$318 Billion Deal Is Set in Congress for Cutting Taxes

cicerone imposter wrote:

Scrat, I make only one observation; a too high national debt during worsening economic periods will not help our economy recover. The economy of today is much different than our economy after WWII. c.i.

CI - Your comment begs two questions:

1) When is the national debt "too high"?

2) Do you think the economy is currently "worsening"?

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au1929 wrote:

Quote:
I recognize that some will disagree vehemently with this argument, and I welcome your comments, but please keep it civil and try to avoid the insults and personal comments that tend to derail discussions here. Thanks.)

Scrat.
You continually make statements such as the one above. I think it's about time you begin to practice what you preach. You continually provoke people with your attitude and belligerence and then complain when you get the same treatment in return. Sorry for being so blunt but it's time you look in the mirror. I have no objection to what you say and I doubt that in general neither do many others. It the how that irks people.

I would think this would be an example of what scrat was trying to avoid. How does this comment on the topic. Of course this post doesn't comment on the topic either, but some off topic posts need to be commented on.

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au1929 wrote:

Quote:
I recognize that some will disagree vehemently with this argument, and I welcome your comments, but please keep it civil and try to avoid the insults and personal comments that tend to derail discussions here. Thanks.)

Scrat.
You continually make statements such as the one above.

Because I keep hoping that people will be more civil and stick to discussing points of view rather than attacking others for expressing theirs.

au1929 wrote:

I think it's about time you begin to practice what you preach.

au - I respect your opinion on a lot of things, but not on this. I practice exactly what I preach, and am rarely anything less than civil. I'll stack my record up against just about anyone's here, including yours.

Do me a favor... take a look at the last few times Moderators have locked discussions or stepped in to ask people to behave and consider who is involved. Let me know what you find, and then tell me that I have no right to simply ask people to be civil.

Now, does anyone want to discuss the TOPIC?

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Scrat, I can only offer my opinions on the economy and national debt. I'll stack my opinion against most of the analysts that get paid thousands for junk info. c.i.

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cicerone imposter wrote:

Scrat, I can only offer my opinions on the economy and national debt. I'll stack my opinion against most of the analysts that get paid thousands for junk info. c.i.

CI - That's cool, I was just trying to understand what your opinions on these are. You state that you consider too much debt in a worsening economy to be a bad thing. These (in bold) are matters of opinion, so I was hoping you could let me know what they mean to you.

My understanding is that our national debt is insignificant given the size of our economy, and I have been seeing indications for some time now that our economy is improving. You seem to disagree with me on these, but I wanted to be sure, and not assume anything about your point of view.

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Scrat, What has kept our economy struggling along the past several years is consumer spending. At the same time, factories have been closing, and our national debt have been increasing, while our government continues to provide tax breaks mostly to the rich who are least likely to spend their tax breaks. When companies continue to constrict to save cost and increase profit, it exacerbates our already too high unemployment ranks. However, since less and less consumers are able to purchase goods and services, the very golden egg that maintains our economy shrinks. This spiral is difficult to turn around once it starts - the momentum becomes more difficult to stop. Prices become more compmetitive in a shrinking market, and gross margins continue to suffer. The inevitable result is deflation. The only saving grace in our economy today compared to immediately after WWII is that we have more products and services that make up our economy. However, that is no panacea for bad fiscal management by our government. c.i.

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The Fed is currently fighting deflation as some indicators are pointing that way! Yes, it's a worsening economy.

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BillW wrote:

The Fed is currently fighting deflation as some indicators are pointing that way! Yes, it's a worsening economy.

I was not aware that the fed was currently taking action to fight deflation. I had heard some question whether they might have to do so (in a worst case scenario) at some point in the future, but did not think they were doing so at this time.

I did a quick search after reading your comment, and here's what I just found on the subject:

Quote:

Economists see Fed cutting rates but question need <- LINK
Mon June 23, 2003 02:53 PM ET
By Tim Ahmann

WASHINGTON, June 23 (Reuters) - As the Federal Reserve gears up to apparently cut U.S. interest rates to 1958 levels this week, many economists are asking a simple question: Why?

There is little doubt about the outcome of the Fed's two-day policy meeting that ends on Wednesday -- the central bank will lower overnight borrowing costs by either a quarter or half-percentage point for the 13th time since early 2001.

But with signs the economy is starting to perk up, with new tax cuts about to fatten consumer wallets and with of money already sloshing around in the economy, some analysts believe another rate reduction is unnecessary. Some even think the Fed could come to regret the move.

"I think the economy's bouncing back," said Mickey Levy, chief financial economist at Banc of America Securities. "If you look simply at the economic data since the last (Fed) meeting and the amount of monetary and fiscal stimulus, a cut in rates probably is not necessary."
...

Later in the same article, I did find this comment:

Quote:

With little prospect for a quick pick-up in inflation, DeKaser said the Fed sees little downside in trying to lessen an already low risk of deflation -- a decline in the overall level of consumer prices that could choke off growth.

This seems in-line with what I thought: the risk of deflation is miniscule and remote and indicators are that the economy is already on the mend. That written, while you overstate it a bit, it does sound like the fed may decide to lower rates once more to head off any chance of deflation.

So, you may be somewhat right that the fed may take action, but I see no justification (beyond wishful thinking) in claiming that the economy is worsening.

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If it deflates the price of housing around here, I'm all for it Smile

. Average home price in the Bay Area, $450K. Average price for a 3/2 on my street, $800K.

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http://news.google.com/news?hl=en&edition=usa&q=deflation

It's been in the news for a couple of weeks now!

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The problem is that this supposed recovery is a jobless one. Unless and until the job market improves how can anyone term it as such. The only area of recovery at this point is the stock market and that is a crap shoot which can turn around at any time. Without a reversal in the job market can anyone term this as recovery.
We keep hearing about increases in productivity which of course is a boon to the bottom line of a company. But what does that mean to the worker, that he is producing more for the same amount of hours worked. Great the companies can lay a few extra people off.
Does that mean the companies will be in a better position to compete against foreign competition? Not a chance the wage scales are non competitive. Until a way can be found to stop the bleeding of jobs [industries] out of the US the job market will only worsen. And the economy for the working person will only become more desperate.

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Good link, BillW. Thanks. c.i.

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Japan Has been in a deflation state for sometime and Germany as with the US are talking deflation. This in and of itself is very troublesome!

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Ammo low, Fed eyes last bullet to lift economy

Federal Reserve's expected interest-rate cut this week may add modest stimulus but is not without risks.

By Ron Scherer | Staff writer of The Christian Science Monitor

NEW YORK – For the past 2-1/2 years, the Federal Reserve has lowered interest rates to stimulate the economy. The result has been a virtual gully washer of money in the economy. But now, as the Fed contemplates yet a 13h cut, it has become much more difficult and complicated to pump up the economy by lowering short-term interest rates.
So, when the Fed meets Tuesday and Wednesday to review the economy and make a decision on interest-rate policy, it will have to consider why this rainstorm of cash hasn't done the job.

more}
http://csmonitor.com/2003/0623/p02s01-usec.html

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India winning higher-status jobs from US

By Amol Sharma | Special to The Christian Science Monitor

BANGALORE, INDIA – Remember that scene from "The Nutty Professor II" when Eddie Murphy morphs into a baby? It looks like Hollywood at its special- effects best. But the scene was produced in a studio 16 time zones - and a cultural world - away, in Bangalore, India.
US companies have outsourced mundane data entry and programming to India for years. But increasingly, US firms are farming out much more sophisticated work to the world's second most populous nation, taking advantage of skilled accountants, market researchers, and medical technicians - even special-effects artists - who work for nickels on the dollar.
Behind the push are the need to cut costs, advances in telecommunications technologies, and growing confidence in India's labor force. "As large global corporations and institutions are becoming more comfortable with the offshore model and more sophisticated in managing business practices remotely, they are moving more complex processes offshore," says Peter Lowes, a partner in the outsourcing practice at Deloitte Touche Tohmatsu.
Forrester Research estimates that 3.3 million jobs will be outsourced to low-wage countries like India by 2015. India's leading technology trade group, NASSCOM, says the Indian back-office sector will grow 65 percent this year, to $2.3 billion.

More}
http://csmonitor.com/2003/0618/p01s03-wosc.html

Average yearly salaries for IT programmers
US $63,331
Poland and Hungary $4,800 to $8,000
India $5,880
Philippines $6,564
Malaysia $7,200
Russian Federation $5,000 to $7,500
China $8,952
Canada $28,174
Ireland $23,000 to $34,000
Israel $15,000 to $38,000

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au, All part of the economic problems in the US; exporting jobs to lower cost labor countries, and increasing unemployment in our own. What we must do is try to reduce the blood-letting by government intervension. In a world economy where labor cost is cheaper in 95 percent of the countries we are trying to compete with, the outflow of jobs is a "natural" outcome. It's one of those catch-22 predicaments for companies trying to increase their profitability. It's only a matter of time when very few jobs will be left for US workers. Self-preservation is an important consideration over free markets. Once you have holes in the barrel for water to escape, trying to replug those holes is going to be a huge task for somebody in the future. c.i.

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BTW, some would opt to let the bleeding continue until a balance is found naturally in the free market place. It's a difficult decision. c.i.

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BillW wrote:

http://news.google.com/news?hl=en&edition=usa&q=deflation

It's been in the news for a couple of weeks now!

Bill - I got sidetracked in editing that previous reply. Please see my edited comments. I was well aware that some had commented on the remote possibility of deflation. A remote future possibility clearly does not approach being evidence that the economy is currently worsening, anymore than the possibility of an earthquake sometime in the future in CA means everyone in LA is currently in danger for their lives.

Sorry for any confusion caused by the delayed edit.

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au1929 wrote:

The problem is that this supposed recovery is a jobless one. Unless and until the job market improves how can anyone term it as such. The only area of recovery at this point is the stock market and that is a crap shoot which can turn around at any time. Without a reversal in the job market can anyone term this as recovery.

Quote:

Other favorable indicators include the number of new claims for unemployment benefits - at a five-week low this past week... LINK

Other positive economic indicators listed in this article are:
- industrial output
- housing construction
- Composite of Leading Economic Indicators
- Consumer Price Index

So, while more employment gains will be welcome, it is not accurate to write that none have occurred, nor is it accurate to write that the stock market is the only evidence of economic recovery.

(There are also some negative indicators listed in the article I cite.)

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Some pundits have talked about deflation, but our government still have not acknowledged we are in deflation. There are some signs that might indicate the beginning of deflation, but if the economy continues as we have the past several years, I think it's only a matter of time. There are too many mixed signals at the present time. c.i.

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$318 Billion Deal Is Set in Congress for Cutting Taxes

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