Where is the US economy headed?

I note today that the U.S. has issued a deep water oil drilling permit in the Gulf of Mexico to Noble Energy of Houston. It will allow the company to resume studies of a well 70 miles off the coast of LA at a depth of 6500 ft below the surface. The government suspended all such activity after the BP disaster last April.
It likely will be years before/if Noble can actually produce any oil from the well.

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@Cycloptichorn,

Cycloptichorn wrote:

Quote:
It will make a bigger difference if the government goes bankrupt.

The government can't go 'bankrupt.' That's a fundamental feature of a sovereign currency.

Not doing yourself any real favors here with the level of arguments.

Cycloptichorn

That's not entirely true. Governments can default on their creditors, which is essentially the same thing. Moreover the collapse, when it occurs is rather sudden - the spreading unwillingness of buyers unwilling to extend more credit to a government that has becomme dependent on a steady supply of it -- as the people and government of Greece recently discovered.

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@georgeob1,

georgeob1 wrote:

Cycloptichorn wrote:

Quote:
It will make a bigger difference if the government goes bankrupt.

The government can't go 'bankrupt.' That's a fundamental feature of a sovereign currency.

Not doing yourself any real favors here with the level of arguments.

Cycloptichorn

That's not entirely true. Governments can default on their creditors, which is essentially the same thing. Moreover the collapse, when it occurs is rather sudden - the spreading unwillingness of buyers unwilling to extend more credit to a government that has becomme dependent on a steady supply of it -- as the people and government of Greece recently discovered.

Statements like that make me wonder whether or not you would agree with your rabid brethren in the House who want the US to refuse to raise the debt ceiling, and put us in default.

Cycloptichorn

1 Reply

@Cycloptichorn,

Cycloptichorn wrote:

Statements like that make me wonder whether or not you would agree with your rabid brethren in the House who want the US to refuse to raise the debt ceiling, and put us in default.

Cycloptichorn

I'm surprised that my statement had any effect on you since it is common knowledge.

I believe you are faulting the wrong party here. If we are headed towards default, or are at least beginning to lose the confidence of bond buyers, the best remedy I can think of is serious and perhaps dramatic action on the part of the government to reduce its growing dependence on borrowed funds. Serious action to restrain government spending would accomplish that nicely.

Such spending restraint is, as you surely know, the root issue being debated in the Congress right now. As we both know, the debt ceiling is merely a gambit in the game and the Democrats are using it as a distraction to evade the central issue.

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@georgeob1,

georgeob1 wrote:

Cycloptichorn wrote:

Statements like that make me wonder whether or not you would agree with your rabid brethren in the House who want the US to refuse to raise the debt ceiling, and put us in default.

Cycloptichorn

I'm surprised that my statement had any effect on you since it is common knowledge.

I believe you are faulting the wrong party here. If we are headed towards default, or are at least beginning to lose the confidence of bond buyers, the best remedy I can think of is serious and perhaps dramatic action on the part of the government to reduce its growing dependence on borrowed funds. Serious action to restrain government spending would accomplish that nicely.

We're only headed toward 'default' if we refuse to pay the interest on our debt. That's what 'refusing to raise the debt ceiling' means. It has no meaning in macro-economic terms other than a conscious decision to no longer take on debt, when we have plenty of people willing to loan us money.

Quote:

Such spending restraint is, as you surely know, the root issue being debated in the Congress right now. As we both know, the debt ceiling is merely a gambit in the game and the Democrats are using it as a distraction to evade the central issue.

Not only does the debt ceiling have little to do with the debate in Congress right now, I should point out that immediately adopting the Republican plan would STILL REQUIRE an expansion of the debt ceiling, because it comes nowhere close to balancing the budget, let alone start addressing the debt.

Cycloptichorn

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@Cycloptichorn,

Cyclo, Those are not the only issue; most wealthy people are willing to pay more in taxes - even Warren Buffet. The only people advocating for lower taxes in government are the GOP members which makes no sense.

On top of all that, the US pays one of the lowest tax rates of all developed countries except Japan.

[img]350px-Income_Taxes_By_Country.svg[/img]

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@okie,

The road to prosperity is paved with McDonald's jobs! Why okie wants every liberal family in America to be supported by McDonald's crew work!

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@parados,

parados wrote:

Your math sucks okie
If you made $9000 and paid $5000 into SS how did you have $5000 left to save?

And your common sense and reading comprehension leaves alot to be desired. My example does not imply that I paid $5,000 into Social Security as well as save $5,000 for my own investment. Also, I never said I paid $5,000 into SS my first year out of college. The point of the example is that if I had been able to invest the money instead of being taxed with FICA, that there would be a huge difference in how much money a person would have at the end, instead of what the government has left. The $5,000 was merely an approximate average over a period of 40 years. In recent years, I have paid far more than $5,000. Similarly, interest rates on savings were much higher 30 years ago than they are now.

Any person with just a beginning knowledge of finance and math knows that a couple hundred grand invested over the past 40 years would probably result into at least twice that amount, and likely several times that amount by now. I illustrated that obvious fact by using an average investment annually and adding a mere 5% interest compounded once annually. If you lack the ability to grasp the truth of that, parados, I suggest you try some of the calculators that are available on the web. Its common sense math.

1 Reply

@georgeob1,

georgeob1 wrote:

I'm surprised that my statement had any effect on you since it is common knowledge.

I believe you are faulting the wrong party here. If we are headed towards default, or are at least beginning to lose the confidence of bond buyers, the best remedy I can think of is serious and perhaps dramatic action on the part of the government to reduce its growing dependence on borrowed funds. Serious action to restrain government spending would accomplish that nicely.

Such spending restraint is, as you surely know, the root issue being debated in the Congress right now. As we both know, the debt ceiling is merely a gambit in the game and the Democrats are using it as a distraction to evade the central issue.

To use an analogy, it would not seem logical for a driver of a car to accelerate toward a cliff seen in the distance. The Republicans are trying to put the brakes on the car, but Democrats seem hell bent upon accelerating faster and faster toward the cliff.

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@okie,

Raising taxes ALSO puts the breaks on the car. But you are dead set against that.

Cycloptichorn

1 Reply

@Cycloptichorn,

You have apparently forgotten that I could favor a very high marginal tax rate on extremely high incomes. I would couple that with the total elimination of income taxes upon businesses or corporations. The high marginal rates would apply only to individuals.

The fact remains that our primary problem is over spending, not under taxation.

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@okie,

No, it isn't common sense math okie..

Saying you put the same amount in 40 years ago when in reality you put in 1/3 of that makes a huge difference in outcome.
In 1970 the max contribution amount for SS employer and employee combined was $538

$538 over 40 years at 5% interest is $3,787.51
$5000 over 40 years at 5% interest is $35, 199

You are starting with almost 10 times what you would have actually earned on your earliest years.

Your math still sucks okie. You don't seem to understand compound interest and how it works.
This is your math...
$5000 for 40 years at 5% ends up being $634,198

If I take the maximum possible contribution from 1970 to 209 which is 40 years at 5% they way you did it okie comes out to about 50% more than that total. The chances that you made enough every year since 1970 to hit the ceiling for SS is pretty slim okie.

Maximum SS contribution for 40 years at 5% interest is $410, 541

Now okie.. before you argue that the interest rate was over 5% many years. I did one other thing. I took the maximum contribution every year in SS and then assumed it would be invested in 1 year T bills every January. This actually was worse than 40 years of maximum at 5%...

40 years of maximum SS contribution invested in 1 year T bill returned $392,438
.

Historical 1 year T-bills
http://www.federalreserve.gov/releases/h15/data/Monthly/H15_TCMNOM_Y1.txt

Maximum for SS yearly
http://www.ssa.gov/history/pdf/t2a4.pdf

1 Reply

@parados,

parados,
re: okie's assumption,

Quote:

$5000 for 40 years at 5% ends up being $634,198

That's because he also assumes a $5,000 contribution into the retirement fund every year. When one makes $12,000/year (average in 1980), not even 1% of those average wage earners are going to be socking away $5,000 into their retirement fund. Even CNNMoney's recent research shows that 43% of Americans have less than $10,000 in their savings. They still have income taxes, mortgages, food, fuel, and other expenses to live. Even eating peanut butter every day will not support his illogical investments of $5,000/year.

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As vocal as they are, okie and omsigdavid have the most limited understanding of economics, the work force, jobs, job requirements and education of any two adults representing themselves as college graduates that I have tripped across.

Totally clueless.

We all know that okie earns more than $100,000/annum. Which roughly means he takes home $60,000, giving him $5,000/month for living. The trouble is that okie doesn't live. He reads nothing. He hates traveling. Cities turn him off. He never participates in music or food forums, so I would guess that he has no interest in either. In fact, the only things that interest him are haranguing people on this forum with his homemade history facts and dizzy economic theories; name calling; denying what he wrote, and repeating the same old tirades over and over.

It would be easy for someone like okie without interests to sock away more than half his take home annually, particularly since he claims his house is paid for. okie simply transfers his dull and insipid life style to everyone else.

As for david, he wrote recently that people with college degrees are generally successful in financial terms. Right. Like the man with doctorate from the Harvard Divinity School who works as a cashier at Stop and Shop, a supermarket. Or the woman with a master's degree in journalism from Columbia who ran a bed and breakfast out of her home because while every paper accepted her freelance work, no one wanted to give her a weekly salary. (I already know what okie's uninformed reponse will be.)

Massachusetts has had a sufficient number of jobs for years, taking into account that everyone here seems to have two or three*, whether they finished high school or graduated from Harvard. However, the problem has been and still is that the jobs are poorly paid positions in the service sector.

Now, I have done the okie/ican thing in terms of reposting the same information. Mine, however, comes from the US Census Bureau (yeah, and georgeob took me to task on that but as my Dad might say about george, "Consider the source.") and it is that for 80% of American wage earners, real wages have remained flat since 1979.

Hmmm. Does that have anything to do with Nixon devaluating the dollar?

I also remember all the talking heads on Wall Street Week telling the late Louis Rykeyser that there will be plenty of jobs in the service segment in the future. Do you want fries with your burger?

* Last night, when I bought gas, the girl working the payment desk yawned. She seemed in the 19-22 range. "I'm sorry," she said. "I'm tired." I asked her when did she get off and she said midnight. "I already worked my other job today." I told her I knew what she is talking about because I have two jobs. She said, "You can't pay the rent on one."

1 Reply

@plainoldme,

plainoldme wrote:

As vocal as they are, okie and omsigdavid have the most limited understanding of economics, the work force, jobs, job requirements and education of any two adults representing themselves as college graduates that I have tripped across.

Totally clueless.

Yes, I am totally clueless. After all, I only grew up poor, worked for every penny to put myself through college for a degree in geology, then only worked for a major oil company for more than 15 years before running my own business successfully for more than 25 years. On top of that, I served in the military, including a tour in Vietnam. Right, I know nothing compared to you, the elite liberal, pom.

Doesn't that say it all about pom, folks?

Quote:

We all know that okie earns more than $100,000/annum. Which roughly means he takes home $60,000, giving him $5,000/month for living. The trouble is that okie doesn't live. He reads nothing. He hates traveling. Cities turn him off. He never participates in music or food forums, so I would guess that he has no interest in either.

You don't know what you think you know. Some years more than 100 k, but most of the time less, sometimes much less.
I live quite well.

Right, I do not enjoy faddish music, but we have much musical talent in the family if you want to know the truth. My dad was an accomplished violinist and talented with the accordian, among other things. Fact is, that is one reason my mother fell for him. I do not participate in music or food forums, because frankly I am not interested. My wife is a far better cook than we can find in restaurants around here.

Travel, I have traveled to the majority of the states of the union, and to Europe, besides traveling while in the military. I won't tell you the details, but I am not ashamed of my knowledge of this country geographically. I have personally lived in 5 different states.

You should be ashamed of spouting off your ignorance and arrogance here, pom. I am serious. You really have made a fool of yourself here, and I think you need a major wake up call to reality.

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Back on the subject, here is an article in regard to a report about the rampant waste in government. Not that most of us don't already know this by simple observation and common sense, but anyway here it is:

http://www.foxnews.com/politics/2011/03/01/government-waste-numbers-report-identifies-dozens-duplicative-programs/

""This report confirms what most Americans assume about their government. We are spending trillions of dollars every year and nobody knows what we are doing. The executive branch doesn't know."

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@okie,

okie wrote:

You have apparently forgotten that I could favor a very high marginal tax rate on extremely high incomes. I would couple that with the total elimination of income taxes upon businesses or corporations. The high marginal rates would apply only to individuals.

The fact remains that our primary problem is over spending, not under taxation.

Sure, I remember that. But I also note that you consistently vote for those who are TOTALLY AGAINST raising taxes on the rich. You vote against the position you think is the correct one. Why? You know that this will lead to fiscal ruin for us in the long run.

Cycloptichorn

1 Reply

@Cycloptichorn,

I vote for the people that believe spending is the first and foremost problem, not being under-taxed. I just posted a report that was put out by your own government, cyclops, that confirms the existence of rampant waste in government. Don't you think you should support politicians that want to fix this problem?

P. S. I haven't seen any prominent politicians running nationally that support elimination of the income tax on business and corporations. Last guy that wanted big reform of the income tax was Huckabee, and you can see how far he got.

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@okie,

okie wrote:

Back on the subject, here is an article in regard to a report about the rampant waste in government. Not that most of us don't already know this by simple observation and common sense, but anyway here it is:

http://www.foxnews.com/politics/2011/03/01/government-waste-numbers-report-identifies-dozens-duplicative-programs/

""This report confirms what most Americans assume about their government. We are spending trillions of dollars every year and nobody knows what we are doing. The executive branch doesn't know. The congressional branch doesn't know"

It's funny where you cut that quote off okie... I added in the missing part...

Of course Bush knew where all the money was going. That must have been why he shipped pallet loads of US bills to Iraq and Afghanistan. He knew it was going to line the pockets of corrupt officials.

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@okie,

okie wrote:

I vote for the people that believe spending is the first and foremost problem, not being under-taxed. I just posted a report that was put out by your own government, cyclops, that confirms the existence of rampant waste in government. Don't you think you should support politicians that want to fix this problem?

I didn't see that report, but I'll go look at it. I just read a similar report regarding waste amongst military contractor spending in Iraq and Afgh., to the tune of 30 billion dollars or more.

I will say that waste is an inevitable part of governance, and the quest to rid ourselves of all waste is futile; we just need to do the best we can to fix it. I haven't seen any indication that Republicans are any more interested in fixing this than Democrats, though.

Regarding the spending issue, I'll repeat what I said in another thread: we are currently experiencing the LOWEST levels of taxation in the last 75 years or so of this country, and the HIGHEST levels of debt and deficit. It doesn't take a genius to figure out that to address the second you MUST address the first. We are indeed being under-taxed and we have been for years. You cannot close the budget hole by cutting spending only!

Cycloptichorn

1 Reply

Where is the US economy headed?

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