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stilicho25
Joined: 05 Apr 2010
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 Posted: Sun Aug 08, 2010 9:26 am Post subject: |
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I think globalization has done more to further human development than any other developement I can think of. From the the time that Japan industrailized till the 80's I can't think of any area that developed. After the free trade policies came into place South Korea, Taiwan, the coastal areas of China, large parts of India all started to develop. Humanity has never had it so good.
http://www.youtube.com/watch?v=RUwS1uAdUcI |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Aug 08, 2010 9:47 am Post subject: |
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| Quote: |
| After the free trade policies came into place South Korea, Taiwan, the coastal areas of China, large parts of India all started to develop |
Korea did not and does not have free trade policies. Taiwan I don't know anything about. China is a strongly protectionist nation. India too. What has happened is the West used "free" (corporate) trade and sent our standard of living to Asia. We borrowed and consumed as a model after this. |
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stilicho25
Joined: 05 Apr 2010
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| Posted: Sun Aug 08, 2010 10:54 am Post subject: |
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We don't have free trade either. We went from a protectionist policy to negotiated agreements with each of the countries I mentioned. In return for investment capital, we got goods at cheap prices. This was a good thing for the asians, and for us. It was to everyones advantage. Now that is changing, because what was a rational policy with competent decision makers in charge under Clinton, became a decadent ill-run affair with everyone scrambling for whatever they could get. From top to bottom, with the poor getting houses they knew they could not afford, to bankers looting the system for all it was worth. I don't think any system can be defended from that sort of decadence.
I actually agree that a sea change is occurring, and we need to act like a developing country and foster industry through protective measures. I still think the loosening of trade in the 80's and 90's was a beautiful thing. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Sun Aug 08, 2010 12:23 pm Post subject: |
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I agree with Rickards. The globalized world is less stable and more prone to catastrophic events.
The West is in decline and the East is rising. We need to retreat with our tail between our legs. Trade that benefits corporations and Asia is a dead end for the West. We can't just be account executives at Citi Bank. |
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stilicho25
Joined: 05 Apr 2010
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| Posted: Sun Aug 08, 2010 12:43 pm Post subject: |
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| The east is rising part I agree with. I don't understand the running away with our tail between our legs part. Engagement doesn't have to be in the same form that we have done up till now. GM makes money selling cars in China. Granted those are Daewoo designs, but there is no reason GM can't expand and sell American luxury cars in China. I saw plenty of caddies and Ford vans in Japan. Renegotiating these deals is in our best interest our long term economic health rests on it. As for stability, before free trade was a long slow economic decline that left most people unhappy enough to vote for Reagan and Thatcher. |
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bucheon bum
Joined: 16 Jan 2003
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| Posted: Mon Aug 09, 2010 5:10 am Post subject: |
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| As for stability, before free trade was a long slow economic decline that left most people unhappy enough to vote for Reagan and Thatcher. |
not to nitpick, but since it really truly isn't free trade, I think a better way to put it is before trade liberalization, or the reduction in trade barriers. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Mon Aug 09, 2010 6:41 am Post subject: |
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| As for stability, before free trade was a long slow economic decline that left most people unhappy enough to vote for Reagan and Thatcher. |
The problems you reference are real but I don't believe they are a consequence of trade. The UK was drowning in public sector nonsense and unionism. The US was suffering from extremely high interest rates as a consequence of paying for Vietnam. The two decades after the war were both protectionist and prosperous in the United States. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Aug 11, 2010 10:15 am Post subject: |
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| The Happy Warrior wrote: |
'Buy' new for only $1000 down!
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�Buy new with $1,000 down,� the advertisement says, the words resting atop a trim green clapboard house offset by a bright blue sky. �The time has come. Stop wasting rent check after rent check and start building equity in your own home. And with only $1,000 down, affordable monthly payments and no private mortgage insurance required, the dream is closer than you think.�
It sounds too good to be true. But it is true. This offer does not come from a subprime lender, looking to reel in thousands of unqualified and ill-advised homebuyers, only to slap them with add-ons, fees and variable rates. It is not a teaser or a trick. The advertisement references a program initiated by the National Council of State Housing Agencies and Fannie Mae, the taxpayer-backed, government-sponsored enterprise that buys up mortgages from lending banks. |
Government policy fail. |
It gets worse!
http://www.zerohedge.com/article/breaking-news-hud-offer-interest-free-loans-distressed-homeowners
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| BN 8:30 *HUD WILL OFFER INTEREST-FREE LOANS TO DISTRESSED HOMEOWNERS |
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stilicho25
Joined: 05 Apr 2010
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| Posted: Wed Aug 11, 2010 10:27 am Post subject: |
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| Hmm that doesn't sound good at all. Obama has been a bit of a disappointment in some ways. However, I am more worried about people buying new homes they can't afford, rather than this sort of vote buying. These people are already screwed, but the admin wants to delay the backlash until after november. This strikes me as pretty cynical by the dems. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Wed Aug 11, 2010 10:31 am Post subject: |
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http://www.bloomberg.com/news/2010-08-11/u-s-is-bankrupt-and-we-don-t-even-know-commentary-by-laurence-kotlikoff.html
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U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff
Let�s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.
...
But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: �The U.S. fiscal gap associated with today�s federal fiscal policy is huge for plausible discount rates.� It adds that �closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.�
The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.
Double Our Taxes
To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.
Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It�s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.
Is the IMF bonkers?
No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.
�Unofficial� Liabilities
Based on the CBO�s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our �official� debt and our actual net indebtedness isn�t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities �unofficial� to keep them off the books and far in the future.
For example, our Social Security FICA contributions are called taxes and our future Social Security benefits are called transfer payments. The government could equally well have labeled our contributions �loans� and called our future benefits �repayment of these loans less an old age tax,� with the old age tax making up for any difference between the benefits promised and principal plus interest on the contributions.
The fiscal gap isn�t affected by fiscal labeling. It�s the only theoretically correct measure of our long-run fiscal condition because it considers all spending, no matter how labeled, and incorporates long-term and short-term policy.
$4 Trillion Bill
How can the fiscal gap be so enormous?
Simple. We have 78 million baby boomers who, when fully retired, will collect benefits from Social Security, Medicare, and Medicaid that, on average, exceed per-capita GDP. The annual costs of these entitlements will total about $4 trillion in today�s dollars. Yes, our economy will be bigger in 20 years, but not big enough to handle this size load year after year.
This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck.
Herb Stein, chairman of the Council of Economic Advisers under U.S. President Richard Nixon, coined an oft-repeated phrase: �Something that can�t go on, will stop.� True enough. Uncle Sam�s Ponzi scheme will stop. But it will stop too late.
And it will stop in a very nasty manner. The first possibility is massive benefit cuts visited on the baby boomers in retirement. The second is astronomical tax increases that leave the young with little incentive to work and save. And the third is the government simply printing vast quantities of money to cover its bills.
Worse Than Greece
Most likely we will see a combination of all three responses with dramatic increases in poverty, tax, interest rates and consumer prices. This is an awful, downhill road to follow, but it�s the one we are on. And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece.
Some doctrinaire Keynesian economists would say any stimulus over the next few years won�t affect our ability to deal with deficits in the long run.
This is wrong as a simple matter of arithmetic. The fiscal gap is the government�s credit-card bill and each year�s 14 percent of GDP is the interest on that bill. If it doesn�t pay this year�s interest, it will be added to the balance.
Demand-siders say forgoing this year�s 14 percent fiscal tightening, and spending even more, will pay for itself, in present value, by expanding the economy and tax revenue.
My reaction? Get real, or go hang out with equally deluded supply-siders. Our country is broke and can no longer afford no- pain, all-gain �solutions.� |
Kotlikoff recently wrote an excellent book at rebuilding the banking system. His estimate of the total liabilities is the largest I've ever read. the Dallas Fed put them at 100 trillion. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Aug 13, 2010 9:23 am Post subject: |
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I was going to post this in the banana republic thread..
http://jessescrossroadscafe.blogspot.com/2010/08/fha-to-extend-government-loan.html
http://www.nbcnewyork.com/around-town/real-estate/Luxury-Condos-Asking-the-Feds-For-Help-100625504.html
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Luxury Condos Asking the Feds For Help
By JUAN DEJESUS
Fri, Aug 13, 2010
Seek FHA insurance to drive condo sales
The federal government may soon come to the rescue of stalled luxury condominiums in Manhattan.
Manhattan luxury condominiums known for posh amenities and high price tags are beginning to apply for Federal Housing Administration backing.
Condominium developers hope to open financing opportunities for their purchasers as well as guarantee a little protection for themselves. Not only will lending institutions be more willing to lend to purchasers with FHA backing, but the FHA will pay the mortgage should a home buyer default.
The FHA loosened the condo rules because of �market conditions,� Lemar Wooley, an agency spokesman told Bloomberg.com
The administration recently agreed to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo in Match, according to Bloomberg. That deal allowed buyers to make a down payment of as low as 3.5 percent in a complex where apartments run up to $3 million... |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Fri Aug 13, 2010 10:41 am Post subject: |
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| mises wrote: |
I was going to post this in the banana republic thread..
http://jessescrossroadscafe.blogspot.com/2010/08/fha-to-extend-government-loan.html
http://www.nbcnewyork.com/around-town/real-estate/Luxury-Condos-Asking-the-Feds-For-Help-100625504.html
| Quote: |
Luxury Condos Asking the Feds For Help
By JUAN DEJESUS
Fri, Aug 13, 2010
Seek FHA insurance to drive condo sales
The federal government may soon come to the rescue of stalled luxury condominiums in Manhattan.
Manhattan luxury condominiums known for posh amenities and high price tags are beginning to apply for Federal Housing Administration backing.
Condominium developers hope to open financing opportunities for their purchasers as well as guarantee a little protection for themselves. Not only will lending institutions be more willing to lend to purchasers with FHA backing, but the FHA will pay the mortgage should a home buyer default.
The FHA loosened the condo rules because of �market conditions,� Lemar Wooley, an agency spokesman told Bloomberg.com
The administration recently agreed to insure mortgages for apartments at the 98-unit Gramercy Park development, known as Tempo in Match, according to Bloomberg. That deal allowed buyers to make a down payment of as low as 3.5 percent in a complex where apartments run up to $3 million... |
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http://www.youtube.com/watch?v=kb6ErLPt4t8
(edit: I guess there's no sound on that one, but whatever.) |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Thu Aug 26, 2010 12:17 pm Post subject: |
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The CRFB Medium and Long-Term Baselines (August 26, 2010)
| CRFB wrote: |
Under realistic assumptions, both revenues and spending are on track to surpass historical norms by a significant amount. The imbalance between projected spending and revenues would drastically increase our borrowing needs, thereby pushing up interest payments on the debt.
Revenues: Revenues under our realistic baseline would rise from about 19 percent of GDP in 2020, to 21 percent in 2040, and to 26 percent by 2080-well beyond a 30-year historical average of about 18 percent.
Spending: Federal spending, meanwhile, would explode, rising from about 26 percent of GDP in 2020, to 34 percent by 2040, and 56 percent by 2080. Such levels are significantly higher than a 30-year average of about 21 percent.
Interest payments: By 2020 interest payments would reach 4 percent of GDP before rising to almost 9 percent by 2040 and 24 percent by 2080. |
CRFB Deficit/Debt Long-term Predictions Graph
| CRFB wrote: |
| Our baseline shows the deficit growing from 6 percent of GDP in 2020, to almost 14 percent by 2040, and to over 30 percent by 2080. And whereas debt remains below 100 percent of GDP until 2070 under the current law baseline, we project it would exceed 100 percent of GDP in the early 2020s, grow to 200 percent in 2043, and reach 488 percent by 2080 under our more realistic assumptions. No economy could possibly sustain debt levels at these heights. |
Fiscal instability is America's most serious and pressing issue, and all other priorities, save only the most fundamental, must subordinate themselves to addressing our debt crisis. |
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The Happy Warrior
Joined: 10 Feb 2010
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| Posted: Fri Sep 17, 2010 2:56 pm Post subject: |
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Senate Minority Leader Mitch McConnell (R-KY) wants to perma-extend all the Bush tax cuts. He also claims to be concerned about the deficit and the national debt.
How can Mitch's world reconcile these two competing aims?
| Tax Vox wrote: |
The biggest remaining program is, of course, Social Security. It happens that projected Social Security spending in 2020 is almost exactly equal to the $1.2 trillion McConnell would need to balance his budget.
What�s left? Well, McConnell would have to abolish all the rest of government to get to balance by 2020. Everything. No more national parks, no more Small Business Administration loans, no more export subsidies, no more NIH. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress. No more nothin�.
He does back a freeze in domestic discretionary spending�an idea that would leave him about 93 percent short of his balanced budget goal. As to the rest, he says he�ll await Obama�s deficit reduction commission that will report, conveniently enough, after the election. |
Anyone who supports a permanent extension of the Bush tax cuts also supports US sovereign bankruptcy. Its pure madness. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Fri Sep 17, 2010 3:23 pm Post subject: |
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http://online.wsj.com/video/the-big-interview-with-david-stockman/8E99A460-CA55-4D99-ABE8-5E4BBF6B6A32.html
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WSJ: [You are] not very sanguine about the economic situation.
Stockman: Well, I think if you look at the fundamentals it's very hard not to be. We went through a thirty or forty year binge where it seems like every time there was a hiccup in the economy we had another stimulus program, we had some more monetary easing --
WSJ: There was a balanced budget --
Stockman: There was one or two years, OK, but the theory, if you go back to the 1960s or 70s, was we would have surpluses or balances [during] most of the time in the good years, and then when we needed to stimulate the economy in a downturn we would do that, but we would balance our affairs over time. We didn't do that. We just added and added and added to the debt. Today we...have $9 trillion worth of federal debt,...but we also have two or three years of absolute gridlock in front of us if the Republicans rout the Congress this fall -- which I think they will. Nothing will be done until 2013, which means that, really, we're not going to get a grip on the federal deficit until Fiscal Year 2014. There's three or four trillion more of debt that's baked in the cake. You add local and state debt, which is public debt, [and] we have $16 trillion of debt baked in the cake -- 100% of GDP. We're in a Greek-scale factual circumstance. |
Taxes will have to be increased and spending decreased. Or default. Something. |
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