The Housing Bubble

Boy, that’s a polished apple!

yep

What trickled down was access to debt. As the rich got richer, they loaned the money to the poor, creating even more debt/money for the rich to get, and then loan out….

This is how total debt went from $4T in 1980 to $38T today.

So, yes. The access to wealth trickled down in the form of buying that wealth on credit, that now can not and will not be paid back.

Trickle down economics is a theory where the rich have less of their earnings confiscated so they have more to invest in business and the “trickle down” effect is real.

Funneling money to the rich thru TBTF-bail outs and ZIRP funding have the opposite effect. ZIRP means free money to invest in treasuries which is really just a transfer of wealth to those privileged enough to access ZIRP funds and there is no investment in business and there is no trickle down.

Trickle down only works when we permit people to invest their own earnings and not when we transfer wealth.

Ha! We have already liquidated the rich, by borrowing their money! They just don’t know when they are defeated.

“…is a theory where the rich have less of their earnings confiscated so they have more to invest in business …”

Let’s bee real here:

“…more to invest in busine$$es that makes ton$ of profit$ [which are happily kept off-America's-$hore] by creating job$ everywhere/anywhere but IN America.

“Trickle down” = elsewhere,… @ all Co$ts

…more to invest in business….Trickle down only works when we permit people to invest their own earnings and not when we transfer wealth.

Trickle down does not work and DID not work. We had trickle down policies for almost 30 years before there was massive TBTF bailouts. Your theory does not jibe with history because we HAD it for decades and the rich HAD more to “invest in business” but it did not translate to greater wealth for the middle-class.

“Trickle down”

Part of the current problem is with so many potential investors scurrying under cover of U.S. Treasurys, interest rates are too low to attract much interest in risk taking. When everyone believes asset prices are on the brink of further declines, it makes more sense to hide money under the mattress than loaning it out at an interest rate that is too low to price in the risk of default.

i always thought that anyone who has a job in the private sector is benefiting from “trickle down” to some degree.

It did, past tense, from about 1945-1975. The trajectory today is down, down, down. Unless of course you’re a 1%er PIG, then it’s all hunky dory

I call BS. Love it or hate it, the US economy to date has generated one of the most successful societies on the planet in a mere 200 odd years.

I’m not sure what you’re calling BS on. The discussion is “trickle-down” which since implemented in the early 80’s has caused a massive increase in wealth and income inequality while NOT benefiting the middle-class as promised.

The fact that we have a successful society does not mask the fact that since “trickle-down” policies have been put into place, the rich have gotten richer and the middle-class and poor have gotten poorer relative to the whole “pie”. And this was not the promise of trickle-down, TaxCutsFortheRich or corporations. It did not “trickle-down”.

“US economy to date has generated one of the most successful societies on the planet in a mere 200 odd years”

It will take far less time for the communists in this country to reverse all of that progress.

It will take far less time for the communists in this country to reverse all of that progress.

Commies? What “commies”? Where? When and how?

Did the “commies”
outsource jobs so the rich got richer?
promote globalization so only the rich got richer?
Bail out Banks so the rich stayed richer?
Gut the middle class so the rich got richer?
Cut taxes for the rich thus undermining a healthy budget?
Promise that cutting taxes for the rich would create jobs?
Promise that cutting corporate taxes would create good jobs?
Gut labor laws so companies could “compete”?
Bust Unions so companies could “compete”?

The communists did all of the above? Very very odd. I see a general trend towards the far right’s economic vision the past 3 decades.

Yes, the communists/progressives/statists in both parties contributed to all of the above.

Curious. The “communists” also made significant contributions to the 1920’s-1970’s era USA success–certainly far more so than today. And there were nitwits searching under their beds for them every night back then, too.

And yet the country thrived….

when they came for them i did nothing but when they came for me there was no one left to do anything?

I don’t think raising taxes 4% on those making 250K a year is quite the same as the origin of that expression.

interesting…where exactly did “metaphor” originate?

Using this quote as a comparison to taxes, implying that having to pay a bit more for the support of your society is comparable to being sent to a Nazi death camp, is inappropriate and indicative of either extreme ignorance (if you don’t know what it refers to and can’t be bothered to google it) or monumental stupidity (you know what it refers to and think that dying of starvation and disease or in a gas chamber is the equivalent of a change in your tax rate or base).

http://en.wikipedia.org/wiki/First_they_came%E2%80%A6

“First they came…” is a famous statement attributed to pastor Martin Niemöller (1892–1984) about the inactivity of German intellectuals following the Nazi rise to power and the purging of their chosen targets, group after group. There is some disagreement over the exact wording of the quotation and when it was created; the content of the quotation may have been presented differently by Niemöller on different occasions.

The text of the quotation is usually presented roughly as follows:

First they came for the communists,
and I didn’t speak out because I wasn’t a communist.

Then they came for the trade unionists,
and I didn’t speak out because I wasn’t a trade unionist.

Then they came for the Jews,
and I didn’t speak out because I wasn’t a Jew.

Then they came for me
and there was no one left to speak out for me.

I answered this but it has a link so it is taking a while. It originated with a German theologian and pastor who was sent to Dachau during WWII.

i’m probably going to get banned for this but:

its a metaphor you nitwit.

if i am banned…i would expect the same for calling me extremely ignorant or monumentally stupid.

It isn’t a metaphor at all. It is a quote. People adapt the quote to fit their circumstances - most of the time inappropriately.

If it’s a metphor, it’s too far of a stretch from the current situation to the metaphor.

And the original saying described an event so serious that it does not lend itself to being used as a metaphor at all.

Stop.

I don’t want to touch on that touchy subject or speak about metaphors or anything like that. So let me create something brand new out of whole cloth.

First they started taking money from people who made 250K+. I didn’t say anything because they were rich and they deserved to pay.

Then they started taking money from people who made 200K+. I didn’t say anything because they were rich and I thought it was okay.

Then the government started taking money from people who made 150K+. I didn’t say anything because they were rich and I thought they could afford it.

Death of a thousand cuts goes by and now, oh, look: they want to tax me a large amount. That’s not okay. I can’t afford it. I’m just a little guy. How dare they!

Very good. That’s the way income tax started out, isn’t it?

“Death of a thousand cuts goes by and now…”

It all depends on the starting point, doesn’t it? It’s all a matter of perspective.

The people in the income groups you mentioned are paying the lowest marginal tax rates in history, and (those in the .1% and above category at least) also pay much less effective tax rates as compared to someone like me.

Why can’t we go back to 1998 rates? Why does going back to pre-Bush cuts have to be such a source of drama?

This is what you are comparing slightly higher tax rates to, Michael:

http://history1900s.about.com/library/holocaust/bldead7.htm

You should be ashamed of yourself.

You should be ashamed of yourself.

a bit melodramatic, no?

The spirit of the quote is valid. If you don’t speak up when other people are affected (because it doesn’t affect you), when things change and it affects you as well, there will be no one left to speak up for you.

It’s like you’re *trying* to be offended, rather than see the obvious intent of the use of the quote.

It’s also the basis for an Aesop fable…”the butcher and the flock”. Nice try with the photo and all though…very emotional.

You should have seen the ones I didn’t use.

Me too. I want others to pay for civilization because it’s better for me if it’s free of charge.

I know you’re trying to make a strawman argument here, but it actually seems to fit quite sincerely with your view of the world.

I didn’t argue that folks shouldn’t pay at all. I called out the argument that certain members of society should be forced to pay more just because they “can”.

By that argument, umemployed folks should be conscripted to work for free, because they have more free time, and can work more, right?

A few things:

1. The 3.8% infuriates me because it is yet another type of tax, not because of who it targets. We should be simplifying the tax code, not making it more complicated. Each member of congress should be required to do their own taxes by hand, without the assistance of a computer or CPA–that would simplify things quickly, I would say.

2. I once heard Roger Altman say that there aren’t enough rich to tax when it comes to solving the deficit problem (a Democrat that served under Clinton, and was an advisor to Kerry and H. Clinton). My objection to raising taxes generally is when they are raised without regard to solving the spending side of the equation. The Simpson-Bowles commission plan will cost the 1% plenty (making capital gains tax rates=ordinary rates, reducing/eliminating lots of deductions, reducing rates overall). It also fixes the long-term deficit problem. The wealthy that I know (mainly Republicans) would gladly accept the higher taxes associated with Simpson/Bowles (they have said as much in conversation), if it meant that the long-term deficit problem was also solved.

If the long-term deficit problem is solved (or on a good path to a long-term solution), interest rates would stay low without massive Fed intervention, strengthening the dollar, and reducing inflation in things like oil and food. In that environment, the middle class is squeezed less, and everyone does better.

The bottom line is, if they’re taking it from them, they’re not taking it from me.

What if “them” is your neighbor? Friend? A parent? Brother?

I agree that justice left the building a long time ago. The whole “it’s okay to punish them but not me” thing seems morally bankrupt to me, though.

I’m tired of people telling me I owe society more. That I don’t give enough, or have enough forcefully taken from me already.

In addition to paying a crapload in taxes, I volunteer ~20 hours a week for nonprofits. I put my life in danger to help others. I pay all expenses for my volunteering out of pocket. I donate a chunk of cash on top of that to various charities. I help pay my mother’s living expenses.

Yet there’s always someone there to tell me that’s not enough. They’re entitled to more of my time, property, and labor.

Why is “Action necessary to ensure the smooth functioning of the economy” considered punishing anyone?

Stop looking at economics as a philosophical issue. It is a pragmatic issue. Fair does not work. We need pragmatic solutions that actually, you know, WORK!!!!!!

Why is “Action necessary to ensure the smooth functioning of the economy” considered punishing anyone?

Taking property from someone under threat of violence is most certainly a punishment, regardless of what the property is being used for.

Clearly you don’t see any issue of morality here. I suppose you have a right to your opinion, just as I have mine. However, I see you make the claim that “Fair does not work.” Please back up your statement.

The current scenario already is not fair. Note that while I don’t agree with the current scenario/setup, I’m not arguing against it here. I’m arguing against making the system even *more* unfair, just because you can.

There are many possible fixes, some of which don’t involve making the system even more unfair than it already is. I would prefer to see those pursued. And yes, there will be pain. There is going to be pain no matter what, for everyone.

“Yet there’s always someone there to tell me that’s not enough. They’re entitled to more of my time, property, and labor.” “Lucky Ducky” working for $9 and hour with no benefits, 2012

Tax the poor because we can.

Tax the poor because we can.

This strawman brought to you by RioInBrasil, copyright 2012

This position has been presented by whom in this thread???

If we’re just surviving and have given up on making it better for the next generation, then our chains are already in place right?

“Taking property from someone under threat of violence is most certainly a punishment, regardless of what the property is being used for.”

Civilized people are not only expected to contribute to the welfare of the society that helped them prosper, but are obligated as well.

Not contributing is theft by the average citizen and tyranny by the wealthy. Thieves do not have the right to the things they steal.

Civilized people are not only expected to contribute to the welfare of the society that helped them prosper, but are obligated as well.

Who said anything about not contributing? I certainly never argued that. Remember what we’re talking about here - *INCREASING* taxes. No one is currently arguing against abolishing taxation.

Are you telling me I don’t contribute enough, and thus am “stealing” for society? That I personally am obligated to give more?

By your definition, may of the “lucky duckies”, as y’all like to call them, are stealing from society.

“the majority of rich people in this country are parasites and/or criminals” - goon squad strawman© 2012

Taking property from someone under threat of violence is most certainly a punishment,

No it is not. It’s called a tax. It’s part of civilization since the history of ……well civilization. Crazy concept huh? Can taxes be onerous? Yes. Are taxes on the rich in America onerous relative to the wealth they’ve made and extracted from the system which taxes support? No, the rich’s taxes are not even close to their historical averages while the rich’s wealth has skyrocketed way past their historical averages.

It’s the math dude. The numbers don’t lie.

“Taking”, “punishing”, “threat of violence” man, you have your am radio buzzwords down pat but they sound really canned to anyone informed.

By your definition, may of the “lucky duckies”, as y’all like to call them, are stealing from society.

No they’re not. In total taxes, salesPayrollMedicarePropertyStateLocalUtility taxes etc. most lucky duckies pay a higher percentage of their meager income than Mitt Romney.

So who’s “stealing”? It ain’t the working poor.

Taking property from someone under threat of violence is most certainly a punishment, regardless of what the property is being used for.

All direct government taxation is done under the threat of force. My point is that everyone I know who earns in excess of $250k/yr can easily afford the additional tax, and if they can’t, maybe they need to examine their lifestyle and budget. Those who are like my family and make much less than that, but still a significant amount compared to the “average” or median family make sacrifices to continue to live a middle class existence.

As I said, either cut services or raise taxes, but the “Middle Class” is already taxed too heavily while the wealthy (top 2%) aren’t taxed enough…

Tax the poor because we can.

This position has been presented by whom in this thread???

By me. I heard it on my radio. You don’t hear it on AM radio? Rush, Hannity, Beck, they all want to tax the lucky duckies more. Remember. “50% of Americans pay no taxes”. We need to tax them more so we can give the “job creators” more tax cuts. Our “job-creators” have the word “creators” in their description so they must be “godlike”. Tax the poor to cut the deficit.

“Taking”, “punishing”, “threat of violence” man, you have your am radio buzzwords down pat but they sound really canned to anyone informed.

I was actually beginning to think you might be able to stick to a discussion of the actual facts/arguments made here. But then you have to fall back to an ad hominem attack. Guess I should study Einstein’s definition of insanity…

I should know better than to attempt to engage you in an actual, honest discussion.

Rush, Hannity, Beck, they all want to tax the lucky duckies more.

If you want to argue against their positions, perhaps you should have a discussion with them, rather than trying to project their positions onto others.

Who said anything about not contributing? I certainly never argued that. Remember what we’re talking about here - *INCREASING* taxes. No one is currently arguing against abolishing taxation.

I’ll say that Romney buffet and their kind paying 14% effective tax rates while I pay 25% is theft.

I make 10x more than someone I pay a much higher tax rate. Romney makes 30x what I make and pays 10% less on each dollar that’s theft. His off ’shore accounts are theft, Hank Paulson saving 200 million on the sale of his GS stock because he was treasurer is theft. The rules pushed by the elite that allow market manipulation, oligopoly, securitization of dog crap, and bailouts that’s theft.

Taxes in my view are just a little pay back.

dumminj, we present facts, you present philosophies that were bankrupt 400 years ago.

Your lack of history is truly telling.

Marie Antoinette didn’t get it either.

I should know better than to attempt to engage you in an actual, honest discussion.

Then don’t attempt it because it’s NOT an honest discussion on your part when you simply parrot AM radio buzzwords. “Taking”, “punishing”, In fact it’s jive.

You want honesty? Here’s honesty:
Can taxes be onerous? Yes. Are taxes on the rich in America onerous relative to the wealth they’ve made and extracted from the system which taxes support? No, the rich’s taxes are not even close to their historical averages while the rich’s wealth has skyrocketed way past their historical averages. by me

Yep, you and the people who agree with you present facts; everybody who doesn’t agree with you presents philosophies, doesn’t know history, listens to AM radio, doesn’t get it or whatever other tired canard you can come up with.

Has there ever been a time when you didn’t get it? Or are you right 100% of the time?

It might help if you learned to speak as if you were sharing your opinion on how the world works instead of speaking as if you’re the burning bush. You might even try adding some “I’m not sure”s and “You may be right, let me look at it some more”s into your speech. If you can start doing that your ego won’t be so full of itself that it can’t see any other interpretation.

“What if “them” is your neighbor? Friend? A parent? Brother?”

They’re free to vote in their own best interest. They don’t need me to support them.

we present facts

Hrm, let’s see what facts have been presented here:

Civilized people are not only expected to contribute to the welfare of the society that helped them prosper, but are obligated as well.

Not contributing is theft by the average citizen and tyranny by the wealthy. Thieves do not have the right to the things they steal.

Fair does not work.

No they’re not. In total taxes, salesPayrollMedicarePropertyStateLocalUtility taxes etc. most lucky duckies pay a higher percentage of their meager income than Mitt Romney.

Hrm. Lots of opinions there. That last one may actually include a fact - well, it’s more of an assertion without proper backing, but let’s call it a fact. But it’s not relevant to my position at all.

Please point out any unbacked assertions I’ve made? Any dishonest statements? Logical fallacies? Any place I’ve asserted I know the truth and you don’t?

Funny, you attack my character wherever you can. I laid out my situation and asked a very straight-forward question. Do I not give enough? Am I ’stealing’ from society, as you say? But you choose to ignore that, why? There are facts for you right there - what I contribute to society. Can’t attack me on that front though?

They don’t need me to support them.

But you’re okay with throwing them under the bus, so you don’t need to be?

It might help if you learned to speak as if you were sharing your opinion on how the world works instead of speaking as if you’re the burning bush. You might even try adding some “I’m not sure”s and “You may be right,

OK, I’ll try. I’m not sure that you think that I think you may be right but here it goes.

I’m not sure that taxes were cut for the rich even though they were and then our deficit exploded but I may be wrong even though that’s a fact. And AM radio may be right that taxcuts for the rich will create jobs even though they didn’t and I could be wrong that Clinton raised taxes in 1993 even though he did and I’m not sure that they promised that globalization would benefit most Americans which they did but it didn’t. (This is hard to do.)

Or are you right 100% of the time?

Of course not, but prove to me with some facts, math and dates where I was wrong today. I’m not sure and I could be wrong but I don’t think you can. (But I could be wrong, right?)

Michael, you have the entire Internet at your fingertips with almost the entire sum of human knowledge and most certainly the min of a college masters degree, available for free.

Prove us wrong. Prove we are not citing facts. Facts are no more open to interpretation than gravity is. That’s why they are called “facts”.

Not understanding that is why most people ARE wrong.

“But you’re okay with throwing them under the bus, so you don’t need to be?”

Oh please, if they’re making that kind of dough it won’t kill them to go back to Clinton era tax rates. You make it sound like they’ll be under hardship.

I’m not sure that taxes were cut for the rich even though they were and then our deficit exploded but I may be wrong even though that’s a fact.

Wow, really? It’s a fact? Your statement implies that it’s a fact that the deficit exploded because taxes were cut for the rich. “you have the entire Internet at your fingertips with almost the entire sum of human knowledge” so look up “Post hoc ergo propter hoc” and understand it. You’re already talking about facts when you’re clearing drawing conclusions.

Taxes for the rich were cut. Fact.
Deficits exploded. Fact.
Not a fact: Deficits exploded because taxes for the rich were cut.
In your world, though, you’ve hit upon a fact. LOL.

Is everything so black and white to you folks? Jeebus there are a bazillion knobs in the system and you, turkey lurkey and several others sure act like you know exactly how each one works and how they all affect the system and which ones are the right ones to pull.

Here’s some more “facts” for you: fire engines are red because books are read, too.

The number of pirates in the world went down and then global temps started increasing. It’s a fact that the lack of pirates causes global warming.

Keep up the false premises!

Taxes for the rich were cut. Fact.
Deficits exploded. Fact.
Not a fact: Deficits exploded because taxes for the rich were cut.

BS and you know it. Using CBO projections and reality:

The Bush Tax Cuts Are the Disaster that Keeps on Giving
Debt Would Be at Sustainable Levels Without Them

http://www.americanprogress.org/issues/2011/06/bushtaxcuts_anniversary.html

Ten years ago today, the first round of Bush tax cuts became law. But what if they hadn’t? What would our fiscal situation look like if history had been different in just one respect: if we’d never implemented President George W. Bush’s eponymous tax policies? The short answer is that the debate over federal debt levels would be entirely different. In that alternate world, total debt as a share of GDP would be under 50 percent this year—instead of pushing 70 percent—and it would be expected to stay under 60 percent for the rest of the decade. (see chart) That’s well below the levels causing such great consternation in Washington.

Bear in mind that President Bush inherited perhaps the strongest federal balance sheet in postwar history. There were record-high surpluses, debt was at around 30 percent of GDP and falling, and the Congressional Budget Office projected that the federal government would be debt free by 2009. The country was in great fiscal shape to deal with any crises or emergencies coming down the road, and it was even ready to deal with the coming retirement of the baby boom generation.

But rather than follow President Bill Clinton’s successful lead, President Bush handed out gigantic tax cuts, with people at the top of the income ladder getting the biggest breaks. Those “supply-side” tax cuts were a complete failure as economic policy, and now, instead of being debt free and well prepared to care for an aging population, our debt-to-GDP ratio is almost 70 percent. If those tax cuts are extended—instead of being allowed to expire on schedule at the end of 2012—it will approach 100 percent by 2021.

Not a fact: Deficits exploded because taxes for the rich were cut…..In your world, though, you’ve hit upon a fact. LOL.

In the world of the Congressional Budget Office, they’ve hit upon a fact too. (But they’re not LOLing)

George Bush owns this deficit
Useless news alert: Tax cuts and war contribute more to our burgeoning debt than Obama’s new policies

….The total cost of new policies initiated during the administration of George Bush: $5.07 trillion. Barack Obama: $1.44 trillion.

…The New York Times/Congressional Budget Office/Center on Budget and Policy Priorities

Bush’s tax cuts and the wars in Afghanistan and Iraq are the obvious big-ticket items. The tax cuts, in particular, are the structural-deficit-gift that keeps on giving. As the New York Times observes, if all of the Bush tax cuts “expired as scheduled at the end of 2012, future deficits would be cut by about half, to sustainable levels.”

Or, as James Fallows puts it more acidly, “It demonstrates the utter incoherence of being very concerned about a structural federal deficit but ruling out of consideration the policy that was largest single contributor to that deficit, namely the Bush-era tax cuts.

http://www.salon.com/2011/07/25/george_bush_owns_the_deficit/singleton/

“Oh please, if they’re making that kind of dough it won’t kill them to go back to Clinton era tax rates.”

+1, InCO. I had the same response above. Why all the friggin’ drama?

All this ‘forced to pay taxes’ stuff is hokum.

No one is forced to pay taxes. If you choose to make money in our society, you must pay taxes on it- it’s one of society’s rules. Don’t like it? Then don’t earn any money, or earn it in another society.

It’s all a matter of free choice.

So…just because TARP got passed doesn’t mean it bailed out the banksters. TARP got passed. Banksters got bailed out. It doesn’t prove one led to the other. Post hoc ergo propter hoc!

Gee, is that how it works? It’s so simple, it seems like maybe we’re missing something.

“eventually get to the ‘we can’t possibly pay it back’ stage.”

Unless the borrower engages in outright theft of resources externally.

‘Unless the borrower engages in outright theft of resources externally’

Even empires that took lots of resources from their colonies, Rome, Spain, the UK, eventually collapsed.

A necessary prerequisite to people with debt paying back the debt, is for people with money to not have the money. See, the people with debt can’t get the money, until the people that currently have that money, no longer have it.

In short, trade imbalances can not persist without increasing debt. For the debt to be repaid, FIRST, the trade imbalances must reverse.

If we can’t borrow money and then never pay it back, then we can’t persist trade imbalances…. See Greece and other PIGGS for example.

If spending your way out does not reverse trade imbalances, then it can not solve debt problems. If austerity does not reverse trade imbalances, then it can not solve debt problems.

‘If austerity does not reverse trade imbalances, then it can not solve debt problems’

Devaluation eases both problems. Not the most desirable of outcomes, but better than sticking your head in the sand and giving the creditors everything you have. Greece can’t compete trade wise, using what’s basically a German currency.

“Devaluation eases both problems. Not the most desirable of outcomes, but better than sticking your head in the sand and giving the creditors everything you have. Greece can’t compete trade wise, using what’s basically a German currency.”

Actually, if you are one of the great unwashed masses with far more debt than money, then devaluation is WIN!

IF you are one of those few that have far more money that debt, then…. well…. silly you. You are not doing your part to ensure the rich can keep getting richer.

The Euro was created to persist trade imbalances. Trade imbalances will not allow themselves to be persisted because they result in excess debt which can not possibly be paid back until after the trade imbalance reverses. The Euro was, therefore, doomed from it’s inception.

‘if you are one of the great unwashed masses with far more debt than money, then devaluation is WIN’

And if a govt has borrowed more than its people can pay, everyone has more debt than money.

Then devaluation is WIN for all of the citizens! The problem is convincing those people that the government’s debt is really their debt.

‘if you are one of the great unwashed masses with far more debt than money, then devaluation is WIN’

Only if that devaluation comes with an increase in wages, ie if food and fuel and clothing go up and your wages don’t you will have a harder time repaying your debt. We have done nothing to address this. The FED has printed piles of money that have been handed to Hedge Funds and Big investors who have gone out and purchased commodities and goods. This has increased the price of fuel and food. Joe 6 pack hasn’t seen a raise.

“Only if that devaluation comes with an increase in wages, ie if food and fuel and clothing go up and your wages don’t you will have a harder time repaying your debt. ”

Which has been my problem with the devaluation scenario for the last 7 years. People pushing up commodity prices in 2007 in anticipation of the Fed accepting that the only way out of this is devaluation, neglected to accept that the devaluation scenario requires increasing wages.

Without increasing wages, higher commodity prices simply means less demand and more debt defaults, reversing the devaluation attempts.

“Greece can’t compete trade wise, using what’s basically a German currency.”

Olive$ & Sauerkraut ball$.

Gotta bee a Hi$tory in there $omehow $omeway.

Call me crazy, but paying ones debts is kinda fundamental to the concept of borrowing.

Paying back, or defaulting—the latter is also one of the two fundamentals of debt.

We had a discussion yesterday about austerity versus borrow/print. But we don’t talk about the hard issues like trade issues, encouraging jobs here, penalizing companies that outsource, having the US again become a creditor country instead of a debtor country.

But the non-spending-related policies would actually require Congress to engage in something other than political theater. That’s been difficult for them even in the best of times, much less now.

Spending is where the individual Congress critters get their power. So naturally, that’s going to be the main, perhaps only, issue they focus on.

What is the collateral for all this debt, the good faith and credit of the United States? What if the US bascially does jingle mail on China? Is China going to come and cart off the Bakken formation? Confiscate the Google headquarters building? Take our workers to the salt mines?

Probably not. What is more likely is that our seniors will die hungry and homeless for lack of Social Security, or in pain for lack of Medicare. That’s how our debt will be paid — in literal pain and suffering.

“our seniors will die hungry and homeless for lack of Social Security, or in pain for lack of Medicare”

Paul Ryan’s 2016 presidential platform in a nutshell

“What is more likely is that our seniors will die hungry and homeless for lack of Social Security, or in pain for lack of Medicare.”

It’s ironic that these same people are compelled to vote for those who promise to “let SS and medicare wither on the vine”.

I say lets give it to them….. let it wither on the vine and we will have a true application of their theories demonstrated for the public. That way, “the government get’s out of my life” and “I get to keep my own money”.

I’m seriously all for it. Let’s do it.

Let’s do it? More like, let’s do it again. It was called the Gilded Age, and it was awful. Which is why SS and Medicare were passed in the first place.

I’m seriously all for it. Let’s do it.

It’s all fun and games until your elderly mother is eating cat food for dinner.

Yes, oxy, but some people (cough*my parents*cough) seem to forget that.

Then devaluation is WIN for all of the citizens! The problem is convincing those people that the government’s debt is really their debt.”

if you get paid in dollars its a paycut. Unless you can get a raise equal to the devaluation. some will most won’t and they will be poorer for it. A logical outcome for people who can’t pay their debts

Yes, oxy, but some people (cough*my parents*cough) seem to forget that.

That’s right. Either we all get it or none of us. I’ll take my chances. Pull the plug on SS and Medicare GOP’ers…. or STFU about it.

damned if we increase taxes..

That’s what they said about Clinton’s tax increases on the wealthy. It ushered in federal budget yearly surpluses.

damned if we decrease taxes

The BushTaxCuts forTheRich did damn our federal budget.

arguing with anyone who does not realize that is futile.

Yes it is. But for the opposite reason you might suspect.

like i said….futile.

‘Clinton’s tax increases on the wealthy…ushered in federal budget yearly surpluses’

Yeah, that all happened in a vacuum, huh? There was no housing bubble or stock bubble in the 90’s? There were no massive Fed interventions for the Asian Crisis, the Russian Crisis, etc? (Can anyone even count all the crisis points any more?)

These tax and spend discussions end up so far out in the weeds, I tuned them out. Next thing you’ll be talking about FDR or Pericles or something. Here’s something novel; let’s discuss today’s problems using current solutions!

Knight Sir Rio De Brazil tosses the metal net of rebuttal!

Right…TOTAL U.S. debts, having gone up only slowly in the latter HW Bush and early Clinton years (when the two men were unpopular), rose rapidly in the later Clinton years (when he was popular).

Soaring private debts enabled the falling federal debt in the late 1990s. Just as falling private debts are only happening now because of soaring federal debt. Otherwise, GDP and debt would be collapsing at the same pace.

‘Clinton’s tax increases on the wealthy…ushered in federal budget yearly surpluses’

Yeah, that all happened in a vacuum, huh? There was no housing bubble or stock bubble in the 90’s?

Nothing happens in a vacuum. What ever happens in a vacuum? But it did happened.

Here’s something novel; let’s discuss today’s problems using current solutions!

Here’s a solution but it’s not novel. Let the BushTaxCutsFor The Rich expire. It will shore up our federal budget. (And not in a vacuum.)

“…let’s discuss today’s problems using current solutions!”

House prices that reflect the revenue$ of x1 income.

“Run Hwy, …Run!”

“this is a proce$$.”

So was $ecuring the “Green Zone” in Baghdad.

“That’s what they said about Clinton’s tax increases on the wealthy. It ushered in federal budget yearly surpluses.”

Trade imbalances can not be persisted without new money being created. New money is created by creating new debt. During the Clinton years, newly lowered interest rates, loosened lending standards and financial innovations had private sector debt exploding.

With the private sector able to generate the new debt/money needed to fund trade imbalances, there was no problem for the federal government to be running small surpluses.

Now, with the private sector WAY beyond “over extended” and unable to continue to generate new debt/money needed to fund our trade imbalances, any attempt to cut federeal government deficits will be death to our current trade imbalance plagued economy….

Unless, of course, you are proposing we use taxes to attack and reverse the trade imbalances… silly you. You must start with the assumption that the sole purpose of the USA economy is to ensure the rich can continue to get richer.

‘Let the BushTaxCutsFor The Rich expire. It will shore up our federal budget.’

That’s an honest suggestion, but again, not happening in a vacuum:

‘Historically low tax rates enacted under former President George W. Bush in 2001 and 2003, and jobless benefits for the long-term unemployed are both set to expire on December 31, as is a temporary payroll tax cut.’

‘In addition, $1.2 trillion in across-the-board reductions in spending on federal programs would begin to phase in as a result of Congress’ failure late last year to find a comprehensive deal to cut the budget deficit.’

http://www.reuters.com/article/2012/05/22/us-usa-economy-outlook-idUSBRE84L1D020120522

And without that new debt/money being pumped into the economy to replace that which leaves circulation in the form of trade imbalances, the economy collapses.

You can’t fund $600B international trade deficits and $1T+ corporate profits (80% of which ends up in the hands of the people with way too much money to actually spend it all) without new debt/money being created to fund it.

If not the federal government, than whom do you propose will be creating this $1.5T a year new debt/money that is needed to fund our imbalances? Certainly you do not expect the private sector, that is WAY beyond tapped out on debt, to play a significant role in the creation of the new debt/money, do you? Return to the days of strawberry pickers buying $700K houses?

If not the federal government, than whom do you propose will be creating this $1.5T a year new debt/money that is needed to fund our imbalances?

I would prefer that the individuals who buy cr@p from China that they can’t afford to be the ones to bear this new debt individually.

Darrell, thanks for taking the time to type things out (again). Over time I tend to forget things and I appreciate the refresher. I still don’t know what The Truth is, but I feel like I learn a lot reading and processing your points.

“I would prefer that the individuals who buy cr@p from China that they can’t afford to be the ones to bear this new debt individually.”

So, you prefer a candy crudding unicorn….

Toooo bad, it does not exist.

If the federal government stops pumping in the $1.5+T a year needed to fund out trade imbalances, then all money drains from circulation, the economy stops functioning, the economy implodes, virtually all debt defaults, wiping out virtually all money.

If we are not going to directly attack and reverse the trade imbalances that made the ever increasing debt necessary in the first place, then we have two other options…. 1) keep the total debt/money expansion continuing to fund the imbalances as long as possible, or 2) total economic collapse.

Your income is someone else’s spending. You can not demand that other person stop spending while assuming that will have no effect on your income.

You can’t fund $600B international trade deficits and $1T+ corporate profits

Why do you need to fund corporate profits? My corporate profits are funded by my clients.

The wealth of the Clinton years did not come from the higher tax rates, rather it came from the huge number of knowledge economy jobs — $50-60K each. The US made its money on volume, so to speak.

Then India figured out how to do business over the internet and we never recovered; it was just one bubble after another.

It wasn’t the tax rates that made the US wealthy under Clinton. The release of the Internet to commercial enterprise created millions of knowledge economy jobs, before the offshoring and H1B invasion. Baby boomers were still in their 50’s and paying peak taxes and not extracting Medicare or unemployment. Housing was still at 2.5x income. The government didn’t conduct any major wars, or shovel trillions of dollars at defense and security contractors who used 9/11 to make a profit. That’s part of why Clinton raised taxes — we were doing well enough that we didn’t mind.

You can’t fund $600B international trade deficits and $1T+ corporate profits

Why do you need to fund corporate profits? My corporate profits are funded by my clients

And where do your clients get their money? I’ll bet a good chunk comes from the gov. Do you really believe your business would thrive if the gov stopped spending? His point is that most businesses would crash if the gov immediately stopped deficit spending in the face of a recession where the consumer and businesses are reducing debt and spending.

Do you really believe your business would thrive if the gov stopped spending?

the gov is spending at record levels and both of my businesses are in the toilet.

yes i do believe i would thrive if the gov stopped spending.

The wealth of the Clinton years did not come from the higher tax rates,….That’s part of why Clinton raised taxes — we were doing well enough that we didn’t mind.

Your economic chronology is off. Clinton raised taxes in 1993. I remember 1993 like it was 1993. We were coming out of recession and the 90’s boom had not yet begun. We weren’t doing “well enough that we didn’t mind” raised taxes. The 90’s boom came later. Clinton’s tax increases helped shore up our federal budget no matter the internet boom that came at the end of the 90’s.

“The recession of the early 1990s describes the period of economic downturn affecting much of the world in the late 1980s and early 1990s……by 1990, economic malaise had returned with the beginning of the Gulf War and the resulting 1990 spike in the price of oil, which increased inflation but to less of a degree as the oil crisis ten years earlier. Nevertheless, for the next several years high unemployment, massive government budgetary deficits, and slow Gross Domestic Product (GDP) growth affected the United States until late 1992 and Canada until 1995.” wiki

Tax on Wealthy Is Boosting U.S. Revenue

Treasury Says 1993 Increase Is Helping Cut the Deficit

President Clinton sold the 1993 income-tax increase as a way to shrink the budget deficit at the expense of the rich.

Republican adversaries predicted it wouldn’t generate much revenue because the rich would work less and take bigger deductions. Now there’s growing, if still tentative, evidence that Mr. Clinton may have been right after all.

The recent flood of revenue pouring into Treasury coffers—enough to push the federal budget to a record $93.94 billion surplus for the month of April—appears to have come mostly from the nation’s biggest earners, indicating that the controversial tax increase may indeed be taking from the rich. “The available data suggest the surge in tax collections has come from the taxpayers with high incomes, who were the only ones affected by the 1993 changes,” says Deputy Treasury Secretary Lawrence Summers.

Corporate taxes, which were increased modestly under the 1993 law, also have brought in more revenue, but at about the level the Treasury had been predicting…

The package, part of the 1993 budget agreement, drew harsh criticism from the right. Texas GOP Rep. Dick Armey, who is now the House majority leader, predicted dire results, “Who can blame many second-earner families for deciding that the sacrifice of a second job is no longer worth it?” he wrote…

“The basic fact is that people looked at the 1993 budget agreement and said there’d be a recession, the deficit would go way up and that tax collections would go way down,” says Mr. Summers. “What has happened is there has been a boom, the deficit has gone way down and tax collections have gone way up.”

—WALL STREET JOURNAL, May 22, 1997, A2.

Clinton raised taxes in 1993

Funny. For some reason I thought that the legislature wrote and passed laws…

What do you sell?

Guns ammo survivalist material?

Your businesses are in the toilet because the credit bubble popped and your customers have less cash, less available credit, more job insecurity and collapsing benefits. Probably the only thing keeping you in business is the fact that the gov is spending money.

Clinton raised taxes in 1993……Funny. For some reason I thought that the legislature wrote and passed laws…

I forgot about that. And Obamacare had nothing to do with Obama either.

OK sorry, so Clinton raise taxes with the help of the Democratic Congress. I guess my point is that the US was doing well enough we probably would have come close to balancing the budget even without the tax rate increase.

we probably would have come close to balancing the budget even without the tax rate increase.

Show us the numbers. ‘Probably’ doesn’t cut it.

For a housing blog where general statements are made on a daily basis, “probably” “come close” does cut it.

I was living with my parents after college till I was 24. I was living in a small town (pop. 19,000). I met a girl one night and after learning who I was, she asked me “are you still living at home?” I started making plans to get my own place the next day.

Anyhoo…I really appreciate the fact that my parents allowed me to do that…such a simple way to allow your child to get a “leg up” in the world.

I did insist on paying them rent…although it was a third of what I would have had to pay in the “real world”. It really did allow me to save.

A month after graduating high school, my dad announced they were selling the house and moving into a condo with no room for me. You have a month to find somewhere else to live….

Americans have been throwing their kids out into the street as soon as they could for over 100 years.

As someone who grew up outside the US, this cultural quirk stands out to me as being “Uniquely American”

You can bet that this trend in the USA will disappear when medicare and social security are gutted.

I came of age in the 80’s. I don’t remember anyone moving back home.

All the kids I knew hustled to make money and get a cheap place. I washed dishes and cleaned houses and waited tables and babysat and walked dogs and temped in offices and basically took any and every job that came along.

Before, during, and after college.

Are the jobs really not there, or are the expectations just different? Or both?

My parents didn’t have to kick me out. It took every ounce of patience I possessed to live at home while attending community college and working to save money for my last 2 years of higher ed. Once I transferred to the Big U, I never came back home except to visit.

SFRenter - those jobs are no longer filled by high school/college kids. I haven’t heard a dish washer in a resteraunt speak anything but Spanish in a long long time.

“Are the jobs really not there, or are the expectations just different? Or both?”

Assuming Lucky Duckling take-home wages of $1000-$1200 per month, consider the following:

Student loans - $200-400/month
i-phone - $100/month (very few under age 30 live without this)
Car insurance - $50-100/month (assume for mom’s paid off, used Camry)
Gas - $100-200/month (to commute to 2 or 3 part time McJobs)
Credit cards - $100-200/month (still paying off all those $150 undergrad textbooks)

I consider the above to be in the average range of expenses a 20-something Lucky Duckling might face. And before someone spouts off that you lived on ramen and slept 3 hours a night after working 2 jobs while getting your BS in engineering, consider that you are the exception, and that maybe not everybody else made all the right decisions with regards to their consequences between the age of 18 and 22…

Adding to the above circumstances, assume that these Lucky Ducklings went to college with reasonable expectations of $35-45K starting salaries and are now making $15-20K/year.

Welcome to the “New Normal”, because the future belongs to Lucky Ducky!

Consider also that parental household income that was $75-100K/year pre-recession is now $40-60K. And then there’s that pesky inflation thing…

The future belongs to Lucky Ducky!

i-phone - $100/month (very few under age 30 live without this)

I know plenty of low paid, young pups who do without an iPhone. Now for those with good jobs, yeah, it’s standard issue.

Car insurance - $50-100/month

That’s for rich people.

You’re all missing WT’s point. Whether or not you lived with your parents or or walked uphill both ways to afford your own place, you always had the option of a family homestead, if you needed it. You knew you wouldn’t have to live under a bridge. And those family homesteads were like paid-off, or close to it, by the time the kids finish college.

WT was saying that with the HELOC’s and the foreclosures, that family homestead option is gone. Where are the kids going to live while they work their menial jobs? Group rental housing. One successful kid buys a house and rents to three lucky ducky buddies. I believe this is what’s happening in the house across the street from me.

One successful kid buys a house and rents to three lucky ducky buddies. I believe this is what’s happening in the house across the street from me.

Exactly what’s playing out across the street from me.

Except I don’t think that the successful kid is that successful anymore. His dad bought the property as an in-VEST-ment. I think they were thinking of selling back in ‘09, but couldn’t get the price they dreamed of. So there the house sits, turning to sh….

…shaving cream.

And making this whole block look bad.

WT was saying that with the HELOC’s and the foreclosures, that family homestead option is gone.

My goal is to still have the modern equivalent of that for my son just as my parents were able to provide it for me. It might just be a paid off trailer, but if it’s Where The Jobs Are it’ll still be a great safety net compared to what his friends will have.

You guys are leaving out the 55+ communities. If I tried to go back to live in my parents’ guest room, they could be forced to kick me out. I think there is a max number of days per year. Please note, I do not think there is any limit on this based on the reason for the visit, so even if I was there to take care of one of them after a medical incident, the rules apply.

“Are the jobs really not there?”

They aren’t there and as previous posters have said, they are also taken by illegals.

Worse, the pay has not kept up with real inflation either. Min wage should be about $8.50hr just to keep up with the most conservative government statistics. REAL min wage should be $12hr.

You’re right, but I never think of them. I know they exist somewhere out there, but nobody I know lives in one.

Polly, another good point. Even for empty nesters that didn’t heloc, they are selling out for 55+ and condos which also exclude the couch option. In addition, the family homestead usually included some semblence of a growable yard. You’re can’t put a viable Victory Garden into a zero lot line yard — maybe if you’re really good with flowerpots.

There are some gated 55+ near me, but I haven’t seen any rules in play personally. I remember reading a story on HBB of kids who had nowhere to go but to live with Grandma in a 55+ development. Grandma had to “hide” the kid to and from school, and never leave a toy in the yard because other seniors were turning informant and reporting them. Is Anne Frank an appropriate metaphor? I’m sure the kids felt that way.

And neither if any are paying any taxes leaving those left to pick up the freight of servicing the programs & debt…Thats what I mean by a lost generation of household formation…

And then there’s your American-ness.

People in other countries can spot it a mile away. Some of them even have the audacity to point it out to you.

Note that he said that just after converting all his shares at GS to treasuries tax free saving himself 200 million dollars and making him the highest paid gov worker of all time.

I’m with you, Carl. I think the last time I clicked on an online ad was purely an accident.

:-)

I hear the complaint that more and more of the money is going to things other than in the classroom. I honestly do not know if this is true or a strawman.

Not a straw man at all. Our school district hires plenty of $80K+ year consultants to come in and try to bludgeon teachers at low-performing schools to raise their test scores. Most school districts are top-heavy, while the actual schools are running on fumes.

Some of the money for all these consultants comes from the feds and everyone has to jump through hoops to keep it flowing.

It’s a failed trickle down system for public education, with graft and waste all the way down.

And don’t get me started on the textbook companies.

I was able to homeschool at <20% the per-student cost of the State public school system– and that included international travel.

I’m sure your kids turned out great, too.

But if everyone homeschooled? Picture it and shudder.

That sound like a perfect solution, we can save 20% on public education costs if we eliminate (or at least stop paying) teachers.

Mr. Bumble: You’ll make your fortune Mr Sowerberry.
Mr. Sowerberry: The prices allowed by the board are very small.
Mr. Bumble: So are the coffins.

You have commies on your city council?

And who elected them?

Wasn’t me.

Seriously. You couldn’t PAY me $650 a day to go to Disneyland. Place is like something out of Dante….

Same here. And I have kids.

If I can raise my kids to adulthood without ever having stepped foot into anyplace even remotely like Disneyland, then I will have been successful as a parent.

We are making our summer bucket list of things to do. My kids don’t go to summer camp, but we take advantage of all the things there are to do in the Bay Area: museums, camping, hiking, tidepooling, surfing, etc.

I do make an exception for the Santa Cruz boardwalk, because the Big Dipper is my favorite roller coaster in the world. I can ride it over and over again.

I don’t know about that. As long as it was only a few days and I was really being paid $650 a day? I could manage that. Are you allowed to only people watch (not actually try to do the park stuff)? Can I bring a book?

Same here. And I have kids.

When we were in SoCal for Legoland I asked my son if he wanted to take a day and go to Disneyland. He was in the middle of a phase where he watched the Disney channel every chance he got. Loved Legoland and no interest in Disneyland even though we were right there.

Do I get to cause chaos in the park for this theoretical $650?

I went in November, no desire to ever go back again. The lines were not that different from any other theme park, but the park itself was nothing special. I spent about 4 hours there; it got cold, so we left. Don’t feel ripped off for I think $80 for a single day per person plus $20 for parking.

If I can raise my kids to adulthood without ever having stepped foot into anyplace even remotely like Disneyland, then I will have been successful as a parent.

Were your parents and mine separated at birth?

Legoland, FL has been a lot of fun for my family. However, we were given free annual passes, our daughter is free (under 3), so we only had to buy an annual pass for my son ($130).

I tend to vote with my dollars. I bought a cane today from CVS. Made in Taiwan. Also bought a coiled hose for the planter. Fifty feet long 3/8″ with a two-year guarantee and made in Canada.

Winning! (maybe)

Marie Antoinette didn’t get it either.

Thanks Rio.