Re: Quit with the shorthand

Post #332,258 by beepster 9/4/10 5:24:49 PM Reply	Re: Quit with the shorthand You cannot create the demand necessary to recover this economy by simply relying on giving money to the people. Thats little d. A HUGE portion of the economy relies on companies selling to other companies or to governments (or to foreign countries). Add people, industry and government together, thats big D. THAT is why it is important 1) to weaken the dollar to help exports 2) to worry about excess capacity and address ways to utilize it effectively and 3) to ensure that recovery money from the government is focussed on infrastructure almost exclusively. The economy has reset. You CANNOT expect consumers, who have become net savers AND who still have debt to pay to create enough demand to pull us up. When you asked anyone a year ago what would they do with their "extra" money from tax credits, what was the thing you heard 99.9% of the time? "I'm going to pay off some bills". That is NOT creating demand. Thats paying for historical demand. Nothing in any of my points is anywhere near supply side economics. I've not mentioned cutting taxes once. (although it would help, along with some very strong build local incentives)...but everything I've said is about creating Demand. Big D. All of this uncertainty in Obama's policies have done something very bad to this economy. Its made corporations become net savers as well. That demand has to be released or we are going to see 10-12% unemployment for a very long time. (in case you missed jobs report..the summer hiring season went by with net job losses...thats some effective "stimulus") Hope this helps. Thought that article articulated the point fairly well. Thats why I posted it. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,260 by drook 9/4/10 8:22:46 PM Reply	So you completely disagree with the "two economies" premise? Divide the population somewhere between the 95th and 99th percentile. I guarantee that any mainstream financial coverage that talks about "good for the economy" or "bad for the economy" or "recovery" or any or a dozen other qualitative descriptions will be accurate for the top group. Hell, they even talk about a "jobless recovery". If there's no jobs, that's not a recovery most people care about. That's what I mean by two economies. (Edwards' "Two Americas" was mostly right, but too broad. It's the economy, stupid. :-/ ) THAT is why it is important 1) to weaken the dollar to help exports 2) to worry about excess capacity and address ways to utilize it effectively and 3) to ensure that recovery money from the government is focussed on infrastructure almost exclusively. I totally agree on your first point. But it would hurt the owners' economy. That's why the visible lobbying is all opposed to it. Your other two points depend on defining "the economy" as a single thing, ignoring the two economies premise. If you keep ignoring that, then yes, we're going to keep talking past each other. Oh, and consumers have become net savers. You forgot a word: again. Historically consumers have always been net savers. It's an anomaly of the housing bubble-driven credit boom that they weren't. And speaking of that ... "consumers, who have become net savers ... made corporations become net savers as well." Why is it when you're talking about saving, consumers and corporations are two different groups. But when you talk about recovery there's only one economy, and one definition of what "recovery" means? -- Drew
Post #332,265 by beepster 9/5/10 12:15:57 AM Reply	Absolutely positively and without a doubt. There are not 2 economies. I don't care what the press says. If they say that, they're wrong too. Whenever someone bows to one group or another...THE economy suffers. And more than 30 years ago people were savers. That isn't what the driver is any longer. 30 years and more ago when consumers were savers there was a solid underlying manufacturing base that we've since pissed away. Oh, certainly, there are those that will tell you we still have a solid manufacturing base..to which I will say I want what they're smoking. And to the last question..did I not just explain to you that there are multiple components to demand? Did I break them into 2 economies? No. Why do you insist on this? Its all the same system. Its all THE economy. There isn't more than one. Its all the same system. It either works or it doesn't. It is singular. If it doesn't work for the owners, it doesn't work for the workers. And I'm not sure who came up with the term "jobless recovery"...but I'm sure they had a lobotomy before they did. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,267 by drook 9/5/10 8:45:07 AM Reply	You're half right If it doesn't work for the owners, it doesn't work for the workers. But it is possible for it to work for the owners even when it's not working for the workers. -- Drew
Post #332,269 by beepster 9/5/10 12:22:08 PM Reply	No, its not. short run it could be either way. Could be good for workers, bad for owners and vice versa. Long run it has to be good for both or it won't work. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,270 by drook 9/5/10 12:30:17 PM Reply	You're kidding, right? Show me any evidence that long-run thinking was responsible for the real-estate bubble, the credit boom that it spawned, or the "creative" instruments (properly called "fraud") that capitalized on it, and I'll think you've got a point. Owners can make short-term bets with enough upside to keep them in style for generations, and any downside covered by government guarantees. There's nothing available to workers that compares. You can say that downside shouldn't be covered by the government, and that owners should be exposed to personal risk if they do a bad job, and I'll agree with you all day. But that isn't the current system. -- Drew
Post #332,273 by boxley 9/5/10 6:26:44 PM Reply	welfare food stamps unemployment compensation social security, medicare, supplemental social security, workmans comp naw the workers dont get a fucking thing. what caused the tech bubble. yuppies pouring dollars into their 401k by the armload created a easing of credit so firms that didnt have an idea could sell to idiot money brokers and a company that had no way of seeing a profit was worth bajillions. that bubble burst so the same dribbling yuppies loaded their money into realestate because unlike stocks realestate doesnt go down. Why wait till Im old to enjoy retirement, I will borrow on my equity. Now they are underwater and unemployed so that monthly jam of 401k money into the market isnt as bountiful as before so next bubble will be delayed until after citybank and boa are dismantled. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,349 by Another Scott 9/8/10 1:37:22 AM Reply	Eh? Drook is talking about the rich gaming the system to increase their wealth. SS, FS, etc., aren't wealth. Gates and Buffett and Helmsely wouldn't have their billions without the system that permits them to accumulate those vast holdings. Whatchotalkinabout? Cheers, Scott.
Post #332,282 by Another Scott 9/6/10 8:39:56 AM Reply	Big D. Yes, a big part of the economy is not direct-to-consumer stuff. That is true. However, the number that is usually bandied about in the press is "the consumer is 70% of the economy" (though some argue with that percentage - http://seekingalpha....he-economy-not-70 ). Even if it were 50%, when that 50% falls off a cliff, there's a big problem. Just about everyone in the US wants us to export more. Recall that Obama says he wants to double US exports over 5 (?) years (which many claim is a pipe dream). How do you propose that the US dollar fall while people are running to the dollar as a safe haven? China obviously isn't going to cooperate with the RMB increasing in value by, say, 30% in the near term, and the Germans are pushing exports as well. Everyone can't massively increase exports simultaneously... Like it or not, there is no single solution to the problem, but having millions of people out of work will make things worse. Checks from Uncle Sam is much better than the alternative. AFAICS, Krugman's presented a stronger case than you have. (His latest summary (without many numbers) is here - http://www.nytimes.c...gman.html?_r=1&hp ) Give us more numbers if you want us to believe you. ;-)
Post #332,299 by beepster 9/6/10 8:19:01 PM Reply	To be honest I'm not worried if you believe me or not :-) If the recent demand spurring failures haven't convinced you otherwise, and you're still quoting Krugman..then there isn't much hope of convincing you anyway. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,300 by boxley 9/6/10 8:57:35 PM Reply	cheese you want a lower dollar start selling them by buying other non pegged currencies until you get the price you want. Thats what central banks are for. If it goes too low you start buying. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,304 by Another Scott 9/7/10 1:40:53 AM 9/7/10 1:58:39 AM Reply	Talk to Sorros about that. [Central] Banks can't beat the market. Cheers, Scott. Edited by Another Scott Sept. 7, 2010, 01:58:39 AM EDT Expand All History
Post #332,308 by beepster 9/7/10 8:42:49 AM Reply	Central Banks >are< the market. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,318 by Another Scott 9/7/10 10:32:10 AM Reply	<Boggle> I guess that's how George never made his $1B... IOW, more words please. Tell me how the Treasury is going to lower the value of the dollar when people around the world are rushing to buy dollars. It's the same sort of problem (in reverse) that the Crown had - if the market doesn't agree with your Central Bank about the value of your currency, there's little the Central Bank can do about it. Cheers, Scott.
Post #332,321 by boxley 9/7/10 11:00:46 AM Reply	piggybacking a market isnt brilliant you just need a lot of money to play with. People are rushing to buy dollars true. We can sell them by buying a basket of solid currencies until the flow reverses. We also could artificially peg to the Renminbi at a rate we would like but that would piss our landlord off. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,333 by beepster 9/7/10 3:24:22 PM Reply	He made it playing the market.. ..that the central banks make. Specifically, he sold the UK central bank short..betting (yes, gambling), that the UK central bank was not going to surrender to the EU currency system. He was correct, and he made a couple billion. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,335 by Another Scott 9/7/10 3:34:29 PM Reply	And...? http://en.wikipedia....Wednesday#Prelude The market said that the UK government couldn't support the pound at the previously agreed-upon level. Soros saw that the UK government was not stronger than the market. The market "won", so Soros made a lot of money. (Your short-hand "the central bankers are the market" doesn't seem to match history.) Now translate that into your suggestion that the dollar needs to be weaker. I ask again: How can that happen when people are running to dollars as a safe haven? Do you agree with Box's suggestion that the Treasury sell dollars for a basket of other currencies? If so: What happens when that doesn't lower the dollar significantly? More words, please. ;-) Cheers, Scott.
Post #332,336 by beepster 9/7/10 4:17:16 PM Reply	Would he have made that money without central banks? no. They are the market. (not central bankers, central banks) He played in their market. Had the UK agreed to stay in the EU system, he would have lost everything. He placed a bet and he won. Certainly flooding the market with dollars could weaken the currency. Reducing the effective yield of treasuries to zero would make other investments more palatable and also take pressure off of the dollar. The "what happens if" just means we are in this rut that much longer. Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,350 by Another Scott 9/8/10 1:47:59 AM 9/8/10 3:47:00 AM Reply	You're not getting it. You're telling me about abstract econ things from textbooks while ignoring what has happened over the past 2 years. The Treasury has flooded the system with trillions of dollars to try to fill the vast pit in the economy. In spite of that, contrary to what many on the right have said, the value of the dollar has increased. Interest rates are already effectively at zero and can't go lower. When we're up against the zero bound, things are different and too many (apparently including yourself) don't want to recognize it. We're talking past each other. I'll quit. [edit:] Some thoughts by Karl Smith on something to try - a payroll tax holiday: http://modeledbehavi...ope-calculations/ I think it might be worth a short, but as a commenter points out, it does nothing for the presently unemployed. As part of a package that includes: 1) Extended UI benefits (including those 99ers who have hit that limit), 2) a tax surcharge on, say, those with AGI > $500k-$1M, 3) a phased-in resumption of payroll taxes as unemployment falls in steps, I think it makes sense. And I think it's more likely to get things moving than trying to force the dollar lower by the Fed and Treasury playing the currency markets. FWIW. Cheers, Scott. Edited by Another Scott Sept. 8, 2010, 03:47:00 AM EDT Expand All History
Post #332,358 by boxley 9/8/10 8:38:26 AM Reply	how very conservative of you :-) herman Cain and others on the right have demanded that for a long time. Treasury is not the fed. What money they have printed went straight to American banks and sits there. That has nothing to do with central banking and foreign currency. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,360 by Another Scott 9/8/10 10:02:29 AM Reply	This has nothing to do with the "Fair Tax". It's hard to know what you're agreeing with there, but I assume it's about the payroll tax holiday. Cain seems to be a fan of the "Fair Tax" (sic). Different animal. There are lots of reasons to be skeptical of a payroll tax holiday, and all proposals aren't equal. I doubt that Cain would be a fan of Reich's proposal from August 2009 - http://robertreich.o...propose-a-peoples [...] Republicans understand the art of tax demagoguery: Put the other side on the defensive by forcing them to explain why a Âtax increaseÂ is warranted and they lose regardless. So instead of playing defense, Democrats should go on the attack. Accuse Republicans of being shills for the rich. And donÂt stop there. Do tax jujitsu. In addition to ending the Bush tax cut for the rich, put forward another proposal for growing the economy that cuts taxes on lower-income Americans. Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000. This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, itÂs likely to be spent. It would also give employers an extra incentive to hire because theyÂd save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers Â who have taken the biggest hit on jobs and pay during the recession. It wouldnÂt add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesnÂt apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years. Call it the PeopleÂs Tax Cut, and let Republicans explain why theyÂre against it. Yeah, the Treasury and the Fed aren't the same. They work together though. E.g. from October 2008 - http://www.econbrows...ance_sheet_o.html But how did the Fed acquire all that stuff, with "only" a $160 B increase in reserve balances and a $30 B increase in currency outstanding? The answer is to be found in a new entry on the liability side described as "Treasury supplementary financing account." This was announced by the U.S. Treasury through the following somewhat obscure release: The Federal Reserve has announced a series of lending and liquidity initiatives during the past several quarters intended to address heightened liquidity pressures in the financial market, including enhancing its liquidity facilities this week. To manage the balance sheet impact of these efforts, the Federal Reserve has taken a number of actions, including redeeming and selling securities from the System Open Market Account portfolio. The Treasury Department announced today the initiation of a temporary Supplementary Financing Program at the request of the Federal Reserve. The program will consist of a series of Treasury bills, apart from Treasury's current borrowing program, which will provide cash for use in the Federal Reserve initiatives. Announcements of and participation in auctions conducted under the Supplementary Financing Program will be governed by existing Treasury auction rules. Treasury will provide as much advance notification as possible regarding the timing, size, and maturity of any bills auctioned for Supplementary Financing Program purposes. Here's what I take that to mean. I gather that the Treasury auctioned off some extra T-bills to the public, in addition to their usual weekly auction, and simply kept the receipts as deposits in an account with the Fed. If that were the end of the story and the Fed kept its total liabilities constant, it would result in a huge (completely infeasible technically) drain on reserve balances and currency in circulation, as banks sought to deliver reserves to the Treasury's account to honor their customers' purchases of the T-bills. So the Fed offset the supplemental Treasury auction with a matching purchase of private assets, such as the PDCF and AMLF, thereby temporarily delivering reserves to banks which the banks in turn could hand over to the Treasury supplementary account. The net result of such dual Treasury/Fed operations is that the newly created "reserves" would just sit there in the Treasury supplementary account doing nothing other than standing as an accounting entry. In other words, the device allowed for a huge expansion of the Fed's balance sheet without causing any change in currency in circulation or reserve deposits. Getting closer to the original topic - If the US exchange rate were fixed, and the US decided it wanted to devalue the dollar by, say, 30%, it would be the Treasury's job - http://en.wikipedia....y_of_the_Treasury Since the exchange rate is not fixed, that means nudging the market (and in this case the headwinds are due to a hurricane of buying of dollars, so moving it the other way won't be trivial). Cheers, Scott.
Post #332,361 by boxley 9/8/10 10:38:49 AM Reply	from October 12, 2009 http://www.wnd.com/i...php?pageId=112634 Suspend the payroll tax for one year. This gives an immediate 7.65 percent increase in take-home pay to all workers. It also lowers the payroll costs for all employers by 7.65 percent for one year. A total of about $900 billion would be injected directly into the economy immediately, rather than through the inefficiency of the federal government. Any opinions expressed by me are mine alone, posted from my home computer, on my own time as a free American and do not reflect the opinions of any person or company that I have had professional relations with in the past 55 years. meep
Post #332,364 by Another Scott 9/8/10 10:53:09 AM Reply	Interesting. Thanks. (The rest of it is bogus, of course.;-)
Post #332,359 by beepster 9/8/10 9:33:24 AM Reply	Oh, I am they haven't tanked the long term rates yet..still over 3. Also, "what he said" in the other response. Additionally, they've done nothing on the other side of my equation..which is focus nearly 100% of the stimulus on asset or export producing endeavors. Seems you ignored the post of yesterday where Pres is asking for more money for infrastructure. Simply put, that should have been where the stimulus went. State & Local need to learn that they cannot expand services and expenses beyond the bounds of per capita growth rate or inflation. (yes, it would have been an extremely painful lesson this go around but all we've done is set the expectation that there is no real risk, since the Fed will come in with cash and/or extend the pain because the come to papa moment is next year instead of this one). Sure, understanding today's complex world of the future is a little like having bees live in your head. But...there they are.
Post #332,363 by Another Scott 9/8/10 10:51:07 AM 9/8/10 10:59:53 AM Reply	Hmmm. Maybe it's the time difference... they haven't tanked the long term rates yet..still over 3. The trend has been down since the spring. http://research.stlo...ed2/data/GS30.txt The lowest rate was 2.87% in December 2008. I think it's a very safe bet that 30 year T-bill rates will continue to drop over the next year or longer. It obviously takes longer for long-term rates to fall. Additionally, they've done nothing on the other side of my equation..which is focus nearly 100% of the stimulus on asset or export producing endeavors. Seems you ignored the post of yesterday where Pres is asking for more money for infrastructure. Simply put, that should have been where the stimulus went. "Nothing"? - http://webcache.goog...&client=firefox-a Due to the combined effects of inventory rebuilding, benefits from the ARRA and exports, manufacturing production increased 8.4 percent over the past year. Still, while the current recovery has been stronger than the initial year of growth following the 1990-1991 and 2001 recessions, it has lagged behind the recoveries that followed the 1981- 1982 and 1974-1975 recessions. The ARRA was full of compromises, and had to be spent in 2 years. Obama's latest proposal is different, and has to be paid for. (I haven't ignored it.) http://iwt.mikevital....iwt?postid=35427 I agree it's long overdue, but your fellow travelers who yell about "TEH TAXES!!!!111" would have tried to scuttle it, and may still try[]. It's not going to be effective if the Republicans put up roadblocks so he can't get it passed. State & Local need to learn that they cannot expand services and expenses beyond the bounds of per capita growth rate or inflation. S&Ls are cutting bone, not fat. Police and Fire are being cut in several areas. The "easy" cuts (turning off lights, closing libraries, closing recreation facilities) have been done already. In my area, the county has around a $1000 (yes, one thousand dollar) budget for road repairs on secondary roads - http://scottsurovell...nding-paving.html . FWIW. ;-) [edit:] [] Speaking of which - http://www.washingto...010_09/025571.php Cheers, Scott. Edited by Another Scott Sept. 8, 2010, 10:59:53 AM EDT Expand All History

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