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Read the rules in the OP before posting, please.In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up! NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action. |
On March 15 2013 16:16 OsoVega wrote:Show nested quote +On March 15 2013 14:09 aksfjh wrote:On March 15 2013 11:42 OsoVega wrote:On March 15 2013 11:30 {CC}StealthBlue wrote:A scathing report released by a Senate panel Thursday shows the financial crisis never really abated: The forces that delivered it -- a toxic combination of reckless speculation, balance sheet manipulation and outright disdain for regulators -- remained fully at work inside the biggest bank of them all, JPMorgan Chase, as recently as last spring.
The 300-page report, which unfolds in tones worthy of an indictment, says JPMorgan executives brazenly misled and bullied their regulators, going so far as to call them "stupid."
This, the report concludes, explains how a bet engineered by a trader called the London Whale for his enormous, market-moving positions burgeoned into losses reaching $6.2 billion. Chief executive Jamie Dimon initially dismissed the Whale losses as a “tempest in a teapot.”
"In contrast to JPMorgan Chase’s reputation for best-in-class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements," the report concludes.
The top in-house regulator at JPMorgan, from the U.S. Office of the Comptroller of the Currency, told the Senate subcommittee that it was "very common" for the bank to push back on examiner filings and recommendations. The regulator recalled one instance in which bank executives yelled at OCC examiners and derided them as “stupid.”
"The bank's initial claims that its risk managers and regulators were fully informed and engaged ... were fictions irreconcilable with the bank’s obligation to provide material information to its investors in an accurate manner," says the report from the Senate Permanent Subcommittee on Investigations.
The report traces responsibility for JPMorgan’s trading fiasco to its highest offices, all the way to CEO Dimon. Source Of course big banks and firms are going to gamble when money is cheap and you have a government bail out waiting for you if you fail. You're not going to get rid of financial turmoil by doubling down on the policies that cause it. They're going to gamble as long as the law allows it. Nature of capitalism and blindly following profit cause it, and regulations and regulators are tasked with stopping it. Explain to me how it is profitable to gamble in a free market. Also, if it is a winning strategy (which it might be if you're using a stupid, non-contextual definition of the word gamble), what's wrong with that?
It's not profitable for a bank to gamble in a free market but the answer is we do not have a free market at the moment with government monopoly of money and the too big to fail issue.
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On March 15 2013 16:21 KwarK wrote:Show nested quote +On March 15 2013 16:16 OsoVega wrote:On March 15 2013 14:09 aksfjh wrote:On March 15 2013 11:42 OsoVega wrote:On March 15 2013 11:30 {CC}StealthBlue wrote:A scathing report released by a Senate panel Thursday shows the financial crisis never really abated: The forces that delivered it -- a toxic combination of reckless speculation, balance sheet manipulation and outright disdain for regulators -- remained fully at work inside the biggest bank of them all, JPMorgan Chase, as recently as last spring.
The 300-page report, which unfolds in tones worthy of an indictment, says JPMorgan executives brazenly misled and bullied their regulators, going so far as to call them "stupid."
This, the report concludes, explains how a bet engineered by a trader called the London Whale for his enormous, market-moving positions burgeoned into losses reaching $6.2 billion. Chief executive Jamie Dimon initially dismissed the Whale losses as a “tempest in a teapot.”
"In contrast to JPMorgan Chase’s reputation for best-in-class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements," the report concludes.
The top in-house regulator at JPMorgan, from the U.S. Office of the Comptroller of the Currency, told the Senate subcommittee that it was "very common" for the bank to push back on examiner filings and recommendations. The regulator recalled one instance in which bank executives yelled at OCC examiners and derided them as “stupid.”
"The bank's initial claims that its risk managers and regulators were fully informed and engaged ... were fictions irreconcilable with the bank’s obligation to provide material information to its investors in an accurate manner," says the report from the Senate Permanent Subcommittee on Investigations.
The report traces responsibility for JPMorgan’s trading fiasco to its highest offices, all the way to CEO Dimon. Source Of course big banks and firms are going to gamble when money is cheap and you have a government bail out waiting for you if you fail. You're not going to get rid of financial turmoil by doubling down on the policies that cause it. They're going to gamble as long as the law allows it. Nature of capitalism and blindly following profit cause it, and regulations and regulators are tasked with stopping it. Explain to me how it is profitable to gamble in a free market. Also, if it is a winning strategy (which it might be if you're using a stupid, non-contextual definition of the word gamble), what's wrong with that? Because they're too big to fail so they can't lose. Other people lose but when you take a narrow view and just look at the bank then it's a very profitable gamble to take. It's not good for the system but it's very good for the bank.
Notice that I used the phrase "free markets". Too big to fail only exists because the government won't let them fail, not because of free market mechanisms.
I agree that banks, today, gamble. That's why I posted that banks gamble, but the person I was responding to disagreed that the gambling is caused by the government and said it is inherent in capitalism.
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On March 15 2013 17:56 OsoVega wrote:Show nested quote +On March 15 2013 16:21 KwarK wrote:On March 15 2013 16:16 OsoVega wrote:On March 15 2013 14:09 aksfjh wrote:On March 15 2013 11:42 OsoVega wrote:On March 15 2013 11:30 {CC}StealthBlue wrote:A scathing report released by a Senate panel Thursday shows the financial crisis never really abated: The forces that delivered it -- a toxic combination of reckless speculation, balance sheet manipulation and outright disdain for regulators -- remained fully at work inside the biggest bank of them all, JPMorgan Chase, as recently as last spring.
The 300-page report, which unfolds in tones worthy of an indictment, says JPMorgan executives brazenly misled and bullied their regulators, going so far as to call them "stupid."
This, the report concludes, explains how a bet engineered by a trader called the London Whale for his enormous, market-moving positions burgeoned into losses reaching $6.2 billion. Chief executive Jamie Dimon initially dismissed the Whale losses as a “tempest in a teapot.”
"In contrast to JPMorgan Chase’s reputation for best-in-class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements," the report concludes.
The top in-house regulator at JPMorgan, from the U.S. Office of the Comptroller of the Currency, told the Senate subcommittee that it was "very common" for the bank to push back on examiner filings and recommendations. The regulator recalled one instance in which bank executives yelled at OCC examiners and derided them as “stupid.”
"The bank's initial claims that its risk managers and regulators were fully informed and engaged ... were fictions irreconcilable with the bank’s obligation to provide material information to its investors in an accurate manner," says the report from the Senate Permanent Subcommittee on Investigations.
The report traces responsibility for JPMorgan’s trading fiasco to its highest offices, all the way to CEO Dimon. Source Of course big banks and firms are going to gamble when money is cheap and you have a government bail out waiting for you if you fail. You're not going to get rid of financial turmoil by doubling down on the policies that cause it. They're going to gamble as long as the law allows it. Nature of capitalism and blindly following profit cause it, and regulations and regulators are tasked with stopping it. Explain to me how it is profitable to gamble in a free market. Also, if it is a winning strategy (which it might be if you're using a stupid, non-contextual definition of the word gamble), what's wrong with that? Because they're too big to fail so they can't lose. Other people lose but when you take a narrow view and just look at the bank then it's a very profitable gamble to take. It's not good for the system but it's very good for the bank. Notice that I used the phrase "free markets". Too big to fail only exists because the government won't let them fail, not because of free market mechanisms. I agree that banks, today, gamble. That's why I posted that banks gamble, but the person I was responding to disagreed that the gambling is caused by the government and said it is inherent in capitalism.
There is no basis for thinking that size will decrease from "free market" economics. When that is said, you are probably correct that the gambling is exacerbated by government interventions and the cluster of serious problems in TBTF.
The question you have to ask yourself is: What will it take to reach a point where too big to fail is invalidated by free market economics and is it realistic that it won't negatively effect other parts of the economy to a larger extend?
I doubt that TBTF can be dealt with only by deregulation and non-interventionalism.
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On March 15 2013 17:56 OsoVega wrote:Show nested quote +On March 15 2013 16:21 KwarK wrote:On March 15 2013 16:16 OsoVega wrote:On March 15 2013 14:09 aksfjh wrote:On March 15 2013 11:42 OsoVega wrote:On March 15 2013 11:30 {CC}StealthBlue wrote:A scathing report released by a Senate panel Thursday shows the financial crisis never really abated: The forces that delivered it -- a toxic combination of reckless speculation, balance sheet manipulation and outright disdain for regulators -- remained fully at work inside the biggest bank of them all, JPMorgan Chase, as recently as last spring.
The 300-page report, which unfolds in tones worthy of an indictment, says JPMorgan executives brazenly misled and bullied their regulators, going so far as to call them "stupid."
This, the report concludes, explains how a bet engineered by a trader called the London Whale for his enormous, market-moving positions burgeoned into losses reaching $6.2 billion. Chief executive Jamie Dimon initially dismissed the Whale losses as a “tempest in a teapot.”
"In contrast to JPMorgan Chase’s reputation for best-in-class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements," the report concludes.
The top in-house regulator at JPMorgan, from the U.S. Office of the Comptroller of the Currency, told the Senate subcommittee that it was "very common" for the bank to push back on examiner filings and recommendations. The regulator recalled one instance in which bank executives yelled at OCC examiners and derided them as “stupid.”
"The bank's initial claims that its risk managers and regulators were fully informed and engaged ... were fictions irreconcilable with the bank’s obligation to provide material information to its investors in an accurate manner," says the report from the Senate Permanent Subcommittee on Investigations.
The report traces responsibility for JPMorgan’s trading fiasco to its highest offices, all the way to CEO Dimon. Source Of course big banks and firms are going to gamble when money is cheap and you have a government bail out waiting for you if you fail. You're not going to get rid of financial turmoil by doubling down on the policies that cause it. They're going to gamble as long as the law allows it. Nature of capitalism and blindly following profit cause it, and regulations and regulators are tasked with stopping it. Explain to me how it is profitable to gamble in a free market. Also, if it is a winning strategy (which it might be if you're using a stupid, non-contextual definition of the word gamble), what's wrong with that? Because they're too big to fail so they can't lose. Other people lose but when you take a narrow view and just look at the bank then it's a very profitable gamble to take. It's not good for the system but it's very good for the bank. Notice that I used the phrase "free markets". Too big to fail only exists because the government won't let them fail, not because of free market mechanisms. I agree that banks, today, gamble. That's why I posted that banks gamble, but the person I was responding to disagreed that the gambling is caused by the government and said it is inherent in capitalism.
Industry rent seeking is a standard part of capitalism.
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On March 15 2013 11:47 ziggurat wrote:Show nested quote +On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:On March 14 2013 10:26 TheTenthDoc wrote:On March 14 2013 02:34 ziggurat wrote:
I think it's refreshing to see a politician standing up for his principles, even if they're not popular. I wish Romney had been more willing to do this. You realize that Paul Ryan is doing the opposite of standing up for principles here, right? The man is either lying through his teeth now or was lying the entire electoral season and during its immediate aftermath. He's either a hypocrite, an idiot, or a maliciously manipulative politician who relies on people not actually reading the things he says and just thinking "gee he's pretty." Saying whatever is popular at the moment is not "standing up" for anything but your own wallet. You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal. Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be.
This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0
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On March 15 2013 16:21 KwarK wrote:Show nested quote +On March 15 2013 16:16 OsoVega wrote:On March 15 2013 14:09 aksfjh wrote:On March 15 2013 11:42 OsoVega wrote:On March 15 2013 11:30 {CC}StealthBlue wrote:A scathing report released by a Senate panel Thursday shows the financial crisis never really abated: The forces that delivered it -- a toxic combination of reckless speculation, balance sheet manipulation and outright disdain for regulators -- remained fully at work inside the biggest bank of them all, JPMorgan Chase, as recently as last spring.
The 300-page report, which unfolds in tones worthy of an indictment, says JPMorgan executives brazenly misled and bullied their regulators, going so far as to call them "stupid."
This, the report concludes, explains how a bet engineered by a trader called the London Whale for his enormous, market-moving positions burgeoned into losses reaching $6.2 billion. Chief executive Jamie Dimon initially dismissed the Whale losses as a “tempest in a teapot.”
"In contrast to JPMorgan Chase’s reputation for best-in-class risk management, the whale trades exposed a bank culture in which risk limit breaches were routinely disregarded, risk metrics were frequently criticized or downplayed, and risk evaluation models were targeted by bank personnel seeking to produce artificially lower capital requirements," the report concludes.
The top in-house regulator at JPMorgan, from the U.S. Office of the Comptroller of the Currency, told the Senate subcommittee that it was "very common" for the bank to push back on examiner filings and recommendations. The regulator recalled one instance in which bank executives yelled at OCC examiners and derided them as “stupid.”
"The bank's initial claims that its risk managers and regulators were fully informed and engaged ... were fictions irreconcilable with the bank’s obligation to provide material information to its investors in an accurate manner," says the report from the Senate Permanent Subcommittee on Investigations.
The report traces responsibility for JPMorgan’s trading fiasco to its highest offices, all the way to CEO Dimon. Source Of course big banks and firms are going to gamble when money is cheap and you have a government bail out waiting for you if you fail. You're not going to get rid of financial turmoil by doubling down on the policies that cause it. They're going to gamble as long as the law allows it. Nature of capitalism and blindly following profit cause it, and regulations and regulators are tasked with stopping it. Explain to me how it is profitable to gamble in a free market. Also, if it is a winning strategy (which it might be if you're using a stupid, non-contextual definition of the word gamble), what's wrong with that? Because they're too big to fail so they can't lose. Other people lose but when you take a narrow view and just look at the bank then it's a very profitable gamble to take. It's not good for the system but it's very good for the bank.
It has nothing to do with "too big to fail." We had banks gambling and failing all the way back to the 1850s at least. Even if we let them fail, even if no banks ever got that big again, the stupid risk would still exist. Government has the responsibility to protect the people from that failure, including forcing a risk ceiling and guarantees for holders of bank notes.
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On March 15 2013 21:51 DisneylandSC wrote:Show nested quote +On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:On March 14 2013 10:26 TheTenthDoc wrote:On March 14 2013 02:34 ziggurat wrote:
I think it's refreshing to see a politician standing up for his principles, even if they're not popular. I wish Romney had been more willing to do this. You realize that Paul Ryan is doing the opposite of standing up for principles here, right? The man is either lying through his teeth now or was lying the entire electoral season and during its immediate aftermath. He's either a hypocrite, an idiot, or a maliciously manipulative politician who relies on people not actually reading the things he says and just thinking "gee he's pretty." Saying whatever is popular at the moment is not "standing up" for anything but your own wallet. You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal. Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0
The longer we wait the more debt we have. That creates a few problems:
1) Increases the probability that the debt will slow long term growth which will make paying the debt back all the harder.
2) Exposes the national budget to monetary policy changes. The more debt we have (particularly short term debt) the greater the impact of interest rate hikes will be.
3) The debt burden falls unequally on the population. Those who are older and wealthier generally hold the debt and so taxes to pay for the debt service can be seen as a transfer of income from the young and poor to the old and rich.
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On March 16 2013 02:32 JonnyBNoHo wrote:Show nested quote +On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:On March 14 2013 10:26 TheTenthDoc wrote:
[quote]
You realize that Paul Ryan is doing the opposite of standing up for principles here, right? The man is either lying through his teeth now or was lying the entire electoral season and during its immediate aftermath. He's either a hypocrite, an idiot, or a maliciously manipulative politician who relies on people not actually reading the things he says and just thinking "gee he's pretty."
Saying whatever is popular at the moment is not "standing up" for anything but your own wallet. You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal. Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The longer we wait the more debt we have. That creates a few problems: 1) Increases the probability that the debt will slow long term growth which will make paying the debt back all the harder. 2) Exposes the national budget to monetary policy changes. The more debt we have (particularly short term debt) the greater the impact of interest rate hikes will be. 3) The debt burden falls unequally on the population. Those who are older and wealthier generally hold the debt and so taxes to pay for the debt service can be seen as a transfer of income from the young and poor to the old and rich.
1) That was from a bogus Alesina paper that has largely been refuted. At the very least, it confuses causality with indebtedness.
2) The government controls monetary policy as well. Not directly, obviously, but the Fed won't crash the government AND the economy unless huge (numerous and stupid) mistakes are made.
3) I don't even think this point makes sense. The idea that debt burden falls unequally on the young is that they are forced by lifespan to pay more of it off. Even that's not true though, because we don't pay our government debt anyways, we outgrow it.
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On March 16 2013 02:58 aksfjh wrote:Show nested quote +On March 16 2013 02:32 JonnyBNoHo wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:
[quote]
You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal.
Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The longer we wait the more debt we have. That creates a few problems: 1) Increases the probability that the debt will slow long term growth which will make paying the debt back all the harder. 2) Exposes the national budget to monetary policy changes. The more debt we have (particularly short term debt) the greater the impact of interest rate hikes will be. 3) The debt burden falls unequally on the population. Those who are older and wealthier generally hold the debt and so taxes to pay for the debt service can be seen as a transfer of income from the young and poor to the old and rich. 1) That was from a bogus Alesina paper that has largely been refuted. At the very least, it confuses causality with indebtedness. 2) The government controls monetary policy as well. Not directly, obviously, but the Fed won't crash the government AND the economy unless huge (numerous and stupid) mistakes are made. 3) I don't even think this point makes sense. The idea that debt burden falls unequally on the young is that they are forced by lifespan to pay more of it off. Even that's not true though, because we don't pay our government debt anyways, we outgrow it.
1) No, Reinhart and Rogoff.
2) We either impair monetary policy or the national budget. That's not a good situation.
3) Rolling the debt over to perpetuity doesn't lower the cost of the debt.
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On March 16 2013 03:21 JonnyBNoHo wrote:Show nested quote +On March 16 2013 02:58 aksfjh wrote:On March 16 2013 02:32 JonnyBNoHo wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:
[quote]
We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The longer we wait the more debt we have. That creates a few problems: 1) Increases the probability that the debt will slow long term growth which will make paying the debt back all the harder. 2) Exposes the national budget to monetary policy changes. The more debt we have (particularly short term debt) the greater the impact of interest rate hikes will be. 3) The debt burden falls unequally on the population. Those who are older and wealthier generally hold the debt and so taxes to pay for the debt service can be seen as a transfer of income from the young and poor to the old and rich. 1) That was from a bogus Alesina paper that has largely been refuted. At the very least, it confuses causality with indebtedness. 2) The government controls monetary policy as well. Not directly, obviously, but the Fed won't crash the government AND the economy unless huge (numerous and stupid) mistakes are made. 3) I don't even think this point makes sense. The idea that debt burden falls unequally on the young is that they are forced by lifespan to pay more of it off. Even that's not true though, because we don't pay our government debt anyways, we outgrow it. 1) No, Reinhart and Rogoff. 2) We either impair monetary policy or the national budget. That's not a good situation. 3) Rolling the debt over to perpetuity doesn't lower the cost of the debt.
1) Ah yes, I remember. Still, correlation and causation. Krugman Response
2) Monetary policies and budget solutions have pros and cons. It's stupid to single out either as the sole or primary solution.
3) It drastically changes the way cost of debt is figured. We don't have to pay back $12 trillion as some final sum, but rather $200-400 billion a year.
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On March 16 2013 03:36 aksfjh wrote:Show nested quote +On March 16 2013 03:21 JonnyBNoHo wrote:On March 16 2013 02:58 aksfjh wrote:On March 16 2013 02:32 JonnyBNoHo wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:[quote] Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The longer we wait the more debt we have. That creates a few problems: 1) Increases the probability that the debt will slow long term growth which will make paying the debt back all the harder. 2) Exposes the national budget to monetary policy changes. The more debt we have (particularly short term debt) the greater the impact of interest rate hikes will be. 3) The debt burden falls unequally on the population. Those who are older and wealthier generally hold the debt and so taxes to pay for the debt service can be seen as a transfer of income from the young and poor to the old and rich. 1) That was from a bogus Alesina paper that has largely been refuted. At the very least, it confuses causality with indebtedness. 2) The government controls monetary policy as well. Not directly, obviously, but the Fed won't crash the government AND the economy unless huge (numerous and stupid) mistakes are made. 3) I don't even think this point makes sense. The idea that debt burden falls unequally on the young is that they are forced by lifespan to pay more of it off. Even that's not true though, because we don't pay our government debt anyways, we outgrow it. 1) No, Reinhart and Rogoff. 2) We either impair monetary policy or the national budget. That's not a good situation. 3) Rolling the debt over to perpetuity doesn't lower the cost of the debt. 1) Ah yes, I remember. Still, correlation and causation. Krugman Response2) Monetary policies and budget solutions have pros and cons. It's stupid to single out either as the sole or primary solution. 3) It drastically changes the way cost of debt is figured. We don't have to pay back $12 trillion as some final sum, but rather $200-400 billion a year.
1) So Krugman is right and R&R are wrong? Flat out? In my statement I said that it would increase the probability of slower growth not that slower growth was a guaranteed outcome.
2) I'm not singling one out as a primary solution. I'm stating a fact - monetary policy exists and at some point monetary policy will dictate that rates rise. When they do the more debt we have the more our national budget will be impacted. Ex. an Op-Ed that touches on the situation.
3) The PV of the debt doesn't change. What you save in principal repayment you lose in future interest payments.
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Speaking of poverty and anti-poverty programs...
A Surprisingly Uncontroversial Program That Gives Money To Poor People
Last year, a federal program called the Earned Income Tax Credit took about $60 billion from wealthier Americans and gave it to the working poor. And here's the surprising thing: This redistribution of wealth has been embraced by every president from Ronald Reagan to Barack Obama.
"This program worked," says Richard Burkhauser, an economist at Cornell University and the American Enterprise Institute. "And there's not a hell of a lot of these programs where you can see the tremendous change in the behavior of people in exactly the way that all of us hoped it would happen."
When he says it worked, he means it helped single mothers on welfare find work and get out of poverty. ...
Source
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On March 16 2013 04:26 JonnyBNoHo wrote:Speaking of poverty and anti-poverty programs... Show nested quote +A Surprisingly Uncontroversial Program That Gives Money To Poor People
Last year, a federal program called the Earned Income Tax Credit took about $60 billion from wealthier Americans and gave it to the working poor. And here's the surprising thing: This redistribution of wealth has been embraced by every president from Ronald Reagan to Barack Obama.
"This program worked," says Richard Burkhauser, an economist at Cornell University and the American Enterprise Institute. "And there's not a hell of a lot of these programs where you can see the tremendous change in the behavior of people in exactly the way that all of us hoped it would happen."
When he says it worked, he means it helped single mothers on welfare find work and get out of poverty. ... Source
EITC is quite awesome, but I recall there are some hidden negative effects. The primary of which seems to be downward pressure on income, as income becomes government subsidized and employers aren't as heavily pressured to raise low wages (at certain levels).
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On March 16 2013 04:29 aksfjh wrote:Show nested quote +On March 16 2013 04:26 JonnyBNoHo wrote:Speaking of poverty and anti-poverty programs... A Surprisingly Uncontroversial Program That Gives Money To Poor People
Last year, a federal program called the Earned Income Tax Credit took about $60 billion from wealthier Americans and gave it to the working poor. And here's the surprising thing: This redistribution of wealth has been embraced by every president from Ronald Reagan to Barack Obama.
"This program worked," says Richard Burkhauser, an economist at Cornell University and the American Enterprise Institute. "And there's not a hell of a lot of these programs where you can see the tremendous change in the behavior of people in exactly the way that all of us hoped it would happen."
When he says it worked, he means it helped single mothers on welfare find work and get out of poverty. ... Source EITC is quite awesome, but I recall there are some hidden negative effects. The primary of which seems to be downward pressure on income, as income becomes government subsidized and employers aren't as heavily pressured to raise low wages (at certain levels).
That's certainly possible. I imagine the effect would be more powerful in recent years with employers having the option to offshore jobs. If so, another reason to be glad that the wage differential is closing.
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I see Mitch McConnell is going after the female early. Stay classy Mitch.
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On March 15 2013 21:51 DisneylandSC wrote:Show nested quote +On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:On March 14 2013 10:26 TheTenthDoc wrote:On March 14 2013 02:34 ziggurat wrote:
I think it's refreshing to see a politician standing up for his principles, even if they're not popular. I wish Romney had been more willing to do this. You realize that Paul Ryan is doing the opposite of standing up for principles here, right? The man is either lying through his teeth now or was lying the entire electoral season and during its immediate aftermath. He's either a hypocrite, an idiot, or a maliciously manipulative politician who relies on people not actually reading the things he says and just thinking "gee he's pretty." Saying whatever is popular at the moment is not "standing up" for anything but your own wallet. You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal. Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0
The fact that you consider a NYT op-ed a "good introduction" to an issue says a lot more than you probably realize...
Look, I've been reading Paul Krugman for years. He's been a huge cheerleader for all the failed stimuli going back to 2008. I think the reason he's willing to argue these things is that he's a big government liberal and he has no problem with high taxes. So even if he's wrong (he certainly has been so far), and massive government spending leads to massive deficits, he's okay with that result because it means an expansion of government and ultimately, inevitably higher taxes on everybody.
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On March 16 2013 08:32 ziggurat wrote:Show nested quote +On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:On March 14 2013 10:26 TheTenthDoc wrote:
[quote]
You realize that Paul Ryan is doing the opposite of standing up for principles here, right? The man is either lying through his teeth now or was lying the entire electoral season and during its immediate aftermath. He's either a hypocrite, an idiot, or a maliciously manipulative politician who relies on people not actually reading the things he says and just thinking "gee he's pretty."
Saying whatever is popular at the moment is not "standing up" for anything but your own wallet. You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal. Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The fact that you consider a NYT op-ed a "good introduction" to an issue says a lot more than you probably realize... Look, I've been reading Paul Krugman for years. He's been a huge cheerleader for all the failed stimuli going back to 2008.
Surely by "failed stimuli", you mean "not big enough"? You're entitled to your opinion on expansionary fiscal policy, but it is a fact - not an opinion - that the stimulus saved millions of jobs.
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On March 16 2013 09:06 kwizach wrote:Show nested quote +On March 16 2013 08:32 ziggurat wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:
[quote]
You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal.
Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The fact that you consider a NYT op-ed a "good introduction" to an issue says a lot more than you probably realize... Look, I've been reading Paul Krugman for years. He's been a huge cheerleader for all the failed stimuli going back to 2008. Surely by "failed stimuli", you mean "not big enough"? You're entitled to your opinion on expansionary fiscal policy, but it is a fact - not an opinion - that the stimulus saved millions of jobs.
Obama predicted that the stimulus would keep unemployment below 8%. Unemployment was above 8% for virtually all of his presidency. The stimulus failed on Obama's own terms.
If you point is that it did something then I guess it's hard to argue with that. That's not the same as succeeding.
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On March 16 2013 09:06 kwizach wrote:Show nested quote +On March 16 2013 08:32 ziggurat wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:
[quote]
You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal.
Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The fact that you consider a NYT op-ed a "good introduction" to an issue says a lot more than you probably realize... Look, I've been reading Paul Krugman for years. He's been a huge cheerleader for all the failed stimuli going back to 2008. Surely by "failed stimuli", you mean "not big enough"? You're entitled to your opinion on expansionary fiscal policy, but it is a fact - not an opinion - that the stimulus saved millions of jobs.
Where did you get your alternate reality creation machine to test this? I'd love to have one.
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On March 16 2013 09:06 kwizach wrote:Show nested quote +On March 16 2013 08:32 ziggurat wrote:On March 15 2013 21:51 DisneylandSC wrote:On March 15 2013 11:47 ziggurat wrote:On March 15 2013 07:40 KwarK wrote:On March 15 2013 07:28 ziggurat wrote:On March 15 2013 05:28 KwarK wrote:On March 15 2013 05:24 ziggurat wrote:On March 14 2013 13:10 KwarK wrote:On March 14 2013 10:58 ziggurat wrote:
[quote]
You sound like you're losing your mind over this. It's a proposed piece of legislation that will balance the budget in 10 years. It's not true or false, it's just a legislative proposal.
Your last sentence sounds like you misread my post. I'm saying that Paul is standing up for the idea of making tough cuts to balance the budget, even though it's not popular. Obama, by contrast, is standing up for what's popular by proposing no tough cuts, raising the minimum wage, etc. We did that in the UK. Unfortunately slashing the public sector with spending cuts while reducing the disposable income of those on benefits caused the economy to suddenly contract. The recession turned into a double dip recession, then into a triple dip recession. Unemployment rose, investment fell during the instability and government spending actually rose as people fell onto the safety net. The estimates for debt repayment were first pushed backwards, then scrapped and a new estimate for when the budget would be balanced was created, then that was scrapped and they stopped making estimates because it was making them look like they had no clue what they were doing. Canada also went through a period of severe austerity a few years back. It was very painful at the time, but I don't think anyone today would argue that it hasn't paid great dividends. It's particularly interesting because it was done by a centre-left government. Here are a couple of articles about it, in case you're interested. http://marginalrevolution.com/marginalrevolution/2010/04/the-public-choice-of-spending-cuts.htmlhttp://www.guardian.co.uk/society/2010/jan/13/paul-martin-budget-deficit-trailblazerI have sympathy for people in other countries that are now facing some very tough choices. I'm very grateful that we in Canada don't face those same choices -- although our current government is back to running deficits, which I am not happy about. Anyway, it's not a happy thing to have to cut government programs at a time when the global economy is in the tank. There's never really a "good" time to do it. It takes a certain amount of political courage to tell people a truth that they don't want to hear. My point is that slashing the budget to repay the deficit based upon assumptions of economic growth is a fiction because the two numbers are connected. You can't take large sums of money out of the economy without experiencing economic contraction and if the shock is sudden enough you'll actually end up spending as much as you did before trying to repair the damage you caused. We're borrowing more, not less, in the UK since the beginning of austerity. My points were that (1) the economic contraction that you've described in the UK is due more to the crappy global economy than it is to austerity measures; and in any event (2) you shouldn't generalize the UK experience to every other country. Other countries in similar positions which didn't commit to harsh austerity measures came out of the recession years ago and are now experiencing growth. They're also part of the same global economy so 1 can be disregarded as nonsensical. Obviously all countries are different but I'm making a general point that austerity in the UK caused rapid economic contraction and the result of that in the UK was that the debt actually increased. If you can provide reasons why that example doesn't apply elsewhere then feel free to bring them up, otherwise the UK experience is relevant to the decision facing the US. You've been talking a lot in generalities, but I'm curious to hear some details. What other countries in similar positions are you talking about? What time period exactly are you referring to? And what exactly were the austerity measures that were so ineffective in the UK? Generally speaking, you don't seem very concerned about massive deficits and you sound like you're happy for your country to continue racking them up. Tackling enormous debts is certainly a painful process for any country. Unfortunately, the longer you wait, the more painful it will ultimately be. This is a topic that has been treated before in this thread. Long story short, a national debt is not the same as a household debt. This observation affect a lot of your statements in this post. So if you have the above opinion you will need to do more to convince someone. In particular your statement that the longer you wait the more painful it [paying of the national debt] is problematic. For a good introduction to the national debt I think the following article in the New York Times is useful. http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-understands-debt.html?_r=0 The fact that you consider a NYT op-ed a "good introduction" to an issue says a lot more than you probably realize... Look, I've been reading Paul Krugman for years. He's been a huge cheerleader for all the failed stimuli going back to 2008. Surely by "failed stimuli", you mean "not big enough"? You're entitled to your opinion on expansionary fiscal policy, but it is a fact - not an opinion - that the stimulus saved millions of jobs.
Lol no it isn't a fact, you can never prove any "stimuli" (loaded term assuming that the fiscal expansion actually works) has worked because the economy isn't static its always dynamic always changing. Just because the government spent X amount of money and some jobs didn't disappear doesn't mean the spending stopped the jobs from disappearing it could be any number of other factors because the economy is always changing always moving.
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EPT
