How Much Positive Momentum Does Pres. Bush's Reelection Entail?

[sagegirl]

So how do Bush tax cuts play into all of this? Should taxes have been raised on upper incomes and the investor class?

The economy is really complex. Tax cuts for the "wealthy" ?????? well if they are suppose to boost the economy figure two things....first of all if you are wealthy enough you get to spend or already spend all the money you want, no problem, and the money you save from a tax cut just goes in the bank. I've heard this comment from some people who have benefited from the tax cut that would not even be considered all that wealthy. There is no obligation that they spend the money to "grow the economy".
Secondly, when spending outpaces revenues we accumulate debt. This debt has several dampening effects on our overall economy short term and long term. It devalues the dollar on international currency markets. All of a sudden this is more complicated than the average person cares to pay attention to . But a stable dollar is important for trade, foriegn investment, etc.
A currency crisis is looming. More money is made or lost from currency movements, or at least made or lost faster, than any other way. Foriegn investors will increase their shift to European securities. Raising interest rates
fast (starting to happen) or asking the world's major central banks to intervene by buying dollars are two solutions.... Probably stalling economic growth, and if your models for economic recovery are based on growth this creates problems. Cooperation from the European Central Bank is unlikely due to our current diplomacy problems, so we would more likely go to Japan, China, etc to bail out the dollar. Unfortuantely these are high saving nations with already large foreign exchange reserves, and export based economies that would also suffer from a cheap dollar.
A few bad turns in the war in Iraq could very well tilt the scale in a very negative way for the economy.
So a tax cut for the wealthy or investor class, at this point in time, seems like a negative idea. That money could be used to keep down the debt and keep the value of the dollar up.

 

[freeandfun1]

The economy is really complex. Tax cuts for the "wealthy" ?????? well if they are suppose to boost the economy figure two things....first of all if you are wealthy enough you get to spend or already spend all the money you want, no problem, and the money you save from a tax cut just goes in the bank. I've heard this comment from some people who have benefited from the tax cut that would not even be considered all that wealthy. There is no obligation that they spend the money to "grow the economy".
Secondly, when spending outpaces revenues we accumulate debt. This debt has several dampening effects on our overall economy short term and long term. It devalues the dollar on international currency markets. All of a sudden this is more complicated than the average person cares to pay attention to . But a stable dollar is important for trade, foriegn investment, etc.
A currency crisis is looming. More money is made or lost from currency movements, or at least made or lost faster, than any other way. Foriegn investors will increase their shift to European securities. Raising interest rates
fast (starting to happen) or asking the world's major central banks to intervene by buying dollars are two solutions.... Probably stalling economic growth, and if your models for economic recovery are based on growth this creates problems. Cooperation from the European Central Bank is unlikely due to our current diplomacy problems, so we would more likely go to Japan, China, etc to bail out the dollar. Unfortuantely these are high saving nations with already large foreign exchange reserves, and export based economies that would also suffer from a cheap dollar.
A few bad turns in the war in Iraq could very well tilt the scale in a very negative way for the economy.
So a tax cut for the wealthy or investor class, at this point in time, seems like a negative idea. That money could be used to keep down the debt and keep the value of the dollar up.

Putting money in the bank contributes to savings which contributes to the availability of money which contributes to building a strong economy.

As you say, Japan and China are export driven economies, so it is in their interest to "bail-out" the dollar. A weak dollar means that products imported into the USA are more expensive and therefore, those export dependent economies will not do well. You are contradicting yourself in several places in your little analysis.

 

[sagegirl]

Putting money in the bank contributes to savings which contributes to the availability of money which contributes to building a strong economy.

As you say, Japan and China are export driven economies, so it is in their interest to "bail-out" the dollar. A weak dollar means that products imported into the USA are more expensive and therefore, those export dependent economies will not do well. You are contradicting yourself in several places in your little analysis.

A weak dollar is good for US exporters because it makes their products cheaper in foreign markets. It also helps US companies that compete with foreign imports because it makes the imports more expensive. I think that is what I said, or meant to say....I dont see the contradiction unless you meant is this good or bad for business?

 

[freeandfun1]

we would more likely go to Japan, China, etc to bail out the dollar. Unfortuantely these are high saving nations with already large foreign exchange reserves, and export based economies that would also suffer from a cheap dollar.

Perhaps I am not understanding you. But it is likely they would use their "large foreign reserves" to help their economy by making the dollar weaker.

All through the 90's we had a weak dollar and our economy grew like mad. It was not until the advent of the economic crisis that began in Asia in 1998 due to the strengthening of the dollar vs. their currencies that our economy began to faulter.

Why was a weak dollar under Clinton good, but under Bush, bad? Nobody has yet to explain that to me.

I own a company that exports about 95% of the products we sell. Our activity has increased over the last month or so like I haven't seen it since the mid 90's. Now that our dollar is weak, the US products we export are becoming more attractive and our customers are increasing their orders.

There always needs to be a balance, but over the last few years, the USD has been higher than NORMAL and so in reality, it is only moving back to where it should be. Also, note that a weak dollar is worst for the Euros than it is for us. We are now again competitive against the Euro in international markets. For the past 6 plus years we have LOST business to the Euros because our dollar was TOO strong.

 

[sagegirl]

Perhaps I am not understanding you. But it is likely they would use their "large foreign reserves" to help their economy by making the dollar weaker.

All through the 90's we had a weak dollar and our economy grew like mad. It was not until the advent of the economic crisis that began in Asia in 1998 due to the strengthening of the dollar vs. their currencies that our economy began to faulter.

Why was a weak dollar under Clinton good, but under Bush, bad? Nobody has yet to explain that to me.

I own a company that exports about 95% of the products we sell. Our activity has increased over the last month or so like I haven't seen it since the mid 90's. Now that our dollar is weak, the US products we export are becoming more attractive and our customers are increasing their orders.

There always needs to be a balance, but over the last few years, the USD has been higher than NORMAL and so in reality, it is only moving back to where it should be. Also, note that a weak dollar is worst for the Euros than it is for us. We are now again competitive against the Euro in international markets. For the past 6 plus years we have LOST business to the Euros because our dollar was TOO strong.

I am a newbie on the economy, but Im trying to understand.....So if the Asian countries invested more in US treasuries,(etc) they would do it now with cheaper dollars, am I right, and that takes more dollars off the market and thus makes those dollars still available on the world market worth more. Maybe not good for your business, and it would slow the recovery, but good for them? Sometimes it seems like a viscious circle, I think a stable dollar, and slight or almost flatline growth would be the ideal situation.

 

[freeandfun1]

I am a newbie on the economy, but Im trying to understand.....So if the Asian countries invested more in US treasuries,(etc) they would do it now with cheaper dollars, am I right, and that takes more dollars off the market and thus makes those dollars still available on the world market worth more. Maybe not good for your business, and it would slow the recovery, but good for them? Sometimes it seems like a viscious circle, I think a stable dollar, and slight or almost flatline growth would be the ideal situation.

In the first sentence, I said they would use their reserves to make the dollar weaker. I was in a hurty, and I meant, stronger.

First off, a stable dollar is best, no matter what the exchange rate is, it just needs to be stable. That is why China has their currency pegged to the USD at a little over 8 RMB to the dollar and they keep it there, no matter how strong or weak the dollar is. Anyway, I digress.

It is a viscious cycle. Foreign nations want our dollar to be strong, so that when we buy goods from them, they will get TOP dollar. I experienced, in a bad way, what happens when the dollar gets too strong. In early 1999, I was in Jakarta and went to bed with the Rupia at 2,500 Rupia to the dollar. When I woke up the next morning, it was 10,000 to the dollar. Needless to say, my trip ended up being a waste cuz my customer cancelled their order - they no longer could afford our products.

Right now Europe is hurting because our dollar is weakening. This is good for US exports, but bad for the nations trying to export to us. It is in China and Japan's best interest to keep our dollar stable, as we are the biggest importers of their products. It is complicated as there are good and bad reasons for a strong or weak dollar. So again, the best for all is a stable dollar. But over the last few years (since about 1998) our dollar has been too strong and during this time, we have lost a lot of business in Asia and elsewhere to European companies because the Euro was weaker and that meant their products were weaker.

I often say that to compete, a company's products need to be 20% better, yet 20% cheaper than their competitors products. Otherwise, why would a customer or potential customer switch suppliers?

When the Euro first hit the markets, the USD to EUR rate was about .86 : 1. It is now, roughly, 1.3 to 1. That means that their (European) products, in the USA are now about 33% higher than they were just a few years ago. That is what happened in Asia in the late 90s. Our products went from being, for example, $1 in the local currency each, to being nearly 3, 4 or even 10 times more depending on the nation and their currency situation.

It is complicated, but for US manufacturers, frankly, a weaker dollar is stonger. However, it the downside is that if there are raw materials that we need to import, then now those raw materials are more expensive.

Damn, I may have just made things more confusing for you. Sorry if I did.

 

[sagegirl]

In the first sentence, I said they would use their reserves to make the dollar weaker. I was in a hurty, and I meant, stronger.

First off, a stable dollar is best, no matter what the exchange rate is, it just needs to be stable. That is why China has their currency pegged to the USD at a little over 8 RMB to the dollar and they keep it there, no matter how strong or weak the dollar is. Anyway, I digress.

It is a viscious cycle. Foreign nations want our dollar to be strong, so that when we buy goods from them, they will get TOP dollar. I experienced, in a bad way, what happens when the dollar gets too strong. In early 1999, I was in Jakarta and went to bed with the Rupia at 2,500 Rupia to the dollar. When I woke up the next morning, it was 10,000 to the dollar. Needless to say, my trip ended up being a waste cuz my customer cancelled their order - they no longer could afford our products.

Right now Europe is hurting because our dollar is weakening. This is good for US exports, but bad for the nations trying to export to us. It is in China and Japan's best interest to keep our dollar stable, as we are the biggest importers of their products. It is complicated as there are good and bad reasons for a strong or weak dollar. So again, the best for all is a stable dollar. But over the last few years (since about 1998) our dollar has been too strong and during this time, we have lost a lot of business in Asia and elsewhere to European companies because the Euro was weaker and that meant their products were weaker.

I often say that to compete, a company's products need to be 20% better, yet 20% cheaper than their competitors products. Otherwise, why would a customer or potential customer switch suppliers?

When the Euro first hit the markets, the USD to EUR rate was about .86 : 1. It is now, roughly, 1.3 to 1. That means that their (European) products, in the USA are now about 33% higher than they were just a few years ago. That is what happened in Asia in the late 90s. Our products went from being, for example, $1 in the local currency each, to being nearly 3, 4 or even 10 times more depending on the nation and their currency situation.

It is complicated, but for US manufacturers, frankly, a weaker dollar is stonger. However, it the downside is that if there are raw materials that we need to import, then now those raw materials are more expensive.

Damn, I may have just made things more confusing for you. Sorry if I did.

I am trying to make sense of it all....I do appreciate you straight forward delivery, seems like you rely more on facts than opinions or rhetoric. I agree that a stable dollar seems to be the best for our economy in the long run. The more I find out about this the more fascinated I become. Economic structures play a very important role in our policies and our future.

 

[freeandfun1]

I am trying to make sense of it all....I do appreciate you straight forward delivery, seems like you rely more on facts than opinions or rhetoric. I agree that a stable dollar seems to be the best for our economy in the long run. The more I find out about this the more fascinated I become. Economic structures play a very important role in our policies and our future.

It sure does.

I will give you a bit of opinion though.

Up until the 1933, the dollar was backed by gold reserves. After that, it was backed by silver until about 1967. After that, the dollar, in my opinion, was backed by two things. Military might and technology. During the 90's, we lost our technological advantage (we used to be the sole supplier of big-ticket items in the world. The Euros overtook us during the 90's with companies like Ericcson, Thomson, Airbus, etc. replacing US companies such as Boeing, Motorola, General Dynamics, etc. as the premier suppliers) and all we have left backing the dollar today are two things. 1) Oil, which is still being bought in dollars, so that props up the dollar and 2) Military might. If either one them is lost, we might be in for a world of hurt. And as you can imagine, right now both are in jeapordy. As the EU builds up their military might we face losing our military advantage in the world and if OPEC starts allowing oil to be bought and sold with the Euro..... well, then what will back the dollar? We could be in for some major trouble.

If you are a religious person, you would say that all the signs for the final conflict are lining up. If Israel and the Arabs sign a seven year peace treaty any time soon, then WATCH OUT!

 

[Bullypulpit]

Nato. The real answer is simple. Bush will keep tax cuts and maybe cut some more, this will encourage investors to invest; the economy will grow, there will be more jobs created. of course like sagegirl pointed out, this assumes you consider growing the economy and providig more jobs for people is a good thing.

This is the same tired old "supply side" economics preached by Reagan. It din't work then and it isn't working now.

 

[rtwngAvngr]

This is the same tired old "supply side" economics preached by Reagan. It din't work then and it isn't working now.

But the TRUTH is that it does work.