Debt Ceiling Chicken

I like that visual. I demand a photoshop of Obama punching (or giving noogies to) a hippie.

Funkenpants wrote:
One thing I'm wondering about is whether Obama and Panetta feel like they can make cuts to defense. Panetta is the first democrat allowed near the job since the mid-1990s. Cohen, who served under Clinton during Clinton's second term, was a republican selected to make the job more "bipartisan." One thing Obama has enjoyed doing is punching a hippie now and then to show he's not a liberal. So maybe pissing off liberals by keeping the defense budget intact is part of that strategy.

I think it has more to do with very, very powerful people with very, very deep pockets not wanting the defense budget cut, but then I'm pretty cynical.

Minarchist wrote:
Funkenpants wrote:
One thing I'm wondering about is whether Obama and Panetta feel like they can make cuts to defense. Panetta is the first democrat allowed near the job since the mid-1990s. Cohen, who served under Clinton during Clinton's second term, was a republican selected to make the job more "bipartisan." One thing Obama has enjoyed doing is punching a hippie now and then to show he's not a liberal. So maybe pissing off liberals by keeping the defense budget intact is part of that strategy.

I think it has more to do with very, very powerful people with very, very deep pockets not wanting the defense budget cut, but then I'm pretty cynical.

I've said this a number of times in conversations with Robear.

If your interests are the public interest, you have one party: the Democrats.

If your interests are those of big business, you have two.

If your interests are those of big business, you have three.

FIXED

Bear wrote:
So let me see if I understand all this financial mumbo jumbo. We bailed out the banks because they were "too big to fail" and if we didn't we were told the economy would collapse. So we bailed them out and the economy collapsed?

Now they want to do this again? I must be missing something...........

The part you missed was that in the process many of the banks merged together (in fact this was encouraged by the government). Yes. The solution to banks being too big to fail is to make them too bigger to failer. Maybe the idea is that once they are as large as a country their deficits won't matter! Soon all of our banks will be deficit spending their way to prosperity.

Yonder wrote:
Bear wrote:
So let me see if I understand all this financial mumbo jumbo. We bailed out the banks because they were "too big to fail" and if we didn't we were told the economy would collapse. So we bailed them out and the economy collapsed?

Now they want to do this again? I must be missing something...........

The part you missed was that in the process many of the banks merged together (in fact this was encouraged by the government). Yes. The solution to banks being too big to fail is to make them too bigger to failer. Maybe the idea is that once they are as large as a country their deficits won't matter! Soon all of our banks will be deficit spending their way to prosperity.


I am not sure if this is a swipe at me or not. But it is pretty ludicrous.

Yonder wrote:
The part you missed was that in the process many of the banks merged together (in fact this was encouraged by the government). Yes. The solution to banks being too big to fail is to make them too bigger to failer. Maybe the idea is that once they are as large as a country their deficits won't matter! Soon all of our banks will be deficit spending their way to prosperity.

So we've entered the financial realm of Dr. Seuss. The Onceler says we need to bigger our banks so we bigger them and bigger them some more.

Awesome...we're f*cked!

Yonder wrote:
The solution to banks being too big to fail is to make them too bigger to failer.

I laughed pretty hard at this. Then I got really sad, because it's true.

goman wrote:
Yonder wrote:
Bear wrote:
So let me see if I understand all this financial mumbo jumbo. We bailed out the banks because they were "too big to fail" and if we didn't we were told the economy would collapse. So we bailed them out and the economy collapsed?

Now they want to do this again? I must be missing something...........

The part you missed was that in the process many of the banks merged together (in fact this was encouraged by the government). Yes. The solution to banks being too big to fail is to make them too bigger to failer. Maybe the idea is that once they are as large as a country their deficits won't matter! Soon all of our banks will be deficit spending their way to prosperity.


I am not sure if this is a swipe at me or not. But it is pretty ludicrous. ;-)

That last part was ;). And it doesn't fall under your realm of "ok" debt (not created from sovereign coinage the bank can make more of at will) but I couldn't help it.

Ulairi wrote:
What's killing the equity markets are hedge funds trying to maintain their liquidity positon. What we're seeing now is going to be like 1987, it's not a debt issue but a liquidity issue. We'll most likely see the markets roar back to even higher than before the decline. Try to buy while the discounts are happening.

Intruiging. I'm an economy dummy, except for the nail Malor and Goman keep hammering, so could you elaborate? By liquidity problem, do you mean they're short on cash right now (in simple terms)? Are some sectors more vulnerable than others?

The really, really douchey part of me still wishes FDIC was capped at 100M....

It can be argued that FDIC helps to keep banks riskier than they should be.

By 2006 or so, I knew just three facts absolutely for sure about the upcoming crisis; Fannie Mae, Freddie Mac, and Washington Mutual would fail. I couldn't make heads or tails of most of the rest of it, couldn't tell if we would inflate or deflate, but I was absolutely certain that those three companies were doomed. For all of my constant alarums and excursions, those three things were the only certainties I had.

And I was banking with WAMU, and because of FDIC, I didn't bother to move. I KNEW that bank would fail. I KNEW it was a bad place to put money. But I also knew the FDIC would make any failure absolutely painless, so I never bothered to shift to a safer bank, because they charged me so little.

How many other savvy players left their deposits in that trainwreck because they knew the government would bail them out? WAMU should have been deprived of operating capital much sooner than it was; it should have failed by, hmm... probably by late 2005, it was pretty obvious they were moribund. How much more damage were they allowed to do to the economy because of that government backstop?

Oh, and:

By liquidity problem, do you mean they're short on cash right now (in simple terms)?

Yes, that's correct, and I think he's right. What you're seeing right now is a flight to cash, a liquidity crunch. We saw the same thing in 2008/2009 as well. There's lots of speculative players that are heavily margined up. They've borrowed money to buy stocks. If stocks go too far down, they get 'margin calls', where they have to either liquidate part of their position or put up extra capital. This causes prices to plunge as the speculators are forced to sell their positions.

What's likely to happen is that the Fed will step up and lend (aka print) money to large players until the crunch passes, and then slowly withdraw the money again. But that takes a little while. This is probably a tradeable dip if you're reasonably sophisticated, but if you're not very experienced, trying to time the market is a very fast way for the big players to take lots of money from you.

Inflation is normally pretty good for stocks, and the market has gone mostly nowhere for about ten years now, so I think there's some room to the upside in the Dow. Ten years ago I was horrified at the thought of buying stocks; in 2011, it's a much better idea than it was.

But don't overdo it; if the economy really and truly crashes, which could happen, those stocks could go a LOT further down. If you take a position, nibble. Cost-average yourself in. Set up slowly, and don't expose too much of your wealth to that one asset class.

If you have a 'mad money' fund, part of your portfolio aimed at risky investments, dumping it into the Dow right now might be a good call. Just be aware that it's risky. Don't put money in that you'll need to get back out. It's not investment, it's speculation; the difference is important.

Malor wrote:
How many other savvy players left their deposits in that trainwreck because they knew the government would bail them out?

Probably none, since it's irrational to leave money in a bank you expect to fail over the long term. You know there could lose access to funds, albeit for a limited time, and there are other banks available that you'd figure aren't in danger. Over the short term, the FDIC system is designed to prevent panic withdrawals and demands for cash that can't be met. Banks aren't designed to allow every depositor access to their funds all at the same time.

So apparently the national debt increased more in four days this month than it did during a 10-year period of time from 1950-1960. That figure *is* adjusted for inflation. That's....staggering.

But no, we don't have a debt problem.

(The article blames everything on Obama, which is rather silly—though he certainly has his part to play—but the numbers hold.)

Minarchist wrote:
So apparently the national debt increased more in four days this month than it did during a 10-year period of time from 1950-1960. That figure *is* adjusted for inflation. That's....staggering.

But no, we don't have a debt problem.

(The article blames everything on Obama, which is rather silly—though he certainly has his part to play—but the numbers hold.)

I don't think anyone is arguing that we don't have a debt problem, at least not anyone that is sane.

The argument should be over what our spending priorities should be. The position the right has taken is laughable in business terms. When you need to increase revenue you do it. When you need to cut spending you do it. We simply can't cut enough to make up the gap. Letting the Bush tax cuts expire was the rational thing to do from a financial perspective but the financial solvency of the country was apparently second to political gamesmanship.

Instead we're forced into discussions about how bad NASA and the EPA are. It's stupidity in it's highest form.

Minarchist wrote:
So apparently the national debt increased more in four days this month than it did during a 10-year period of time from 1950-1960. That figure *is* adjusted for inflation. That's....staggering.

And what were tax rates back then? To complain about a deficit when tax rates are low and to fight against higher tax rates when the deficit is high, as republicans are apt to do, is the sign of not believing in a debt problem.

Federal outlays rose more than 100% between 1950 and 1960 in nominal terms. Though GDP also grew almost 80% in nominal terms during the same period (don't think we'll see that in the next decade).

In terms of GDP, government spending accounted for 15.6% of the economy in 1950, and 18.8% in 1959. Without there being a deficit issue.

Funkenpants wrote:
Minarchist wrote:
So apparently the national debt increased more in four days this month than it did during a 10-year period of time from 1950-1960. That figure *is* adjusted for inflation. That's....staggering.

And what were tax rates back then? To complain about a deficit when tax rates are low and to fight against higher tax rates when the deficit is high, as republicans are apt to do, is the sign of not believing in a debt problem.


It was 91% (on the equivalent of $1.8 million of income), but does it really matter for a discussion of deficits? Hauser's Law dictates that you're still going to pull in 19% of GDP regardless.

Bear wrote:
The argument should be over what our spending priorities should be.

Rightly said.

We simply can't cut enough to make up the gap.

I completely disagree.

Minarchist wrote:
Funkenpants wrote:
Minarchist wrote:
So apparently the national debt increased more in four days this month than it did during a 10-year period of time from 1950-1960. That figure *is* adjusted for inflation. That's....staggering.

And what were tax rates back then? To complain about a deficit when tax rates are low and to fight against higher tax rates when the deficit is high, as republicans are apt to do, is the sign of not believing in a debt problem.


It was 91% (on the equivalent of $1.8 million of income), but does it really matter for a discussion of deficits? Hauser's Law dictates that you're still going to pull in 19% of GDP regardless.

So since a certain group of people refuse to pay taxes we should codify the tax rate at whatever they want. I want to pay no taxes. Refund check, please!

DSGamer wrote:

So since a certain group of people refuse to pay taxes we should codify the tax rate at whatever they want. I want to pay no taxes. Refund check, please!

I think there's a "within reason" caveat to that. But the data is there.

I'm really confused why the same people that have complained that all of this deficit spending we have done for decade would force us, or our kids, to pay more to cover those deficits have not come to grips that it means raising taxes. That's the point. Part of solving the problem of decades of deficit spending is to force the government to spend less, but for us to start paying it back.

We are the kids of the Baby Boomers that got screwed. I bitched about the Boomers 20 years ago. We all know what they did, and continue to do to us. the "greatest generation" were a bunch of freeloaders that we now have to support in their retirement. But complaining about how it is not fair doesn't solve the problem. Passing it on to our kids doesn't solve the problem

If you consider Reagan a hero, then by all means, open your pocketbook. The bill has come due. Don't whine about taxes now.

Minarchist wrote:
...but does it really matter for a discussion of deficits? Hauser's Law dictates that you're still going to pull in 19% of GDP regardless.

Yes, since the manageability of the debt depends on bringing revenues closer to expenditures. A 1% deficit each year is perfectly normal (I call that Funkenpants' Law) for the post-war period. But we took in only 15% of GDP in revenue last year, well below Hauser's 19% assumption. Cut spending, raise taxes. If you aren't for doing both, then you're not serious about closing the deficit. And that's why republicans have zero credibility on the issue, what with the "no new taxes evar!" declarations.

That was impressive....and completely accurate.

My dream is that Obama snaps and goes Samuel Jackson.

"I am tired of all this mother f*cking special interest money in my mother f*cking congress".

"Tell me you won't raise taxes one more time mother f*cker, I dare you, say it one more time"

Jayhawker wrote:
We are the kids of the Baby Boomers that got screwed. I bitched about the Boomers 20 years ago. We all know what they did, and continue to do to us. the "greatest generation" were a bunch of freeloaders that we now have to support in their retirement. But complaining about how it is not fair doesn't solve the problem. Passing it on to our kids doesn't solve the problem

To be fair, the "Greatest Generation" refers largely to the parents of Baby Boomers -- the last generation that actually had to work for or truly sacrifice. At least, sacrifice as an entire generation. I'm sure the caveats and anecdotes will flood this post after that statement.

I am curious to see how many generations have alarmingly predicted the "mortgaging of our children's future" with no real desire to stop that. I think you're spot on that, generationally speaking, Baby Boomers have been the worst thing to happen to this nation, and subsequent generations will pay for it.

The question is (and has been) -- when do we start? and the answer is "right after I die."

Or maybe that happy face should be a

Seth wrote:
Jayhawker wrote:
We are the kids of the Baby Boomers that got screwed. I bitched about the Boomers 20 years ago. We all know what they did, and continue to do to us. the "greatest generation" were a bunch of freeloaders that we now have to support in their retirement. But complaining about how it is not fair doesn't solve the problem. Passing it on to our kids doesn't solve the problem

To be fair, the "Greatest Generation" refers largely to the parents of Baby Boomers -- the last generation that actually had to work for or truly sacrifice. At least, sacrifice as an entire generation. I'm sure the caveats and anecdotes will flood this post after that statement.

My bad. I should have known that the Boomers would be considered anything but great.

Bear wrote:
My dream is that Obama snaps and goes Samuel Jackson.

"I am tired of all this mother f*cking special interest money in my mother f*cking congress".

"Tell me you won't raise taxes one more time mother f*cker, I dare you, say it one more time"

That is so sigged!

Bear wrote:
My dream is that Obama snaps and goes Samuel Jackson.

Obama is raising millions of dollars from special interests. He plays the game as well as anyone else.

Funkenpants wrote:
(I call that Funkenpants' Law)

If you aren't for doing both, then you're not serious about closing the deficit. And that's why republicans have zero credibility on the issue, what with the "no new taxes evar!" declarations.

I agree that doing both is one way to close the deficit, but I also think it can be entirely closed without touching taxes at all. The problem is that nothing ever gets cut. People are all for cuts until you start actually talking about what needs to cut, then it's "well, we can't cut that" for every single entity. Apparently it's find in a vague, general sense, but heaven forbid you start talk about cutting defense spending or SS benefits or, well, anything in discretionary spending. Whether it's the EPA or NASA or the Dept. of Education or anything else, someone will always be there to say "but we need that!" Everything is a sacred cow to someone.

...so instead we just talk about increasing taxes.

Funkenpants wrote:
Bear wrote:
My dream is that Obama snaps and goes Samuel Jackson.

Obama is raising millions of dollars from special interests. He plays the game as well as anyone else.

That's why he has to snap. Duh!