10
   

$13.00 a Week. Is everyone Happy?

 
 
chai2
 
  1  
Reply Fri 13 Feb, 2009 09:45 am
@BigTexN,
You know, that might be funny if it wasn't so darn ignorant.

So, apparantly you're someone for whom the future doesn't exist past 2pm today.

If you went out and spent $1,000,000 just now, it wouldn't be felt yet.

If you're going to try to jerk someone's chain, at least have some intelligence about it.

If you own a car wash, you would know what amount labor/supplies/other expenses costs for washing a vehicle. You would also know that when the customer requests anything extra, like wax, foam polish, armour-all, air freshner, etc, it is almost pure profit, as those items cost mere pennies, don't increase your labor, and you charge several dollars for each extra item.

If during the course of the week only a few people a day, who have a few extra dollars in their pockets, splurge for the spray wax or something else, you as the owner would have your extra $200, which is the amount that would make you say WOW.

It sure doesn't seem that you have a lot of common sense Tex. Maybe that's why you burn through $50 without even knowing what you got for it.

I notice you're rich with the comments, but have nothing to say of concrete examples of what a lot of people would do.

Right now, If I had $13 handed to me, I'd go get a $50 massage, and tip the worker $15

I spent money I probably wouldn't of right now, but that little extra tipped the scales to entice me to spend more, because I'd really look forward to a massage.
old europe
 
  1  
Reply Fri 13 Feb, 2009 10:51 am
@roger,
roger wrote:

Sure. Interest is the price of money. If the price is down, doesn't that seem a good sign that either supply is high, or demand low?


Well, sure, interest is the price of money. And the federal funds rate is at the moment .25%.

It seems to me that at current rates, if a bank needs money, it makes much more sense to borrow the money from other banks rather than to wait for costumers to open savings accounts and deposit money.


Which is kinda the point of reducing the federal funds rate, I'd say. It creates an incentive for interbank lending, it brings down interest rates, it spurs economic activity by making credits more available to companies and consumers, it encourages spending but also discourages saving....
Cycloptichorn
 
  1  
Reply Fri 13 Feb, 2009 10:53 am
@old europe,
old europe wrote:

roger wrote:

Sure. Interest is the price of money. If the price is down, doesn't that seem a good sign that either supply is high, or demand low?


Well, sure, interest is the price of money. And the federal funds rate is at the moment .25%.

It seems to me that at current rates, if a bank needs money, it makes much more sense to borrow the money from other banks rather than to wait for costumers to open savings accounts and deposit money.


Which is kinda the point of reducing the federal funds rate, I'd say. It creates an incentive for interbank lending, it brings down interest rates, it spurs economic activity by making credits more available to companies and consumers, it encourages spending but also discourages saving....


But there's no interbank lending really happening, even with the low funds rate.

B/c the real thing this crisis has highlighted, is how massively over-leveraged so many institutions are. Technically they are supposed to have the money to cover all their agreements; truthfully many of them are short by a factor of ten. This is a real problem and it's just going to get more painful before it's fixed...

More and more economists are pointing out that most large US banks are technically insolvent.

Cycloptichorn
old europe
 
  1  
Reply Fri 13 Feb, 2009 10:57 am
@Cycloptichorn,
Cycloptichorn wrote:
But there's no interbank lending really happening, even with the low funds rate.


No argument there. Still, to me, the low federal funds rate explains the low interest rate on savings better than the idea that the banks simply don't need any money, and are not interested in people depositing their savings with them.
BigTexN
 
  1  
Reply Fri 13 Feb, 2009 11:04 am
@chai2,
Quote:
You know, that might be funny if it wasn't so darn ignorant.

So, apparantly you're someone for whom the future doesn't exist past 2pm today.

If you went out and spent $1,000,000 just now, it wouldn't be felt yet.


The government spent $400 billion plus in October and November...felt that jolt yet?

Ignorant dumbass thinks $13 a week will do more than the first $400 billion did...hold on to that, chai!
Cycloptichorn
 
  1  
Reply Fri 13 Feb, 2009 11:05 am
@BigTexN,
BigTexN wrote:

Quote:
You know, that might be funny if it wasn't so darn ignorant.

So, apparantly you're someone for whom the future doesn't exist past 2pm today.

If you went out and spent $1,000,000 just now, it wouldn't be felt yet.


The government spent $400 billion plus in October and November...felt that jolt yet?


Yes, we did feel that jolt. Yaknow all those banks that didn't collapse? That was the jolt.

Quote:
Ignorant dumbass thinks $13 a week will do more than the first $400 billion did...hold on to that, chai!


It will do more. The 400 billion stabilized the books of some major institutions but didn't pump money into our economy. The 50 bucks a month though, the vast majority of it will become part of the Velocity stream very quickly.

Cycloptichorn
maporsche
 
  1  
Reply Fri 13 Feb, 2009 11:09 am
@old europe,
And you've hit the crux of the problem.

Banks are being encouraged to borrow money as opposed to incentivizing people to save money.

The American consumer has been encouraged to borrow money as opposed to saving money.

The Federal goverment is borrowing money as opposed to saving money.


How long do you think we can last on this cycle?


Obama should come out and explain to the country how we've gotten ourselves into this problem (deficit spending, easy credit, over-consumption, waste, focusing on instant gratification, etc); explain to the public that the only real way to fix this current problem is a mind-shift in the way American's minds work. He needs to tell us that the going to going be tough for the next 1-3 years and that it is incumbant on each of us to prepare for the future, to spend smartly, to help each other get through this.

He needs to LEAD the country in a NEW direction, not this "go shopping" mantra that he's counting on all of us doing. It was a dumb idea when Bush said it, and despite Obama's surpurb use of the English language, it's STILL a dumb idea.
maporsche
 
  1  
Reply Fri 13 Feb, 2009 11:11 am
@Cycloptichorn,
Cycloptichorn wrote:

The 50 bucks a month though, the vast majority of it will become part of the Velocity stream very quickly.


You're HOPING.
0 Replies
 
BigTexN
 
  1  
Reply Fri 13 Feb, 2009 11:11 am
@Cycloptichorn,
Ahh come on, Cyclo, you can't seriously believe that your $13 a week portion will do more than the first $400 billion...really?

I just spent another $1 on a Coke...that puts me $5.46 ahead of my $13 budget for the week...feel that jolt yet?

Nope...Dow down 53.12 points....
Cycloptichorn
 
  1  
Reply Fri 13 Feb, 2009 11:17 am
@BigTexN,
BigTexN wrote:

Ahh come on, Cyclo, you can't seriously believe that your $13 a week portion will do more than the first $400 billion...really?

I just spent another $1 on a Coke...that puts me $5.46 ahead of my $13 budget for the week...feel that jolt yet?

Nope...Dow down 53.12 points....



What is this idiocy, with you interspersing your personal spending with the Dow? They are two unrelated items, and the point isn't to raise the Dow anyway. I can't quite grasp why you would make such comments.

Yes, I think the 50 bucks a month will have a greater stimulus effect than the 400 billion in our financial system. And you would too if you bothered to use your brain for a second.

Cycloptichorn
BigTexN
 
  1  
Reply Fri 13 Feb, 2009 11:24 am
@Cycloptichorn,
Uhoh, Dow's down 75.02 points...Cyclo and Chai get out there spend your $13 and quit chit-chatting on a2k already!

Hurry and get that "greater stimulus effect" working!
0 Replies
 
old europe
 
  1  
Reply Fri 13 Feb, 2009 11:24 am
@maporsche,
maporsche wrote:

And you've hit the crux of the problem.

Banks are being encouraged to borrow money as opposed to incentivizing people to save money.


Yes. Because you're in a recession. It seems to me that the measures you have to take immediately are entirely different from what you have to do in the long term.

It's not that it's unknown that lowered interest rates, increased borrowing and reduced savings rates will lead to inflation. But they usually also lead to an increase in economic activity.


maporsche wrote:
The American consumer has been encouraged to borrow money as opposed to saving money.

The Federal goverment is borrowing money as opposed to saving money.


How long do you think we can last on this cycle?


Obama should come out and explain to the country how we've gotten ourselves into this problem (deficit spending, easy credit, over-consumption, waste, focusing on instant gratification, etc); explain to the public that the only real way to fix this current problem is a mind-shift in the way American's minds work. He needs to tell us that the going to going be tough for the next 1-3 years and that it is incumbant on each of us to prepare for the future, to spend smartly, to help each other get through this.

He needs to LEAD the country in a NEW direction, not this "go shopping" mantra that he's counting on all of us doing. It was a dumb idea when Bush said it, and despite Obama's surpurb use of the English language, it's STILL a dumb idea.


I wouldn't really disagree with that. It's just that, with the collapse of some financial institutions, you've really gotten into this vicious circle. All of a sudden, money is no longer as easily available as it was before. Therefore, consumption goes down. Therefore, demand goes down, sales go down, companies make deficits, but are unable to borrow money. Therefore, employees get laid off. Therefore, demand goes even further down, sales go even further down, companies make deficits..... you know.


Look, when you own a car, there's a situation where your car is sitting in the garage, and you can think about how it's time for inspection, and how you should probably bring it to the shop to have it checked. And there's a situation where you're going 80 on the highway and a tire bursts, and you'll have to hold the steering wheel firmly, let the car slow down, and maybe try to change to a lower gear.

And yes, maybe your tire blew out because you missed that inspection. You'll still have to react to the situation at hand.
old europe
 
  1  
Reply Fri 13 Feb, 2009 11:26 am
@BigTexN,
BigTexN wrote:
Ahh come on, Cyclo, you can't seriously believe that your $13 a week portion will do more than the first $400 billion...really?


What do you think the situation would look like if the government had allowed the banks to collapse? Better or worse than at the moment?
maporsche
 
  1  
Reply Fri 13 Feb, 2009 11:41 am
@old europe,
At the moment...maybe worse.....2 years from now, much better that where I see us heading now.
BigTexN
 
  1  
Reply Fri 13 Feb, 2009 11:47 am
@old europe,
Quote:
What do you think the situation would look like if the government had allowed the banks to collapse? Better or worse than at the moment?


I don't think that you can expect any sort of effect from the government's refund of $13 a week any where near what we saw from the $400 billion.

At best, you can claim...as it seems you and Cyclo are...that the first $400 billion merely kept the banking ships from sinking.

But, somehow a $13 a week stipend is going to turn the economy around?

I don't think any of you truly believe that...I think ya'll are just goofing with me!
Cycloptichorn
 
  1  
Reply Fri 13 Feb, 2009 11:48 am
@maporsche,
maporsche wrote:

At the moment...maybe worse.....2 years from now, much better that where I see us heading now.


I don't think you have a very good grasp of how badly our financial system and society would have been hurt if the banks had collapsed.

It's like some of you guys think the baseline for humanity is 'stable society.' It is not. Things can spin out of control extremely quickly, you don't want to **** around with that.

Cycloptichorn
Cycloptichorn
 
  1  
Reply Fri 13 Feb, 2009 11:49 am
@BigTexN,
BigTexN wrote:

Quote:
What do you think the situation would look like if the government had allowed the banks to collapse? Better or worse than at the moment?


I don't think that you can expect any sort of effect from the government's refund of $13 a week any where near what we saw from the $400 billion.

At best, you can claim...as it seems you and Cyclo are...that the first $400 billion merely kept the banking ships from sinking.

But, somehow a $13 a week stipend is going to turn the economy around?

I don't think any of you truly believe that...I think ya'll are just goofing with me!


Dude, are you completely incapable of math?

How much money do you think $13 a week * almost every worker in America equals? And it's money which will go to vendors and small businesses, instead of just shoring up some bank's books and then sitting there.

Do you understand the Velocity of money, and why that's important?

Cycloptichorn
chai2
 
  1  
Reply Fri 13 Feb, 2009 12:01 pm
@maporsche,
maporsche wrote:

He needs to tell us that the going to going be tough for the next 1-3 years and that it is incumbant on each of us to prepare for the future, to spend smartly, to help each other get through this.



Do you really think everyone does not know this already?

You honestly think most citizens don't realize this is going to be a tough 1-3 years?

You don't think that there are tons of people out there who are, and have been for awhile, helping each other by informal agreements, barter, under the table back and forths?

You know that $150K I said I put into my house to get it in shape? If I had spent all money on doing this, I estimate it would have been closer to $225K. You tile my bathroom and I'll build you a fence. You dig a hole and I'll give you a little money and a home cooked meal.

You said you grew up poor. You know how it works.

New flash. Everyone already knows it's going to be a tough few years.
0 Replies
 
old europe
 
  1  
Reply Fri 13 Feb, 2009 12:04 pm
@BigTexN,
Right. So, at best, the banks didn't collapse. The money didn't really go towards increasing economic activity, towards consumer spending, increase in demand, etc. etc. It merely kept the banks from folding.

Now, you have billions of dollars that will be targeted on efforts to increase economic activity. Sure, it may not be a lot if you break it down per person (So, as an aside, it shouldn't be a problem if you have multi-trillion dollar debt, right? No bitching and whining and moaning necessary, right? After all, we're merely talking about a couple of cents per person, per hour, for a couple of years......), but it's still an accumulated billions of dollars. If that's merely as effective as the bank bailout that kept the financial system from collapsing, shouldn't you be really happy with that?
0 Replies
 
maporsche
 
  1  
Reply Fri 13 Feb, 2009 12:05 pm
@old europe,
There's also a time, since we're big on analogies, where a gambler has gambled away all of this life savings, he's borrowed money, mortgaged the house, sold his assets to the Chinese, and he's now hit a brick wall. If only he could just hit the big jackpot, he'd be back on easy street.

At this point should the gambler take out an 1.3 trillion loan from a loan shark and try to hit that jackpot, or should he maybe rethink how he got into this situation and take immediate steps to correct it, even though life will be tougher in the near term.
 

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