Re: US defaulting ...

by Allan D Fri 29 Jul 2011, 17:52

skully wrote:US = Fat and lazy, and starting to pay the price in spades.

Skully = No stereotype left unturned.

Yep, exactly right. Nothing but Microsoft and McDonald's. Who'd want to live there?

Mexican wave

by Allan D Fri 29 Jul 2011, 17:56

The One wrote:look across the waters to germany

Deutschland erwache aus deinem bösen Traum!
Gib fremden Juden in deinem Reich nicht Raum!
Wir wollen kämpfen für dein Auferstehn
Arisches Blut soll nicht untergehen!

by lardbucket Sat 30 Jul 2011, 01:56

Allan D: No Pavlovian bell left unrung

by JGK Sat 30 Jul 2011, 04:29

Allan D wrote:I agree that the Greeks would be better off if they had retained their own currency but increasing the money supply, either through the priniting press or EU and IMF bailouts, does not solve your problems. It just makes them worst by adding inflation making you less competitive thus turning you into a bigger credit risk. It's the equivalent of paying off your loans with your credit card.

There is no pain-free solution, as is often fondly imagined on the left. Taxing all those earning $200,000> at 100% wouldn't cover the US' social security bill for 3 months. The only solution to indebtedness is solvency. To do that you have to begin by cutting your outgoings which are responsible for pushing up the debt in the first place.

Obama has been more than reasonable so far.

by Bradman Sat 30 Jul 2011, 05:46

JGK wrote:
Allan D wrote:I agree that the Greeks would be better off if they had retained their own currency but increasing the money supply, either through the priniting press or EU and IMF bailouts, does not solve your problems. It just makes them worst by adding inflation making you less competitive thus turning you into a bigger credit risk. It's the equivalent of paying off your loans with your credit card.

There is no pain-free solution, as is often fondly imagined on the left. Taxing all those earning $200,000> at 100% wouldn't cover the US' social security bill for 3 months. The only solution to indebtedness is solvency. To do that you have to begin by cutting your outgoings which are responsible for pushing up the debt in the first place.

Obama has been more than reasonable so far.

So was Chamberlain.

Like ramping up defence spending on an unworkable missile shield to bankrupt a country that couldn't feed itself in the good times and thus "winning" the Cold War at the expense of any reasonable social security net a country as rich as the US could afford?

On any cost/benefit analysis, spending on social security is cheaper than the costs of rectifying the consequences of not spending on social security. You've already pointed out some filthy rich US companies don't pay a lot ( if any ) tax anyway and have previously said this was good because it allowed certain sectors to compete with overseas markets. (See your post on private aircraft). As not taxing the rich doesn't seem to have helped the economy, let's give milking the bastards a whirl.

by Allan D Sat 30 Jul 2011, 10:42

lardbucket wrote:Allan D: No Pavlovian bell left unrung

Is that a woof?

snoopy-dance

by Allan D Sat 30 Jul 2011, 11:50

Bradman wrote:
JGK wrote:
Allan D wrote:I agree that the Greeks would be better off if they had retained their own currency but increasing the money supply, either through the priniting press or EU and IMF bailouts, does not solve your problems. It just makes them worst by adding inflation making you less competitive thus turning you into a bigger credit risk. It's the equivalent of paying off your loans with your credit card.

There is no pain-free solution, as is often fondly imagined on the left. Taxing all those earning $200,000> at 100% wouldn't cover the US' social security bill for 3 months. The only solution to indebtedness is solvency. To do that you have to begin by cutting your outgoings which are responsible for pushing up the debt in the first place.

Obama has been more than reasonable so far.

So was Chamberlain.

Like ramping up defence spending on an unworkable missile shield to bankrupt a country that couldn't feed itself in the good times and thus "winning" the Cold War at the expense of any reasonable social security net a country as rich as the US could afford?

On any cost/benefit analysis, spending on social security is cheaper than the costs of rectifying the consequences of not spending on social security. You've already pointed out some filthy rich US companies don't pay a lot ( if any ) tax anyway and have previously said this was good because it allowed certain sectors to compete with overseas markets. (See your post on private aircraft). As not taxing the rich doesn't seem to have helped the economy, let's give milking the bastards a whirl.

Except it wouldn't solve the problem and could well make it worse due to a well-explained phenomenon known as the Laffer curve:

The Laffer Curve

Taxing the rich until the pips squeak may make left-wingers feel good but it will hardly yield more revenue. In fact it is likely to yield less as the wealthy take advantage of tax loopholes, hide more of their income in tax shelters such as offshore trusts, emigrate to less taxing climes or simply pay themselves less. This was true in the UK in the 1960s when the top rate of earned income tax was 98% and that on unearned income (such as through investments) was 102%.

Also since it is rich people who provide employment for the less well-off increasing taxes at any level in a a situation where there is already a 9.5% unemployment level (which is the voters' chief beef against Obama) is hardly likely to improve the general revenue situation since unemployed people do not pay income tax and are in receipt of social security. Depriving Bill Gates of his wealth is hardly likely to increase the number of people working for Microsoft.

When Lawson reduced the top rate of income tax to 40% in 1985 tax revenues from top earners actually doubled, not because there was a sudden increase in their wealth (although there was due to the reduction in tax) but because it was no longer economic to employ accountants and lawyers to avoid paying the taxman. An increase in tax revenures following a reduction in taxes also occcurred in the US when Reagan and Bush Jnr. cut taxes on the rich, an aspect of their policies the left choose to ignore.

This empirical evidence on both sides of the Atlantic (in other countries too such as Australia under Hawke-Keating) proves the existence of the Laffer Curve, imo. If you want General Electric to pay more, indeed any, federal taxes on its US turnover (it of course pays state and payroll taxes), which it should, then corporate taxes should be reduced along with the abolition of existing corporate tax loopholes.

It is also a myth that the US tax system is not already highly progressive and that the rich already carry their fair share, and arguably more than their fair share, of tax revenue. In 2008 the top 10% of income earners - roughly those earning $150,000 and above, paid 70% of US federal income tax revenues. The top 1% paid 38% of Fedral revenues whereas the bottom 50% paid only 3% of Federal revenues and 49% of US households paid no Federal income tax at all (of course they paid local state, property and indirect taxes too) and this was in the bad old days of George W Bush!

Percentage of Federal Income Taxes (2008)

When Obama talks about "burden-sharing" he would do well to look to his own supporters. I do agree with your analogy of Obama to Chamberlain though. However those he is seeking to appease are not the Tea Party or the wicked Republicans generally but his own far-left supporters. The original (and only) plan he put on the table included cuts in so-called entitlement programmes such as means-testing the Medicare programme forcing the elderly rich to pay more towards their medical costs but this drew forth such howls of outrage from his own supporters, particularly amongst the unions who operate very generous medical benefits for their members (which has resulted in Obama exempting them from his own supposedly universal healthcare programme) and whose support he needs in his re-election campaign next year that the plan was withdrawn.

Subsequently Obama adopted a harsher rhetoric depicting, quite wrongly, the Republican opposition as the obstacle. Noone but a small handful on the Republican side has opposed raising the debt ceiling. Noone but a small handful on the Democratic side in Congress does not believe that before the debt ceiling can be raised a fiscal plan must be put in place to curb the ever-burgeoning increases in government spending.

The "Party of No", preventing agreement has been Obama himself, more concerned about his re-election prospects than the stability of the US and wider global economies.

by CT Sat 30 Jul 2011, 12:04

they will need to do both raise taxes and cut spending how hard is that to understand and they need to create new opportunities for their own people to start off manufacturing and maybe a new service industry.

well a carbon tax could mean that they can create technology for cleaner energy and parts for that. new technology gives new opportunities. {TIC}

by Allan D Sat 30 Jul 2011, 13:09

Bit of a logical contradiction there. Higher taxation discorages economic activity. Also the biggest investor in green technology has been Spain which currently has a 25% unemployment rate.

by Henry Sat 30 Jul 2011, 13:27

CT wrote:they will need to do both raise taxes and cut spending how hard is that to understand and they need to create new opportunities for their own people to start off manufacturing and maybe a new service industry.

well a carbon tax could mean that they can create technology for cleaner energy and parts for that. new technology gives new opportunities. {TIC}

AND you support a carbon tax. Wow, you hardly forum but I already hate you.

by Zat Sat 30 Jul 2011, 22:30

CT is an Aussie. Would have thought that was enough for you.

by bodyline Mon 01 Aug 2011, 04:17

JGK wrote:On the good side, I've been forced to reduced my exposure to shares over the last month.

On the bad side, it's because we bought a house so now our exposure is to the propoerty market

Yet the market is still soft? Why buy now???

by WideWally Mon 01 Aug 2011, 06:35

http://www.theaustralian.com.au/national-affairs/us-debt-warning-were-all-exposed/story-fn59niix-1226105878661

.

by JGK Mon 01 Aug 2011, 15:05

bodyline wrote:
JGK wrote:On the good side, I've been forced to reduced my exposure to shares over the last month.

On the bad side, it's because we bought a house so now our exposure is to the propoerty market

Yet the market is still soft? Why buy now???

We needed a house.

by Henry Mon 01 Aug 2011, 15:06

So the US delays the inevitable. It's all gonna come crashing down sooner or later.

by JGK Mon 01 Aug 2011, 15:14

US markets are down today so they seem to agree with you.

by skully Tue 02 Aug 2011, 04:28

So is X a batsman or a bowler, JGK? No, that's BabyK3 in you avatar, isn't it? Please tell me he has a good wrong'un?

And I see the anti-default vote got through the House. Now for the Senate.

by JGK Tue 02 Aug 2011, 04:51

That's V3. He's more likely to be a prop for the Wallabies if I'm honest.

by skully Tue 02 Aug 2011, 05:38

Bah, TGM started out solid as. Get that red ball in his hand - NOW!!!!

by embee Tue 02 Aug 2011, 05:44

Wallabies Prop and Oz spinner both seem like lottery selections lately ...he could do both

by JGK Tue 02 Aug 2011, 06:02

He is the easily the most coordinated of all my kids (which isn't saying much) so who knows. However, I still see any sporting greatness lying in power sports.