Joined: May 18, 2006 Posts: 3964 Location: Minneapolis, MN
Posted: Sun Jul 20, 2008 10:08 am Post subject: Re: The Economist: America may default on it's debt
Cashmere wrote:
Uniquack wrote:
I'd like to see a one-time super-wealthy tax. No one should be able to accumulate a billion dollars, let alone more than, say, $25 million. The marginal utility after that is minor and it allows individuals to distort the democracy. A one time super-wealth tax would redistribute a dangerously lopsided society and could pay for the infrastructure changes we need to prepare for peak oil. It could also be used to pay off much of our debts. Just an idea.
I think you're only telling a part of the truth.
What you'd really like to see is anybody who has more than you knocked down to your level.
Joined: Mar 12, 2007 Posts: 890 Location: As close as I can get to the beginning of the pipe.
Posted: Sun Jul 20, 2008 10:47 am Post subject: Re: The Economist: America may default on it's debt
roccman wrote:
Quote:
In addition, Roubini predicts that Lehman Brothers "won't be able to survive" as an independent broker dealer.
Hey Iaato - Roubini agrees with me.
Got silver?
Bite me, Rocc.
It's a race to see who gets to the front of the chow line first; F&F or LEH. _________________ "For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." --Patrick Henry
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Sun Jul 20, 2008 10:47 am Post subject: Re: The Economist: America may default on it's debt
Governments as big as the US, with economies as large as the US's, don't go bankrupt. If they are stupid, they repudiate their debt, which involves simply disowning it, but that is neither wise nor necessary for the US. For countries with the status of the US, what matters a lot more is their production of real wealth and the availability of resources and commodities needed to produce that wealth. Therein lies the real problem. When resources are plentiful and cheap, debt is actually good because it enlarges the economy. Alexander Hamilton argued that point in the early days of the US, trying to fight off the idea of debt repudiation, which is what a lot of people wanted to do. Instead, his plan involved the US taking on all the debts of the States and making deals with the creditors for repayment and further investment. His idea was implemented and worked fantastically.
The Freddie/Fannie problem is not my problem IMO. Free market theory dictates that they go belly up along with all the rest of the banks out there who were stupid. The real problem is that these banks believe in the much expulsed, "to big to fail" dictum, which is absolutely false. Such a belief led them to their current condition. Allowing a business to fail, be it a bank or otherwise, creates new opportunities from the resulting rubble. Imagine all the newly cheap real estate deals that would emerge out of the plentiful foreclosures. If you've got the cash, you could pick up a lot of bad loans in the bankruptcy sale for next to nothing, then use your cash reserves to execute foreclosures, which is the problem for the banks; they don't have enough money or time to foreclose on all those properties which is all a lose - lose to them anyway. It's just part of the natural process of wealth moving from dumb people to smart people.
The too big to fail BS floating around out there is just the financial community trying to preserve their wealth and status. They are collectively the most arrogant bunch of MF'ers I've ever seen. If they are dumb, they shouldn't be rewarded for their dumbness, which is all a bailout does anyway. If you are dumb enough to think that a bailout helps the US population, even the bad debtors, you are deluded. If you can't afford your mortgage, read the writing on the wall and give the house to the bank. Of course you have to move out, but you can't afford it anyway. Currently, there is a glut of rentals on the US market from years of starvation. Former renters found out that they could buy a house for the first time in history. The house was vastly inflated in price, but who cares? No money down was required.
Real Estate prices have to fall and fall a lot to come in line with a real free market system. That's the writing on the wall. Any attempt at repudiation is financial death. Bailouts are a form of repudiation and such, should not even be considered. _________________ "That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money
Posted: Sun Jul 20, 2008 11:25 am Post subject: Re: The Economist: America may default on it's debt
That would be fine, provided you had trustworthy politicians and bureaucrats who knew what they were doing and did so is a timely fashion.
When has that ever been the case?
Uniquack wrote:
I'd like to see a one-time super-wealthy tax. No one should be able to accumulate a billion dollars, let alone more than, say, $25 million. The marginal utility after that is minor and it allows individuals to distort the democracy. A one time super-wealth tax would redistribute a dangerously lopsided society and could pay for the infrastructure changes we need to prepare for peak oil. It could also be used to pay off much of our debts. Just an idea.
_________________ Gravity is not a force, it is a boundary layer.
Everything is coincident.
Love: the state of suspended anticipation.
To get any appreciable distance from the Earth in
a sensible amount of time, you must lie.
Joined: Sep 04, 2005 Posts: 362 Location: central MA, USA
Posted: Sun Jul 20, 2008 11:38 am Post subject: Re: The Economist: America may default on it's debt
roccman wrote:
My first post here was a call to mail your keys in...default on your credit cards and student loans...buy what you need now even if it means going into debt.
But if you can't pay off that debt, don't think someone won't show up to collect it.
Posted: Sun Jul 20, 2008 12:37 pm Post subject: Re: The Economist: America may default on it's debt
shortonoil wrote:
mmasters said:
Quote:
I don't think they'll default. The government just issues more debt and gets credit from the fed to cover the old debt payments. They can do this basically indefinitely as they have been doing.
That strategy only works if you have a functioning banking system. That may be a rather presumptuous assumption to make at this junction.
They can do it till the cows come home. _________________ Just look at us. Everything is backwards; everything is upside down. Doctors destory health, lawyers destroy justice, universities destroy knowledge, governments destroy freedom, the major media destroy information and religions destroy spirituality.
Posted: Sun Jul 20, 2008 1:41 pm Post subject: Re: The Economist: America may default on it's debt
mmasters wrote:
I don't think they'll default. The government just issues more debt and gets credit from the fed to cover the old debt payments. They can do this basically indefinitely as they have been doing. I think what's more likely is a run on the dollar by foreign countries which would put an enormous amount of government bonds on the market without a buyer. In this case the fed would have to buy them by their mandate and the result would be severe inflation and the downfall of the dollar as a global currency.
Weimer scenario, for sure. People think that the current dollar isn't backed by anything. But it actually is backed by a certain amount of confidence, so far, and you could say as long as foreigners are buying it, it's backed by their labour and goods, which keeps the cash "alive" and somewhat vital.
This is the other part of the war on Iran scenario, that people are ignoring. The missiles are trained on Iran for a number of reasons, but chief among them is the threat of interfering with China's number one source of oil and future contracts for oil. If the Chinese govt, (already reducing their appetite for treasuries) starts massive dumping of treasuries they have already acquired, the US will bomb Iran in an attempt to destroy their energy security. Ugggggllllly!
Joined: Mar 07, 2007 Posts: 321 Location: Holland, United Kingdom (of the seven Netherlands)
Posted: Sun Jul 20, 2008 1:57 pm Post subject: Re: The Economist: America may default on it's debt
More and more companies will go into default. This will only increase when the government and Fed start to actively fight inflation. F&F will follow soon. No bailout for the shareholders (or at a severe loss to the shareholders in the case of the GSEs). Those defaulting companies will be nationalized. I could see the government controlling most of the financial sector before things turn to normal again.
But I do not expect the government to default on it's debt. They can find plenty of reasons to take control over the printing press if needed.
Posted: Sun Jul 20, 2008 2:13 pm Post subject: Re: The Economist: America may default on it's debt
Uniquack wrote:
I'd like to see a one-time super-wealthy tax. No one should be able to accumulate a billion dollars, let alone more than, say, $25 million. The marginal utility after that is minor and it allows individuals to distort the democracy. A one time super-wealth tax would redistribute a dangerously lopsided society and could pay for the infrastructure changes we need to prepare for peak oil. It could also be used to pay off much of our debts. Just an idea.
This is a very likely scenario. Capital controls, controlling capital flight, then tax the ever loving hell out of the super rich. And I'm talking billionaires and upper seven digit millionaires. A single digit millionaire, or someone living in New York city, for example, pulling down 200,000 per year, isn't necessarily super wealthy.
Joined: Sep 29, 2004 Posts: 2330 Location: Pennsylvania, USA
Posted: Sun Jul 20, 2008 2:32 pm Post subject: Re: The Economist: America may default on it's debt
Such a one time "wealth tax" would run the risk of being shot down as unconstitutional. One of the reasons why the government doesn't engage in "special" taxes that apply only to certain income levels is that if they risk going to the supreme court and getting shot down. Then the ruling risks being applied to all income taxes. _________________ "That's the problem with mercy, kid... It just ain't professional" - Fast Eddie, The Color of Money
Joined: Sep 03, 2007 Posts: 598 Location: Sunny Virginia, USA
Posted: Sun Jul 20, 2008 2:39 pm Post subject: Re: The Economist: America may default on it's debt
Uniquack wrote:
I'd like to see a one-time super-wealthy tax. No one should be able to accumulate a billion dollars, let alone more than, say, $25 million. The marginal utility after that is minor and it allows individuals to distort the democracy. A one time super-wealth tax would redistribute a dangerously lopsided society and could pay for the infrastructure changes we need to prepare for peak oil. It could also be used to pay off much of our debts. Just an idea.
I'm sorry, but this is really lame and comes from a typical envious, non-thinking reactionary that is ripe for the pied piper of socialism.
Let's see what will happen:
Action:
95% of the wealth is redistributed to everyone in the US.
Reactions:
1) People who are working at jobs that pay low but produce wealth are suddenly quitting their jobs because they have "money" and think they don't need to work. Imports pick up, domestic production goes down to near zero.
2) Massive inflation sets in because there is so much money suddenly being used to buy "things" without generating more wealth via markets of real value.
3) The people who had the money taken away from them continue to do the things that got them the money and they collect most of it back over a decade or so, only this time they hide it so it can't be taken easily away again.
4) When the money runs out for the 95% who "got the money", we all realize that the production infrastructure has degraded to the point where a crash bigger than the great depression sets in.
If I remember correctly, Spain had something like this happen to them after they brought back all that gold from the Americas. _________________ When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
Joined: Sep 03, 2007 Posts: 598 Location: Sunny Virginia, USA
Posted: Sun Jul 20, 2008 2:44 pm Post subject: Re: The Economist: America may default on it's debt
Uniquack wrote:
I'd like to see a one-time super-wealthy tax. No one should be able to accumulate a billion dollars, let alone more than, say, $25 million...
And if you are talking about the government taking the money as a tax and keeping it, all you've done is given government a one-time boost in spending that will do absolutely nothing to fix any of our problems. Governments all over the world have proven (and the US is one of the leaders) that governments reward failed programs and punish successful programs. _________________ When somebody makes a statement you don't understand, don't tell him he's crazy. Ask him what he means. -- Otto Harkaman, Space Viking
Posted: Sun Jul 20, 2008 2:51 pm Post subject: Re: The Economist: America may default on it's debt
Hedge fund operators who have pulling in 8 and 9, yes 9 digit salaries in the last few years, by playing, often recklessly with other people's money deserve to have their asses taxed off or handed to them. They should be able to pick. Tax or Guillotine.
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