Disgusted With Obama Administration.

• gut

  IggyPride00;1165619 wrote:Actually, to me the real crime is that we loan banks money at zero percent interest, and at the same time are charging 3.4-6.8% interest to student loans.

  Umm, that's not how the overnight rate works, but ok.
• Manhattan Buckeye

  gut;1165623 wrote:Umm, that's not how the overnight rate works, but ok.

  No kidding. There is always a cost of carry, even with our historically low rates. At any rate (no pun intended) the rates on student loans aren't the issue. It is the cost of tuition...when we subsidize a commodity the commodity becomes more expensive. Universities need to explain why two semesters of tuition that was $20,000 in 2000 is now $45,000 in 2012.
• IggyPride00

  

  gut;1165623 wrote:Umm, that's not how the overnight rate works, but ok.

  I am aware of how the overnight rate works, I was being facetious. My point was that banks borrow at a miniscule rate compared to what the student loan rate is. That seems ass backwards to me considering the importance of education to the future of this country.
  
  I agree that tuition is the problem, but as long as the loan program exists it should be cheaper for students than it is considering how historically low borrowing costs are, and the fact the government is guaranteeing every loan anyway.
• BoatShoes

  gut;1164384 wrote:You're completely missing the point. First off, stop pretending Europe is an identical comparable. It's not - they have no recourse left in financing. You can't separate the affects between default/insolvency and austerity. You also continue to ignore the forward looking nature of business/markets which goes back to the credibility issue I mentioned - one need only look at the very recent elections to see that businesses and investors should have little confidence Europe is correcting course.

  
  You're talking about Europe as a whole and not focusing on individual countries. Spain does not fit this massive profligate vision you have in your mind. Spain's Debt to GDP ratio was dropping. They were running fiscal surpluses. They were more fiscally responsible than us in the United States. They pursued a confidence building agenda in pursuit of a balanced budget as lower tax revenues and higher unemployment started to erode their budget surplus. It did not work because there is no magical confidence fairy out there. If it did not work in Spain when they were more fiscally virtuous than we are running budget surpluses...why suppose we can engender confidence with a path to a balanced budget when we're running trillion dollar deficits?
  
  

  The other issue, as Quaker mentions, is the massive increase in spending the past few years. Where is this money going? I strongly question it's additive value, if any, to GDP. There's a massive Obama/deficit overhang right now, and you don't understand this. Shaving off $250-$300B a year likely won't have any impact and is not nearly the severe "austerity" you want to claim. Restoring confidence and credibility - neither of which bumbling Europe has been able to come close to managing - is the key to restoring sustainable growth.

  
  That money is going to unemployment insurance and food stamps because the economy is terrible. There are people with Ph.D's, JD's and MA's on food stamps and unemployment insurance. Cutting Food stamps and unemployment insurance would undoubtedly impact GDP.
  
  
  http://www.huffingtonpost.com/2012/05/07/food-stamps-phd-recipients-2007-2010_n_1495353.html#s609260&title=10_South_Carolina
  
  
  
  This increase in spending is not a zero sum game no matter how much you wish to believe. Instead of just giving a free handout from these automatic stabilizers the government could hire them or contract with a private firm to hire them in the short term so they could get paid compensation for a valuable service rendered rather than just be on the dole...which is undoubtedly going to happen when the unemployment rate persists above 8% for year after year.
  
  
  There is no doubt that GDP would contract and the unemployment rate would go hire if those billions were cut from SNAP and unemployment insurance. We need to get them off the dole by exchanging that compensation for at least some valuable service rendered. That is why it is not stimulus spending and really just stabilization because people receiving the gubmint checks aren't producing anything valuable in exchange when there are things they could be doing for their nation or their state in the short term.
  
  

  What's holding us back is lack of private sector growth, which you need to PAY for all those leeching govt jobs you're lamenting the loss over. We're going backwards on education so, yeah, I'm not crying over a few teachers losing their jobs.

  
  That is nonsense. Like I've said we have gained back the 4.2 million private sector jobs that have been lost since January 2009 as the private sector has experienced a relatively robust recovery but the public sector; particularly at the state and local level has contracted...which did not happen under Ronald Reagan, Clinton or Bush Jr.; all three of them benefited from growth in the public sector.
  
  
  
  
  
  
  
  Additionally, despite Several on here continually referring to President Obama as anti-business; the Fortune 500 have done considerably well earning 824.5 billion dollars last year, crushing the 2006 record of 785 billion. So, despite this massive fear of Obama permeating the minds of business worldwide, the private sector is still growing and its biggest companies are doing very well.
  
  
  Furthermore, I'm not sure why you'd think going to a Republican would be a better bet for the private sector to grow. Since JFK, the private sector has gained 42 million jobs under democratic presidents as opposed to only 24 million under republicans.
  
  
  http://www.bloomberg.com/news/2012-05-08/private-jobs-increase-more-with-democrats-in-white-house.html
  
  
  you can see the chart here:
  
  
  http://www.bloomberg.com/chart/isqi31tjaZFo/
  
  
  
  Seems the confidence fairy has more confidence in democratic presidents than Republicans, no?
  
  But, Like I've said, what is holding us back is the cuts in state and local public sector jobs. There's a new report that without those cuts, the unemployment rate would be at 7.1% (let alone where it would if those jobs had grown at the rates they did under Bush Jr. or Reagan). From the WSJ no less.
  
  
  http://blogs.wsj.com/economics/2012/05/08/unemployment-rate-without-government-cuts-7-1/
  
  
• BoatShoes

  Cleveland Buck;1163487 wrote:Double digit inflation as measured by the CPI would be fantastic. It sure took care of unemployment in the 70s. What a prosperous time that was.

  Gas Prices Expected to Fall now
  
  http://www.msnbc.msn.com/id/42946338/ns/business-personal_finance/t/gas-prices-expected-fall-cents-summer/
  
  Where are BGfalcons and Cleveland Buck warning us about the imminent hyper-deflation???
• jmog

  BoatShoes;1166601 wrote:Gas Prices Expected to Fall now
  
  http://www.msnbc.msn.com/id/42946338/ns/business-personal_finance/t/gas-prices-expected-fall-cents-summer/
  
  Where are BGfalcons and Cleveland Buck warning us about the imminent hyper-deflation???

  Just in time for elections...hmm...lol
• QuakerOats

  ^^ since when was energy even counted in the equation? Another fallacy. But then again, when gas prices doubled under obama in just 2 years, the media didn't want to talk about it, but now that is has eased by 6% from the highs, the media wants to throw credit his way --- strange isn't it?
• QuakerOats

  Manhattan Buckeye;1165662 wrote: Universities need to explain why two semesters of tuition that was $20,000 in 2000 is now $45,000 in 2012.

  
  Thank you; a voice of reason.
• BoatShoes

  Manhattan Buckeye;1164646 wrote:This is so delicious I have to fisk this point by point:
  
  
  "It is clear that you don't want to understand. Your views are being tried and are failing."
  
  
  As opposed by the geniuses running things now. The idea that I should balance my checkbook likely is misunderstood now.

  
  The deficits being caused by automatic stabilization due to increased spending on SNAP and unemployment insurance and the payroll tax cut have all made sure we are better off than we otherwise would be. We could be doing much better but it is assured that if we tried to run a balanced budget right now it would be disastrously worse. Your checkbook is not analogous to a macroeconomy. Budgets should be balanced or in surplus when the economy is at full employment...not now.
  
  

  " Where were all of you people in 2005 demanding that government employees be fired? Firing Public Employees during an economic slump and putting them on unemployment insurance when we're no where close to full employment is lunacy. "
  
  
  Make that 2006 and I can tell you where I was, I wasn't demanding government employees be fired...

  
  Well you should have been. The time to cut government spending and inefficiencies in public employment is doing good economic times...not when there's not enough work available for millions who are already unemployed.
  
  

  "Even if a Teacher is not that great and could probably be fired; it makes no sense to do that en masse when interest rates are at zero because the Fed cannot offset the depressing effect of fiscal consolidation with lower rates. It is a recipe for higher unemployment and worse long term debt problems. "
  
  
  So public jobs are guaranteed. Got you there chief, I mean comrade. WTF does the interest rate have anything to do with it. In my world (reality) to keep a job there needs to be a job.

  
  
  
  No, public jobs are not guaranteed...they should just be more secure during bad economic times. A government job ought to be less secure during good economic times when government spending actually crowds out private investment. Your statement "what does the interest rate" have anything to do with it reveals your ignorance.
  
  
  When the economy is doing well, if the government runs a deficit, the central bank will keep interest rates higher then they might otherwise would have which will crowd out private investment. Thus, even though firing public employees will undoubtedly have a depressing effect on gdp...at low levels of unemployment with normal interest rates, the central bank can offset the contractionary effect by lowering the interest rate and the former public employee can find private employment.
  
  
  When rates are at zero...if you fire a public sector worker, the central bank cannot offset the depressing effect and there's no private sector job for him to find and he goes on the dole...exacerbating debt and deficit problems as well as the unemployment problem.
  
  In Reality, there are all kinds of jobs right now that the public might demand...for instance, building a mega wall on the border of mexico seems to be in high demand amongst tea partiers. Something like that could be down now, as opposed to during good economic times.
  
  
  
  

  "You can't start firing inefficient public employees until we're at full employment and interest rates can be cut when they're fired."
  
  
  Does your utopia extend to the private sector? Jobs for all! Who cares where the money comes from, we'll just invent it like the USSR early 80's.

  
  No, obviously not. The government and government employees are the producers of last resort. And investors are throwing money at the government right now to do it.
  
  
  "But just so we're clear; Manhattan Buckeye believes that you get to full employment by firing people and put them on unemployment insurance. "
  
  

  Liar. Liar. Liar. I said no such thing. Although as lousy as your points are I should feel flattered. I said nothing about full employment. We likely will never enjoy such, some people are unemployable.

  
  Well you never said as much...but you often complain about the state of the economy and the high unemployment rate and the dreary prospects for recent grads, etc. You also are combating me about whether or not it's a good thing to keep or fire public employees right now. Consequently, you seem to suggest that firing people will make our economy better and for that to happen the unemployment rate would have to come down.
  
  
  Additionally, full employment is probably around 5% these days in order to keep price stability. You don't think we could get there?
  
  

  But public sector workers shouldn't be shielded from economic realities because of some internet nut's strange economic theories - not even Keynes believed that.

  
  You're right. He thought they should be fired during good economic times if they're not good at their job. You consolidate during the boom not the bust as he would say.
  
  

  "Getting to full employment is the chief concern and concerns about inefficiencies in the public sector are secondary at this point."
  
  
  Problem solved, we all become government workers, half digging ditches and the other half filling them - where the money comes from we'll just play ignorant until the house of cards falls.

  
  We don't all have to become government workers. Just makes no sense to fire the ones we have and put them on the dole and even if they're not that good at their job their is productive activity they could do while investors are begging the treasury to take their money. (hint hint, that's where the money will come from).
  
  
  And here's the bottom line; you think that you some how had a good retort here as my post was "so delicious" you have to go through point by point. Yet, there seems to be little substance in your post. Mostly just calling me a communist, etc.
• BoatShoes

  QuakerOats;1166626 wrote:^^ since when was energy even counted in the equation? Another fallacy. But then again, when gas prices doubled under obama in just 2 years, the media didn't want to talk about it,

  ^Yes they did. The President of the United States has little to no effect on the price of gasoline. That is true when the price rises and that is true when the price falls.
• BoatShoes

  gut;1164650 wrote:The simple and obvious question which Boatshoes can't answer is....if running huge deficits is bankrupting Europe, then how is spending MORE money they don't have going to fix things? What happened to all the economic growth from all their govt spending and socialism? That dog hasn't hunted in years.

  "running deficits" isn't what is bankrupting Europe. It is all in the matter of "how" the deficit materializes. Is the government running a deficit because you've hired a bunch of people to build tanks, missiles, ships, bridges, etc. Or, is the deficit materializing because you're slashing spending and raising taxes in the belief that the confidence fairy will arrive and the private sector will be unleashed?
  
  The first is good, the second is bad. The second is what Europe is doing.
  
  This is Jean Claude Trichet; the President of the European Central Bank, in 2010. Notice how much he sounds just like Gut:
  
  "As regards the economy, the idea that austerity measures could trigger stagnation is incorrect."
  
  Incorrect?
  
  “Yes. In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation. I firmly believe that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”
  
  
  And how successful has that been???
  
  
  Oh Confidence Fairy? Wherefore Art Thou Confidence Fairy?
• gut

  Europe is slashing budgets because they have no money and no one to give them any. Period. Their current mess is all a result not of auterity measures, but of years of anemic growth stemming from huge deficits to fund unbridled socialism. There is a cost, apparently, to paying people to sit on their ass.
  
  You can't blame austerity for stagnation and anemic growth when that is what you had to begin with. Go take a gander at Robert Barro's article in today's WSJ (I think today, it's online). Again, you keep confusing the impact of a debt/financial crisis with austerity. Unemployment has been steadily rising since 2008 from your own chart, and a short period of stability hardly makes a case against "austerity" in what is absolutely a structural problem in Europe, one brought about in part by reckless deficit spending.
  
  The Keynesian model has failed in Japan, failed in Europe, and it's failing in the US. You can pretend all you want that the answer is MORE govt spending and pretend like the huge deficits aren't weighing tremendously on growth. Austerity is the only choice, and if the US doesn't get things in order before it's too late then we will end-up just like Europe and Japan.
• BoatShoes

  gut;1166698 wrote:Europe is slashing budgets because they have no money and no one to give them any. Period. Their current mess is all a result not of auterity measures, but of years of anemic growth stemming from huge deficits to fund unbridled socialism. There is a cost, apparently, to paying people to sit on their ass.
  
  You can't blame austerity for stagnation and anemic growth when that is what you had to begin with. Go take a gander at Robert Barro's article in today's WSJ (I think today, it's online).
  
  The Keynesian model has failed in Japan, failed in Europe, and it's failing in the US. You can pretend all you want that the answer is MORE govt spending and pretend like the huge deficits aren't weighing tremendously on growth. Austerity is the only choice, and if the US doesn't get things in order before it's too late then we will end-up just like Europe and Japan.

  
  I read Robert Barro has an op-ed in the WSJ today making a mistake liable to be made by an undergrad. Truly mindblowing. I'm shocked, and a bit saddened, at how sloppy the op-ed is. The countries Barro cites show, about as clearly as economic data can show anything, that austerity is a failure. It was precisely Greece, Ireland, and Portugal that implemented major austerity programs -- they got weak growth and high deficits. Germany and Sweden maintained high government spending -- they got strong growth and low deficits.
  
  
  Yet he proclaims Germany and Sweden as proof austerity works! LoL! Germany for instance required private firms to only engage in temporary lay-offs rather than permanent lay-offs with the government paying 80% of the wages! This is in direct conformity with Keynesian economic philosophy because the aim is to prevent a drop in aggregate demand which will lead to spiraling job losses, thereby aggravating and prolonging a recession. The last thing Professor Barro wants to do is to use Germany or Sweden as examples because these countries are heavily invested in social programs and stimulus as a reason why austerity works.
  
  
  Barro ignores actual austerity programs (or any consideration of government spending) and just compares deficits and growth after the crisis; he then compounds the problem by assuming that deficits cause low growth, rather than the other way around. Prof. Barro is a smart scholar, but he's clearly just playing for team republican! Unreal!
  
  
  And further, it's Republicans that want to pay people to sit on there ass because they want to fire public employees with spending cuts and then put them on unemployment insurance while they wait for the confidence fairy to spur private job creation! I'd rather pay them to produce something for the state, local or national government for the short term!
• QuakerOats

  ^^ fiscal austerity must be paired with business-friendly accomodation. This is the major component sadly being missed in Europe, and they shall pay the price.
• QuakerOats

  Great piece:
  
  http://www.freedompolitics.com/news/greece-3579-don-union.html
  
  Why the Death of Europe is America's Opportunity.
• gut

  BoatShoes;1166704 wrote:... that austerity is a failure. It was precisely Greece, Ireland, and Portugal that implemented major austerity programs -- they got weak growth and high deficits. Germany and Sweden maintained high government spending -- they got strong growth and low deficits.

  Good lord....let me try to say it more slowly and clearly for you.
  
  The issue is FORCED austerity. They were out of options. What you are blaming "austerity" for is really attributable to out-of-control deficits and lack of available financing (i.e. NOT the case with Germany and Sweden, which is why they are able to have a more managed austerity program, the sort I've argued for). It is the typical debt overhang you can observe with companies in the stock market all the time.
  
  And the one thing Barrow got right is you have no evidence the alternative to austerity is any better. None. It's just a belief Keynesians continue to hang on to despite evidence to the contrary in Japan and Europe. Massive deficit spending is unsustainable, yet that it exactly the logical fallacy you continue to commit in arguing against "austerity".
  
  Flat out the bottom line is you can't run deficits forever. There is a tipping point that Europe is past, and the US is barreling toward. You don't seem to understand this. I don't disagree with Keynesian economics, but there clearly are limits you and the diehards are incapable of acknowledging.
• IggyPride00

  

  Banking reform really worked.
  
  JP Morgan, who moved its derivatives tading unit into the FDIC protected banking deposit arm, lost 2 Billion dollars today on wildly risky bets with the number likely to grow signficantly.
  
  Now the taxpayers are on the hook for all there CDS exposure if the department blows up, but at least they can borrow from the Fed window practically for free.
  
  Glass Steagal was a good thing, and we are still paying the price for its repeal today.
  
  Wall Street really learned its lesson.
• pmoney25

  

  You can't be successful with austerity programs by going after welfare spending first. Stop Corporate Subsidies, Cut Defense Spending, reduce regulations. You can add in tax reform also to that. Then once people actually have money and jobs, you can start to cut back on Welfare Programs. If you just go straight after welfare and cut government programs. You are going to have riots and situations where people are getting voted out every election.
  
  You have to limit government power as well as cut spending to fix this problem.
• Footwedge

  IggyPride00;1167291 wrote:Banking reform really worked.
  
  JP Morgan, who moved its derivatives tading unit into the FDIC protected banking deposit arm, lost 2 Billion dollars today on wildly risky bets with the number likely to grow signficantly.
  
  Now the taxpayers are on the hook for all there CDS exposure if the department blows up, but at least they can borrow from the Fed window practically for free.
  
  Glass Steagal was a good thing, and we are still paying the price for its repeal today.
  
  Wall Street really learned its lesson.

  Repeat after me. "Privatize the profits, socialize the losses." Mission statement of the banking cartel. But we need rich bankers..they create jobs you know...especially bankruptcy lawyers and foreclosure agents.
• IggyPride00

  

  Footwedge;1167528 wrote:Repeat after me. "Privatize the profits, socialize the losses." Mission statement of the banking cartel. But we need rich bankers..they create jobs you know...especially bankruptcy lawyers and foreclosure agents.

  I have to admit, it is niice to see Jamie Dimon (I'm the smartest banker in the world) with some egg on his face.
  
  He has been more vocal than anyone about his opposition to the Volcker rule, but at least admitted today that this episode isn't exactly helping his case as what happened with JP Morgan is exactly what the rule is supposed to guard against.
  
  The most comical thing of all though is that synthetic credit products were supposed to hedging their risk on things. Those things are financial WMD's, and have no business being anywhere near a traditional banking model that has access to the Fed window. They have rigged the game so bad it is laughable.
• Cleveland Buck

  

  First of all, spending more than you bring in, even if it slightly less than before, is not austerity. Second of all, of course the government massaged GDP numbers will fall if spending is cut. They count that in the GDP. If you have a private economy, cuts in government spending are a Godsend if you also prevent the government from interfering in the process of letting markets clear. Of course they have almost no private economy in Europe, and we have less and less of one here every day, so "austerity" will definitely show declines in GDP growth and we would "fall back into recession". The reality is that we never left the recession. It is debatable whether or not we ever left the 2000-2001 recession. Pumping money into the GDP figure that was printed and/or borrowed does not at all signify real economic growth.
  
  We are reaching the planned economy end game. Governments are not bound by the price system and profit-and-loss test, so they have no idea how to efficiently create jobs or manage an economy. Only free people acting in a free economy can do it. The U.S. government has tried everything they can to blow up another artificial bubble, and they have, but that bubble is in treasuries, so that cheap credit is flowing where the bubble formed, federal spending.
  
  This is the final bubble though, because when it bursts you will have two options. The federal government defaults or the Fed monetizes 100% of treasury debt and the dollar is destroyed.
• Cleveland Buck

  

  IggyPride00;1167291 wrote: Glass Steagal was a good thing, and we are still paying the price for its repeal today.

  It is easy to blame everything on deregulation when people don't look at or even understand the whole picture.
  
  Say a volcano is ready to erupt. Lava is heading toward the surface. Regulations try to plug the cracks in the Earth. Deregulating unplugs the cracks. No matter what you do to the cracks the lava is going to get out.
  
  Easy Fed money/credit will always find a crack from which to escape, a bubble to inflate, no matter what the regulators do. There is only one solution.
• Cleveland Buck

  

  IggyPride00;1167533 wrote: The most comical thing of all though is that synthetic credit products were supposed to hedging their risk on things. Those things are financial WMD's, and have no business being anywhere near a traditional banking model that has access to the Fed window. They have rigged the game so bad it is laughable.

  Everyone has access to the Fed window. Well, everyone they deem worthy. The Fed window was bailing out Ford and GM before Congress was. They are bailing out Europe as we speak.
  
  The debt instruments are not the problem. The amount of easy credit flying around Wall Street giving them money to get reckless with them is the problem. Well that and the existence of a lender of last resort to bail them out.
• IggyPride00

  

  Cleveland Buck;1167545 wrote:It is easy to blame everything on deregulation when people don't look at or even understand the whole picture.
  
  Say a volcano is ready to erupt. Lava is heading toward the surface. Regulations try to plug the cracks in the Earth. Deregulating unplugs the cracks. No matter what you do to the cracks the lava is going to get out.
  
  Easy Fed money/credit will always find a crack from which to escape, a bubble to inflate, no matter what the regulators do. There is only one solution.

  It's alot easier to make bets when you have access to the FED window than when you don't.
  
  Allowing banks to use customer deposits to make wild bets as we saw w/ J.P Morgan is an example of why that wall needs to be there.
  
  We had 50+ years of relative stability before things went totally haywire when we tore that wall down.
• Cleveland Buck

  

  IggyPride00;1167548 wrote:It's alot easier to make bets when you have access to the FED window than when you don't.
  
  Allowing banks to use customer deposits to make wild bets as we saw w/ J.P Morgan is an example of why that wall needs to be there.
  
  We had 50+ years of relative stability before things went totally haywire when we tore that wall down.

  Correlation does not imply causation. The shit was going to hit the fan with or without deregulation. And Glass Steagall never prevented any banks from dealing in CDOs and other derivatives anyway.
  
  And banks should not be using demand deposits to gamble with. That is the solution. Not trying to plug cracks in the earth with your fingers.
  
  How do you stop banks from gambling with customer demand deposits? You eliminate deposit insurance and when a bank can't redeem a customer's deposit you close their doors and throw the bank owner in prison for fraud.