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On August 06 2011 11:36 Mohdoo wrote:
Karl Marx called it!
"Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to communism"
Karl Marx, Das Kapital, 1867
Or there could be rioting in the streets and we devolve into anarchy. Or people will all follow some new cult and we will have a Neo Confucian Caliphate. The banks won't have to be nationalized, last time they just created the Fed and went into WWII. Do you really think our government would turn communist before starting up some war to unite us together?
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Returning to the gold standard is an utterly stupid idea that is not taken seriously by anyone that knows even the smallest amount about economics. How is having less fiscal control in a crisis the solution to anything?
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On August 06 2011 11:58 caradoc wrote:Show nested quote +On August 06 2011 11:52 RJGooner wrote:On August 06 2011 11:47 DeltaSigmaL wrote:On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected. Well I think there's room for debate there, I personally don't believe that deficit spending works and I don't think that the multiplier effect exists, but of course it depends on who you talk to. In my eyes, one of the most positive thing to arise from recent history is that its now socially acceptable to question the dominant economic logic.
I'm pretty sure this is sarcasm, but there are entire schools backed by extremely intelligent economists who do not accept the Keynesian multiplier. Milton Friedman was one of these economists.
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On August 06 2011 12:13 RJGooner wrote:Show nested quote +On August 06 2011 11:58 caradoc wrote:On August 06 2011 11:52 RJGooner wrote:On August 06 2011 11:47 DeltaSigmaL wrote:On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected. Well I think there's room for debate there, I personally don't believe that deficit spending works and I don't think that the multiplier effect exists, but of course it depends on who you talk to. In my eyes, one of the most positive thing to arise from recent history is that its now socially acceptable to question the dominant economic logic. I'm pretty sure this is sarcasm, but there are entire schools backed by extremely intelligent economists who do not accept the Keynesian multiplier. Milton Friedman was one of these economists.
Yeah, but Milton Friedman was an ideological hack serving the corporate class. His ideas have been widely debunked by modern research.
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On August 06 2011 12:12 Fleebenworth wrote:
Returning to the gold standard is an utterly stupid idea that is not taken seriously by anyone that knows even the smallest amount about economics. How is having less fiscal control in a crisis the solution to anything?
Well it gives less opportunity for abuse by the Fed. If you think they're doing a good job, then it would be bad, yes.
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On August 06 2011 12:13 RJGooner wrote:Show nested quote +On August 06 2011 11:58 caradoc wrote:On August 06 2011 11:52 RJGooner wrote:On August 06 2011 11:47 DeltaSigmaL wrote:On August 06 2011 11:38 Cassel_Castle wrote:On August 06 2011 11:36 shinosai wrote: Economists said spend during 2008-9 and spend we did. It save us from certain depression. If you doubt the depression looke at the climate back then. Lehman, AIG were failing, credit was freezing. Trust in banks was falling, sound familar? Now that things are more or less stable, extreme right wing has the audacity to claim we didn't need that spending. They call it reckless. What they are doing is extremely reckless.
(I don't have anything against the right, infact I think they are better at getting things done than the left, it's just the extreme that I do not like.) It didn't save us from depression. They just made another bubble (the bailout bubble) and it's going to pop and make things worse than they would have been if we simply let the market correct itself. It's not the recession/depression that is the problem, it's the cure. The economic boom is the problem. Trust in banks was falling. It should have! They made risky investments. They continue to do so. You think things are stable? They're about to fall apart and it's even worse now than it was going to be before. Spending money to stimulate the economy during recession only works if you saved money during the boom. We were already in debt. It made things better for a little bit but now they will be worse. Good post. A lot of people blame Keynesianism for our economic woes but our leaders haven't really been following Keynes' advice, Keynes said to run surpluses in good economic conditions to have a "rainy day fund" for recession spending. None of the "Keynesians" that everyone's blaming have actually done that. (besides Clinton) keynesian isn't always spending from existing fund. Deficit spending works as well, but you do need to recover the money during the upswing, a move that politicains have neglected. Well I think there's room for debate there, I personally don't believe that deficit spending works and I don't think that the multiplier effect exists, but of course it depends on who you talk to. In my eyes, one of the most positive thing to arise from recent history is that its now socially acceptable to question the dominant economic logic. I'm pretty sure this is sarcasm, but there are entire schools backed by extremely intelligent economists who do not accept the Keynesian multiplier. Milton Friedman was one of these economists.
yeah, Friedman and Chicago school economics is its own little bubble universe. Very popular amongst the wealthy, pretty much universally reviled by serious economic research.
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This is all Jimmy Carters fault i know it.
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This is what accountability feels like ladies and gentleman. Own it and quit wishing to put your head back in the sand! We're lucky our rating is AA+. To get to this point and still have so much indecision and inaction could easily have deserved worse.
Personally, I don't see why interest rates rising is such a huge deal? Of course they will rise, times are tough around the world and we've been subsidizing our low rates to hide that. They're still extremely favorable for the US in comparison to almost everyone else. What's changed is that the US can't put on its shiny suit, throw decadent white parties on exclusive beach front property, and then complain about jet fuel anymore. "Take that, take that". Everyone is tired of fronting, even our own people.
It's going to take hard work, growth, and advancement to lower the sense of risk. The good news is that people aren't going to stop working and forget about their dreams and aspirations. We'll suck it up and walk it off. And going forward, we'll make sure to hold our government accountable so that someone else doesn't have to.
Finally, if you don't run a business, please stop talking about high taxes having anything to do with jobs. If a business needs resources to meet their goals (leaving it broad on purpose) then they will create business models to get them, regardless of what the tax rates are - that's what top management does. And guess what happens if they don't? A younger, newer version of them comes along and puts them into retirement or forces them to change.
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So don't vote for any incumbents and hope a new batch of Congressmen have the balls to fix this?
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On August 06 2011 12:46 johanngrunt wrote:
So don't vote for any incumbents and hope a new batch of Congressmen have the balls to fix this?
There isn't a lot of difference in policy between the two major parties, and both are far to the right of actual public opinion.
It will take demonstrations and general strikes and a lot of activism to actually fix the deep structural problems imo, or a third party, but the way the media functions, it is extremely unlikely that a third party will just emerge.
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On August 06 2011 12:46 johanngrunt wrote:
So don't vote for any incumbents and hope a new batch of Congressmen have the balls to fix this?
You know what they say about a strategy based on "hope"......
+ Show Spoiler +
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On August 06 2011 12:50 caradoc wrote:Show nested quote +On August 06 2011 12:46 johanngrunt wrote:
So don't vote for any incumbents and hope a new batch of Congressmen have the balls to fix this? There isn't a lot of difference in policy between the two major parties, and both are far to the right of actual public opinion. It will take demonstrations and general strikes and a lot of activism to actually fix the deep structural problems imo, or a third party, but the way the media functions, it is extremely unlikely that a third party will just emerge.
I agree with this. I think our only hope is a third party, but find it unlikely.
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im a financial analyst irl, so let me just soothe some worries/confusion:
1) s&p downgraded our long-term debt; the truth is (and argue all you want) that nobody is worried about a default on our BONDS. only our NOTES (notes are defined as 3, 5, 7, and 10yr maturities). the downgrade has zero impact on current financial problems (we are restructuring our mid-term debt; hence the herpderp by s&p).
2) s&p misstated u.s. debt projections by $2 trillion. the us treasury contacted s&p informing them of the misprojection, and the s&p basically said "oops". heeerpaderpppp.
3) this one is opinion-based, so feel free to disagree (the above two are strict fact): why do you think s&p HONESTLY downgraded our long term debt? my answer: the first of the big three to make a bold statement will be given the most media attention, thus generating more hype, and leading to more prestige. classic move by mcgraw hill.
--
in the end of the day, we are screwed. trust me, i'd know; but this downgrade has no actual impact on our cost of financing. if moody's and fitch affirms our debt, but s&p dissents, there's no fear. most debt covenants require a majority of "major credit rating agencies (fitch, moody's, s&p)" to dissent from previously stated ratings in order to have substantive changes. just check out note indentures if you disagree.
have no fear, valuation investing is here 
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I'm an economic illiterate but what approximately does this credit downgrade mean, as in what does it affect and how?
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On August 06 2011 12:51 gulati wrote:im a financial analyst irl, so let me just soothe some worries/confusion: 1) s&p downgraded our long-term debt; the truth is (and argue all you want) that nobody is worried about a default on our BONDS. only our NOTES (notes are defined as 3, 5, 7, and 10yr maturities). the downgrade has zero impact on current financial problems (we are restructuring our mid-term debt; hence the herpderp by s&p). 2) s&p misstated u.s. debt projections by $2 trillion. the us treasury contacted s&p informing them of the misprojection, and the s&p basically said "oops". heeerpaderpppp. 3) this one is opinion-based, so feel free to disagree (the above two are strict fact): why do you think s&p HONESTLY downgraded our long term debt? my answer: the first of the big three to make a bold statement will be given the most media attention, thus generating more hype, and leading to more prestige. classic move by mcgraw hill. -- in the end of the day, we are screwed. trust me, i'd know; but this downgrade has no actual impact on our cost of financing. if moody's and fitch affirms our debt, but s&p dissents, there's no fear. most debt covenants require a majority of "major credit rating agencies (fitch, moody's, s&p)" to dissent from previously stated ratings in order to have substantive changes. just check out note indentures if you disagree. have no fear, valuation investing is here
Just wondering, since you say it doesn't affect anything too much. I know interest rates will be about the same etc BUT won't the direct effect be that whatever bonds etc banks own when Moody's etc also change to AA+ will be worth less causing (even though a default on the bonds is very very improbable) major instability on the markets short term?
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On August 06 2011 10:12 EnderCraft wrote:Show nested quote +On August 06 2011 10:01 DKR wrote:On August 06 2011 09:58 On_Slaught wrote:
I hope the tea party people are happy. This. The Tea Party is less than 20% of congress. Please don't be so naive to think that this is all the Tea Party's fault.... They're apart of the problem, but so is the rest of our government. All of them...
The real problem and only solution to this "crisis" is the American public.
Will they ever "wake up"?
When will they realize the government doesn't work for you or me? Would've thought this was made more than abundantly clear when the hard-working tax-payers of America bailed out the banks while the crooks on wall-street got off scott free.
These people that you "elect" don't give a shit about you. Is it past the time to stand up and take matters into your own hands?...possibly...maybe even too late.
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On August 06 2011 13:12 b0ngt0ss wrote:Show nested quote +On August 06 2011 10:12 EnderCraft wrote:On August 06 2011 10:01 DKR wrote:On August 06 2011 09:58 On_Slaught wrote:
I hope the tea party people are happy. This. The Tea Party is less than 20% of congress. Please don't be so naive to think that this is all the Tea Party's fault.... They're apart of the problem, but so is the rest of our government. All of them... The real problem and only solution to this "crisis" is the American public. Will they ever "wake up"? When will they realize the government doesn't work for you or me? Would've thought this was made more than abundantly clear when the hard-working tax-payers of America bailed out the banks while the crooks on wall-street got off scott free. These people that you "elect" don't give a shit about you. Is it past the time to stand up and take matters into your own hands?...possibly...maybe even too late.
Things are going to have to get a lot worse before this happens.
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On August 06 2011 13:21 Fleebenworth wrote:Show nested quote +On August 06 2011 13:12 b0ngt0ss wrote:On August 06 2011 10:12 EnderCraft wrote:On August 06 2011 10:01 DKR wrote:On August 06 2011 09:58 On_Slaught wrote:
I hope the tea party people are happy. This. The Tea Party is less than 20% of congress. Please don't be so naive to think that this is all the Tea Party's fault.... They're apart of the problem, but so is the rest of our government. All of them... The real problem and only solution to this "crisis" is the American public. Will they ever "wake up"? When will they realize the government doesn't work for you or me? Would've thought this was made more than abundantly clear when the hard-working tax-payers of America bailed out the banks while the crooks on wall-street got off scott free. These people that you "elect" don't give a shit about you. Is it past the time to stand up and take matters into your own hands?...possibly...maybe even too late. Things are going to have to get a lot worse before this happens.
"The Churchill Postulate: America will do the right thing, but only when it has exhausted every other solution."
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It's sad that the shit congress is doing will affect the rest of the world, seeing as voting americans voted for them. As they say, people choose their leaders after all. It sucks for voters that actually ARE informed about politics but may have to suffer because of those that aren't. This is where universal suffrage can be a problem with really no easy solution.
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As far as I understand it the spending and budget had largely already been passed by the Democrats and the Republicans in April. So this is money they had already spent. Voting against raising the debt limit just caused a crisis for no reason. They need to worry about the next budget and the amount their spending in the future if they want to bring the deficit and burrowing down.
To me its seems that the republican's where just trying to cause a crisis which they can blame on Obama since he's in power even though they caused it. I apologise if I’m not understanding the situation correctly but that’s what it looks like to me. Worryingly a lot of republican voters will probably buy this and we’ll start hearing ‘well look what happened to the economy whilst Obama was in power’ even though it was mostly the Tea party and Republicans fault.
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EPT
