einsteinboricua
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Possibility Of US Default?

Mon Apr 18, 2011 4:36 pm

http://www.msnbc.msn.com/id/42643641/ns/business-eye_on_the_economy/

Judging by the looks of this, it seems that the possibility of default grows larger each day. What options does the government have to avoid a default? I would assume a combination of:
1. Cutting spending (no raise in taxes)
2. Cutting spending (let the Bush tax cuts expire)
3. Cut spending and raise taxes

I don't think cutting spending and cutting taxes at the same time solves anything, so I didn't include it in the options (but I would imagine some in Capitol Hill would defend the option).

Should the US declare default, I assume the consequences would be devastating. Would anyone care to speculate on what may happen?
"You haven't seen a tree until you've seen its shadow from the sky."
 
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DocLightning
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RE: Possibility Of US Default?

Mon Apr 18, 2011 4:49 pm

Quoting einsteinboricua (Thread starter):

I don't think cutting spending and cutting taxes at the same time solves anything,

The GOP does.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
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Superfly
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RE: Possibility Of US Default?

Mon Apr 18, 2011 4:59 pm

Tax cut or not, the lobbyist need to go to hell!
There are too many laws and lobbyist who's loyalty is not with the United States.
Bring back the Concorde
 
Ken777
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:15 pm

Quoting einsteinboricua (Thread starter):
Should the US declare default, I assume the consequences would be devastating.

What we are seeing today is the word "negative" used for the first time in our lifetimes regarding the credit worthiness of the US Treasury.

One of the core foundations of our economy has been the Full Faith & Confidence in our national financial obligations.

If the US does default in any area you'll see significant increases in interest rates. Financing for consumers and small businesses will be far harder to get approval for, and larger companies will raise prices and cut staff to cover their interest increases.

Because our economy is still fragile from the Great Recession you'll see a double dip - at best.

Today it seems that some are far more concerned about their own "wealth" and their actions (like refusing to consider tax increases) will, in due course, work to shrink this wealth they prize so much, as well as the financial strength of the country in general.

Quoting Superfly (Reply 2):
Tax cut or not, the lobbyist need to go to hell!

Sadly the situation is pretty simple. The wealthiest companies and individuals in the country can afford to pour in very large amounts of money in order to "protect their interests". The Health Insurance Industry alone can afford to contribute billions to establish and protect their control of Medicare under the current Republican plan. I see the lobbyists being more active if the country's economic situation includes a default.
 
wardialer
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:30 pm

The only way that the US can gain its foot back into a positive economy is to bring back all the US jobs that were outsourced to Eastern Europe.

And its not suprising to me that Eastern Europe is well better off than the US.

The Greek debt is just a walk in the park compared to the US's debt crisis. And it will get worse.
The US is fighting two wars: Iraq and Afghanistan....Now, guess how much those two wars costs the US Government and the Tax payers?

Thats another reason why we are in this debt crisis in the first place. And then of course, outsourcing jobs to Easter Europe.....No wonder their much better off economically...

Ohhhh...just one note to add here...Gas prices are sky rocketing. Another recepie for a massive US recession.

[Edited 2011-04-18 10:32:20]
 
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Aesma
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:39 pm

Even without the risk of defaulting (something I can't believe in at the moment), it only makes sense to lower the debt rating when the Fed is printing so much money that inflation will inevitably skyrocket, making bonds at a low interest rate a losing proposition.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
Superfly
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:39 pm

Quoting wardialer (Reply 4):

Well said!
It's sad that we're not getting any return on any of these wars!
Bring back the Concorde
 
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Dreadnought
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:45 pm

Quoting Ken777 (Reply 3):
The Health Insurance Industry alone can afford to contribute billions to establish and protect their control of Medicare under the current Republican plan.
http://www.opensecrets.org/industries/totals.php?cycle=2010&ind=H

Historically that was true, however the Healthcare industry has spent $157 million in contributions to Democrats over the last 2 election cycles vs $137 to Republicans. Clearly they prefer Obamacare and expect to clean up with it.

The effects of a default would be tremendous, including on other countries. The credit ratings of other countries like Germany, Japan and China which hold a lot of our T-Bills would take a big hit. In fact, the effect on day-to-day living in the US might arguably be less than in the rest of the world.

But the worst effect will be inflation. Already it is heating up. Last Friday they announced that YoY inflation in the US is over 6% (and that doesn't include food and fuel, which we know has risen more than that). At the same time, GDP growth estimates are only between 1 and 2% - Normally a couple of years after a recession we should be growing at 5-7%, but it hasn't happened.

It all can be linked to outrageous public spending. I hope you guys are paying attention to the Inflation and GDP numbers. The last time they were so badly upside down was with Jimmy Carter in charge, and we even invented a word for it - Stagflation. That's where we are headed.
Forget dogs and cats - Spay and neuter your liberals.
 
wardialer
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RE: Possibility Of US Default?

Mon Apr 18, 2011 5:46 pm

The US dollar will collpase. We all know that for sure.

Europe is doing quite well now compared to the US. And thats whats sad about the whole thing,
 
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falstaff
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RE: Possibility Of US Default?

Mon Apr 18, 2011 6:09 pm

Quoting wardialer (Reply 4):
The only way that the US can gain its foot back into a positive economy is to bring back all the US jobs that were outsourced to Eastern Europe.

How many jobs was that? I would rather the massive amount of jobs we outsourced to China and Mexico come back home.
My mug slaketh over on Falstaff N503
 
MadameConcorde
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RE: Possibility Of US Default?

Mon Apr 18, 2011 6:17 pm

Quoting wardialer (Reply 4):
The Greek debt is just a walk in the park compared to the US's debt crisis. And it will get worse.

How is the U.S. going to repay not only the debt but also the interest on the debt? The debt beast is there getting bigger by the year and devouring us.

 Wow!
There was a better way to fly it was called Concorde
 
baroque
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RE: Possibility Of US Default?

Mon Apr 18, 2011 6:27 pm

Quoting Ken777 (Reply 3):
What we are seeing today is the word "negative" used for the first time in our lifetimes regarding the credit worthiness of the US Treasury.

Since you mention it:
http://www.bbc.co.uk/news/business-13118834
US warned on top credit rating by Standard & Poor's
The US has been warned that the credit rating on its government debt could be cut by Standard & Poor's.

S&P is concerned that Democrats and Republicans will not be able to agree a plan to reduce the growing US deficit.

It has downgraded its outlook from stable to negative, increasing the likelihood that the rating could be cut within the next two years.

The US Treasury responded that S&P had underestimated its ability to tackle the national debt.


Considerable irony if S&P cuts the rating due to indebtedness of the US when a fairish part of the recent debt comes from trying to unscramble the eggs so well messed up by ratings agencies giving high ratings to what turned out to be toxic bank debt.

With the $A nearly at $US1.06 now the market seems less than confident there will be a resolution. Tears before bedtime?

Gets closer and closer to finding what a disaster it is when the banking system goes T U. I did not want to find out about that in 2008 and I still do not now. But it is rapidly getting to be the way it is going to go.

With Greece, Ireland and Portugal the Germans moved in as bailiffs. Let me see if I can guess who would have to move in for the US?!!!
 
LAXintl
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RE: Possibility Of US Default?

Mon Apr 18, 2011 6:28 pm

Quoting wardialer (Reply 4):
The only way that the US can gain its foot back into a positive economy is to bring back all the US jobs that were outsourced to Eastern Europe.
Quoting falstaff (Reply 9):
How many jobs was that? I would rather the massive amount of jobs we outsourced to China and Mexico come back home.

Well then first lets roll back things like the minimum wage, union contracts, taxes, land values, etc..

If the US has become a non-competitive place to do business in some industries on a global stage you can hardly expect business to remain here as others can run circles around us simply for sake of nationalism.

Simply put cost competitiveness is paramount in today's economy where the consumers most often drive pricing power.
From the desert to the sea, to all of Southern California
 
Ken777
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RE: Possibility Of US Default?

Mon Apr 18, 2011 6:41 pm

Quoting wardialer (Reply 4):
The only way that the US can gain its foot back into a positive economy is to bring back all the US jobs that were outsourced to Eastern Europe.

We need to bring back jobs, period. And not McWages jobs.

That shift in jobs flow is going to require some major changes. And it has long been an argument of mine that a core change is shifting core health care to a profit based tax for employers and an income based tax for individuals.

Take a look at the cost of US products with health care added in. Can US companies be more competitive with US based employees IF they didn't have the burden of basic health insurance? Add on private plans become a small fraction of current costs today.

I'm also a strong believer in tax incentives for real apprentice programs - and I don't mean cooking fries. I was exposed to some of the apprenticeship programs at Qantas when I was working in Australia and this country needs to learn from programs like that.

Quoting wardialer (Reply 4):
Now, guess how much those two wars costs the US Government and the Tax payers?

The Ego War in Iraq was estimated a few years ago to have a 3+ Trillion long term cost. The annual costs of waging the war is only one part. Long term care of the Veterans is expensive. Replacement of capital equipment and supplies isn't cheap.

So 3+ Trillion and counting on Iraq alone. And that war was clearly not necessary.

Quoting Dreadnought (Reply 7):
Historically that was true, however the Healthcare industry has spent $157 million in contributions to Democrats over the last 2 election cycles vs $137 to Republicans.

And with that $157 Million they avoided a public option. Well worth a Billion Dollars if it had been necessary. Actually when you add in all spending by the industry to avoid a public option it might be close than you think.

Quoting Dreadnought (Reply 7):
Clearly they prefer Obamacare and expect to clean up with it.

No, they prefer to avoid a public option and they especially prefer to avoid the single payer (tax dollars) to pay for the core care. The queer thing is that insurance companies can make a boatload of money providing supplemental programs, like in Australia and with Medicare Supplements.

Quoting Dreadnought (Reply 7):
It all can be linked to outrageous public spending

And a failure to tax at a level that pays for that spending. We have the lowest tax rates in generations and those rates have turned out to be a total failure.

Quoting wardialer (Reply 8):
Europe is doing quite well now compared to the US.

The fear is how other countries will do if the Dollar falls dramatically. For example, Airbus, who will have a lot of sales based on the Dollar.

Quoting MadameConcorde (Reply 10):
How is the U.S. going to repay not only the debt but also the interest on the debt?

Part of our needs is to cut spending, but increasing taxes and fees is an equal, or more important part. LIke it or not, we either get our economic mess cleaned up or all of the "gains" made by cutting taxes will be lost to inflation, the collapse of property and investment assets and the dramatic increase in imported products, like oil.
 
Yellowstone
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RE: Possibility Of US Default?

Mon Apr 18, 2011 7:22 pm

I'm not sure how "S&P warns that it might, in the future, lower US credit rating from AAA to AA, thus putting us on the same level of risk as Belgium, New Zealand, Spain, and Taiwan" turns into "OMG!!!!11one!!1eleven! The US might default on its debt!"

Oh, right, humans are flighty and panicky little creatures. That's how.
Hydrogen is an odorless, colorless gas which, given enough time, turns into people.
 
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par13del
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RE: Possibility Of US Default?

Mon Apr 18, 2011 7:37 pm

Quoting wardialer (Reply 8):
The US dollar will collpase. We all know that for sure.

Where exactly is the US dollar right now, if you check with US tourist travelling to Europe they will tell you that the dollar has already collapsed.

Did anyone ever expect to pay the bill for all the consumer spending which has been used to drive the US economy for the last couple decades, the shift in driving appears to have been all towards the consumer.

The US is spending more than it is collecting, if you raise taxes and give them more money to spend will they then spend less, has there any been politicians who collect money and refuse to spend it, and which party is going to agree to use the revenue from increased taxation to pay off debt, when they can simply raise the ceiling again?

I have been doing more reading on entitlements and discretionary spending as it relates to the US Congress, it seems that this is the major battle ground. One thing, the rest of this session through to the end of the year will be interesting.
 
BMI727
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RE: Possibility Of US Default?

Mon Apr 18, 2011 7:55 pm

Quoting Superfly (Reply 6):
It's sad that we're not getting any return on any of these wars!

That's because all of the nice liberals won't take the oil, but would rather run around building schools.

Quoting falstaff (Reply 9):
I would rather the massive amount of jobs we outsourced to China and Mexico come back home.

How are you going to do that? US workers just can't, or won't, compete. It's just too expensive.

Quoting Ken777 (Reply 13):
And a failure to tax at a level that pays for that spending.

Wrong mentality. It is failure to spend at a level taxes can pay for.
Why do Aerospace Engineering students have to turn things in on time?
 
windy95
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RE: Possibility Of US Default?

Mon Apr 18, 2011 8:08 pm

Quoting Ken777 (Reply 13):
And a failure to tax at a level that pays for that spending. We have the lowest tax rates in generations and those rates have turned out to be a total failure.

No the excessive spending has been a total failure.
 
eaa3
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RE: Possibility Of US Default?

Mon Apr 18, 2011 8:10 pm

Quoting einsteinboricua (Thread starter):
http://www.msnbc.msn.com/id/42643641/ns/business-eye_on_the_economy/

Judging by the looks of this, it seems that the possibility of default grows larger each day. What options does the government have to avoid a default? I would assume a combination of:
1. Cutting spending (no raise in taxes)
2. Cutting spending (let the Bush tax cuts expire)
3. Cut spending and raise taxes

I don't think cutting spending and cutting taxes at the same time solves anything, so I didn't include it in the options (but I would imagine some in Capitol Hill would defend the option).

Should the US declare default, I assume the consequences would be devastating. Would anyone care to speculate on what may happen?

The US will never default in US dollars. This is basically just by definition. The government can't default in it's own currency i.e. not be able to pay dollars to creditors. After all they can print them and have been shown to be perfectly willing to do this. I mean why do people think that the governments financing rate and interest rates are so low today. It's because the US government has been buying government bonds of the market i.e. printing money. It's flooding the market with liquidity.

However I think that this Standard and Poors downgrade of US government debt is not a statement saying that the US government will actually default but rather that in order to lower government debt levels the government will induce inflation and therefore will inflate away a large part of the debt. This is the last resort but Standard and Poors is saying that this is not inconceivable and that if that happens then holding US government debt may not be ideal. Although I don't know what is ideal in that case. Some people say that deflating away debt is a sort of "soft" default.

I think that this is a much bigger problem than just a US government problem. Many governments around the world have an unsustainable debt level and eventually there may be a consensus that inflating away debt is the right course of action. No matter how much the markets and other may dislike it.

Note though that this is just my guess. Also I doubt that a policy of "inflating away debt" would ever be explicit.
 
Ken777
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RE: Possibility Of US Default?

Mon Apr 18, 2011 8:46 pm

Quoting Baroque (Reply 11):
Let me see if I can guess who would have to move in for the US?!!!

If the Republicans & Tea Party have their way: the poor, the sick & the elderly.

The top 10% certainly won't agree to man up and the right wing politicians will do what ever they are told.

Quoting LAXintl (Reply 12):
Well then first lets roll back things like the minimum wage

Having too low a minimum wage is one of the major problems holding us back. As long as the middle class is pushed down then the "upper classes" are putting their US based assets at risk - as well as the economy.

Quoting BMI727 (Reply 16):
Wrong mentality.

Nope. This country performed far better when taxes were higher for the top earners (or "lucky sperms") and the middle class was larger and stronger.

The Bush Tax Cuts (as well as other Bush/Cheney decisions) have shown to be a total failure IMO.

Quoting par13del (Reply 15):
I have been doing more reading on entitlements

Some entitlements (like Social Security) has been paid for all of our lives. Others, like Medicare has been funded by most of us all of our lives.

Others, like health care for the poor is such a basic human right - equal to public education for the poor - that it is an embarrassment that people are pushing to see that program deteriorate.
 
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Dreadnought
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RE: Possibility Of US Default?

Mon Apr 18, 2011 9:06 pm

Quoting Ken777 (Reply 19):
If the Republicans & Tea Party have their way: the poor, the sick & the elderly.

I got it! I knew you reminded me of someone:

Forget dogs and cats - Spay and neuter your liberals.
 
windy95
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RE: Possibility Of US Default?

Mon Apr 18, 2011 9:52 pm

Quoting Ken777 (Reply 19):
Having too low a minimum wage is one of the major problems holding us back

So you agree that illegals are artifilially lowering our wages and prices?

Quoting Ken777 (Reply 19):
If the Republicans & Tea Party have their way: the poor, the sick & the elderly.

The top 10% certainly won't agree to man up and the right wing politicians will do what ever they are told

Have to love Moveon.org talking points. Of course you have nothing to back it up with but you will kep tossing it around.

Quoting Ken777 (Reply 19):
The top 10% certainly won't agree to man up and the right wing politicians will do what ever they are told.

Obama and his rich friends from the left can start donating to the fed anytime they want. be a leader and man up and donate to the treasury.

Quoting Ken777 (Reply 19):
Some entitlements (like Social Security) has been paid for all of our lives


But if you die six months after you start collecting your family gets nothing..Ponzi scheme. And since congress has already spent what was in the lockbox the Ponzi scheme will come tumbling down.
 
Ken777
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RE: Possibility Of US Default?

Mon Apr 18, 2011 10:51 pm

Quoting windy95 (Reply 21):
So you agree that illegals are artifilially lowering our wages and prices?

Minimum wage is too low for someone on that level to work ful time and NOT qualify for government assistance - like food stamps.

Unless you are talking about a true apprenticeship program for young people I believe the minimum wage should be above the poverty level. Better think about that if your want to level the income tax brackets.

Quoting windy95 (Reply 21):
Of course you have nothing to back it up with

I don't go to moveon.org - but thanks for the link.  

If you are looking for anything to back up my statement then look no further than the fight the right made to keep the tax cuts for the top tax rate in December. And Ryan's efforts to LOWER that top rate again for the super rich to 25%.

Quoting windy95 (Reply 21):
But if you die six months after you start collecting your family gets nothing..

And if you die, say, 10 years after your START working and leave a family then Social Security will start paying your wife each month. That is the death & disability insurance in Social Security that the Financial Sector won't tell you about as they lobby (and contribute to campaigns) in order to get your SS Dollars.

Quoting Dreadnought (Reply 20):
I knew you reminded me of someone:

Bit of bad judgement (taste?) on your part there.

I wore the uniform of the U.S. Navy in case you are actually interested.
 
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DeltaMD90
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RE: Possibility Of US Default?

Mon Apr 18, 2011 10:56 pm

Lowering minimum wage is out of the question. In most parts of the county it's simply unlivable. I can see having no minimum wage for high schoolers or guest workers, though I can see how that can cause problems too...
Ironically I have never flown a Delta MD-90 :)
 
einsteinboricua
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RE: Possibility Of US Default?

Tue Apr 19, 2011 12:30 am

Quoting Yellowstone (Reply 14):
I'm not sure how "S&P warns that it might, in the future, lower US credit rating from AAA to AA

For starters, S&P has not announced just how many notches it will downgrade US credit. It just said it will cut it from AAA. Unlike those in AA which are still able to meet their debt, the US can and may go down further. I wouldn't be surprised if it went all the way to junk status, though the odds of that happening are still very slim.

Quoting par13del (Reply 15):
Where exactly is the US dollar right now, if you check with US tourist travelling to Europe they will tell you that the dollar has already collapsed.

I would say the dollar is crumbling, but it's still stable. When the euro reaches $2/Euro with daily changes of over 1 cent, be worried.
"You haven't seen a tree until you've seen its shadow from the sky."
 
JBirdAV8r
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RE: Possibility Of US Default?

Tue Apr 19, 2011 12:54 am

Quoting Eaa3 (Reply 18):
Many governments around the world have an unsustainable debt level and eventually there may be a consensus that inflating away debt is the right course of action. No matter how much the markets and other may dislike it.

Note though that this is just my guess. Also I doubt that a policy of "inflating away debt" would ever be explicit.

Inflating away debt won't work this time anyway. It worked in the Great Depression and to an extent in the 1970s. Most of our problems come from massively bloated (and explosively growing) entitlement programs that are indexed to inflation, either explicitly like Social Security, or implicitly like Medicare or Medicaid. We could literally print all the money in the world and still only eliminate a tiny fraction of our debt.

What's the solution? As a fiscal conservative and a realist, I think it's simple.

1) MASSIVE, painful cuts. We need to accept some cuts in some unpopular places to right this ship.

2) A modest, not huge, increase in taxes.
I got my head checked--by a jumbo jet
 
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Dreadnought
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RE: Possibility Of US Default?

Tue Apr 19, 2011 12:55 am

Quoting Ken777 (Reply 22):

Bit of bad judgement (taste?) on your part there.

I wore the uniform of the U.S. Navy in case you are actually interested.

So did John Walker. The point is that we hear little from you than the dem party line. The facts are that within a generation, if we keep going the way we are - and as your party seems to want, Our children will be saddled with huge taxes, a worthless currency and a nation of shopkeepers. Think of the USSR in the 90s (although they kept a lot of their industry, unlike us). The facts are that entitlements - our biggest expenditure - and the federal bureaucracy must be slashed. That will be unpopular in the short term but future generations (who unfortunately can't vote yet) will thank us for it, at least if history is properly taught.
Forget dogs and cats - Spay and neuter your liberals.
 
Confuscius
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:02 am

Quoting einsteinboricua (Thread starter):

Can the Chinese repossess the Statue of Liberty or San Francisco's Chinatown?
Ain't I a stinker?
 
einsteinboricua
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:07 am

Quoting Confuscius (Reply 27):
Can the Chinese repossess the Statue of Liberty or San Francisco's Chinatown?

A joke we tell here is that in order for the US to get rid of its debt is to sell its possessions. We often joke that we will end up as a China possession.
"You haven't seen a tree until you've seen its shadow from the sky."
 
Confuscius
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:22 am

Quoting einsteinboricua (Reply 28):
We often joke that we will end up as a China possession.

Like these?

http://atozcollectibles.com/yahoo_site_admin/assets/images/Elvis_The_Ledgend.217204444_std.jpg

[Edited 2011-04-18 18:23:13]
Ain't I a stinker?
 
wingman
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:34 am

This whole debate defines the United States and what it has become, a nation of individuals so consumed about their personal agendas that they would see the country go into bankruptcy just to fuel their sense of outrage and point fingers. Whether you're a party line Dem or a party line Re-Pub, you're never going to be part of the solution until you bring yourself to care more about your country and it's future than about your political affiliation.

Let's say it together people..."more money in, less money out". Such a beautiful and simple concept. The last time Re-Pubs ran Congress and we had a Democratic president (Bill Clinton) that little equation put us on course to wipe out our national debt by the time Obama took office. But the very Re-Pubs that froth at the mouth about government spending today were positively nowhere to be seen when Bush and Cheney turned that ship around and drove it right into the rocks. And so I say that people who simply point fingers are incapable of rational thought, or otherwise don't really care about this country. It is simply not possible to have it both ways.

Spending has to drop and taxes have to go up. Actually, taxes don't really have to go up per se, they just have to revert back to what they were the last time this country had a grasp on its finances (Clinton and Newt!) And if someone that makes $1M can't afford to put off renovations on their third vacation home to help save this country for their children then let them move their greedy little ass to Montecarlo. And please, before anyone starts panting like Beck or some other right wing sycophant about taxes and growth and jobs, look up the charts. There is zero correlation between taxes, growth, debt and employment. Why just the other decade someone lowered taxes and it coincided with just the opposite.
 
Okie
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:46 am

Quoting wingman (Reply 30):
There is zero correlation between taxes, growth, debt and employment.


I would ask your source, while I did not ace econ 101, I do remember a correlation.

Okie
 
Ken777
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RE: Possibility Of US Default?

Tue Apr 19, 2011 1:48 am

Quoting Dreadnought (Reply 26):
The point is that we hear little from you than the dem party line.

I deliver my own opinions, regardless of what party line is or isn't.

First opinion? We have to maintain the Full Faith & Confidence is the US Treasury or we have some huge, long term economic problems.

Second? Default is default, regardless of how much lipstick you put on a pig. That includes government programs that we have paid into during our working lives.

Third opinion? Any effort to clean up the national debt with spending cuts ONLY is going to lead to more economic crisis.

Opinion #4? We had an Ego War that will create a long term cost of 3+ Trillion and the conservatives are pretty weak when it comes to being blunt in saying it was unnecessary. But the conservatives will probably be quick to cut funding to those Veterans who served - all in the name of cutting the deficit of future generations (and cutting the top tax rate to 25%),

Now what do we hear from you? Lap dog for the hard right and Tea Party? Not much else from what I can tell. Just spewing the party line that is going to reward those at the top 10% while those below that level become second class Americans.

Quoting Dreadnought (Reply 26):
The facts are that entitlements - our biggest expenditure - and the federal bureaucracy must be slashed.

Defaulting as fast as you can isn't going to solve problems, it is simply going to explode those problems for far too many Americans. You and your hard right buddies won't be able to handle the disaster you're so eager to hand to today's Americans, much less the future generations.

Quoting Dreadnought (Reply 26):
but future generations (who unfortunately can't vote yet) will thank us for it,

Sure they will, IF they are one of the Lucky Sperms. That's the issue you're not addressing. How are YOU planning to take of the poor, the sick, the elderly? Turn over all those tax dollars to AIG and others in the financial sector? That simply ensures that outcomes like infant mortality is worse than Cuba's instead of being equal to Cuba as it is today.

Quoting Dreadnought (Reply 26):
So did John Walker.

You trying to put me in the same class as him? You have some real problems, dude.
 
sna752
Posts: 72
Joined: Mon Sep 03, 2007 3:45 pm

RE: Possibility Of US Default?

Tue Apr 19, 2011 2:38 am

Quoting Ken777 (Reply 3):
Sadly the situation is pretty simple. The wealthiest companies and individuals in the country can afford to pour in very large amounts of money in order to "protect their interests".
Quoting Ken777 (Reply 19):
The top 10% certainly won't agree to man up and the right wing politicians will do what ever they are told.

How about setting an example and donating 5% more of your income to help the cause? Then you can tell them "see, it's not that painful to get taxed 5% more..." The problem isn't that the rich don't want to be taxed. They have paid higher taxes in the past, but so did everyone else. Thus, increasing the national tax rate by 2% at every level would likely meet less opposition than the age-old (and foolish) "stick it to the rich" mentality.

Quoting BMI727 (Reply 16):
Wrong mentality. It is failure to spend at a level taxes can pay for.

It's always nicer to spend someone else's money, isn't it?

Quoting Ken777 (Reply 19):
Nope. This country performed far better when taxes were higher for the top earners (or "lucky sperms") and the middle class was larger and stronger.

Based on what? There's no correlation between GDP and tax rates. Even still, they're usually around 19% of GDP. Only the tax base tends to vary (and very little, at that). So, stating that tax rates were higher when the country performed better fails because simultaneity does not mean causation. There are many other macro- and micro-economic factors that better explain GDP growth.

Government spending usually means that GDP growth will be higher. However, that theory can be substantiated when the government is spending money it has. We are operating in an environment where we do not have the money we are spending. Thus, cutting our government expenditures is likely to increases GDP because it will lower our interest payments on the debt we currently have.

GDP= G + I1 + G + (eX -i) = R + I2 + P + SA + W. Whereas I1 = investment and I2 = interest.

Quoting Ken777 (Reply 32):
Third opinion? Any effort to clean up the national debt with spending cuts ONLY is going to lead to more economic crisis.

Incorrect. See above.
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Dreadnought
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RE: Possibility Of US Default?

Tue Apr 19, 2011 2:44 am

Quoting Ken777 (Reply 32):
First opinion? We have to maintain the Full Faith & Confidence is the US Treasury or we have some huge, long term economic problems.

May I remind you that already last year, US Treasury yields went higher than those on a number of blue-chip corporate bonds, such as Berkshire Hathaway, Procter & Gamble, Lowe’s, Johnson & Johnson, and a host of other blue-chip corporate borrowers. The U.S. government has the ability to levy taxes on the largest national economy in the world, a vast and fearsome revenue-collection apparatus, and more than two centuries of constitutional government under its belt. P&G has Tampax. The international financial markets thinks Tampax is a safer bet.

Quoting Ken777 (Reply 32):
Second? Default is default, regardless of how much lipstick you put on a pig. That includes government programs that we have paid into during our working lives.

Tell me, (I know you are close to retirement age) do you know how much money you paid into those government programs over the years, and how much you are expected to cost those same programs once you become eligible? Take into account TVM, of course. I'll bet if you do, you have not paid in enough. Government programs are a ponzi scheme - the only difference is that Madoff goes to jail, but when the government does it that's just dandy.

Quoting Ken777 (Reply 32):
Third opinion? Any effort to clean up the national debt with spending cuts ONLY is going to lead to more economic crisis.

And I agree. So does the GOP which has recommended taking a chainsaw to all the tax loopholes (the Ryan plan, borrowing from the bi-partisan deficit commission which Obama ignored). You can keep the tax rates the same, and even reduce them while increasing revenue if you do that.

Quoting Ken777 (Reply 32):
Opinion #4? We had an Ego War that will create a long term cost of 3+ Trillion and the conservatives are pretty weak when it comes to being blunt in saying it was unnecessary. But the conservatives will probably be quick to cut funding to those Veterans who served - all in the name of cutting the deficit of future generations (and cutting the top tax rate to 25%),

1) The huge cost of the wars was because of the stupid idea that you can win hearts and minds while the fight's still going on. It should be the subject of another thread entirely, but it was Political Correctness taken to warfare.

2) While cuts may be necessary across the board, including Vets, Most conservatives consider them very high on the list of priorities. The military is one of very few functions which ONLY the federal government can do, and we ask more of our troops than any other federal employees. The day that IRS auditors have a 1 in 10 chance of not walking out of a meeting without the loss of life and limb, I might amend that thought.

Which leads me to Federal civilian employees. That payroll needs to be taken on with a nuke. I see no reason why we can cut that payroll by 50% or more and the taxpayers would not notice any real loss of service.

Quoting Ken777 (Reply 32):

Now what do we hear from you? Lap dog for the hard right and Tea Party? Not much else from what I can tell.

Have you read what I've been saying about healthcare for the past 2 years?

Quoting Ken777 (Reply 32):

Defaulting as fast as you can isn't going to solve problems, it is simply going to explode those problems for far too many Americans.

Then tell Obama to stop it.

Quoting Ken777 (Reply 32):
Sure they will, IF they are one of the Lucky Sperms. That's the issue you're not addressing. How are YOU planning to take of the poor, the sick, the elderly? Turn over all those tax dollars to AIG and others in the financial sector?

I have also expounded at length on the need for simple yet firm regulations on the financial industry, particularly those sections which deal with people's pensions and retirement funds.

Quoting Ken777 (Reply 32):
You trying to put me in the same class as him? You have some real problems, dude.

That was a bit harsh, and I apologize. I was just pointing out that service in the Navy does not automatically say you are beyond reproach, which appeared to be your message.
Forget dogs and cats - Spay and neuter your liberals.
 
Superfly
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RE: Possibility Of US Default?

Tue Apr 19, 2011 3:02 am

Quoting BMI727 (Reply 16):
That's because all of the nice liberals won't take the oil, but would rather run around building schools.


School in Iraq and Afghanistan that end up being destroyed once finished only to rebuild again. It's crazy!

Quoting Confuscius (Reply 27):
Can the Chinese repossess the Statue of Liberty or San Francisco's Chinatown?


I wish China would take over ALL of San Francisco. They would solve the homeless and street gang problem over night. The MUNI trains would run perfectly and all the bad, lazy bus operators would be gone.
The NIMBY's and tree huggers would be ignored and the Central and Embarcadero freeways would be reconstructed. China owning San Francisco would be a good thing.
Same for Chicago, New York, Detroit and most other big cities.

Quoting LAXintl (Reply 12):
Well then first lets roll back things like the minimum wage, union contracts, taxes, land values, etc..


What good would that do?
The jobs that's been outsourced were not minimum wage jobs. The 'new' jobs that have been created with 'hope & change' have mostly been minimum wage jobs.
Bring back the Concorde
 
sna752
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RE: Possibility Of US Default?

Tue Apr 19, 2011 3:20 am

Quoting Superfly (Reply 35):
The jobs that's been outsourced were not minimum wage jobs. The 'new' jobs that have been created with 'hope & change' have mostly been minimum wage jobs.

Minimum wage causes a price floor that is above the equilibrium wage. Essentially, there are people willing to work for less than the minimum wage, yet they are unable to because employers are not allowed to pay less than that floor price. Similarly, employers are willing to pay less than minimum wage, yet are unable to because they are not allowed to pay less than the floor price (usually for unskilled labor). This will create more unemployment since the floor price is higher than the eqilibirum price and the difference would be the deadweight welfare loss. A minimum wage does not work when the minimum wage is below the equilibrium wage, which rarely happens in practice.

Are we sure that are jobs created? I'd tend to think that when unemployment goes from 7 to 10%, jobs aren't created. Then, when unemployment drops from 10% to 9%, it is also unlikley that jobs were created. Rather, they were not lost and/or reinstated. I suppose it depends on how you interpret the government's numbers.

[Edited 2011-04-18 20:24:31]
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Confuscius
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RE: Possibility Of US Default?

Tue Apr 19, 2011 3:34 am

Quoting Superfly (Reply 35):
The MUNI trains would run perfectly and all the bad, lazy bus operators would be gone.

Yeah but the MUNI passengers will be cutting in line and the bus drivers will ignore all traffic rules!
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Superfly
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RE: Possibility Of US Default?

Tue Apr 19, 2011 4:01 am

Quoting Confuscius (Reply 37):
Yeah but the MUNI passengers will be cutting in line and the bus drivers will ignore all traffic rules!


That happens already. I assume you're being sarcastic.  
Quoting sna752 (Reply 36):
Minimum wage causes a price floor that is above the equilibrium wage. Essentially, there are people willing to work for less than the minimum wage, yet they are unable to because employers are not allowed to pay less than that floor price. Similarly, employers are willing to pay less than minimum wage, yet are unable to because they are not allowed to pay less than the floor price (usually for unskilled labor). This will create more unemployment since the floor price is higher than the eqilibirum price and the difference would be the deadweight welfare loss. A minimum wage does not work when the minimum wage is below the equilibrium wage, which rarely happens in practice.


The current economic crisis has nothing to do with minimum wage. Going after minimum wage is like attempting to put out a forest fire with a toy water gun.

Quoting sna752 (Reply 36):
Are we sure that are jobs created? I'd tend to think that when unemployment goes from 7 to 10%, jobs aren't created. Then, when unemployment drops from 10% to 9%, it is also unlikley that jobs were created. Rather, they were not lost and/or reinstated. I suppose it depends on how you interpret the government's numbers.


I havent seen any hiring sprees at any major factories or new construction in the US. All the reports I've been reading are service sector/fast-food jobs. Are these the 'green jobs' Obama was talking about?

http://www.care2.com/causes/politics...ck-but-expect-to-be-paid-a-mcwage/
Bring back the Concorde
 
wardialer
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RE: Possibility Of US Default?

Tue Apr 19, 2011 4:15 am

All I have to say, saldy enough, is that Europe esp. the Eastern European regions, are doing quite great compared to the US. They have no debt crisis and their average unemployment rate now is 3%.

No kidding.....Cheap labor really pays off....Doesnt it???

And people blame the President for all this mess. We should blame all the corporate CEOs who outsourced these companies. The President/Government has no right to stop a private sector business to outsource their business. These are Private sector jobs. And people are blaming the Government for it....Blame the CEOs....

Like I said, the only way to get US economy stable again, is to bring back those jobs. Period.

But the average American people will NOT work for minimum wages. And they CANNOT!!!!! Because, in the USA, the standard cost of living is really high like the rent, auto insurance, health insurance and so forth....In Europe, the Government pays half their doctor visits......So whos complaining there?

[Edited 2011-04-18 21:17:31]

[Edited 2011-04-18 21:18:55]
 
einsteinboricua
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RE: Possibility Of US Default?

Tue Apr 19, 2011 4:39 am

Quoting wardialer (Reply 39):
In Europe, the Government pays half their doctor visits

Unfortunately, people on this side of the pond have come fear that since that is termed socialism. I never realized that the government helping people was bad. Yes, it's bad now because of a huge debt. But if said debt did not exist, would it still be a bad thing? (not to be answered, please. Just trying to make a point)

[Edited 2011-04-18 21:43:10]
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BMI727
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RE: Possibility Of US Default?

Tue Apr 19, 2011 4:50 am

Quoting wardialer (Reply 39):
We should blame all the corporate CEOs who outsourced these companies.

Why? They are doing their jobs.
Why do Aerospace Engineering students have to turn things in on time?
 
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RayChuang
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RE: Possibility Of US Default?

Tue Apr 19, 2011 5:18 am

If we're going to fix the US economy and avoid a possible default, we need to do the following:

1. Aggressively audit every Federal, state and local government agency for bureaucratic overlap and agency bloat and use the audit results to cut the size of government 30% now with an eventual goal of 50-60%.

2. Massively overhaul our national taxation system to reduce complexity and make it more business-friendly. We should start with the Steve Forbes flat income tax plan right now.

3. Aggressively overhaul financial sector oversight far beyond what was done in 2010. The reforms should strictly regulate newer-style investments like hedge funds and derivatives, increase the minimum margin requirements to slow down price speculation, reform the Sarbanes-Oxley Act to make it easier to do corporate IPO's, and re-impose the 1933 Glass-Steagall Act to protect bank assets from the volatile equities market.

4. Unify pollution control laws so the entire USA works off a single national standard for air and water pollution, formulations for clean burning fossil fuels, and so on.

5. Begin a decade-long process to replace the Federal Reserve Note fiat currency with a new US dollar that is backed by gold, silver, platinum, palladium, copper and nickel (the most common metals used in coins and bullion blocks for monetary exchange).
 
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DocLightning
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RE: Possibility Of US Default?

Tue Apr 19, 2011 5:41 am

Quoting Dreadnought (Reply 26):
The facts are that within a generation, if we keep going the way we are - and as your party seems to want, Our children will be saddled with huge taxes, a worthless currency and a nation of shopkeepers.

And if we do what you want, we will live in a polluted, overpopulated hellhole with people literally dying and rotting on the streets from treatable diseases, like India.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
sna752
Posts: 72
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RE: Possibility Of US Default?

Tue Apr 19, 2011 5:41 am

Quoting Superfly (Reply 38):

I havent seen any hiring sprees at any major factories or new construction in the US. All the reports I've been reading are service sector/fast-food jobs.

Well, for starters, when the column name is "get political," I think that there is almost certainly going to be a ton of bias and it's quite difficult to respect that as a serious source.

Last month (March, announced 1 April), we saw goods-producing jobs increase 31,000 (+73,000 in Feb), while manufacturing grew 17,000 (+32,000 in Feb) and healthcare jobs rose 44,500. Construction did decline 1,000 (+37,000 in Feb). Private sector jobs increased by 199,000. Payroll also was up 1% Y-O-Y, which doesn't outpace inflation, but it's still headed upwards.

It just seems difficult to say that because companies aren't hiring en masse, there isn't any job growth. The growth is going to come from the small & medium businesses, who hire one or two at a time. Of course, there are many on here that refuse to believe this and want to tax them more, but logic will prevail.

Housing starts are down to 500,000 per year (on an annualized pace), but the March number comes out in the morning and should be more indicative of current market conditions. To wit, housing starts have stabilised, which is a postive sign of sector recovery.
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stasisLAX
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RE: Possibility Of US Default?

Tue Apr 19, 2011 6:03 am

One critical point - the U.S. dollar is currently the recognized "reserve currency" of the world's commerce. Thus the term "petro dollars" where oil is largely paid for in U.S.dollars by purchasers worldwide. A downgrade in the creditworthiness of the dollar would put the entire world's financial systems into complete and total chaos. The likely solution - make the Chinese "Yuan" the reserve currency before a complete collapse of the dollar, although China and Japan will suffer most as the largest governmental holders of U.S. debt. Interesting and frightening economic times ahead, that is a certainty.
"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
 
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DocLightning
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RE: Possibility Of US Default?

Tue Apr 19, 2011 6:41 am

Quoting sna752 (Reply 44):

It just seems difficult to say that because companies aren't hiring en masse, there isn't any job growth. The growth is going to come from the small & medium businesses, who hire one or two at a time. Of course, there are many on here that refuse to believe this and want to tax them more, but logic will prevail.

And this is likely to lead to the most stable, long-term recovery, rather than having another boom. All booms end in bust.
-Doc Lightning-

"The sky calls to us. If we do not destroy ourselves, we will one day venture to the stars."
-Carl Sagan
 
Ralphski
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RE: Possibility Of US Default?

Tue Apr 19, 2011 6:51 am

I know what the problem is...the rent is too damn high!
 
TheCommodore
Posts: 3458
Joined: Tue Dec 25, 2007 2:14 am

RE: Possibility Of US Default?

Tue Apr 19, 2011 7:07 am

Quoting stasisLAX (Reply 45):
One critical point - the U.S. dollar is currently the recognized "reserve currency" of the world's commerce.

Maybe not for much longer.... perhaps ?

Quoting stasisLAX (Reply 45):
Thus the term "petro dollars" where oil is largely paid for in U.S.dollars by purchasers worldwide. A downgrade in the creditworthiness of the dollar would put the entire world's financial systems into complete and total chaos. The likely solution - make the Chinese "Yuan" the reserve currency before a complete collapse of the dollar, although China and Japan will suffer most as the largest governmental holders of U.S. debt. Interesting and frightening economic times ahead, that is a certainty.

  

You make some good points, however the Chinese have to take some BIG steps before that can happen and I'm not sure if/when/how, they do it ?

Bonds appear to be the key word here, they would have to be freely traded on the "open market".... Not sure if China is quite ready for the next move just yet, but I think it will be sooner rather than later.

Here is a good article written about 3 years ago on said subject.

http://www.businessweek.com/globalbi...tent/may2009/gb20090522_665312.htm
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StarAC17
Posts: 3400
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RE: Possibility Of US Default?

Tue Apr 19, 2011 9:53 am

Quoting RayChuang (Reply 42):
1. Aggressively audit every Federal, state and local government agency for bureaucratic overlap and agency bloat and use the audit results to cut the size of government 30% now with an eventual goal of 50-60%.

2. Massively overhaul our national taxation system to reduce complexity and make it more business-friendly. We should start with the Steve Forbes flat income tax plan right now.

3. Aggressively overhaul financial sector oversight far beyond what was done in 2010. The reforms should strictly regulate newer-style investments like hedge funds and derivatives, increase the minimum margin requirements to slow down price speculation, reform the Sarbanes-Oxley Act to make it easier to do corporate IPO's, and re-impose the 1933 Glass-Steagall Act to protect bank assets from the volatile equities market.

4. Unify pollution control laws so the entire USA works off a single national standard for air and water pollution, formulations for clean burning fossil fuels, and so on.

5. Begin a decade-long process to replace the Federal Reserve Note fiat currency with a new US dollar that is backed by gold, silver, platinum, palladium, copper and nickel (the most common metals used in coins and bullion blocks for monetary exchange).

I'll add a few more.

- Get out of both Iraq and Afghanistan asap and bring home at least some troops from countries like Germany, South Korea, and Japan which costs billions to keep in place. The defense budget has to be looked at as well as entitlements, there is plenty to cut in that $700 billion budget.

- Cut Farm and Agro subsidies.

- End the War on Drugs (which has a blank check from the federal government to fight an un-winnable war) and Legalize drugs like pot and tax the hell out of it to get more revenue.
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