Economic Shitstorm coming, but not for 5 years

[Wiseacre]

Interesting piece in the NYT, which ordinarily I detest but this one is worth reading IMHO. I've seen plenty of doomsday prophecies where the US and world economies will tank in 2011 or 2012, or 2013. And maybe so, but this pov is a little less imminent. I do think we should not raise taxes at all until the economy has significantly stengthened and unemployment is back down to reasonable levels, say 7%. Instead of raising rates, we should be looking at the most egregious tax breaks and loopholes and correcting them, for both income and corporation taxes.

And I do think we should be cutting spending, but not as draconian as some have suggested. There was a report that came out a month or 2 back that talked about duplicate, obsolete, or ineffective programs that currently exist in the federal gov't. You know, like 10 different agencies all doing the same thing. Why the hell don't we go find and eliminate that stuff first? Maybe save as much as a couple hundred billion a year, maybe a trilllion and a half or 2 trill over 10 years.


"
The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.
What needs to be done now is to design a long-term plan to reduce fiscal deficits in the future. The authors contend that such a program would “reassure the markets, keep interest rates low and instill greater confidence and certainty about future tax and spending policies, thereby encouraging businesses to commit their resources to job-creating investment projects.”
"


http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1&pagewanted=all

 

[boedicca]

Translation: It's going to get worse than that much more quickly.

 

[percysunshine]

The NYT is usually the last to cotton on to something.

 

[Truthmatters]

The tax rate on the top during the great depression recovery was an average of 88% from what I recall.


Yes we can raise taxes on the very people who benifited from this crash.

Its been proven that doesnt stop a recovery.

History has already shown us that.

 

[Truthmatters]

Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy. Written with Marc Hinterschweiger, a research analyst there, the report states plainly: “That government debt will grow to dangerous and unsustainable levels in most advanced and many emerging economies over the next 25 years — if there are no changes in current tax rates or government benefit programs in retirement and health care — is virtually beyond dispute.”

From your won article.

If we dont raise the taxes we cant keep the programs.

Easy one, we have historically low tax rates on the top levels right now

 

[boedicca]

High taxes and excessive regulation during the Great Depression prolonged it, you sad ninny.

What about World War II? We need to understand that the near-full employment during the conflict was temporary. Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make. The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.

No one knew this more than FDR himself. His key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. The president believed a New Deal revival was the answer—and on Oct. 28, 1944, about six months before his death, he spelled out his vision for a postwar America. It included government-subsidized housing, federal involvement in health care, more TVA projects, and the "right to a useful and remunerative job" provided by the federal government if necessary.

Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.

Congress—both chambers with Democratic majorities—responded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.

Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945. ...

Burt Folsom: Did FDR End the Depression? - WSJ.com


And as usual, TMN complete neglects the concept of inflation. That $200,000 in 1940 is the equivalent of $3.2M today. And yet, families with $250,000 of income are the targets for punitive taxation in Obamanomics.

 

[sparky]

instead of the usual tax/benifit economic myoptism which will in all likelyhood amount to the usual flung factiod demise , because not even a team of NY lawyers can sort it out, why can't the more obvious economic results be forwarded?

for instance, we have a growing disparity , inequity, all serving as indicators to prove a decline , one that , despite minorities who rode the waves of past bubbles to success, have affected the majority now for a generation

in short, our policies of the past aren't working out in the long run here. and that would be an all inclusive umbrella view, inclusive of foriegn policy , immigration , trade, unions, the SEC, IRS, HS, EPA, OSHA, SCOTUS (et all gov oversight) who seem to no longer have a vested interest in America

 

[waltky]

Gonna take some time, stay the course, a thousand points of light at the end of the tunnel...

28 Months Later, Obama Says: Recovery’s ‘Going to Take Time’
Sunday, June 12, 2011 - Twenty-eight months ago—on Feb. 13, 2009--Congress passed a $787-billion economic stimulus law and sent it to President Barack Obama who signed it while declaring it would create or save 3.5 million jobs.

This Saturday, in his weekly address, President Obama pointed to his predecessors for causing problems in the economy and indicated a full recovery would not come soon. “I wish I could tell you there was a quick fix to our economic problems,” Obama said. “But the truth is, we didn’t get into this mess overnight, and we won’t get out of it overnight. It’s going to take time.” When Obama signed the stimulus, the most recent unemployment statistics (for January 2009) showed a national unemployment rate of 7.8 percent. Obama’s economic advisers had predicted the stimulus would keep the national unemployment rate below 8 percent.

Yet, today, the national unemployment rate is 9.1 percent. Since President Obama signed the stimulus law, the Congressional Budget Office has also re-estimated its true cost to be $830 billion. In fact, according to a Congressional Budget Office analysis published in May, the maximum number of jobs created or saved as a result of the stimulus through the second quarter of this calendar year (which ends in June) will be 2.9 million. The CBO estimated that it was also possible the jobs created or saved by the stimulus by the end of this quarter might be as few as 1.0 million. More importantly, according to the CBO, the economic impact of the stimulus is already waning.

“The effects of ARRA on output peaked in the first half of 2010 and have since diminished, CBO estimates,” said CBO. “The effects of ARRA on employment and unemployment are estimated to lag slightly behind the effects on output; CBO estimates that the employment effects began to wane at the end of 2010 and continued to do so in the first quarter of 2011.” By 2012, according to the CBO, number of jobs on average that Obama can claim were created or saved by the stimulus will range from a low of 200,000 to a high of 700,000. Even if you take the CBO’s high-end estimate of 700,000 jobs, that works to more a cost of $1,185,714 per job.

28 Months Later, Obama Says: Recovery

 

[FiscalSanity]

Monkeying around with the tax rates might make good political theatre, but as long as you have a tax code that's longer then most novels (and not nearly as interesting) do any of you honestly think it's going to make much a of a difference to what is actually collected? It's so complicated that tax accountants have to specialize in specific areas, and the code is the perfect example of there being an exception for every rule.

What we really need is a politician with balls to stand up and propose that we totally throw out the existing tax code, and replace it with something that is simple enough that anyone can understand it. No exemtions. No loopholes. No credits for mortgage interest, kids, etc. We can use a progressive scale income tax if we really want, though I'm starting to come to the conclusion that a 10-15% Value added tax on all non food sales would be fairer.

We also need to fix the whole concept of the capital gains tax. Income earned off of investments is income, pure and simple, and there is no logical reason to tax is at a lower rate as if it were somehow special. If we're going to have some form of income tax then the money managers should be paying the full rate on their investment profits, not the 20-25% less they get today.

 

[Wiseacre]

I do not see how our economy can flourish without a significant degree of certainty over such things as taxes, energy, regulations, and all the other factors that go into the decision making for starting or expanding a business. Whatever is decided has to be bi-partisan, we can't be having one party left out and as a result hell-bent to repeal the other side's programs when they get back into power. If businessmen and consumers do not see stability coming out of Washington then stability does not really exist. Things will marginally get better and the economy will improve, but to a lesser extent than might otherwise be the case if we continue to witness the lack of proper governance that has prevailed for some time now.

In short, we can do better, but we're not going to until forced to. Unfortunately, I think that means a very bad time for everybody (depression) is the only catalyst that is strong enough. Hope I'm wrong.

 

[Toronado3800]

High taxes and excessive regulation during the Great Depression prolonged it, you sad ninny.

What about World War II? We need to understand that the near-full employment during the conflict was temporary. Ten million to 12 million soldiers overseas and another 10 million to 15 million people making tanks, bullets and war materiel do not a lasting recovery make. The country essentially traded temporary jobs for a skyrocketing national debt. Many of those jobs had little or no value after the war.

No one knew this more than FDR himself. His key advisers were frantic at the possibility of the Great Depression's return when the war ended and the soldiers came home. The president believed a New Deal revival was the answer—and on Oct. 28, 1944, about six months before his death, he spelled out his vision for a postwar America. It included government-subsidized housing, federal involvement in health care, more TVA projects, and the "right to a useful and remunerative job" provided by the federal government if necessary.

Roosevelt died before the war ended and before he could implement his New Deal revival. His successor, Harry Truman, in a 16,000 word message on Sept. 6, 1945, urged Congress to enact FDR's ideas as the best way to achieve full employment after the war.

Congress—both chambers with Democratic majorities—responded by just saying "no." No to the whole New Deal revival: no federal program for health care, no full-employment act, only limited federal housing, and no increase in minimum wage or Social Security benefits.

Instead, Congress reduced taxes. Income tax rates were cut across the board. FDR's top marginal rate, 94% on all income over $200,000, was cut to 86.45%. The lowest rate was cut to 19% from 23%, and with a change in the amount of income exempt from taxation an estimated 12 million Americans were eliminated from the tax rolls entirely.

Corporate tax rates were trimmed and FDR's "excess profits" tax was repealed, which meant that top marginal corporate tax rates effectively went to 38% from 90% after 1945. ...

Burt Folsom: Did FDR End the Depression? - WSJ.com


And as usual, TMN complete neglects the concept of inflation. That $200,000 in 1940 is the equivalent of $3.2M today. And yet, families with $250,000 of income are the targets for punitive taxation in Obamanomics.

Damn war and the destruction of every competing economy in the world. We will never be able to damn the new deal conclusively.

Would it be fair to say though a tad bit of socialism goes a far way in preventing a socialist revolution during one of the decades when capitalism rears its ugly head for feeding?

Not that I am sold on the recovery or inspired by Obamanomics, but before you reply too quickly that Obama has ruined our recovery with deficit spending consider any negative effects of the spending increase will be seen when it is time to pay off the debts. During that first month you've gotten your credit card and maxed it out life is good.

 

[waltky]

Obama must be listenin' to the economists...

Economists warn against any new Fed action
6/13/2011 WASHINGTON — Survey shows sentiment is that the economy needs time to heal, not stimulus

The best cure for the economy now is time. That's the overwhelming opinion of leading economists in a new Associated Press survey. They say the Federal Reserve shouldn't bother trying to stimulate the economy — and could actually do damage if it did. The economists are lowering their forecasts for job creation and economic growth for the rest of this year, mainly because of high oil prices. A batch of bleak data over the past month has suggested that the 2-year-old economic recovery is slowing.

The economists now expect the nation to create 1.9 million jobs this year, about 200,000 fewer than when they were last surveyed eight weeks ago. They expect the unemployment rate, now 9.1 percent, to be 8.7 percent at year's end. Before, they expected 8.4 percent. Despite their gloomier outlook, 36 of the 38 economists surveyed oppose any further efforts by the Fed to invigorate growth. The Fed has already cut short-term interest rates to near zero. And it's ending a program to buy $600 billion in Treasury bonds to keep longer-term rates low to help spur spending and hiring.

The economists say another round of bond-buying wouldn't provide much benefit, if any. And some fear it could make things worse by unleashing high inflation and disrupting financial markets. When it buys bonds, the Fed in effect prints massive amounts of money. All that extra money in the system raises the nominal value of the things we buy, weakening the dollar, and it can create bubbles in the prices of stocks and commodities.

What the economy needs most, says John Silvia, chief economist at Wells Fargo, is time. Consumers must further shrink huge debts amassed in the mid-2000s. And the depressed housing market needs time to recover from a collapse in prices and sales. "There are no magic bullets," Silvia says. "A lot of this stuff just really needs to be dealt with. It's not a question of stimulus." In Washington, there's little appetite for major spending projects to try to strengthen the economy. Lawmakers are focused instead on whether to raise the nation's borrowing limit and how to cut its long-term debt.

More Economists warn against any new Fed action - Business - Stocks & economy - msnbc.com

 

[waltky]

Granny havin' to give away so many apples to peoples outta work, she ain't hardly makin' any money...

Fed: US Economy Growing More Slowly Than Expected
June 22, 2011 - The head of the U.S. central bank says the economy is growing more slowly than expected.

U.S. Federal Reserve Chairman Ben Bernanke Wednesday that the slower growth is due to temporary problems such as the disruptions caused by Japan's earthquake and an increase in gasoline prices. The Fed's experts now expect around 2.8 percent growth this year, which is about four-tenths of a percentage points lower than earlier estimates.

In a meeting with journalists, Bernanke also said unemployment is declining from its current 9.1 percent, but at a "frustratingly" slow pace. The Fed predicts the jobless rate will fall as low as 7 percent in 2013.

The economic assessment comes after two days of consultations among top bank officials and follows several disappointing economic reports. Fed officials voted to keep interest rates steady in the ultra-low range of zero to 0.25 percent where they have been for some time.

Source

 

[waltky]

Mebbe the economy is gettin' better?...

Shoplifting on the rise: A sign of recovery?
June 24, 2011: That latest sign of an economic recovery: shoplifting is back.

Typically, an increase in shoplifting is believed to be an indicator of tough economic times. But a recent study by the National Retail Federation, which found that retail theft by employees is on the rise, says the recent spike in stealing could very well mean the economy is on the upswing. According to the National Retail Federation's security survey, inventory shrinkage -- which is the retail value of lost merchandise -- cost retailers more than $37 billion in 2010, up from $33.5 billion in 2009.

The losses were largely due to employee theft, the survey said, followed by shoplifting by customers, administrative error and vendor fraud. The survey polls roughly 140 retailers year after year. "A lot of times shoplifting is an inside job," said Jim Angel, associate professor of finance at the McDonough School of Business at Georgetown University. When the economy hit its lowest point, employees were primarily consumed with keeping their jobs, said Richard Hollinger, a criminology professor at the University of Florida and author of the security survey.

Workers were deterred from stealing simply because even minimum-wage jobs in retail were scarce. "They were so worried about their future, their families and paying the mortgage, they realized this is what is keeping their family afloat," Hollinger said. Shoplifting rates fell significantly in 2007. But as the recovery takes hold, shoplifting rates are on the rise again. As employees feel more secure in their positions, they may be more inclined to take some risks, Angel said.

At the same time, employers drastically reduced head counts during the recession, which left fewer employees on the floor with heavier workloads in the early stages of the recovery. As workers feel more disgruntled, theft becomes "very tempting," Hollinger said, "especially if they feel that the company can afford it and they're being paid minimum wage."

MORE

 

[Big Fitz]

Interesting piece in the NYT, which ordinarily I detest but this one is worth reading IMHO. I've seen plenty of doomsday prophecies where the US and world economies will tank in 2011 or 2012, or 2013. And maybe so, but this pov is a little less imminent. I do think we should not raise taxes at all until the economy has significantly stengthened and unemployment is back down to reasonable levels, say 7%. Instead of raising rates, we should be looking at the most egregious tax breaks and loopholes and correcting them, for both income and corporation taxes.

And I do think we should be cutting spending, but not as draconian as some have suggested. There was a report that came out a month or 2 back that talked about duplicate, obsolete, or ineffective programs that currently exist in the federal gov't. You know, like 10 different agencies all doing the same thing. Why the hell don't we go find and eliminate that stuff first? Maybe save as much as a couple hundred billion a year, maybe a trilllion and a half or 2 trill over 10 years.


"
The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.
What needs to be done now is to design a long-term plan to reduce fiscal deficits in the future. The authors contend that such a program would “reassure the markets, keep interest rates low and instill greater confidence and certainty about future tax and spending policies, thereby encouraging businesses to commit their resources to job-creating investment projects.”
"


http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1&pagewanted=all

If we're lucky... it'll be only 5 years out. Unlucky, this year.

 

[Big Fitz]

Mebbe the economy is gettin' better?...

Shoplifting on the rise: A sign of recovery?
June 24, 2011: That latest sign of an economic recovery: shoplifting is back.

Typically, an increase in shoplifting is believed to be an indicator of tough economic times. But a recent study by the National Retail Federation, which found that retail theft by employees is on the rise, says the recent spike in stealing could very well mean the economy is on the upswing. According to the National Retail Federation's security survey, inventory shrinkage -- which is the retail value of lost merchandise -- cost retailers more than $37 billion in 2010, up from $33.5 billion in 2009.

The losses were largely due to employee theft, the survey said, followed by shoplifting by customers, administrative error and vendor fraud. The survey polls roughly 140 retailers year after year. "A lot of times shoplifting is an inside job," said Jim Angel, associate professor of finance at the McDonough School of Business at Georgetown University. When the economy hit its lowest point, employees were primarily consumed with keeping their jobs, said Richard Hollinger, a criminology professor at the University of Florida and author of the security survey.

Workers were deterred from stealing simply because even minimum-wage jobs in retail were scarce. "They were so worried about their future, their families and paying the mortgage, they realized this is what is keeping their family afloat," Hollinger said. Shoplifting rates fell significantly in 2007. But as the recovery takes hold, shoplifting rates are on the rise again. As employees feel more secure in their positions, they may be more inclined to take some risks, Angel said.

At the same time, employers drastically reduced head counts during the recession, which left fewer employees on the floor with heavier workloads in the early stages of the recovery. As workers feel more disgruntled, theft becomes "very tempting," Hollinger said, "especially if they feel that the company can afford it and they're being paid minimum wage."

MORE

You know, it's getting so delusional down NYTimes way even RDean is refusing it to line his 6% Parrot Cage and wants something more soothing to his nerves like the print version of the Huffypuffy Poost.

 

[waltky]

Hmmm... wonder how many manufacturing jobs in Iowa lost to outsourcing?...

In Iowa, Obama Underscores Role of Manufacturing in Recovery
June 28, 2011 - President Barack Obama paid another visit to the politically-important state of Iowa, as part of his efforts to highlight success from his economic recovery policies. Iowa will be crucial to Mr. Obama's 2012 re-election prospects, and is a key destination for Republican presidential candidates as well.

The visit to the Alcoa Davenport Works Factory in Bettendorf, Iowa was another in a series Obama has made across the country to highlight examples of strength and innovation in an economy still struggling from the impact of the recession, with an unemployment rate above 9 percent. The Iowa stop was a follow up to Obama's visit last week to Carnegie Mellon University in Pittsburgh, which also focused on as the importance of technologies and manufacturing, and joint steps by businesses and universities, in boosting job growth and U.S. global competitiveness. Addressing about 350 employees at Alcoa, the world's leading aluminum products manufacturer, Obama noted that the company was able to re-hire employees laid off during the 2008 financial crisis.

Saying he knows many Americans may be tempted to turn cynical, Obama contrasted what he called "squabbling" in Washington with what he described as the teamwork seen in companies across the country. "Problem solving all the time," said President Obama. "That is what has made you successful. That is what will make America successful. By adapting and innovating but also thinking like a team, instead of turning on each other." The president's Iowa visit came as the state is in the spotlight for announced or potential Republican presidential candidates challenging Obama's leadership on the economy and other issues. Republicans have been campaigning there and increasing media advertising ahead of an informal "straw poll" (August 13,2011) seen as a major test for the 2012 Republican presidential field.

Minnesota Congresswoman Michele Bachmann formally announced her candidacy for the Republican presidential nomination in Iowa on Monday. A leader of the activist conservative small government Tea Party movement, she lashed out at Obama's economic policies and predicted he will lose the White House in 2012. "Make no mistake about it," said Michele Bachmann. "Barack Obama will be a one term president!" In Washington, President Obama is now deep in the fray of negotiations with Democrats and Republicans on achieving between $2 trillion and $4 trillion in reductions in government deficit spending.

With Republicans resisting Democrat's attempts to find additional revenue sources through tax increases targeting the wealthy, the deficit issue is now linked to an August 2 deadline to raise the government's borrowing limit. After White House talks with the Senate Democratic and Republican leaders on Monday, Press Secretary Jay Carney announced that Mr. Obama would meet with a wider group of Senate Democrats on Wednesday. In the Senate, Majority Leader Harry Reid warned again of the repercussions of a government default if a compromise cannot be reached and described Republicans as inflexible. "The time for empty rhetoric is over," said Senator Reid. "Now it is time for my Republican colleagues to put the good of our economy ahead of their own politics."

Speaking with reporters, Press Secretary Jay Carney provided little in the way of new information, other than to say again the White House believes there is an "opportunity for a substantial deficit reduction" compromise, but one that is balanced. Carney described the president's meeting with Senate Republican leader Mitch McConnell as "useful" but declined to elaborate when asked if there was any specific progress from those talks. As Obama was in Iowa on Tuesday, a new poll showed a high level of public dissatisfaction with the president's handling of the deficit issue. A new Gallup survey showed American's overall economic confidence remains low, and worse at the end of this month than at a similar point last year.

Source

 

[Avorysuds]

The tax rate on the top during the great depression recovery was an average of 88% from what I recall.


Yes we can raise taxes on the very people who benifited from this crash.

Its been proven that doesnt stop a recovery.

History has already shown us that.

First you own your face by trying to make it out as if high tax rates helped during the 12 year long Great Depression, next you forget (again lol) that no one paid 88% taxes, there are deductions.

Please just go away, you're so fucking stupid it makes my sides hurt from laffing at you~

 

[CrusaderFrank]

The tax rate on the top during the great depression recovery was an average of 88% from what I recall.

Yes we can raise taxes on the very people who benifited from this crash.

Its been proven that doesnt stop a recovery.

History has already shown us that.

Remind me again, in what year did FDR end the FDR Depression?

 

[rdean]

Interesting piece in the NYT, which ordinarily I detest but this one is worth reading IMHO. I've seen plenty of doomsday prophecies where the US and world economies will tank in 2011 or 2012, or 2013. And maybe so, but this pov is a little less imminent. I do think we should not raise taxes at all until the economy has significantly stengthened and unemployment is back down to reasonable levels, say 7%. Instead of raising rates, we should be looking at the most egregious tax breaks and loopholes and correcting them, for both income and corporation taxes.

And I do think we should be cutting spending, but not as draconian as some have suggested. There was a report that came out a month or 2 back that talked about duplicate, obsolete, or ineffective programs that currently exist in the federal gov't. You know, like 10 different agencies all doing the same thing. Why the hell don't we go find and eliminate that stuff first? Maybe save as much as a couple hundred billion a year, maybe a trilllion and a half or 2 trill over 10 years.


"
The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.
What needs to be done now is to design a long-term plan to reduce fiscal deficits in the future. The authors contend that such a program would “reassure the markets, keep interest rates low and instill greater confidence and certainty about future tax and spending policies, thereby encouraging businesses to commit their resources to job-creating investment projects.”
"


http://www.nytimes.com/2011/05/29/business/economy/29gret.html?_r=1&pagewanted=all

Business doesn't "make jobs". They identify a "demand" and then "invest" to create a "supply".