Where is the US economy headed?

@cicerone imposter,

I think the smart money has decided that if Spain needs 100 billion Euros as the down payment for proping up the banks then we know that the final bill will be somewhere around a half trillion. The Germans don't have enough money to save the Euro, nor are the German people going to stand for the elites sending away all of their wealth while loading them up with debt.

1 Reply

@hawkeye10,

True! What Spain is facing is their bank's bankruptcy because the fundamentals are not there to correct existing problems. Feeding $100 billion Euros into the problem only exacerbates their problems - not correct them. Their problems are not the same as when the US financial companies went kaput, because the US's equities is multiple of trillions vs dropping values in Spain that has no potential for recovery.

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@cicerone imposter,

Something that I'm not able to wrap my thinking around is why American voters want the wealthy and corporations not to pay more taxes. All while the average household income and net equity shrinks.

http://i2.cdn.turner.com/money/2012/06/11/news/economy/fed-family-net-worth/chart-family-income.top.gif

We have shrinking funds for our infrastructure, schools, and social support systems, and most voters want more of the same.

What gives?

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@cicerone imposter,

I think all the 100 billion Euro amounts to is the cost of one can kick down the road.........

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@hawkeye10,

Yeah, I think you are right and, after a few minutes this morning, the markets responded. The $125Bn for Spain really resolves nothing and Greece and Ireland and Italy are grousing about the terms Spain got.
Merkel may not be able politically to keep this thing going.
I thought I saw today that bond rates in some of those weak economies topped 6% while U.S. rates fell to something like 1.6%.

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@hawkeye10,

And probably last as long; a few minutes for most people.

Surely, these games that the Euro countries are playing have pretty much played out into "fool me once....."

Will they ever catch on? It's the fundamentals, stupid!

1 Reply

@cicerone imposter,

The EU leadership has pretty much run out of credibility, not just the constantly falsely claiming the crisis over but also running all the way back to the setting up of the Euro on what we now know was a foundation of sand. This argues for the inevitability of the big crash.

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@hawkeye10,

I remember when the first countries started to change their currency into the Euro; they had a time limit on changing their country's currency into the Euro, and after such date, their currency became worthless wallpaper.

I wonder how they're going to revert back to their own country's currency when the Euro is circulated amongst the 23 separate entities and around the world.

As each country begins to drop out of the Euro, the remaining countries will absorb the devalued currency. OUCH!

That's a task that looks insurmountable from where I stand.

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@cicerone imposter,

Timely from the NYT.

Quote:

Family Net Worth Drops to Level of Early ’90s, Fed Says
By BINYAMIN APPELBAUM
Published: June 11, 2012
WASHINGTON — The recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.

A hypothetical family richer than half the nation’s families and poorer than the other half had a net worth of $77,300 in 2010, compared with $126,400 in 2007, the Fed said. The crash of housing prices directly accounted for three-quarters of the loss.

Families’ income also continued to decline, a trend that predated the crisis but accelerated over the same period. Median family income fell to $45,800 in 2010 from $49,600 in 2007. All figures were adjusted for inflation.

The new data comes from the Fed’s much-anticipated release on Monday of its Survey of Consumer Finances, a report issued every three years that is one of the broadest and deepest sources of information about the financial health of American families.

I just wonder if any conservative have been affected; you wouldn't know it by how they vote. They want to get rid of unions, and also don't want the wealthy and corporations to pay more taxes.

1 Reply

@cicerone imposter,

Oh? Do you then believe that unions and higher taxes promote new economic activity and job creation? I would be very interested to read your explanation of how they do that.

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@georgeob1,

One at a time:
Unions have shown to improve non-union pay and benefits. We learned that in Econ 101.

Higher taxes for the wealthy is justified based on their ability to pay. That you wish to connect higher taxes to job creation, I'll answer 'yes.'

The proof is based on history. After GW Bush's tax cuts in 2001-2003, job creation was at its worst since the Great Depression. Not only that, it exacerbated the country's deficit to higher levels, because GW Bush didn't pay for the two wars he started, and those costs increased our deficit.

Historically speaking, the US economy did much better under Democratic administrations where the majority gained. Under Republican administrations, the rich just got richer, and the rest of society didn't do as well.

From currencythoughts.com.

Quote:

With twenty years on each side and since some of the ups and downs of the U.S. business cycle lie beyond the direct control of policymakers, one would expect similar results in the two groups. Not so. Instead, one discovers below a significant advantage when a Democrat occupied the White House in each of the five categories.

% Per Annum Democrat Republican.. Bush43
GDP Growth..... 4.1%..... 2.9%.... 2.2%
Employment.... 2.9%.... 1.7%..... 0.5%
CPI.................. 4.0%.... 5.1%..... 3.0%
DJIA................ 8.1%..... 6.5%..... 0.9%
Dollar............... +0.8%... -3.6%.... -5.9%

National Debt By President.
http://zfacts.com/sites/all/files/image/debt/US-national-debt-GDP.png

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@cicerone imposter,

cicerone imposter wrote:

Something that I'm not able to wrap my thinking around is why American voters want the wealthy and corporations not to pay more taxes. All while the average household income and net equity shrinks.

http://i2.cdn.turner.com/money/2012/06/11/news/economy/fed-family-net-worth/chart-family-income.top.gif

We have shrinking funds for our infrastructure, schools, and social support systems, and most voters want more of the same.

What gives?

In my opinion, your question would be answered if you could explain why the "red" states vote Republican, even though so many of its voters are not wealthy. I believe it is because so many of the "red" states (white) voters are voting for "maintaining the status quo." Meaning that the corporation that employs a large percentage of the county remains in the county, and the families that own most of "main street" continue to maintain main street businesses. In my opinion, the small town voter is not voting from the same perspective as the urban voter.

1 Reply

@Foofie,

You're asking a question that's a mystery to most liberals and Independents like me. Do you have the answer?

You're wrong; they are not voting the status quo. They are voting to a) cut government spending, b) cut government unions, c) strangle our police, fire, and schools from funding, d) cut government jobs, e) discriminate against gays and women, f) cut taxes for the wealthy and corporations, and g) cut their own throats. It might make sense to conservatives, but I'm totally mystified.

1 Reply

@cicerone imposter,

cicerone imposter wrote:

You're asking a question that's a mystery to most liberals and Independents like me. Do you have the answer?

You're wrong; they are not voting the status quo. They are voting to a) cut government spending, b) cut government unions, c) strangle our police, fire, and schools from funding, d) cut government jobs, e) discriminate against gays and women, f) cut taxes for the wealthy and corporations, and g) cut their own throats. It might make sense to conservatives, but I'm totally mystified.

If they are voting for what you enumerate above, then it is a vote for the status quo. Why you ask? Some people have a nostalgia for the way things were/are. Not everyone wants another person's version of progress. Sort of like the song "Tradition" in Fiddler On the Roof.

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@Foofie,

It only means you know nothing about the political history of this country.

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Quote:

The latest report from the Federal Reserve tells us that wealth of the middle class declined by more than a third between 2007 and 2010. The wealth of the top 10%, however, grew by two percent.

http://finance.yahoo.com/news/why-rich-recovered-rest-didnt-201748043.html

****!

This is far worse than I thought...this kind of dynamic blows societies apart, if we are not all in this together it is only a matter of time before some decide it is time to burn it down.

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@hawkeye10,

I already posted this information (on this page), which reports the loss of equity and income for the middle class, and the fact that Democratic administrations perform better for the over-all economy over Republican administrations.

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@cicerone imposter,

cicerone imposter wrote:

It only means you know nothing about the political history of this country.

Would you please have repartee with someone else.

By the way, I've changed my definiton of the west coast Japanese-Americans being interned in "internment camps" during WWII, rather than referring to them as "concentration camps." I now believe they were just put into "quarantine camps," like the Chinese of San Francisco were quarantined in 1900 with the bubonic plague. You see, possible Japanese saboteurs were the pathogen that could have been seeking a safe haven in the Japanese-American community. Quarentining the Japanese-Americans in "quarantine camps" was the safest way to prevent the pathogen, of a Japanese saboteur, from gaining access to the Japanese-American community as a safe haven.

As patriotic Americans, the Japanese-American community should only be upset about the loss of any material possessions, but glad to be protected from the pathogen of any Japanese saboteurs. If you are aware of the biological warfare experiments that the Japanese were conducting in Manchuria, you might see my reasoning as logical.

1 Reply

@Foofie,

Foofie wrote:

\

As patriotic Americans, the Japanese-American community should only be upset about the loss of any material possessions, but glad to be protected from the pathogen of any Japanese saboteurs.

They should be grateful?

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@realjohnboy,

I suppose there is bound to be some sort of economic fall-out when what was said about Ben Johnson necessarily has to apply to Lance Armstrong.

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Where is the US economy headed?

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