The Next Big Stink, The killjoys are back. What do they have in store for us?

[Skandery]

My only point, if you look at it from the perspective of keeping the monetary system from crashing, I believe it has at least accomplished part of that.  Deflation fears have subsided.  Monetary velocity is improving.

Ziggy, I want you to go back to Mankiw's blog, scroll down, click on that video of Christy Romer on "Face the Nation" with Bob Schieffer.  Watch it and pay close attention when Schieffer says we only have spent $350 billion of the 700 and many people can't truly discern exactly what good that $350 billion did.  So if its stone-cold, un-varnished, honest-to-goodness FACT that TARP saved us from the greatest financial collapse in modern human history, why can't anybody convince the majority that THAT money did a damn bit of good.  Even some conservative rank and file have questioned exactly what the money did.  Now if Mankiw wants to pull out a statistic and declare the problem solved (or on its way to resolution), that its your prerogative to swallow it whole.  Me, I remain skeptical.  I know there's more than one way to skin a cat and in economics there's more than a million ways to analyze statistics.   

So if you choose to ignore what was clearly obvious, because it Bush and Paulson, then so be it.

Clearly obvious.  Fellow posters, raise your hand that it was "clearly" obvious that the entire monetary system was on the precipice of absolute collapse before TARP?  I really want to here the opinons here.  Joe, Laker Fan, Lurker, any other fiscal conservatives, moderates, anyone . . . was that notion clearly obvious?  Me personally, I still had my job, my wife (a BANKER!) had her job, my student loans, my car, my mortgage (paid on time every month), I could afford gas and food.  And I was under the impression that 95% of Americans were in my situation--Joe has stated 2008 was the best economic year of his life!  Perhaps I've just personally grown weary of scare tactics and color-coded warning signals. 

If you want to place blame and accountability on Obama, then a response of "Well look at what Bush did" is not holding him accountable.  It is just a rationalization and will get us more of what we don't want.

I never intended to place blame or rationalize anything Obama or Bush do or did.  I stated I felt that article was lame and seemed to be cooked by a conservative hack.  I simply observed that if you look at the scope:  700 billion and 830 billion aren't that far off (Not when the military-industrial complex gets greased to the tune of at least 600 billion ANNUALLY!).  So the bleeding heart douchbag, Obama, wants to create jobs and build infrastructure while the redneck, zealot, wingnut Bushie wants to entrust it to the Wall-Street elite to "stabilize" the money supply.  One hasn't worked and the other is yet to be seen but will probably amount to little in the end.  Let's say I 100% believe your analysis that Bush's stimulus, indeed, SUCCESSFULLY stabilized the money supply.  We've yet to see actual benefit (the markets have yet to recover, recession is sinking deeper, unemployment is sky-rocketing); only an ominous "all hell would have broken loose immediately".     

I am not going to try and rationalize TARP.

 

Why not.  You're doing a fantastic job, better than the schlock I heard from Paulson and others in the Administration at the time.   

[Skandery]

Ted

We're talking about trillions Skander. You're talking about billions.

Actually, No, we're still talking about billions.  Hundreds of billions, but billions nonetheless.

They took credit for the boom behind the collapse. Would you take it from them?

Wait a minute, I though Reagan took the credit for the boom in the 90s.  Which means Clinton should take the blame for Ocks collapse, Dubya will be responsible for what happens this next era, while Carter was responsible for the economic recovery/Debt growth of the 80s.  Right? 

[Skandery]

Lurker, Ted, Ziggy:

1.)  Value it for what you paid for it, less whatever depreciation has been applied if that is appropriate.
2.)  Value it at the NPV of the expected future cash flow.3.)  Value it at the open market price, in a liquid and transparent market, and where the asset is fundamentally the same as the asset sold in that market.
4.)  Value it liquidation value.

Now correct me if I'm wrong, but I've studied how it was bolded #2 was how Enron became the biggest corporate fraud in history.  Marking their assets at an price indicative of rosy and profitable future forecasts of performance like the gigantic energy plant they built in India that has been abandoned since construction since no one in India could afford the energy.  I've also read its #2 that is how MtM is generally used by many corporations to inflate their stock prices.

[Lurker]

Lurker, Ted, Ziggy:

1.)  Value it for what you paid for it, less whatever depreciation has been applied if that is appropriate.
2.)  Value it at the NPV of the expected future cash flow.3.)  Value it at the open market price, in a liquid and transparent market, and where the asset is fundamentally the same as the asset sold in that market.
4.)  Value it liquidation value.

Now correct me if I'm wrong, but I've studied how it was bolded #2 was how Enron became the biggest corporate fraud in history.  Marking their assets at an price indicative of rosy and profitable future forecasts of performance like the gigantic energy plant they built in India that has been abandoned since construction since no one in India could afford the energy.  I've also read its #2 that is how MtM is generally used by many corporations to inflate their stock prices.

NPV of cash flows is a very common valuation tool.  But as most calculations...garbage in , garbage out.  If the cash flows are just pie in the sky estimates then the result is bogus. But if you are valuing a rental property that has had steady rents (or use a 3 yr average) then it can be a very valid valuation tool.

Enron had more to do with putting assets on their books and burying corresponding liabilities on the books of "other" companies that they controlled but didn't include in their financials.  That is what they described as "off the books" info.



Also Skander, I think that you are equating Bush's policies with Reagan's when the only thng they had in common was that both were elected under the Republican banner.  Bush II was not a fiscal conservative.  He did not push through budget cuts but championed tax cuts only.  Massive deficit spending like Bush did is more a hallmark of Democratic administratins than Republican.

[Lurker]

You should actually look at tax revenues and which portion of the population pays how much.  Under Reagan the total percentage of taxes paid by the rich rose.  Their rates went down but so did the rates for lower incomes as well as larger brackets for those lower rates.  EVERYBODY got a tax break under Reagan.  The surpluses in Clinton's admin was due to the tax cuts as well as spending cuts that Reagan & his gang pushed through.

The poor got anywhere from a 3% decrease to a 15% INCREASE.

The middle class America got anywhere from a 3% increase to a 12% decrease

The wealthiest Americans got a 44% DECREASE.

Yea, that seems fair.

Based on tax rates or based on actual taxes paid to the government. 

It doesn't mean much if your TAX RATE goes up but the amount of income subject to those rates DECREASES.  If you look at who pays the taxes, the percentage of taxes paid by the wealthiest 10% has increased since Reagan.

Tax Rate, the rich got a 44% reduction in their tax rate.  They removed a lot of "deductions" for everyone across the board but then they gave rich people a huge discount and the middle class and poor a minor discout while increasing their taxable income.  Rewarding the rich at the expense of the middle class sounds all to familiar and all too recent.

And the poor and middle class got expanded earned income credit (refunds without paying any tax), expanded child care credit, new child credit, tuition credits, deductions for student loan interest, expanded lower brackets for the low rates (10, 15 & 20%).  And all of those credits start phasing out when income reaches the top 30-35% of all earners.  And the rich got limitation on itemized deductions (phased out at higher incomes), phase out of exemptions, higher AMT tax rates.   The rich got larger reduction in tax rates but pay a larger percentage of all income taxes collected.  Even more recent has been a credit for retirement savings and constant AMT patches that benefit people making less than $60-65,000 a year.  And some of these credits are refundable...which means that if the credit is larger than your tax bill the govt PAYS you the difference.  Talk about wealth redistribution.

[rickortreat]

Lurker, Ted, Ziggy:

1.)  Value it for what you paid for it, less whatever depreciation has been applied if that is appropriate.
2.)  Value it at the NPV of the expected future cash flow.3.)  Value it at the open market price, in a liquid and transparent market, and where the asset is fundamentally the same as the asset sold in that market.
4.)  Value it liquidation value.

Now correct me if I'm wrong, but I've studied how it was bolded #2 was how Enron became the biggest corporate fraud in history.  Marking their assets at an price indicative of rosy and profitable future forecasts of performance like the gigantic energy plant they built in India that has been abandoned since construction since no one in India could afford the energy.  I've also read its #2 that is how MtM is generally used by many corporations to inflate their stock prices.

NPV of cash flows is a very common valuation tool.  But as most calculations...garbage in , garbage out.  If the cash flows are just pie in the sky estimates then the result is bogus. But if you are valuing a rental property that has had steady rents (or use a 3 yr average) then it can be a very valid valuation tool.

Enron had more to do with putting assets on their books and burying corresponding liabilities on the books of "other" companies that they controlled but didn't include in their financials.  That is what they described as "off the books" info.



Also Skander, I think that you are equating Bush's policies with Reagan's when the only thng they had in common was that both were elected under the Republican banner.  Bush II was not a fiscal conservative.  He did not push through budget cuts but championed tax cuts only.  Massive deficit spending like Bush did is more a hallmark of Democratic administratins than Republican.

Deficit Spending is NOT a hallmark of Democratic admins.  In fact, other than LBJ, they all reduced the deficit.  Only Republicans are irresponsible enough to increase the national debt. You can't have an intelligent discussion if you insist on distorting the FACTS.


By the way, the TARP money is allowing the Govt. to buy up the worthless OTC derivatives held by the banks.  They get to be solvent again, and the US taxpayer gets saddled with crap paper in an ultimate rip-off by irresponsible failed businessman, who lack the understanding to even admit what they got themselves into.  They are all culpable because they all lied.  The borrower lied about his job and his resources, his ability to pay.  The lending agent lied about the balloon payments or the implication of taking on a mortgage.  The lending bank then sold the mortgage to fannie or freddie who bought up every piece of crap there was, because they lied on their books and holdings and valuations so that the entire world lent them even more money to invest in US housing.  This always happens at the end of a credit regime boom.  You keep lending and eventually the only ones borrowing are the ones without jobs.  You leverage all the way at 20-1 and when 5% go bad, you go broke. Everyone knew this, but they did it anyway, all for their paychecks and bonuses.  All because of LAX REGULATION, which is all you really need to perpetrate FRAUD.

[Skandery]

Deficit Spending is NOT a hallmark of Democratic admins.  In fact, other than LBJ, they all reduced the deficit.  Only Republicans are irresponsible enough to increase the national debt. You can't have an intelligent discussion if you insist on distorting the FACTS.

Thank you, Rick.  You beat me to it.

Lurker, I'm going to randomly do a google search on "Chart of National Debt".   

1st link up:  http://zfacts.com/p/318.html (this one in %GDP)

2nd link up:  http://www.cedarcomm.com/~stevelm1/usdebt.htm

a) Figure 1 in US Dollars
b) Figure 3 is interesting.  Even Carter, reviled by most Cons as the worst economic president ever knew how to spend LESS than he made.
c) Figure 4 shows the line graph of Debt in terms of %GDP with corresponding Figure 1. 

3rd link up:



Its time to bury the age-old, FALSE, adage that Democrats are the big spenders.  I know when the same distortion is repeated across decades so that its interwoven in the public fiber as "conventional" wisdom, its really hard to break from; but I think its time we went ahead and accept that the Earth revolves around the Sun.

[Ted]

Wait a minute, I though Reagan took the credit for the boom in the 90s.  Which means Clinton should take the blame for Ocks collapse, Dubya will be responsible for what happens this next era, while Carter was responsible for the economic recovery/Debt growth of the 80s.  Right? 

Skandalicious, I'm talking about the housing market boom. The HOUSING MARKET.

[Skandery]

Well, according to the document I referenced earlier, "...That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed...."

In other words, and I think Lurker will back me up on this, military spending SHOULD make up most of the federal government's budget, because defending the rights of those governed under it is 1) its primary purpose, and 2) about the only thing it has historically proven to be any good at doing.

You want to take one word out of this one line and manipulate and twist it to back the silly assertion that the only responsibility government has to its people is ability to make WAR!  Can't let you get away with it.  Why don't we take the sentence in the full context Jefferson wrote it.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness." 

Life, liberty, and the pursuit of happiness are the rights secured by government and violence, pre-emption, and deadly force aren't the only means by which the word secure can be interpreted.  Why can't government secure the right of a child citizen to pursue his happiness by educating him and allowing him to acquire a skill to provide and grow wealth.  I especially like the next sentence.  The right of citizens to abolish a government that becomes destructive to those ends.  Are you safer than you were 8 years ago?  Are you happier than you were 8 years ago?  On any level you want to argue:  Economy, Foreign policy, World Opinion, Education, War, Infrastructure, has government been constructive or destructive.  I declare that my liberty and the pursuit of my happiness came under greater jeopardy from (your favorite) John Ashcroft's PRIVACY ACT than anything Saddam Hussein ever pulled.

And one more thing since we're talking about the founding father's.  One of the greatest American leaders of any time, ranked in the Top 3 of President's, and perhaps the greatest military mind America ever spawned--contributing more than anyone to the creation of the country in the first place was George Washington.  He had one feeling about the perpetual maintenance and funding of a large standing army.  He WARNED AGAINST IT!

On the issue of the military and its just place in society, I'm going to take the word of George Washington and Dwight Eisenhower before I take the word of the National Heritage Foundation, Ronald Reagan, Rupert Murdoch, Dubya, Rumsfeld, or any other Warhawk conservative you want to pray to the alter of.

[Ted]

And one more thing since we're talking about the founding father's.  One of the greatest American leaders of any time, ranked in the Top 3 of President's, and perhaps the greatest military mind America ever spawned--contributing more than anyone to the creation of the country in the first place was George Washington.  He had one feeling about the perpetual maintenance and funding of a large standing army.  He WARNED AGAINST IT!

On the issue of the military and its just place in society, I'm going to take the word of George Washington and Dwight Eisenhower before I take the word of the National Heritage Foundation, Ronald Reagan, Rupert Murdoch, Dubya, Rumsfeld, or any other Warhawk conservative you want to pray to the alter of.

Not to split hairs here, but George Washington was not a great military mind. He was a leader; he was courageous in battle; and he held together an army under more pressure and adversity than just about anyone ever has. No money, no uniforms, no food--he held men together. But as far as being a military mind; he had many many defeats in service to both England and America that came about because of his mistakes.

I agree with your sentiments. In a perfect world, abolishing a standing army would be a nice goal. But today it is suicide. Any political leader who would even suggest it would be instantly marginalized and possibly drummed (or laughed) out of office.

Next I have an honest question for everyone on the board. First as a preface: I am not in favor of giving up all of my civil liberties in the name of security. The Patriot Act concerns me because it could allow the government more access to my personal life.

That said: I have felt absolutely no difference in my so-called level of freedom since the introduction of the Patriot Act or Privacy Acts. I understand that I may have lost some privacy. But I've never noticed it; never felt it; never been affected by it. (Except for the changes in airport security screening. I was picked at random once and thought it was a funny experience.)

Has anyone else felt a real intrusion by the government or a real loss of their civil liberties? I'm curious to know if it has affected any of you.

[Joe Vancil]

Have I been impacted by the Patriot Act?  Not in a noticeable way.

Then again, how would I notice it?  It's not like I plot against the government every day, or fund political candidates, or do much of anything that would deserve the attention of the powers that be.  I've not joined any protests recently.  I've simply stated my opinion and voted my conscience.

The questions I have are WHAT information is the government gathering, what do they do with it once they get it, and why are they spending the money on it?

The reason I'm not too keen on this is because of the slippery slope it's on.  But due to threats, I'm not TOO opposed to the Patriot Act.

That said, some of the indescretions of the Bush presidency make me less comfortable with it.  I'm a big believer in punishing anyone who misuses authority by taking it away from them.  And I do believe that the Bush White House misused the powers they were given.

[Joe Vancil]

Well, according to the document I referenced earlier, "...That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed...."

In other words, and I think Lurker will back me up on this, military spending SHOULD make up most of the federal government's budget, because defending the rights of those governed under it is 1) its primary purpose, and 2) about the only thing it has historically proven to be any good at doing.

You want to take one word out of this one line and manipulate and twist it to back the silly assertion that the only responsibility government has to its people is ability to make WAR!  Can't let you get away with it.  Why don't we take the sentence in the full context Jefferson wrote it.

"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, governments are instituted among men, deriving their just powers from the consent of the governed. That whenever any form of government becomes destructive to these ends, it is the right of the people to alter or to abolish it, and to institute new government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their safety and happiness." 

Life, liberty, and the pursuit of happiness are the rights secured by government and violence, pre-emption, and deadly force aren't the only means by which the word secure can be interpreted.  Why can't government secure the right of a child citizen to pursue his happiness by educating him and allowing him to acquire a skill to provide and grow wealth.  I especially like the next sentence.  The right of citizens to abolish a government that becomes destructive to those ends.  Are you safer than you were 8 years ago?  Are you happier than you were 8 years ago?  On any level you want to argue:  Economy, Foreign policy, World Opinion, Education, War, Infrastructure, has government been constructive or destructive.  I declare that my liberty and the pursuit of my happiness came under greater jeopardy from (your favorite) John Ashcroft's PRIVACY ACT than anything Saddam Hussein ever pulled.

And one more thing since we're talking about the founding father's.  One of the greatest American leaders of any time, ranked in the Top 3 of President's, and perhaps the greatest military mind America ever spawned--contributing more than anyone to the creation of the country in the first place was George Washington.  He had one feeling about the perpetual maintenance and funding of a large standing army.  He WARNED AGAINST IT!

On the issue of the military and its just place in society, I'm going to take the word of George Washington and Dwight Eisenhower before I take the word of the National Heritage Foundation, Ronald Reagan, Rupert Murdoch, Dubya, Rumsfeld, or any other Warhawk conservative you want to pray to the alter of.

Well, in that same speech, Washington also warned us about foreign entanglements, but I don't see you wanting us to get out of the U.N., which is about as foreign-entanglement as you can get.  Washington essentially wanted us to be somewhat isolationistic.  Even in that day and age, such a policy was problematic at best and impossible at worst.

The idea that the government should "secure" your rights by educating you means that you forgo LIBERTY in favor of PURSUIT OF HAPPINESS.  Liberty means freedom FROM government influence.

The reason the founding fathers put in the idea of revolting against a bad government is simple:  they didn't trust *ANY* government!  The basic difference between today's Democrat and today's Republican is in what they trust the government to do.  The Democrats entrust it in so many ways socially that it is a MUST, and think it should provide MORE social programs.  The Republicans trust it only to keep unwanted outside change OUT.  The Founding Fathers would have been Libertarians:  they're just barely able to stomach the government AT ALL.

Let's face it;  we're not united by our form of government any more.  What unites all Americans is our ECONOMY.  We pretty much all believe in CAPITALISM.  Yes, even the Democrats.  Everything that either political party does is about MONEY...who gets to get it, and who has to spend it.  Small wonder the one thing you can get Democrats and Republicans to compromise on year after year is the BUDGET.

What's the one complaint you continually hear about the war?  HOW MUCH IT COSTS.  HOW MUCH IT IS DRAINING THE ECONOMY.  It's like we forget everything else in the face of that one question.

The fact of the matter is that all we really care about, as a nation, is money.  It's just about the only that motivates us any more.  The truth is that FREEDOM today doesn't include life or liberty.  It just includes the pursuit of happiness.  I'm starting to believe that "pursuit of happiness" was a phrase that was used by a society that could never imagine how SELF-CENTERED we've become in this day and age.  I honestly believe that, were the founding fathers revising their document for today's world, "pursuit of happiness" would be replaced with "civicly-responsible exercise of self-determination."