economy, including consumer spending will recover with it.

The idiots who overpaid for housing have to lose money - there's just no way around that problem. The government can't force companies to write off what in many cases is 30% of the loan value. Reckless consumers over extended themselves and now the time has come to settle up.
Hypocrisy. It's the new black for liberals.
 
andessmf
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 6:47 pm



Quoting FXramper (Reply 2):
Bernanke: Juice the economy 'quickly'!

That is the current problem, and not just in the US. Too much juice. This current down cycle should be used to remove the excesses created and to start a new cycle, that should be based in actual production, as opposed to the rampant speculation that has occurred in the last years.
 
AsstChiefMark
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:05 pm

Gut feeling: I ain't gonna work. It's just something to distract Americans from the country's real problems (which, according to FXramper, we aren't allowed to mention).

"Benny, you're doing a heck of job."
Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Red tail...Damned MSP...Red tail...Red tail
 
AirportSeven
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:05 pm

Whoo hoo! Stay the course! Stay the course! If we keep doing the sames things over and over again, we can expect different results, right? Right?

Taking a quick look at our current finances, we are running a budget deficit and a trade deficit. Where will the money come from to pay for these rebates and tax cuts? Nobody's mentioned any spending cuts, so it kind of sounds like we are going to have to continue borrowing to pay for giving ourselves money.

Does anyone in this administration or the Federal Reserve have any ideas other than cutting taxes, borrowing and spending, and cutting interest rates? Anyone? We are heading towards a recession, and these are the best ideas that the people in charge can come up with?

Borrowing from one credit source to repay another credit source is called "kiting" at the consumer level. It is considered to be fraud.

Quoting Pope (Reply 5):
The economy is about to tank because of a negative savings rates and rampant consumer spending brought about by credit that was too easy to get and too cheaply priced.

And we are all about to get signed up for a high interest loan and told to go blow the proceeds on shit we don't need as a short term boost to the economy without any thought to really fixing what is wrong.
 
catsfan
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:19 pm



Quoting Pope (Reply 5):
The quickest way to do this is to raise interest rate NOT CUT THEM. Higher rates will force housing prices to fall as a new equilibrium is establish as the demand drops quickly in the short run and the supply grows.

By lowering interest rates you allow those people who are stuck in ARM mortgages the ability to refinance thus "affording" the house they currently have or a new house they are interested in buying. So, possibly raising interest rate could only make affordable housing less obtainable to those people with financial issues. A saturation of the housing market combined with defaulted loans has already driven down housing prices. I am thinking of buying investment properties due to the recent decline in prices.

 twocents 
I gotta have more cowbell!
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:22 pm



Quoting AirportSeven (Reply 8):
And we are all about to get signed up for a high interest loan and told to go blow the proceeds on shit we don't need as a short term boost to the economy without any thought to really fixing what is wrong.

Quite the opposite. Global interest rates are falling. Have you seen the yield on US Treasuries lately? It's almost free to borrow money in the 5 to 10 year horizon. Heck many would argue that the real rate of interest (interest rate less inflation) is negative.

The fundamental problem is that government should not involve itself in markets. The current problem exists because the Fed kept pumping cheap money into the market and therefore created an asset pricing bubble. The answer cannot be, pump more money into the market.

I do agree that we need to address the long-term issues of deficit spending. But no person is ever going to be elected to anything by advocating and following through on the promise to cut the size of government. Government is a self-protecting institution. All branches want more power and power is largely measured by money.
Hypocrisy. It's the new black for liberals.
 
andessmf
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:26 pm



Quoting CATSFAN (Reply 9):
By lowering interest rates you allow those people who are stuck in ARM mortgages the ability to refinance thus "affording" the house they currently have or a new house they are interested in buying.

Not all of them, since a good chunk of them were not paying loan principal or even full interest. Or if they had multiple properties, it doesn't help when they are upside down on what they owe.

Quoting CATSFAN (Reply 9):
So, possibly raising interest rate could only make affordable housing less obtainable to those people with financial issues.

Some investors may demand higher returns (via higher interest rates) to offset the higher risks.

Quoting CATSFAN (Reply 9):
I am thinking of buying investment properties due to the recent decline in prices.

I would be very careful, as I see a saturation of both for sale and for rent units. You could purchase a house that would give you positive returns, provided you can find a renter for it.
 
AirCop
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:29 pm



Quoting Cfalk (Reply 4):
Quoting Seb146 (Reply 1):
Will Americans have to repay the rebates like before?

Hmmm. I don't recall that. When did that happen?

The last time they did this, you were supposed to claim your rebate on your income taxes as income.

Quoting AGM100 (Reply 3):
The good economy has more to do with the American people and the people around the world who invent , invest and work hard to buy ,sell and market goods.

Research and development of new ideas/concepts are the magic words..

Quoting AGM100 (Reply 3):
The current down turn can be blamed on some bad judgements by bankers

One word = greed.

Quoting AGM100 (Reply 3):
If you say recession enough ..it is going to happen

You are correct.

Last time the government did this, most taxpayers used the rebates to pay down credit cards, savings etc, which really didn't help the economy rebound, you really need the money spent on new consumer items.
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:34 pm



Quoting CATSFAN (Reply 9):
By lowering interest rates you allow those people who are stuck in ARM mortgages the ability to refinance thus "affording" the house they currently have or a new house they are interested in buying. So, possibly raising interest rate could only make affordable housing less obtainable to those people with financial issues. A saturation of the housing market combined with defaulted loans has already driven down housing prices. I am thinking of buying investment properties due to the recent decline in prices.

I respectfully submit that there are several errors in this line of thinking:

1. People who can refinance have already done so. Every day it's becoming increasingly clear that many of the people affected by this problem cannot afford the house they're in even if it had no interest on the loan. Someone whose overpaid for a house (or for that matter any asset) has to take a loss at some point.

The National Association of Realtors claim that the median home price is $220,000 in the US. The median US income is in the low $40,000's. The problem is that the old rule of thumb was that you could afford a house that was between 2.5 and 3 times your gross earnings. Well that means that the median family should be in a house that between $100,000 and $120,000. Given the extent of the overvaluation, people are never going to be able to ride out the pregnant losses that are present. They're going to have to pop that loss.

But even if you ignore the median housing price to median income dilema. Compare rental cost to ownership costs. Cost of owning, including P&I, insurance and taxes are at historical highs versus rents. It frankly is now cheaper to rent than to own. The premium is now about 30% above its historical averages. Again, that indicates that housing is substantially overvalued.

2. It only makes sense to buy housing now if you believe we've hit bottom. My bet is that we haven't and buying tangible assets with a very tangible carrying cost (your insurance and property taxes alone) while the market is still declining is like trying to catch a falling knife.
Hypocrisy. It's the new black for liberals.
 
AirTranTUS
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:44 pm



Quoting Seb146 (Reply 1):
Is there somewhere to view it besides foxnews.com?

And that will change the information how?

Quoting Seb146 (Reply 1):
Will Americans have to repay the rebates like before?

When did that happen?
I love ASO!
 
andessmf
Posts: 5689
Joined: Wed Jan 25, 2006 8:53 am

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:51 pm



Quoting Pope (Reply 13):

I'd take you also post here?

http://thehousingbubbleblog.com/index.html
 
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fxramper
Posts: 5837
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 7:52 pm



Quoting AirTranTUS (Reply 14):


Quoting Seb146 (Reply 1):
Is there somewhere to view it besides foxnews.com?

And that will change the information how?



 rotfl 

Would a rebate help anyone on this site?

 confused 
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:07 pm



Quoting AndesSMF (Reply 15):
I'd take you also post here?

http://thehousingbubbleblog.com/inde....html

No. This is the only place I post. I do read:

http://housingpanic.blogspot.com/

I like HP because of the breadth of the data they have AND the sarcasim of the writing.
Hypocrisy. It's the new black for liberals.
 
N174UA
Posts: 860
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:19 pm



Quoting Pope (Reply 5):
This is a band-aid to a severed limb.

The economy is about to tank because of a negative savings rates and rampant consumer spending brought about by credit that was too easy to get and too cheaply priced.

The single best way to rest the economy is to bust the bubble that exists in the housing market so that the middle class can again go out and buy houses they can afford. The quickest way to do this is to raise interest rate NOT CUT THEM. Higher rates will force housing prices to fall as a new equilibrium is establish as the demand drops quickly in the short run and the supply grows.

As housing becomes more affordable people will buy home and as the housing market improves, the rest of the economy, including consumer spending will recover with it.

The idiots who overpaid for housing have to lose money - there's just no way around that problem. The government can't force companies to write off what in many cases is 30% of the loan value. Reckless consumers over extended themselves and now the time has come to settle up.

Thank you for reminding me why I have you on my RU list. Curious as to your economics/education background? You have a great handle on macroeconomics, that's for sure.

This rebate thing was done in 2001, and here we are again. It's a band-aid, designed to get people to spend it on something, rather than encourage them to bank it (which I will do, when it arrives) and save it for a rainy day when they lose their jobs.

I don't pretend to know all the answers, not by a long shot. But I know this isn't it. We need more structural, long-term reforms in lending practices, incentives to consumers to save for a rainy day rather than live for the moment, and for retraining for those who lose their jobs due to no fault of their own, extension of unemployment benefits for those who need it, etc. Most importantly, our government, regardless of who runs Congress or is POTUS, needs to slow the rate of deficit spending. While I strongly disagree that a balanced budget amendment is needed, clearly fiscal controls need to be implemented.
 
catsfan
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:25 pm



Quoting Pope (Reply 13):

I agree with your first point for the most part.....a majority of people who can refi have. The point I was trying to make was there are still people who can benefit from a reduction in interest rates (people who don't have negative equity, are still in their "fixed" term of their ARM).

I however can't agree with your second point.....The "low" point in the housing market depends on so many things (location, demand, inventory, interest rates, market trends, etc...), so the low point in your market may be different than the low point in my market. So, to say that it isn't a good time to buy in general isn't really an accurate statement. People are selling their houses for less than they paid for them 3-5 years ago in my area. A person will only bend so far before it is more advantageous for them to keep a house and eat the carrying costs.
I gotta have more cowbell!
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:29 pm



Quoting N174UA (Reply 18):
Curious as to your economics/education background?

30 years of watching my parents teach me the value of a dollar and personal responsibility by the way they lived
B.S. (4 years) and M.S. (1 year) in Accounting from the University of FL; minor in finance
5 years in international M&A consulting at a Big 5 Accounting Firm
9+ years as an executive in a privately held company
Read a lot from a lot of different source.

Fundamentally most people know why this happened. They just don't want to accept that the real cure is not going to be easy or pleasant.
Hypocrisy. It's the new black for liberals.
 
AirportSeven
Posts: 309
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:32 pm



Quoting Pope (Reply 10):
Global interest rates are falling. Have you seen the yield on US Treasuries lately? It's almost free to borrow money in the 5 to 10 year horizon. Heck many would argue that the real rate of interest (interest rate less inflation) is negative.

When I said it was a high interest loan, the interest I had in mind was more along the lines of the cost of implementing a short-term solution to a long term problem. Also, what good will it do the U.S. economy to stimulate consumer spending when most consumer items are manufactured in China?
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:34 pm



Quoting CATSFAN (Reply 19):
I agree with your first point for the most part.....a majority of people who can refi have. The point I was trying to make was there are still people who can benefit from a reduction in interest rates (people who don't have negative equity, are still in their "fixed" term of their ARM).

The problem is that this situation can't be solved on a case-by-case basis. The structural problems involving the unsustainability of housing prices has to be fixed on a macroeconomic level.

Whenever you draw a line and create a policy it's always going to seem most unfair to the people immediately on either side of the line. While I'll accept the premise that there are some people who would benefit from a reduction in rates, I'd say that this is a relatively small number. Bank's aren't foreclosing on loans because people are $100 a month short. They're foreclosing because the vast majority of the people can't pay the principal regardless of the interest rate.

In my estimation, by raising rates you quickly pop the asset pricing bubble. Housing prices will fall dramatically and the economy will reset. The new equilibrium position will allow people to get into the housing market who right now are shut out because of the cost of entry.

But we are never going to solve the basic problem if we don't accept that people are going to get hurt and suffer.
Hypocrisy. It's the new black for liberals.
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:40 pm



Quoting AirportSeven (Reply 21):
When I said it was a high interest loan, the interest I had in mind was more along the lines of the cost of implementing a short-term solution to a long term problem.

But the market doesn't agree with you on that. If the market thought that there was going to be a long-term cost to this then the rate at which the US government borrows would have to reflect the fact that the investment in US government obligations carry a default risk. The Financial Times had an article on this recently.

Quoting AirportSeven (Reply 21):
Also, what good will it do the U.S. economy to stimulate consumer spending when most consumer items are manufactured in China?

60% of the US trade deficit comes from our purchasing of oil. Consumer spending has a direct benefit on the US economy. The washer and dryer you buy at Sears may have been manufactured in China / Taiwan / Korea / Canada or Mexico. But it was sold to you by a US company, delivered to the warehouse by a US truck, landed on the dock by a US dock worker. You paid US sales tax on the purchase and the money Sears and everyone else earned is subject to US income tax.
Hypocrisy. It's the new black for liberals.
 
catsfan
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 8:50 pm



Quoting Pope (Reply 22):

It is obvious that you are well educated on the housing market. Although we have differing views on the current needs of the housing market, I respect your educated views.
I gotta have more cowbell!
 
Pope
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 9:01 pm



Quoting CATSFAN (Reply 24):
It is obvious that you are well educated on the housing market. Although we have differing views on the current needs of the housing market, I respect your educated views.

I respect your views as well. When it comes to investment decisions there will never be an absolute right or absolute wrong answer. Two people can have completely different investment horizons, different risk tolerances, different risk / reward matrix. Furthermore, real estate is local, though certain macro effects certainly impact the situation. Not knowing where you live I wouldn't even fathom a guess about whether it's a good idea for you to buy or not. I was just making a generalization that I think there is more downside risk to the real estate market as a whole than upside risk in the 3 - 5 year horizon.

Quoting CATSFAN (Reply 19):
A person will only bend so far before it is more advantageous for them to keep a house and eat the carrying costs.

I just think that many people simply can't eat the carrying costs because they lack the financial capacity to do so.
Hypocrisy. It's the new black for liberals.
 
boeingfever777
Posts: 1990
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RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 9:03 pm



Quoting FXramper (Reply 16):
Would a rebate help anyone on this site?

Show me the $1600 married rebate tax W!  yes 
Faire du ciel le plus bel endroit de la terre.
 
seb146
Posts: 13773
Joined: Wed Dec 01, 1999 7:19 am

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 9:09 pm



Quoting Cfalk (Reply 4):
Hmmm. I don't recall that. When did that happen?

I recall during Bush's first term, there were rebates sent out. Taxes went up after that.

Quoting AirTranTUS (Reply 14):
And that will change the information how?

If I read the information on the GAO website, for example, I would trust it a lot more than if I saw it on CNN, Fox News, NYT, etc.
Life in the wall is a drag.
 
andessmf
Posts: 5689
Joined: Wed Jan 25, 2006 8:53 am

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 9:19 pm



Quoting Pope (Reply 25):
I was just making a generalization that I think there is more downside risk to the real estate market as a whole than upside risk in the 3 - 5 year horizon.

Bingo!

I still know several people and family, who see and experience the market downturn, but strongly believe that prices will go back to where they were soon.

As prior bubble charts show, once a bubble is popped, prices will head down and return to where they should have been in the first place, stick there for a while, and then slowly start appreciating again. But we will not see the same inflation-adjusted prices in our lifetime.

Quoting Pope (Reply 25):
I just think that many people simply can't eat the carrying costs because they lack the financial capacity to do so.

Rich or poor, many made this mistake. Being that I live in California Bubble Central (Sacramento) I am very familiar with these situations. When some are upside down by literally $100,000, and $800 rebate does nothing.

Quoting CATSFAN (Reply 19):
A person will only bend so far before it is more advantageous for them to keep a house and eat the carrying costs.

Unless their home is foreclosed.
 
MD-90
Posts: 7835
Joined: Mon Jan 17, 2000 12:45 pm

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 10:05 pm



Quoting AGM100 (Reply 3):
The current down turn can be blamed on some bad judgements by bankers and the over-hyping by the press for political reasons.

No, the downturn is the Fed's fault, namely Greenspan's fault for inflating the money supply. Bernanke naturally doesn't appear willing (like Volcker was) to make the tough decision and take the loss.
 
767Lover
Posts: 3254
Joined: Fri Sep 26, 2003 6:32 am

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 10:58 pm

Quoting Cfalk (Reply 4):
Quoting Seb146 (Reply 1):
Will Americans have to repay the rebates like before?

Hmmm. I don't recall that. When did that happen?

No kidding...I definitely didn't pay it back!

Quoting Pope (Reply 25):
I just think that many people simply can't eat the carrying costs because they lack the financial capacity to do so.

Bingo. Too many people have been given loans because of a belief that it is a person's right to own a home. And a new car. And an iPhone...Credit has been far too easy to get all the way around, and add it all up and pretty soon monthly payments for all of this exceeds the income. And then God forbid if you lose your job. People leave themselves no cushion, because the bank says "you can afford this amount." Banks have approved loans far higher than what they should be based on earning levels. (There's no way in hell I was going to buy an expensive of a house as what I was approved for 10 years ago. It would have stretched me too much each month at the time.)

Consumers have no discipline, and banks are like the drug pushers who feed the consumer's greed.

[Edited 2008-01-18 15:01:31]
 
catsfan
Posts: 39
Joined: Thu Jan 17, 2008 5:07 pm

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 11:22 pm



Quoting AndesSMF (Reply 28):
Quoting CATSFAN (Reply 19):
A person will only bend so far before it is more advantageous for them to keep a house and eat the carrying costs.

Unless their home is foreclosed.

Obviously they don't have an option to keep the house if it is being foreclosed unless they can bring the loan current.
I gotta have more cowbell!
 
andessmf
Posts: 5689
Joined: Wed Jan 25, 2006 8:53 am

RE: President Bush Pitches Income Tax Relief.

Fri Jan 18, 2008 11:26 pm



Quoting CATSFAN (Reply 31):
Obviously they don't have an option to keep the house if it is being foreclosed unless they can bring the loan current.

Many have no means to bring their loan current, regardless of income level, as they purchased a home wrongly assuming that appreciation would leave them with a good chunk of change in their pockets in case of trouble. Or they used equity to live way beyond their means.

And what happens in this case? (Have examples to prove it) What if you bought a home for a million, and that same house is now selling for $600K. What is your incentive to keep paying the $400K 'lost' equity?
 
catsfan
Posts: 39
Joined: Thu Jan 17, 2008 5:07 pm

RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 12:01 am



Quoting AndesSMF (Reply 32):
Many have no means to bring their loan current, regardless of income level, as they purchased a home wrongly assuming that appreciation would leave them with a good chunk of change in their pockets in case of trouble. Or they used equity to live way beyond their means.

Again....I was simply clarifying my previous statement. Thought it was implied that forclosure would prevent someone from keeping their house. I made no refernce to anyones financial status.
I gotta have more cowbell!
 
seb146
Posts: 13773
Joined: Wed Dec 01, 1999 7:19 am

RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 12:43 am



Quoting 767Lover (Reply 30):
No kidding...I definitely didn't pay it back!

So, your taxes were lowered? I wish mine would have been! But, I have just been one of the middle working class...
Life in the wall is a drag.
 
Arrow
Posts: 2325
Joined: Wed Jun 19, 2002 7:44 am

RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 12:51 am



Quoting AirportSeven (Reply 8):
Taking a quick look at our current finances, we are running a budget deficit and a trade deficit. Where will the money come from to pay for these rebates and tax cuts? Nobody's mentioned any spending cuts, so it kind of sounds like we are going to have to continue borrowing to pay for giving ourselves money.

This is the elephant in the room. The one thing the administration could do that would be useful is to curb spending and eliminate deficit financing. But it looks to me like the deficit will rise, not fall. If a slew of tax cuts is accompanied by the status quo on spending, I don't see a rosy picture.

The one piece of potential good news is that globally the US economy has a lost a lot of clout. It's per centage share of global growth has dropped from 30% to 10%, largely because of rapid growth in Asia. That might mean the US can't pull the rest of world into recession with it, and it might mean a US recession would be short-lived.

Article on this today:

http://www.theglobeandmail.com/servl...ssioncares0118/BNStory/energy/home

Excerpt:

However, Mr. Rubin pointed out Friday that commodity prices have stubbornly held their ground in the face of the recent stock selloff: crude oil futures are trading at $90 (U.S.) a barrel while copper is worth $3.20.

The biggest factor behind the stubborn strength of commodity prices is the dwindling importance of the U.S. economy to the global economy, Mr. Rubin said. In the late 1990s, the American economic growth accounted for nearly 30 per cent of global growth while today it accounts for only 10 per cent.

“And that loss is much greater when it comes to impacting resource markets,” he said.
Never let the facts get in the way of a good story.
 
andessmf
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Joined: Wed Jan 25, 2006 8:53 am

RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 1:01 am



Quoting Arrow (Reply 35):
It's per centage share of global growth has dropped from 30% to 10%, largely because of rapid growth in Asia.

The relevant questions are these:

What percentage of the world economy has grown by exporting to the US? For example, has China's economy grown exponentially as their exports to the US have grown? What percentage of these other economies growth is directly or indirectly related to the rampant consumerism of US residents?

If Americans can no longer go on spending sprees, and their oil usage goes down, will this affect OPEC and other countries?

Let's be clear on this. IMHO, the problem has not just been the 'US Housing Bubble', this will be known as the 'Worldwide Asset Bubble'. It is folly to believe that this will only affect the US. When I read stories about the doubling of home prices in Vietnam, New Zealand, S. Africa, etc., I know this is not contained to one region.
 
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Aaron747
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 3:05 am



Quoting AndesSMF (Reply 6):
This current down cycle should be used to remove the excesses created and to start a new cycle, that should be based in actual production, as opposed to the rampant speculation that has occurred in the last years.

Couldn't agree more.  checkmark 

Quoting Pope (Reply 20):
Fundamentally most people know why this happened. They just don't want to accept that the real cure is not going to be easy or pleasant.

This is essentially why politicians never cut it when responsible for running their own businesses (just look at the man at the top of this thread). Bernanke and Greenspan are elite coffeetable lovers of money printing who never did appreciable real work in industries where nuts and bolts accounting practices applied.

Quoting AndesSMF (Reply 36):
When I read stories about the doubling of home prices in Vietnam, New Zealand, S. Africa, etc., I know this is not contained to one region.

Got that right. Just an article yesterday about how Tokyo real estate values have likely peaked after dipping to 20 year lows just seven years ago. With GDP having grown at only 2% in the interim, HTF does anyone think that happened? Dontcha love unchecked speculation?

This proposal from the administration and the accompanying nonsense from Congress are steaming piles of financial manure. Recession is a necessity and the more they try to delay it, the more it's going to hurt.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
VonRichtofen
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 3:31 am

I heard on the news that the US economy is about 70% dependent on consumer spending. Is this true? If it is then that's pretty scary. It pretty much forces wastefulness and inefficiency.

Another thing, if the US economy is so dependent on consumer spending then the fact that many of the new jobs being created pay dick cheese and the fact that wages overall have been pretty stagnant isn't going to help at all.

Unless of course, that 70% figure is way off the mark. I heard it from some analyst on the news.
 
andessmf
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 3:49 am



Quoting Aaron747 (Reply 37):
Recession is a necessity and the more they try to delay it, the more it's going to hurt.

Pretty much. Trying to prevent it will cause more damage in the future.

Quoting VonRichtofen (Reply 38):
I heard on the news that the US economy is about 70% dependent on consumer spending. Is this true?

Yes.

Quoting VonRichtofen (Reply 38):
If it is then that's pretty scary

No, it is NORMAL.

Quoting VonRichtofen (Reply 38):
It pretty much forces wastefulness and inefficiency.

Why? You make a product, you sell a product. Eventually that product gets to people. BTW, consumer spending has driven this economy for decades. Thanksgiving came early during the Great Depression in an attempt to spur more consumer spending.

The problem is that some countries grow their economies by providing consumables at a cheap price to the US, instead of raising their own standards of living so THEIR citizens spend money on products for themselves.
 
N174UA
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 4:33 am



Quoting Pope (Reply 20):
30 years of watching my parents teach me the value of a dollar and personal responsibility by the way they lived
B.S. (4 years) and M.S. (1 year) in Accounting from the University of FL; minor in finance
5 years in international M&A consulting at a Big 5 Accounting Firm
9+ years as an executive in a privately held company

Wow. You and I have very similar educational backgrounds, and my parents too were very smart with their money (both retired at 58 and own their home free and clear) though you clearly have more work experience. You're right on the money, and I hope a lot of the readers here read very carefully what you write and learn from it.

Quoting Pope (Reply 20):
Fundamentally most people know why this happened. They just don't want to accept that the real cure is not going to be easy or pleasant.

I think this recession will be longer and deeper, because of the extent of the credit bubble bursting. Many live paycheck to paycheck, and without ample reserves, they will face very difficult decisions.

Quoting Pope (Reply 22):
The new equilibrium position will allow people to get into the housing market who right now are shut out because of the cost of entry.

I agree, however my concern would be that the cycle could start over again. With lower prices, more people with questionable credit will get loans from lenders who would still take wild risks.

Quoting 767Lover (Reply 30):
Credit has been far too easy to get all the way around, and add it all up and pretty soon monthly payments for all of this exceeds the income.

Part of it is unscrupulous lending...no arguments there. However, the people who borrow that money need to CLEARLY understand what the payment schedule is, the interest rates, penalties, etc. before they sign on the dotted line. Unfortunately, emotion in a big purchase typically trumps logic/reason/financial planning, and here we are.

While I could go on forever, public schools need to teach personal finance, not how to prepare for a standardized test that no one will give a $hit about a month after the scores come back. Too many people in this country lack a basic understanding of personal financial management and knowing when to say yes or no when given many opportunities to borrow. Understanding the importance of credit is so very important.

Quoting 767Lover (Reply 30):
Consumers have no discipline, and banks are like the drug pushers who feed the consumer's greed.

Well, a fool and his/her money soon part ways. Your statement assumes all consumers have no discipline and all banks are unethical and greedy. Neither are true.

Quoting AndesSMF (Reply 36):
It is folly to believe that this will only affect the US. When I read stories about the doubling of home prices in Vietnam, New Zealand, S. Africa, etc., I know this is not contained to one region.

My article review that I turned in last week (Pound Brought Back to Earth, WSJ, 1/11/2008) for my Int'l. Finance class said exactly that. Did you know the UK pound has fallen about 7% against the Dollar since hitting it's 26-year high late last year? And down 8% against the Euro? And Canada is in the same boat. Housing prices are falling in the UK, and they too have had the issue of easy access to credit as well. And other areas I'm sure are equally affected as well.
 
VonRichtofen
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 4:42 am



Quoting AndesSMF (Reply 39):
No, it is NORMAL.

Normal for the US? Or is it "normal" because it's the way the US does it?

Quoting AndesSMF (Reply 39):
Why? You make a product, you sell a product. Eventually that product gets to people. BTW, consumer spending has driven this economy for decades. Thanksgiving came early during the Great Depression in an attempt to spur more consumer spending.

Wasteful in that it relies on the US population buying shit they don't need, and then throwing it in the garbage a short time later to buy the next latest thing. Add to that most Americans are in debt up to their eyeballs to keep up with such a lifestyle and you have some problems.
 
andessmf
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 5:23 am



Quoting VonRichtofen (Reply 41):
Wasteful in that it relies on the US population buying shit they don't need, and then throwing it in the garbage a short time later to buy the next latest thing.

Not in disagreement. A lot of commodities are much cheaper now than before, where it becomes cheaper to replace rather than fix. Again, other countries should concentrate on better serving the needs of their own population rather than relying on exporting to consumer nations.

Quoting VonRichtofen (Reply 41):
Add to that most Americans are in debt up to their eyeballs to keep up with such a lifestyle and you have some problems.

Canada and many other countries have the same exact problem. Let's not try to single out the US when other countries do the exact same thing. Even the Canadian bubble is showing signs of popping.
 
Falcon84
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 5:26 am



Quoting AGM100 (Reply 3):
We have been enjoying one of the best economies ever over the past several years.

 rotfl 

Sorry, the economy in the 90's blew this one away. There were way too many sectors of the nation that didn't get any benefit from this "great" economy. And it was built, as Pope said, on too much credit, to easy to get, and on deficit spending on a level never seen before in this nation.

Quoting AGM100 (Reply 3):
it is going to happen and frankly the Dems need it to happen .

I don't think they do. They're still odds-on favorite. And the economy hasn't been as great as you say-the loss of many, many well-paying jobs in the outsource frenzy, especially in the Great Lakes region, has not been forgotten. That and the collapse of the housing market are bigger issues, tied in, of course, with the overall economy.

Quoting AirCop (Reply 12):
Quoting AGM100 (Reply 3):
The current down turn can be blamed on some bad judgements by bankers

One word = greed.

THANK YOU!  bigthumbsup 

Quoting Pope (Reply 13):

Again, I'm no financial expert, but we're close to going from an ARM to a fixed 30-year mortgage, at about 6%. And, if our appraisal comes in a little better than we expect, then we might even be able to ge a better deal.

Maybe raising the rates, long-term, as you suggest, will help, but right now, it's a good time to refinance, simply because 1. interest rates have fallen 2. lenders are desperate to get some business in the wake of the sub-prime mess.

Quoting FXramper (Reply 16):
Would a rebate help anyone on this site?

Not much. Pay off a bill or two, perhaps, nothing else. It won't let me buy a yacht like it would the richest Americans who have gotten the windfalls from Bush's tax cuts.  Yeah sure

Quoting Pope (Reply 20):
Fundamentally most people know why this happened. They just don't want to accept that the real cure is not going to be easy or pleasant.

The best line of the thread. Americans-the average person, and the politicians, have lost their will to make tough choices. They don't want any economic pain, and will put it off till it will swallow us whole. And, in an election year, Pope is right-they or us won't get something that would "hurt", but we want the quick fix. In the end, it won't do much over the long run.
Work Right, Fly Hard
 
andessmf
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 5:52 am



Quoting Falcon84 (Reply 43):
Sorry, the economy in the 90's blew this one away.

Sorry, same shit, different president. Why do you think it is now referred to as the dot.com bubble?
 
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fxramper
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 5:52 am



Quoting Falcon84 (Reply 43):
Sorry, the economy in the 90's blew this one away.

Led by a Republican Congress.  duck 

Quoting Falcon84 (Reply 43):
buy a yacht like it would the richest Americans

Don't hate my folks.  rotfl 

Quoting Falcon84 (Reply 43):
In the end, it won't do much over the long run.

I agree. The entire 'stimulus' package is rather silly. Are the final 11 months of the presidency going to be used for damage control? Me thinks so.

God, I hope we don't invade Iran.  Yeah sure
 
j_hallgren
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 6:31 am

As soon as I heard about it, I was thinking about how the last one was so misunderstood, and this one likely would be also if similar...it was a tax rebate so IF you didn't pay any taxes, you didn't get one, and that basic concept was not understood by many who fall into the lowest income categories and who thus pay very little or no taxes or get money back via credits...and some complained they didn't get the full amount...well IF you only paid $50 in tax, how could you get a rebate for any more than that? It'd be like trying to get a mail-in rebate for $50 for something that you only paid $25 for...ain't going to happen!

Having helped a few confused people fill out an "extension to file" form on various Apr 15 dates, it's very obvious many people don't understand taxes at all...they would often say "well, I didn't pay taxes and I get money back"...fine, but they HAD money witheld and thus paid taxes, it's just they will get that back.
COBOL - Not a dead language yet!
 
threeifbyair
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 7:09 am



Quoting Pope (Reply 20):
Fundamentally most people know why this happened. They just don't want to accept that the real cure is not going to be easy or pleasant.

Amen to that. I'm amazed at the extent of the media coverage on the economy, which I think is fanning the fears of "recession" to unreasonably high levels.

A number of economists disagree about how bad the economy actually is right now. There are huge differences depending on where you are in the country. Seattle is doing just fine, even if WaMu and Boeing are trying their best to implode. There are very few forclosures, and property prices are stabilizing, not collapsing. Many other parts of the country are not doing so well.

With 2008 being an election year, we see more stupid pandering all around. Robert Samuelson has a good analysis.

I am disinclined to support any sort of "stimulus" package because it will never be offset by corresponding spending cuts. And, if we are to raid the piggy bank, tax rebates are pretty inefficient way to "stimulate" the economy. Extending unemployment benefits or giving more food stamps are both more targeted and generate more economic activity than throwing money at people who may or may not need it.
 
Falcon84
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 3:49 pm



Quoting AndesSMF (Reply 44):
Sorry, same shit, different president. Why do you think it is now referred to as the dot.com bubble?

If you want to call a 7-year run on a very good economy a "bubble", then maybe you call this one a "little bubble", because that economy was was strong for a very extended period.
Work Right, Fly Hard
 
huskyaviation
Posts: 912
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RE: President Bush Pitches Income Tax Relief.

Sat Jan 19, 2008 4:14 pm



Quoting AndesSMF (Reply 6):
This current down cycle should be used to remove the excesses created and to start a new cycle, that should be based in actual production, as opposed to the rampant speculation that has occurred in the last years.

This has already occurred in many, if not most, major markets around the US.

Quoting AirCop (Reply 12):
Last time the government did this, most taxpayers used the rebates to pay down credit cards, savings etc, which really didn't help the economy rebound, you really need the money spent on new consumer items.

Wrong. Actually, this would help the economy rebound, as it would ease the credit crunch. It would help banks to begin securitizing those receivables again, which is a major economic engine in the US economy.

Quoting Aaron747 (Reply 37):
Recession is a necessity and the more they try to delay it, the more it's going to hurt.

Please elaborate on this specifically. A lot of people on this site make this claim, but back it up. How is allowing the economy to spiral into a recession a good thing if steps can be taken to cushion the blow?

Quoting Falcon84 (Reply 43):
In the end, it won't do much over the long run.

Well then don't give Bill Clinton any credit for "helping" the US out of the economic slowdown in 1993, because his "stimulus" package did much the same thing as this plan does.

Quoting ThreeIfByAir (Reply 47):
I am disinclined to support any sort of "stimulus" package because it will never be offset by corresponding spending cuts.

You fundamentally misunderstand the point of a stimulus package then. You don't have corresponding spending cuts with a stimulus package. That's the point of it. You are pumping more money into the economy. If you had spending cuts, the net effect would be zero, and there wouldn't be much point now, would it?

Quoting Falcon84 (Reply 48):
If you want to call a 7-year run on a very good economy a "bubble", then maybe you call this one a "little bubble", because that economy was was strong for a very extended period.

And the 1990s economy was fueled by inflated stock prices for companies that never earned a dime, and 2000-2001 witnessed a loss of over a trillion dollars as those stocks crashed back to earth. That's not a bubble?

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