Where is the US economy headed?

@mysteryman,

Mysteryman, even though my income is much less than $200 thousand a year, I am enraged for as well as opposed to letting "the tax breaks for the wealthiest Americans expire. "

When we demand that those who earn over $200 thousand pay a greater share of their income than those of us who make less, we are reducing the opertunities the wealthy will be able to create for our kids and grandchildren--and indeed the opportunities for the younger generations to do the kind of things our generation was able to do because of the wealthy. The wealthy spend and invest a far greater amount of money than do those earning less than $200 thousand, and its that spending and investment that makes life better for all of us. Leveling incomes reduces everyone's income in the long term.

I'm fed up with the damn self-distructive envy crap. When in the hell are these damn enviers going to wise up? In their current state of mind they act like mindless robots!

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@ican711nm,

I'm not sure, but I think you just contradicted yourself ican. How can you be enraged and opposed to letting the GWB tax breaks for the wealthy expire (meaning the wealthy will have to pay a lot more taxes) and at the same time say that making them pay more taxes prevents them from spending and investing so we can all have a better life?

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Good evening, JayePB. We welcome your participation on one of several threads that I had pretty much given up on. There was a lot of vitriol here recently amongst a few that was painful for the rest of us to sit through.
Bernanke's testimony today unsettled the stock markets. He did not seem to be able to say much that was reassuring.
I think I recall you mulling, a few pages back, about the wisdom of the bailouts of some banks and the auto industry at the end of the Bush administration and the start of the Obama administration. My inclination is that we came perilously close to a total meltdown in the U.S. and world wide banking system. I think that, when this is all studied, that will be the conclusion and the actions taken were sound.
The auto companies' bailouts and certainly the subsequent other stimulus programs have had dubious results. I can see why they might have made sense if the recession was short-term. But clearly, this is not a short-term problem. There are, I believe, fundamental changes in the economic landscape regarding things like employment and consumer spending which coincide with a change in attitude with, in the U.S., changes in things like where we want to live.

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@realjohnboy,

realjohnboy wrote:

My inclination is that we came perilously close to a total meltdown in the U.S. and world wide banking system.

I agree, rjb. I was saying the same thing at the time. But what does "total meltdown... of the banking system" mean, exactly? I'm sure it wouldn't have been a whole lot of fun, but what does, "It's going to be baaaaaad" mean? I saw numbers of 20-30% unemployment from the trickle down effect of the credit crisis. Ok, if that's what was going to happen than that's pretty bad.

I was actually in favor of the auto bailout as a jobs bill. It kept a couple hundred thousand auto workers employed and paying taxes (I believe that's what I recall) even if they were making a product that no one wanted to buy.

My thoughts at the time were that GM would be allowed to slowly fade away once the unemployment numbers started to turn around. The problem is, they haven't started turning around at all. In fact, per Mr Bernanke's statement today, there's no reason to think they're going to turn around for another couple years yet.

I do believe that an L-shaped recovery is the best we can hope for. I don't think that's what's going to happen but it's good to have hope.

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@ican711nm,

Quote:

When we demand that those who earn over $200 thousand pay a greater share of their income than those of us who make less, we are reducing the opertunities the wealthy will be able to create for our kids and grandchildren--and indeed the opportunities for the younger generations to do the kind of things our generation was able to do because of the wealthy.

I have a bridge to sell to you. It is called the Verrazano Narrows Bridge. You already own the Brooklyn Bridge.

What you are promoting in this naive quote is the raygun economic policy known as "trickle down." After raygun, 80% of the working public failed to progress economically while the fat cats in the top 20% made certain their incomes soared.

I suspect it is called trickle down because the rich urinate on everyone else.

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We have no tools to forge a recovery. We shipped manufacturing overseas. We shipped white collar jobs overseas. We set up a service economy. Retail has become chain after chain after chain so that the same merchandise is sold from coast to coast and most of it is unnecessary stuff.

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@JPB,

Total Meltdown:
My employees got paid today. They went to the bank across the street and cashed their checks, taking money out of that bank. That left that bank, for a time, a bit short of cash. No problem in normal times. They could borrow the money from another bank for a few minutes, literally for a few minutes, until the grocery store across Main Street came in and made their deposit.
Add a whole bunch of zeros and you have, in the U.S. and the world, trillions of dollars, yen, euros , pounds and yuan moving amongst banks. Sloshing around.
But what happens if one of those banks, in New York, London, Paris or Hong Kong, is perceived to be on the brink of failure - within minutes or hours or perhaps, in the long term, a day? Inter-bank lending stops.
The system seizes up, like a car engine with peanut butter mixed with the oil. Lending between banks, like the car engine, stops, with catastrophic results.

That is what almost happened, I think, near the end of the Bush administration and the start of Obama's. I am sticking with that scenario.

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@realjohnboy,

Quote:

But what happens if one of those banks, in New York, London, Paris or Hong Kong, is perceived to be on the brink of failure - within minutes or hours or perhaps, in the long term, a day? Inter-bank lending stops.

wrong, The problem is that the system is no longer transparent with all the scams and lacking a functional bond rating system. Our credit markets seized up because no one knew whos word was good and whos was not, because it is impossible to see who is above the water line and who is not. If you cant trust anyone you dont trade, simple as that.

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@JPB,

And speaking of GM... I love how they paid back their TARP money with TARP money and called it a good thing.

smoke and mirrors

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@JPB,

JPB wrote:

On a brighter note... (not)

Quote:
WASHINGTON

"In short, it look likes our economy is in need of additional help," said the committee's chairman, Sen. Chris Dodd, D-Conn.

Oh. My. God!

"I'm from the government, and I'm here to help you".

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@JPB,

I think that's robbing Peter to pay Paul.

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Quote:

During those moments when I'm willing to look beyond the toilet bowl I like to read The Financial Times, UK's business news. I oftentimes think that a European perspective on American issues is more "fair and balanced" than just about anything one can read here. This week, the FT is hosting a discussion on the austerity vs stimulus debate - a discussion that many of us here have on an on-going basis, and certainly an issue of global importance. The FT is available free online with registration but I'll post the article summaries here in full. Each post can be read in it's entirety at http://www.ft.com/cms/s/0/dc3ac844-9010-11df-91b6-00144feab49a.html (registration required)

Darn... I posted the full article and then noticed on the FT website where one is specifically asked not to do that. Oh, well... it's a good read and debate at the highest level of those who supposedly know what they're talking about. It's definitely worth the effort to register.

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So much for a rebound on Wall Street today.

Quote:

WASHINGTON — New jobless claims jumped last week by the most since February, reversing a sharp fall two weeks ago. The rise is partly a result of seasonal factors but also reflects the job market's weakness.

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@JPB,

JPB wrote:

And speaking of GM... I love how they paid back their TARP money with TARP money and called it a good thing.

smoke and mirrors

And how exactly did they do that JPB?

If you get a loan for $10,000 and pay back $5,000 of that loan using part of the $10,000 does that mean you didn't pay back $5,000 of the original loan?

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@parados,

Two accounts -- both TARP funds. One a loan, one an escrow account controlled by GM. They used money from the escrow account to pay back the loan and then ran an ad campaign patting themselves on the back for being such good stewards of taxpayer's money.

Smoke and mirrors.

Quote:

At issue is whether GM is correct in trumpeting what it says in a national ad and an op-ed in the Wall Street Journal that it has repaid -- with interest and ahead of schedule -- the $4.7 billion in bailout funds that it owed to the government.

The money for the loan repayment came from other bailout funds housed in an escrow account belonging to GM. To critics, that smacks of deception.

snip

The government's remaining stake in GM consists of $2.1 billion in preferred stock and a 60.8 percent stake in the automaker, according to the Treasury Department.

Under questioning from Republican Sen. Susan Collins of Maine, who called the ad "very misleading," Treasury Secretary Timothy Geithner conceded at a Senate hearing on Thursday that some in his department are also concerned about the GM commercial. But Treasury has maintained that GM's loan repayment is "good news" despite the fact that the money used to repay the loan stemmed from the government.

A GM spokesman gave a similar response to the Issa and Jordan letter today.

"It's hard to understand how giving money back to the government could be considered a bad thing," said GM spokesman Greg Martin.
Source

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@JPB,

Quote:

"It's hard to understand how giving money back to the government could be considered a bad thing,"

Perhaps you can answer this one JPB...

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@parados,

Where did I say it was a bad thing to give half of the money back? I just said it was deceptive (and I believe that it was) to say that their obligations to repay the loan in full with taxpayer money is a good thing, particularly when they didn't include the part in their ad campaign that the funds to repay the loan were other TARP funds.

So... basically we gave them a loan and then gave them the money to pay it back.

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@JPB,

You said this

JPB wrote:

And speaking of GM... I love how they paid back their TARP money with TARP money and called it a good thing.

smoke and mirrors

It doesn't really resemble what you are saying now..

Quote:

I just said it was deceptive (and I believe that it was) to say that their obligations to repay the loan in full with taxpayer money is a good thing, particularly when they didn't include the part in their ad campaign that the funds to repay the loan were other TARP funds.

But you are still making up facts JPB.. We didn't give them money to pay back the loan. They used money from an account they OWNED.
They were given a loan from TARP. They were given money for operating expenses in exchange for stock.

They found they were making enough money to use the money in the operating account to pay off the TARP loan. The only thing questionable was the GM ad and you never mentioned that until now.

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@parados,

Well... when I read the two statements of mine in the two boxes you quoted I don't see any differences in point. In the first instance I used the phrase "smoke and mirrors" and in the second one I used the word "deceptive". To me those are synonyms. In the first box I said they paid back the loan with TARP money. In the second one I said they repaid the loan with TARP money. I don't see how those two points don't really resemble each other.

I also included an article from as unbiased a site as I could find as I could find and included as much detail from both sides of the discussion as was available to not present a biased position. I'm not making up any facts at all. Part of the bailout process left the American taxpayer as a majority owner of an automobile manufacturer, something we certainly wouldn't do under normal circumstances. How is that not providing the funds for the loan and for paying it back?

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@JPB,

They don't resemble each other or the article you posted because your first statement doesn't mention the ad. It is the ad that is deceptive.

GM had both the TARP loan funds and the bailout funds for months before they used the bailout funds to pay back the TARP funds. It wasn't deceptive of them to use some of their funds to pay back the loan. In fact, that would be a good thing. The only thing that people can really complain about is in the ad GM looked like they paid back all the government money.

1 Reply

Where is the US economy headed?

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