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Aaron747
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Bernanke: Debt Ceiling Must Be Raised

Tue Jun 14, 2011 11:10 pm

Speaking before the Committee for a Responsible Federal Budget (a hilarious misnomer if there ever was), the Fed Chairman, as predicted, lambasted GOP opposition to raising the debt ceiling yet again. As the mouthpiece for Wall Street, he indicated the mere talk of this action would have potentially severe market implications that are not needed to achieve the committee's goals. He also dismissed some GOP suggestions of selectively paying debt as it comes due in the interim:

Given the size of the debt and the uneven flow of government revenue, such an effort would buy only a short amount of time while raising unnecessary concerns in financial markets, he said.

"While debt-related payments might be met in this scenario, the fact that many other government payments would be delayed could still create serious concerns about the safety of Treasury securities among financial market participants," Bernanke said.


Wall Street is clearly not on board, and as the saying goes, what they want, they usually get. Back to square one??

http://www.sfgate.com/cgi-bin/articl...2011/06/14/national/w113225D24.DTL
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Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 1:47 am

Quoting Aaron747 (Thread starter):
Wall Street is clearly not on board, and as the saying goes, what they want, they usually get. Back to square one??


Well you just have to figure this is a political appointee and will choose his path based on that.
I do not think that the philosophy of continue to feed a heroin addict more heroin until you kill him is going to work.

I had him on in the background this am while working in the office and my thought was he sounded like Barney Frank about 6 weeks before the Freddie and Fannie were found out to be sitting on over 5 Trillion in bad debt.

Okie
 
DfwRevolution
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 2:17 am

Quoting Aaron747 (Thread starter):
Speaking before the Committee for a Responsible Federal Budget (a hilarious misnomer if there ever was), the Fed Chairman, as predicted, lambasted GOP opposition to raising the debt ceiling yet again.

There is no reason what-so-ever to trust the federal government with an increase in the debt ceiling unless it is directly coupled with the measures necessary to rapidly get back under the existing ceiling and start chipping away at the debt. The American people should be given the confidence that raising the debt ceiling would only serve to provide a factor of safety while we maneuver a heavy ship and not just enable more unrestrained deficit spending. If that's too much to ask, then let the pseudo-default happen. The games must end.
 
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Aaron747
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 3:03 am

Quoting okie (Reply 1):

Well you just have to figure this is a political appointee and will choose his path based on that.

Neither Bush or Obama have particularly sound economic knowledge, so not sure how this has much bearing beyond cementing his own legacy.

Quoting dfwrevolution (Reply 2):
There is no reason what-so-ever to trust the federal government with an increase in the debt ceiling unless it is directly coupled with the measures necessary to rapidly get back under the existing ceiling and start chipping away at the debt.
Quoting dfwrevolution (Reply 2):
The games must end.

Absolutely - so where are the realistic proposals from either party?? I still don't see alphabet agencies on the chopping block, closure of tax loopholes, or a ban on the Fed using taxpayers as a piggy bank for bankers...

Quoting dfwrevolution (Reply 2):
pseudo-default happen

I'm not sure stabbing the patient is practical treatment.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 3:42 am

Quoting Aaron747 (Reply 3):

I'm not sure stabbing the patient is practical treatment


It would be more like rehab, curing the patient from his addiction.

Quoting Aaron747 (Reply 3):

Absolutely - so where are the realistic proposals from either party


There will absolutely be none as long as the temporary solution is the least path of political resistance to get re-elected instead of what is the correct path to get the spending under control for the sustainability of the country's financial well being. We are talking a political process that counts on funding and legislation for special interest groups that return the votes for the funding or legislation.

Okie
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:17 am

Perhaps someone will care to volunteer the US debt rating a week after default would occur. Then start working through the implications of whatever debt rating it is. You might suddenly find Boeing and GE in trouble, not to mention GM and Ford. And as for small business, good luck.

Why not have a look at Greece, apparently some find the fate of Greece attractive. Well you will get most of that, but without those wonderful Aegean islands.

Wall St is not jumping up and down simply because it thinks there will be a solution, but many of you guys are suggesting that the best thing is to default. I don't suppose Wall St would be backing that view as a way forward, least of all for them!

Matthew Zames for one seems less than sanguine about the effects of a default.
 
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:22 am

Quoting okie (Reply 1):

Quoting Aaron747 (Thread starter):
Wall Street is clearly not on board, and as the saying goes, what they want, they usually get. Back to square one??


Well you just have to figure this is a political appointee and will choose his path based on that.
I do not think that the philosophy of continue to feed a heroin addict more heroin until you kill him is going to work.

Um, yes he is. And, for the record, who appointed him first?
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Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:52 am

Quoting Baroque (Reply 5):
Wall St is not jumping up and down simply because it thinks there will be a solution, but many of you guys are suggesting that the best thing is to default. I don't suppose Wall St would be backing that view as a way forward, least of all for them!


No Baroque, most are looking for spending cuts and massive cutting down the size of government before and finding a path to sustainability before giving a go ahead for a short term debt increase.
The big socialist push is to put massive taxes on small business and high income until they put them out of business.
Population is roughly 307M, 134M taxpayers/families, the upper 1% pay 50% of the taxes the lower 50% (67M) pay no taxes. Using those numbers then each of the upper 1% pays the tax burden for 67 families
Divided into the population that means the average taxpayer in the 1% bracket supports the tax-burden of 154 people.
What would you consider a fair number 154, 250, 1,000 or more?

Okie
 
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 5:10 am

Quoting dfwrevolution (Reply 2):
There is no reason what-so-ever to trust the federal government with an increase in the debt ceiling unless it is directly coupled with the measures necessary to rapidly get back under the existing ceiling and start chipping away at the debt.

Amen. _Both_ sides here have a meritorious, existential argument. We die if the debt ceiling is reached. We also die if it _is_ raised and we spend ourselves to death, which is what the Democrats want to do.

This is what gives some steel to the Republican point of view. I agree with yours BTW. The economic debt should end here. If we raise the ceiling let's make equivalent cuts going forward. IMO a health care revolution. And reduced defense footprint.
 
slz396
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 7:48 am

Well there's really no option but the raise the ceiling is there, even though that in itself is a very bad idea, because let's face it, when the ceiling is raised, US public debt with quickly snowball completely out of control to levels which are simply surreal.

It has been said numerous times before, but the AAA+ rating for the US government is completely out of touch which economic reality of the country as the underlaying fundamentals are nowhere near this premium status which dates from another era still: there is no way on earth the US can ever repay its debt and if it weren't for the Chinese buying whatever government paper the US currently prints, the US would have a very hard time raising the cash it urgently needs to fund its standards of living, which have grown way above and beyond its economic status right now.

Now, raising the dept ceiling basically means selling out to the PRC and you can bet your life than in 10, 15 or maybe 20 years, they'll come back and claim what's rightfully theirs: looks to me like the US has just put out very big FIRE SALE banner, all across the country and the PRC is very pleased to see that happening.
 
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 7:54 am

Quoting okie (Reply 7):
No Baroque, most are looking for spending cuts and massive cutting down the size of government before and finding a path to sustainability before giving a go ahead for a short term debt increase.
The big socialist push is to put massive taxes on small business and high income until they put them out of business.
Population is roughly 307M, 134M taxpayers/families, the upper 1% pay 50% of the taxes the lower 50% (67M) pay no taxes. Using those numbers then each of the upper 1% pays the tax burden for 67 families
Divided into the population that means the average taxpayer in the 1% bracket supports the tax-burden of 154 people.
What would you consider a fair number 154, 250, 1,000 or more?


Wow, that is impressive! Half of the taxable population does not pay taxes? Is half of the population to poor to be taxed? How come?

Also, do not forget VAT and other possible taxes beyond income. I cannot imagine that 50% of the taxable population do not pay VAT.
 
dxing
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 8:58 am

Quoting Aaron747 (Reply 3):
I'm not sure stabbing the patient is practical treatment.

As Sam Kinison said, "I checked with a rehab, just in case you know...they wanted 13,000 dollars for 3 weeks....my first thought was that if you are doing drugs and have 13,000 dollars, you don't have a f---ing problem yet!". And that in a nutshell is our problem. If the politicians get the debt ceiling raised without tying the raise to some sort of cuts, then the problem is solved in their minds until the next time we hit the debt ceiling.

Quoting Baroque (Reply 5):
Why not have a look at Greece, apparently some find the fate of Greece attractive.

All you have to do is look at how the left on this forum alone spins up to 105% rated power when just the mention of revamping SS or Medicare, starting in a decade or more is brought up. Greece will look like a minor disturbance if we have to really crack down on either of those programs or food stamps or any other number of other social programs.

Quoting Rabenschlag (Reply 10):
I cannot imagine that 50% of the taxable population do not pay VAT.

There is no federal sales tax at this time in our country but that can't last long now.
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baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 10:47 am

Quoting okie (Reply 7):
Quoting Baroque (Reply 5):
Wall St is not jumping up and down simply because it thinks there will be a solution, but many of you guys are suggesting that the best thing is to default. I don't suppose Wall St would be backing that view as a way forward, least of all for them!

No Baroque, most are looking for spending cuts and massive cutting down the size of government before and finding a path to sustainability before giving a go ahead for a short term debt increase.

Ahem. That IS a solution. Although not, I suspect, the one that Wall St expects though they would be happy enough with it -until someone runs the profit expectations with a substantial cut in government expenditure at which point - oh I don't think I should mention it as obviously we are in the land of the flat earth here.

They probably expect a cave-in and on past experience that would be the strong favourite. But one way or another they expect a solution. Which probably means they will be doubly pissed if one does not eventuate.

Hell probably hath no fury like a market scorned to adapt a well known turn of phrase.
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 2:03 pm

Quoting Rabenschlag (Reply 10):
Also, do not forget VAT and other possible taxes beyond income. I cannot imagine that 50% of the taxable population do not pay VAT


All pay a sales tax, fuel tax etc on items now but the income tax is adjusted so that the lower 50% get credit back on income tax. So as long as the there is a double system it would not matter if it was a VAT tax or any other if it credited back on income tax then it a matter of semantics of what you call the tax or at what point in the chain the tax is collected.

I am by no means remotely close to the 1% but self employed. I have to file my taxes quarterly and in-spite of all the rhetoric the taxes have to be paid first before I get to pay myself.
Now if I took an extreme view and for sake of discussion then I am supporting the tax burden of say maybe 4 families.
The conclusion would be that I get to buy a lot of HDTVs, Homes, Automobiles, Vacations, Food, Clothing for 4 families before I can buy food to feed my family.

Okie
 
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 3:33 pm

Quoting okie (Reply 13):
The conclusion would be that I get to buy a lot of HDTVs, Homes, Automobiles, Vacations, Food, Clothing for 4 families before I can buy food to feed my family.

That's incredible OKIE, You pay taxes on zero income?
Of course not.
To pay taxes, you have to have income. You are not paying taxes first.

Also, we pay taxes to support Government programs. Everyone in the Conservative side likes to gripe about how much money get's paid to welfare, but would you rather pay the 20,000 a year to keep a family floating ,or the 40,000-60000 a year to incarcerate everyone that turns to theft and violance to survive instead of vegging on welfare?


The Governement must control spending , no doubt, but they need to do it on the biggest damn items. Defense, social security, medicare,and interest on the debt.
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Arrow
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 3:39 pm

Quoting okie (Reply 13):
Now if I took an extreme view and for sake of discussion then I am supporting the tax burden of say maybe 4 families.
The conclusion would be that I get to buy a lot of HDTVs, Homes, Automobiles, Vacations, Food, Clothing for 4 families before I can buy food to feed my family.

You're all dissing progressive tax systems -- we all have them because, well, the alternative would be to impoverish a huge chunk of the population. How does that fit with the land of the free and the great society?

Take 50% of a million in income and the guy still has $500,000 to spend. I doubt he'll starve.
Take 10% from a guy who makes $20,000, and he struggles to pay the rent.

I'd be way more impressed with the right's call for spending cuts if they were prepared to get rid of Homeland Security, get out of Iraq and Afghanistan immediately, and cut military expenditures in half. Oh, and get rid of all those horrendous agricultural subsidies. But no -- the focus is on SS and medicare. The idea is to cut useful spending so they can continue to spend on useless stuff -- great thinking.

Doesn't anyone down there understand that a US debt default would be globally catastrophic? Too busy pointing fingers, I guess. I sure as hell won't be buying any US dollars for a while, and I think I'll sell the few US equities I have before its too late.
Never let the facts get in the way of a good story.
 
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Aaron747
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 3:51 pm

Quoting Arrow (Reply 15):
But no -- the focus is on SS and medicare.

As it should be - one is bloated and hasn't adapted to the times, the other is redundant.

Quoting Arrow (Reply 15):
useful spending

Is education and infrastructure improvements.

Quoting slz396 (Reply 9):
looks to me like the US has just put out very big FIRE SALE banner, all across the country and the PRC is very pleased to see that happening.

All told the Fed doesn't mind killing the dollar either as they've been at it for a good 20 years now.

Some interesting thoughts from the Economist:

The Republican failure on the deficit is more serious. Mr Obama is deeply vulnerable here, not least because he is still trying to kid Americans that their fiscal future can be shored up merely by taxing the rich more. But the Republican solution of tax cuts and even deeper spending cuts (typified by Mr Pawlenty’s proposals this week) is arguably worse. Most of the burden of repairing America’s public finances should certainly fall on spending. But the deficit is simply too large to close through spending cuts alone. The overall tax take—at its lowest, as a share of GDP, in decades—must eventually rise.

An honest Republican candidate would acknowledge this and lay out the right way to do so—for instance, by eliminating distorting loopholes and thus allowing revenues to rise. He (or she) would also come up with a more systematic plan on the spending side. No Republican seems to understand the difference between good spending and bad. Investment in roads and education, for instance, ought not to be lumped in with costly and unreformed entitlements, like Social Security and Medicare. Defence should not be sacrosanct. That Mr Obama has no strategy either is not an excuse.


http://www.economist.com/node/18805643
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Flighty
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:18 pm

Quoting Arrow (Reply 15):
But no -- the focus is on SS and medicare. The idea is to cut useful spending so they can continue to spend on useless stuff -- great thinking.

Doesn't anyone down there understand that a US debt default would be globally catastrophic?

If you're not willing to look @ medicare and medicaid reform / replacement, then no matter. The finances will blow up within 5 years anyway. Whether we default now or in 5 years, is not a major difference. You advocate one kind of explosion, the Repubs threatening default are talking about a different kind of explosion. Neither side is recommending a balanced budget and continued prosperity. Oh well.
 
Arrow
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:43 pm

Quoting Flighty (Reply 17):
Whether we default now or in 5 years, is not a major difference.


Yes it is. If you default now. There's no tomorrow. The result will be catastrophic. With five years to fix things, well, at least you have five years to fix things

Quoting Aaron747 (Reply 16):

As it should be - one is bloated and hasn't adapted to the times, the other is redundant

I mispoke myself. I didn't mean to suggest those programs don't need major reform, they do. With a well-organized universal health care system in place, medicare would indeed be redundant. Social security is a different animal I still have a hard time understanding how you could create this universal pension system and then not fund it adfequately -- arms length from the government.
Never let the facts get in the way of a good story.
 
Flighty
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 4:52 pm

Quoting Arrow (Reply 18):
Yes it is. If you default now. There's no tomorrow. The result will be catastrophic. With five years to fix things, well, at least you have five years to fix things

Okay, well, either way most of my career is in the dead zone. I'd really like this to be fixed this year. It will be painful and I'd like to take the pain now. Otherwise this death march will continue for years. Both parties have a "default" policy right now and that isn't good enough. Of course businesses are quivering with fear.
 
NIKV69
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 5:14 pm

Quoting Baroque (Reply 12):
They probably expect a cave-in and on past experience that would be the strong favourite. But one way or another they expect a solution. Which probably means they will be doubly pissed if one does not eventuate.

One will, the GOP has control of both houses on this one. They own the house and have th votes in the Senate to block any increase without the cuts. What we are seeing is all theatre. In the end the debt ceiling will be raised with the cuts the GOP wants.
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 6:16 pm

Quoting Arrow (Reply 15):
Doesn't anyone down there understand that a US debt default would be globally catastrophic? Too busy pointing fingers, I guess. I sure as hell won't be buying any US dollars for a while, and I think I'll sell the few US equities I have before its too late.

Hey, be careful!  Wow! In the real "down there" we well understand what a US debt default would mean, it is "in between" you need to worry about.

Deep cuts in Federal expenditure are not as bad as a debt default, but will cause further destruction in the US economy. With a bit more skill, the US could soon have a war with Pakistan to fund. Special exception for that???
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 7:23 pm

Quoting Baroque (Reply 21):
Deep cuts in Federal expenditure are not as bad as a debt default, but will cause further destruction in the US economy. With a bit more skill, the US could soon have a war with Pakistan to fund. Special exception for that???


I do not think that the US is going to default on debt. There is enough income to pay the debt. The US government is just a mad spender that has maxed out the credit card.
The concept of Demonizing the Bank for not raising the credit limit does not seem to be working.
Spending is going to have to be cut, we have quadrupled the spending in the last two years and doubled the debt, it is just not sustainable. One thing for sure those who buy our debt are going to be demanding some marginally higher interest rates.

Pakistan may be the regimes next target who knows.
Right now the government is busy arming the Mexican drug cartels with automatic weapons. No telling how many 1,000's of lives that is going to cost along with Billions of dollars to clean up.

Okie
 
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Aaron747
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RE: Bernanke: Debt Ceiling Must Be Raised

Wed Jun 15, 2011 11:38 pm

Quoting NIKV69 (Reply 20):
In the end the debt ceiling will be raised with the cuts the GOP wants.

Yes, but as the Economist article put it so well, the cuts need to be smart or there's no point in this exercise. Redundant agencies need to be axed, tax loopholes need to be closed to increase revenues, and the like. I have not seen these proposals to date.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
MD-90
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 2:16 am

Quoting Rabenschlag (Reply 10):
Also, do not forget VAT and other possible taxes beyond income. I cannot imagine that 50% of the taxable population do not pay VAT.

They do pay local sales taxes, the gasoline (road) tax, etc. Just not income taxes to the federal government. Lots of them are actually in the positive since they get tax credits and actually receive money from the government instead of paying. Of course politicians love that since they can promise voters more money or "benefits" (aka government handouts forcibly confiscated from someone else through taxation).

Quoting Arrow (Reply 15):
You're all dissing progressive tax systems -- we all have them because, well, the alternative would be to impoverish a huge chunk of the population. How does that fit with the land of the free and the great society?

No, it'd have a dramatically smaller government and more freedom.

Quoting Baroque (Reply 12):
They probably expect a cave-in and on past experience that would be the strong favourite. But one way or another they expect a solution. Which probably means they will be doubly pissed if one does not eventuate.

Wait, what did you say? I'm pretty sure only Sarah Palin can get away with saying "eventuate."
 
gigneil
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 2:21 am

We. Need. More. Taxes.

Period, in case you missed it.

NS
 
BMI727
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 2:45 am

Quoting slz396 (Reply 9):
Now, raising the dept ceiling basically means selling out to the PRC and you can bet your life than in 10, 15 or maybe 20 years, they'll come back and claim what's rightfully theirs: looks to me like the US has just put out very big FIRE SALE banner, all across the country and the PRC is very pleased to see that happening.

And torpedo a massive export market's economy? They need us as surely as we need them.

Quoting Rabenschlag (Reply 10):
Is half of the population to poor to be taxed? How come?

Politicians decided they were.

Quoting Arrow (Reply 15):
Take 50% of a million in income and the guy still has $500,000 to spend. I doubt he'll starve.
Take 10% from a guy who makes $20,000, and he struggles to pay the rent.

That doesn't make it right.

Quoting gigneil (Reply 25):
We. Need. More. Taxes.

But then the government will just not restrain themselves, or worse, spend more. California has some of the most oppressive taxes in the country and they're still a financial mess.

[Edited 2011-06-15 20:42:02]
Why do Aerospace Engineering students have to turn things in on time?
 
gigneil
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:26 am

Quoting BMI727 (Reply 26):
That doesn't make it right.

Yes it DOES make it right, actually.

What's actually fairest is a consumption tax. Let's get one of those.

Quoting BMI727 (Reply 26):
But then the government will just not restrain themselves, or worse, spend more. California has some of the most oppressive taxes in the country and their still a financial mess.

That's because we elect idiots at the local level. Honestly, we need to spend more, too. Until Obama we hadn't invested a dime in basic infrastructure in years. We had bridges falling down and roadways with potholes the size of moon craters.

NS
 
BMI727
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:42 am

Quoting gigneil (Reply 27):
What's actually fairest is a consumption tax. Let's get one of those.

Sounds good. Let's go to a VAT. You pay as much tax as you wish.

Quoting gigneil (Reply 27):
That's because we elect idiots at the local level.

And we don't nationally?

Quoting gigneil (Reply 27):
Honestly, we need to spend more, too.

Shift it away from entitlement crap then.
Why do Aerospace Engineering students have to turn things in on time?
 
Flighty
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 4:10 am

Quoting BMI727 (Reply 28):
Sounds good. Let's go to a VAT. You pay as much tax as you wish.

The elderly / wealthy favor a VAT because poor / young people then pay higher tax rates vs income than they do on the VAT. (Since rich people spend less of their total income)

It sounds like something America ought to have in addition to our income tax on the affluent. The middle and lower classes ought to pay at least something. The problem is, they control elections. Which makes VAT unlikely, unless it is rammed down the throats of the public. That is the scenario being discussed... doomsday.

[Edited 2011-06-15 21:13:21]
 
BMI727
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 4:16 am

Quoting Flighty (Reply 29):
It sounds like something America ought to have in addition to our income tax on the affluent.

It has to replace income tax, otherwise it's not helping much.

Quoting Flighty (Reply 29):
Which makes VAT unlikely, unless it is rammed down the throats of the public.

Maybe that's what needs to happen.
Why do Aerospace Engineering students have to turn things in on time?
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 6:44 am

Quoting okie (Reply 22):
I do not think that the US is going to default on debt. There is enough income to pay the debt.

You might think so, but you hit that debt limit and you do not. I am wondering if you understand what default is?

Quoting gigneil (Reply 25):
We. Need. More. Taxes.

Period, in case you missed it.

NS

Taxes (or rather the lack of them) could well bring the end of the American experiment. Maybe it is an inevitable outcome of an excessive emphasis on independence and a lack of appreciation of the value of collaboration. Many of the Asian economies leave that model of a society for dead.

Quoting MD-90 (Reply 24):
Quoting Baroque (Reply 12):
They probably expect a cave-in and on past experience that would be the strong favourite. But one way or another they expect a solution. Which probably means they will be doubly pissed if one does not eventuate.

Wait, what did you say? I'm pretty sure only Sarah Palin can get away with saying "eventuate."

What am I missing about the word eventuate?

eventuate [ɪˈvɛntʃʊˌeɪt]
vb (intr)
1. (often foll by in) to result ultimately (in)
2. to come about as a result famine eventuated from the crop failure
eventuation n

Result ultimately in? No???????

No ultimate result (rise in debt limit), Wall St gets pissed. Not I would have thought a Palinism???
 
slz396
Posts: 1883
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 8:42 am

Quoting BMI727 (Reply 26):
And torpedo a massive export market's economy? They need us as surely as we need them.

What will happen however is that the ballance of power will change: in 20 years time, the US will no longer be treated as a respectable customer of consumer goods produced in the PRC, but will be treated like a crack hooker who's largely dependent on the constant streem of those goods AND has sold out pretty much everything it ever owned to its dealer...

For a country that is so proud on itself and its status as a leading nation, such a public humiliation is going to be a bitter pill to swallow and yet it's exactly what is waiting to happen, as every day billions of US debt are bought up by the PRC in return for nothing but some cheap consumer goods.

The idea that the PRC will just keep sending cheap consumer goods forever in return for nothing but government paper which is in essence just as worthless as Greek government paper (even though US treasury paper formally still has a tripple Aplus rating), is not a very sustainable concept, i am afraid!

[Edited 2011-06-16 01:43:41]
 
NIKV69
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 9:08 am

Quoting Aaron747 (Reply 23):
Yes, but as the Economist article put it so well, the cuts need to be smart or there's no point in this exercise. Redundant agencies need to be axed, tax loopholes need to be closed to increase revenues, and the like. I have not seen these proposals to date.

Probably because the Dems don't want to just get rid of the loopholes and want to increase the tax rate on the rich while letting unions continue to run ramshod. Which is not going to happen when we don't need any other companies leaving. What it will come down too is accepting the ages on SS and medicare has to be raised two years. No way around it.

Quoting gigneil (Reply 25):
We. Need. More. Taxes.

Period, in case you missed it.

We didn't. I am not sure what you mean here but if you mean the top earners paying more than everyone else it won't fly. I am all for taking away the subsidies but signing on to the MSNBC idea of 49% tax rate for the upper earners is not going to happen.

Quoting gigneil (Reply 27):
Yes it DOES make it right, actually.

Only to the class haters.

Quoting gigneil (Reply 27):
What's actually fairest is a consumption tax. Let's get one of those.

Actually Forbes' flat tax would have been better.

Quoting gigneil (Reply 27):
That's because we elect idiots at the local level. Honestly, we need to spend more, too. Until Obama we hadn't invested a dime in basic infrastructure in years. We had bridges falling down and roadways with potholes the size of moon craters.

Yet we seemed to think it was better to give money to Planned Parenthood and NPR.   
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 1:12 pm

Quoting Baroque (Reply 31):
You might think so, but you hit that debt limit and you do not. I am wondering if you understand what default is?


We are only close to 50% of our income going to debt service. It will be a matter of how many social programs, government employee's that will not have funds along with military, defence etc.
I just really do not think we will get there, however those buying our debt are sure going to want to see some massive cuts in spending coupled to the budget process otherwise they will be demanding 10-15% interest rates which will put the US on the ropes when the previous short term notes come due to be renewed.

Okie
 
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Aaron747
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 1:53 pm

Quoting NIKV69 (Reply 33):
Probably because the Dems don't want to just get rid of the loopholes and want to increase the tax rate on the rich while letting unions continue to run ramshod.

Both parties have shown they are unable to do anything about tax loopholes. There are wealthy donors to both parties who do not want the IRS to do anything about the Cayman monies, fake Swiss HQ offices, or whatever other tax dodging methodologies are being utilized.

The real problem with the Democrats at the moment is they are unwilling to push for any kind of reform to unemployment benefits. There are several good proposals that have been fielded, such as halting payout benefits at 42 weeks and banking another three months as a 'signing bonus' to be used when someone actually secures a full-time job. Better to pay someone for finding work then pay them to sit at home and vegetate.

Quoting NIKV69 (Reply 33):
What it will come down too is accepting the ages on SS and medicare has to be raised two years.

Two years is absolute bunk. Most of the numbers put out by the CBO suggest five years is the minimum if we want to buy any sustainability.
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 2:01 pm

Quoting okie (Reply 34):
however those buying our debt are sure going to want to see some massive cuts in spending coupled to the budget process otherwise they will be demanding 10-15% interest rates which will put the US on the ropes when the previous short term notes come due to be renewed

So, you do understand.    Trouble is that if you hit that limit, you risk those interest rates and massive cuts not to mention being on the ropes.

Please Do Not Do It. Cut expenditures and raise taxes.

Object lesson yesterday when Greece was flavour of the month. Weakness in the Euro due to Greece in a matter of hours took the Aus dollar 1 cent down against the US dollar and 1.3% up re the Euro. And that is a problem where Greece is cushioned by being part of a currency union. Get the same problem with the US economy and who knows what will happen except it will be very unpleasant.

[Edited 2011-06-16 07:06:41]
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:03 pm

Quoting Baroque (Reply 36):

Please Do Not Do It. Cut expenditures and raise taxes


I do not really have much control here but as pointed out up thread that the top 1% of the tax payers are supporting roughly 154 peoples tax burden, 50% actually 48% pay no taxes at all.
What do you think the fair number would be 154, 250, 1000?

I am a firm believer in a social safety net as far as social programs go, we have regressed to the point that now we are supplying a "Hammock for Life". There need to be some ropes cut in all areas. The political spin has just gone to the point of being ludicrous.
Speaking of ludicrous spin. Today we hear that we are painting smiley faces on bombs and missiles for Libya therefore it is not a war but friendly exchange.

Okie
 
gigneil
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:07 pm

Quoting NIKV69 (Reply 33):
Actually Forbes' flat tax would have been better.

I was on board with that.

NS
 
FlyPNS1
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:12 pm

Quoting NIKV69 (Reply 33):
What it will come down too is accepting the ages on SS and medicare has to be raised two years. No way around it.

But that won't fix the near-term budget problems. It might help in the long-term (2020 and beyond), but it does nothing to help today.
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:23 pm

Quoting okie (Reply 37):
I do not really have much control here but as pointed out up thread that the top 1% of the tax payers are supporting roughly 154 peoples tax burden, 50% actually 48% pay no taxes at all.
What do you think the fair number would be 154, 250, 1000?

I do hope you cannot catch me as ever having told you where to raise your taxes - unless I weakened and mentioned that you pay ridiculously low taxes on liquid fuels - so I don't presume to tell you where to get the money from, just that you badly need to raise more money. And even at this distance, it is clear that if you rely ONLY on cutting expenditure, you will crash your economy. Again, I am not silly enough to presume you do not have plenty of waste but one man's waste is another one's essential. Me, I would cut defence expenditure, as I think that damaging defence is less dangerous than demolishing your truly awfully expensive health system. Almost wherever you cut, you will do damage. But there will be places where it does less damage. Most of those however, save piddling amounts and - alas - you need more than piddling amounts.

But they are all preferences. If you do not address both expenditure and income, you are truly stuffed. And if you are stuffed, so are the rest of us. So just take it as self interest when you get comments from Arrow and me about government revenues needing to rise.

Keep watching the UK who are trying to do it mainly by cutting. They might get away without further destroying their economy but I would not want to put much faith in that outcome.

A major trouble is that the US ran deficits during the happy (far too happy of course) years running up to the current mess. During the current recession, you need to run deficits. It was the previous 6 or so years of deficits when there should have been surpluses.
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:42 pm

Quoting Baroque (Reply 40):
If you do not address both expenditure and income, you are truly stuffed


All I can tell you at this point is that nobody and I mean nobody has jumped up and said increase my taxes nor cut the ropes on my "Hammock for Life".
There are a plenty saying to increase someone else's taxes or cut somebody else's program.
So it will end up being a process that comes up with some sort of political solution instead of a financial solution with a lot of spin and probably little results other than increase the debt limit. That is my take.

Okie
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 3:58 pm

Quoting okie (Reply 41):
So it will end up being a process that comes up with some sort of political solution instead of a financial solution with a lot of spin and probably little results other than increase the debt limit. That is my take.

I just wish I did not agree with you on this!    Wow! The extra taxes should be really really widely based. Maybe progressive but this is not really a time to be too picky. For these reasons, a consumption tax would best fit the bill (yep pun intended). In Aus there was much huffing and puffing when we got a 10% Goods and Services tax GST), but really it was much ado about nothing. It must be a pain for retail business, but for my own business it is almost a blessing, it forces me to to keep my books pretty well up to date (wish I could write up to date, but the 30 June end of Fin year beckons and there is still much to do!!!). But I digress, except that what many bitch on about as being a major change turns out to be minor and mostly for the better. Prior to GST, claiming tax inputs was a total pain, now all you do is submit a list of GST paid and subtract that. Last but one quarter, due to a major CAPEX expenditure, I ended up being paid by the tax office, but this quarter they get their pound of flesh. But they get one pound of flesh leaving me with 10! Tis ever thus with taxes.

The US systems of deductions seems to be one major weakness. Too complex and too expensive. You can tell here with US companies, they spend for ever trying for the most ridiculous deductions. Most Aus companies would put their time to better and more profitable use. ESSO v Australian Tax Office back in the 1990s was a superb example.
 
Arrow
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 4:18 pm

Quoting Baroque (Reply 40):
If you do not address both expenditure and income, you are truly stuffed.

The irony is, so many other places solved the problem by doing exactly that. We had a finance minister here years ago who coined the phrase "short term pain for long term gain." Sadly, he didn't deliver on that slogan, but his successors did. That ideological Grand Canyon down there (as opposed to down under  ) is hamstringing any compromise. Democrats need to understand that spending has to go down significantly, and Republicans need to understand that revenues have to go up significantly, and the only way to accomplish that is through some creative tax measures. And that doesn't mean just soak the rich.

Unfortunately, Reaganomics keeps getting in the way and there's this mystifying (and unassailable) belief that if taxes are lower, revenues get higher. That might have been true in a rapidly expanding economic cycle (although there are lots who think it wasn't true then either), but the US is not going to see a rapidly expanding economic cycle for a long time, if ever. The era of US economic dominance is over.

And yes -- Americans continue to float along fat and happy with the world's lowest free-market energy taxes. If they would just match ours (the second lowest free-market energy taxes) they might claw their way out of deficit a little sooner. And sooner means lower debt-servicing charges. I wonder how many people understand that last year the US paid out more than $400 billion on interest alone. Talk about money down a drain.

I really hope they solve this without being driven to the wall, because we're all going to suffer if that happens.
Never let the facts get in the way of a good story.
 
Okie
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 4:32 pm

Quoting Baroque (Reply 42):

The US systems of deductions seems to be one major weakness. Too complex and too expensive


And in a constant state of change I would add.
What ever accounting procedures you did last year or last quarter for that matter go out the window with a new set to follow.

It ought to be a simple form
Line 1 How much did you Gross
Line 2 Subtract how much you spent to make the Gross
Line 3 Profit
Line 4 Send in 10% of profit for taxes.

Okie
 
baroque
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 5:57 pm

Quoting okie (Reply 44):
It ought to be a simple form
Line 1 How much did you Gross
Line 2 Subtract how much you spent to make the Gross
Line 3 Profit
Line 4 Send in 10% of profit for taxes.

I can buy that. It is the % of this or that, if you stood on your left foot for four hours on the second Tuesday in the month that gets me mad. Most of that rubbish went for us with the GST. The GST is just a charge on top. And you deduct input GST charges. So all invoices must state the amount of GST. Then input costs come off income to calculate your main company tax.

The deductions part is one bit of the US oil industry I have never bothered even to try to understand, that and land permitting. At least if I get to understand a stratigraphy, it will prove useful, but figuring out why deductions are made seems totally pointless. Even our resource rent tax seems simple by comparison.

But looking at your companies, their taxes and dividends, I cannot help feeling that the US missed a major trick by not going for the Bush proposal for imputation for taxes paid on dividends. It provides an incentive for companies to pay taxes as shareholders prefer dividends with franking for taxes paid. And there is an incentive for companies to pay dividends. So far, it does not seem to prevent companies from funding development from internal cash flow. It also has some effect in discouraging high levels of company debt, and having less debt would be very good for the US in these difficult times.
 
NIKV69
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 6:31 pm

Quoting Aaron747 (Reply 35):
There are several good proposals that have been fielded, such as halting payout benefits at 42 weeks

How can you do that in times like this when the real unemployment rate is 15%? In normal times that works great but in a recession it's death.

Quoting Aaron747 (Reply 35):
Two years is absolute bunk. Most of the numbers put out by the CBO suggest five years is the minimum if we want to buy any sustainability

I didn't mean to say 2 years is the end all but it's a huge start and very practical to addressing the problems of SS and medicare. 5 years is impossible and not practical. Maybe in 20 years when we make some more breakthroughs in medicine but now 2 years is the way to go.

Quoting FlyPNS1 (Reply 39):
But that won't fix the near-term budget problems. It might help in the long-term (2020 and beyond), but it does nothing to help today

That ball was dropped 2 years ago.
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
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Aaron747
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 10:56 pm

Quoting NIKV69 (Reply 46):
How can you do that in times like this when the real unemployment rate is 15%? In normal times that works great but in a recession it's death.

Some recent studies have suggested a majority of people receiving unemployment benefits have halted their active searches at an average of 10 months. Such a plan would provide some incentive for people to get off their ass and stop giving up. What's the point of paying people benefits who are doing absolutely nothing??
If you need someone to blame / throw a rock in the air / you'll hit someone guilty
 
Flighty
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 11:12 pm

Quoting Aaron747 (Reply 47):
What's the point of paying people benefits who are doing absolutely nothing??

It's harmful in many ways. As you point out, it reduces people's drive to work. So by definition it cuts work output there. It also is a large debt. There are substantial deadweight losses when you collect a tax from viable businesses and families to pay those unemployment benefits.

I am not on board with unemployment bennies. Those should be provided within the family. Move into your family's basement, if you are well and truly broke. Anyone over about 40 should have substantial savings, anyhow. Unless they had medical problems.

I am for (efficient!) universal health care and education. Otherwise all these govt programs are a basically just a wild profit center for govt employees and contractors. Those people would blow up the USA -- they are well diversified global investors (as am I) so even if USA "doomsday" occurs, they made their money.
 
NIKV69
Posts: 10910
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RE: Bernanke: Debt Ceiling Must Be Raised

Thu Jun 16, 2011 11:22 pm

Quoting Aaron747 (Reply 47):
Some recent studies have suggested a majority of people receiving unemployment benefits have halted their active searches at an average of 10 months. Such a plan would provide some incentive for people to get off their ass and stop giving up. What's the point of paying people benefits who are doing absolutely nothing??

Recent studies? The states have systems in place that force extended benefits receivers to prove they are looking for work and can't simply sit on their rear end. Again in a time like we are now halting benefits even at 10 months would be a disaster. Is some states real unemployment in areas are near 20%. It would be the beginning of the bread lines again.

Quoting Flighty (Reply 48):
I am not on board with unemployment bennies. Those should be provided within the family. Move into your family's basement, if you are well and truly broke. Anyone over about 40 should have substantial savings, anyhow. Unless they had medical problems

What if they are dead? Or have moved out of state? This is not even close to practical. We can give GM billions after they managed themselves into a ditch and couldn't get out but nothing for someone who loses their job and can't find one?
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!

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