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Old 08-23-2009, 02:06 PM   #1 (permalink)
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White house raises deficit estimate

White House Deficit Estimate To $9 Trillion From $7.1 Trillion

Posted: August 22, 2009 at 7:53 am


The Administration quickly and fairly quietly raised its budget deficit number for the next ten years to $9 trillion from $7.1 trillion, an astonishing 27% increase.

The new estimate is much closer to the number that the Congressional Budget Office posted earlier this year.

One of the reasons for the change is that tax receipts are running below estimates due to the recession. The Administration believed unemployment would peak at 8%.

The shortfall in government revenue could continue for another year or more. The White House budget forecast robust GDP recovery in 2010 and 2011. Many economists expect the improvement will be closer to 2%. Unemployment will almost certainly remain above 9% next year and perhaps even into early 2011.

Tax receipts from businesses are also below forecast. A number of factors, especially consumer spending, have hurt many American companies worse than expected.

The alternatives for fixing the deficit problem are all bad. One is to raise taxes. A much higher burden on individuals would almost certainly wound a recovery in consumer spending. Higher taxes on enterprises will make it less likely they will cut more workers. It becomes a vicious cycle which ultimately adds to unemployment.

Another option is for the treasury to sell more debt. The New York Times recently reported that China’s appetite for US debt is falling. The paper writes “Figures released by the Treasury Department this week indicated that China reduced its holdings of Treasury securities by $25 billion in June, the most China had ever sold in a month.” That only leaves the Treasury one option, which is to offer higher interest rates on bonds. That will push up most other interest rates including those essential to the recovery, particularly mortgages.

The only alternative that will work to help the rising red ink is too cut government spending. The Congress and The White House have not shown much interest in that. But, the time is coming when their hands may be forced. That leaves the only open question as which programs will be slashed and which will be preserved.

Douglas A. McIntyre
-----------------------------------------------------------------------------------------------

Isn't that amazing? The one viable alternative when low on cash is to quit spending so much.
Seems the White House, with all those professionals, would figure out what is common sense to common folks.
When the dough is low, just say no.

Thoughts?
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Old 08-23-2009, 02:22 PM   #2 (permalink)
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There's another solution, which I doubt they will take, and that is to raise reserve requirements on banks. It does two things.

1) If banks are required to hold more in reserves, they cannot loan as much, which in turn means that they cannot expand credit as much, which keeps inflation at bay.

2) This would allow the Fed to print more money without risk of runaway inflation. They will need a way to pay for their astronomical debts, and in the past, monetization has been a popular means.

If they do raise reserve requirements, dramatically, this will piss off the banks, dramatically. However, it will lead to a more stable money supply, and therefore, a more stable price structure. This will allow more efficient market clearing, over time, and an increase in employment (as the labor market clears). All they would have to do is blame the recession on the banks (not too hard, considering how much they had to spend bailing them all out from their rotten investments in MBS's), and they could get public support for this move.

Historically, however, powershifts from banks to government have been common in the ascendency of fascist regimes, so who knows. At least they'll be able to monetize the debt without completely fucking the economy.



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Old 08-23-2009, 02:32 PM   #3 (permalink)
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sometimes I think the government is just trying to bankrupt us.
I'd put all my money into gold... That is if I had any money.
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Old 08-23-2009, 03:34 PM   #4 (permalink)
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The most assuredly are, as a whole, trying to bankrupt the people. I think this desire for control comes from roots held by people far outside the political spectrum, but the roots are old and long.

Either way, I think it's a beautiful thing. They are, through their relentless desire for monopolizing the monetary system, are causing a movement towards local sustainability. And they can't do a thing about it, so hence they are taking whatever they can get now. They will be undone by the same hands that created them. So I say, let them spend it. The worst that can happen is we all realize that money really isn't important.
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Old 08-23-2009, 03:35 PM   #5 (permalink)
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it wont be locally sustainable when they have to balance the budget by raising taxes on localities 50% .

Last edited by John F. Kerry; 08-23-2009 at 03:54 PM.
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Old 08-25-2009, 07:27 PM   #6 (permalink)
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Quote:
Originally Posted by Ego Tripping View Post
The most assuredly are, as a whole, trying to bankrupt the people. I think this desire for control comes from roots held by people far outside the political spectrum, but the roots are old and long.

Either way, I think it's a beautiful thing. They are, through their relentless desire for monopolizing the monetary system, are causing a movement towards local sustainability. And they can't do a thing about it, so hence they are taking whatever they can get now. They will be undone by the same hands that created them. So I say, let them spend it. The worst that can happen is we all realize that money really isn't important.

We can only hope.

I just spent a few days around Vermont, and good god there is a lot of co-ops. Every little town has its' co-op branch with amazing produce, organic dry goods, and reusable conatiners for cooking (oil,peanut butter, sugar, flour) that they discount when you bring it in for a refil. Cars had "support food, buy co-op" bumper stickers. It was empowering to see, and just as expensive as S&Shop.
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Old 08-25-2009, 09:28 PM   #7 (permalink)
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Quote:
Originally Posted by The Rev View Post
There's another solution, which I doubt they will take, and that is to raise reserve requirements on banks. It does two things.

1) If banks are required to hold more in reserves, they cannot loan as much, which in turn means that they cannot expand credit as much, which keeps inflation at bay.

2) This would allow the Fed to print more money without risk of runaway inflation. They will need a way to pay for their astronomical debts, and in the past, monetization has been a popular means.

If they do raise reserve requirements, dramatically, this will piss off the banks, dramatically. However, it will lead to a more stable money supply, and therefore, a more stable price structure. This will allow more efficient market clearing, over time, and an increase in employment (as the labor market clears). All they would have to do is blame the recession on the banks (not too hard, considering how much they had to spend bailing them all out from their rotten investments in MBS's), and they could get public support for this move.

Historically, however, powershifts from banks to government have been common in the ascendency of fascist regimes, so who knows. At least they'll be able to monetize the debt without completely fucking the economy.



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Rev, you never cease to amaze me. Very very nice theory, I love it.


But I do agree with Ego, the White House only has so much effect on our economy, when in reality those with really old money truly control the economy (through loopholes, persuading Senate/House of Reps members, etc)
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Old 08-27-2009, 05:00 PM   #8 (permalink)
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Rev, you never cease to amaze me. Very very nice theory, I love it.

Yup. Just what we need.
More manipulation of the market rather than tried and true measures.
How about this?
Quit fucking spending what you don't have?
Hey, works for millions of poor people.

Maybe, just maybe, if we got some oversight on the Fed and ceased the manipulations of the market that got us in this position in the FIRST PLACE we could make some REAL improvements.
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Old 08-27-2009, 05:42 PM   #9 (permalink)
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unfortunately, things aren't that easy.

you can try to fix the issue with some laws trying to stop the manipulation, but lawyers will always find a way for the companies to avoid what they want to avoid.


The more basic the law/rule, the easier it will be to enforce, and in my opinion, just saying you have to have a certain level of reserves according to whatever would be pretty basic as compared to legal jargon.



And dude, calm the fuck down. it was some good thinking, no need to get your panties in bunch
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but I do show—thanks to a lot of in-depth interviews with GOP sources—how they plotted to obstruct Obama before he even took office. I show how the stimulus was chock full of stuff they claimed to support until Jan. 20, 2009—not just things like health IT and the smart grid and energy efficiency and scientific research, but the very idea of Keynesian stimulus. Every presidential candidate in 2008 proposed a stimulus package, and Mitt Romney’s was the largest.
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Old 08-27-2009, 11:38 PM   #10 (permalink)
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Rev,

You seem to legitimately have in interest in "economics". You def have a decent grasp on a lot of it yet imo you've got too many of these of this pop-internet econ concepts clouding your analysis.

Some resources I would recommend:

Financial Markets — Open Yale Courses

Financial Markets is the most relevant course that deals with the stuff youre interested in. Yale actually offers their FinMarkets course online for free. Its a a video series of the entire course they offer. (Actual lectures that students get - not cartoons used to make bullshit points like youll see posted on sites like Yahooka) Markets was my fav course in b-school because it actually deals with how markets work in reality - unlike econ courses which deals with how market work in theory.

ftalphaville.ft.com

Read the threads there and check the blogroll on the right side of the page. These are resources that are written and used by professionals and will give you a much more grounded (and technical) view of the current state of the economy.
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