40 Economists Agree: The GOP Is In Fiscal La-La Land

[Toro]

So the Eurozone catastrophe was because of...?

Too much debt in the periphery, inflexible exchange rates and productivity differentials.

No doubt, hiding the Greek debt was a catalyst for the European problem but its not the root cause.

Wasn't just Greece. You should read up on this.

Yeah, I know about it. I watched about half the PBS documentary and turned it off half way through because I wasn't learning anything new.

 

[Toro]

How did they misprice the credit?

The Fed sets the funds rate. The term structure of the Treasury market is influenced by the funds rate. So keeping it so low and being very clear that they would gradually raise rates, along with the perception of the Bernanke and Greenspan Put, led to excess leverage in the financial system. The real funds rate has averaged less than zero since 2000.

But the failed mortgages were all long term debt.

Not all. Many were ARMs, which are priced off LIBOR, which is related to the funds rate. But long-term mortgages are priced off the Treasury curve. When the funds rate is too low, investors will go out on the curve for yield, driving yields down, which drives mortgage rates down.

 

[Darkwind]

You mean we really can't pay off debt by cutting taxes?

Thats right. We can't.

But it isn't taxation that is the problem.

It is spending.

WE CAN pay off the debt if we cut spending.

There is NO NEED to raise taxes on anyone.

 

[GoneBezerk]

Democrap economics...

Raise corporate tax rates to #1 in the world, then complain corporations leave the country for less taxes overseas.

Regulate companies to death until they shutdown, leave the country, lay off workers, etc.

Tax investors until they no longer feel it is worth their time to invest their money and actually keep it in the USA.

Tax everyone with hidden product taxes but stick it to the middle and upper class with income taxes while taking that money and giving it to the poor in welfare payments to so-called stimulate the economy.

Tax people's wealth when they die so that their family can't have it to invest/use, spend, etc.

Spend taxpayer money beyond the incoming revenues, then print more money wondering why the US dollar falls in value and getting into debt with enemy countries like China is a bad thing long term. Oh keep spending money like last year didn't happen and get further into debt, then blame Republicans.

Take money from workers via income taxes then pick and choose who gets that taxpayer money via programs, grants, etc like say your buddies in the green energy criminal scams.

Eventually collapse the system through Govt spending through the roof and driving every business into the ground with high taxes and regulation, then start over again as a socialist system because Democraps just proved the capitalist system didn't work to their idiot followers.

 

[ConservaDerrps]

Too much debt in the periphery, inflexible exchange rates and productivity differentials.

No doubt, hiding the Greek debt was a catalyst for the European problem but its not the root cause.

Wasn't just Greece. You should read up on this.

Yeah, I know about it. I watched about half the PBS documentary and turned it off half way through because I wasn't learning anything new.

Yeah. You should have kept watching.

 

[Toro]

Wasn't just Greece. You should read up on this.

Yeah, I know about it. I watched about half the PBS documentary and turned it off half way through because I wasn't learning anything new.

Yeah. You should have kept watching.

Why? Tell me what I'm missing. I've spent nearly 20 years working in the financial markets for large institutions. I rarely learn anything from the popular press. What was so special about that documentary that someone who has spent his career in the markets wouldn't already know?

 

[ConservaDerrps]

Yeah, I know about it. I watched about half the PBS documentary and turned it off half way through because I wasn't learning anything new.

Yeah. You should have kept watching.

Why? Tell me what I'm missing. I've spent nearly 20 years working in the financial markets for large institutions. I rarely learn anything from the popular press. What was so special about that documentary that someone who has spent his career in the markets wouldn't already know?

Oh. You're an industry insider. That explains your partisanship.

 

[Chris]

Republicans want to destroy the government, so the Koch brothers can pollute the planet at will.

It's called Thursday.

 

[Toro]

Yeah. You should have kept watching.

Why? Tell me what I'm missing. I've spent nearly 20 years working in the financial markets for large institutions. I rarely learn anything from the popular press. What was so special about that documentary that someone who has spent his career in the markets wouldn't already know?

Oh. You're an industry insider. That explains your partisanship.

You're a n00b. You'd realize how silly your comment was if you weren't.

 

[GoneBezerk]

It's unfair, you actually do that work while he is on welfare and only gets info on it from the internet....

Why? Tell me what I'm missing. I've spent nearly 20 years working in the financial markets for large institutions. I rarely learn anything from the popular press. What was so special about that documentary that someone who has spent his career in the markets wouldn't already know?

Oh. You're an industry insider. That explains your partisanship.

You're a n00b. You'd realize how silly your comment was if you weren't.

 

[Toddsterpatriot]

They're derived from debt issues.

Currency swaps are derived from debt issues?
Please explain further.

? Seriously ?

You don't even know what a currency swap is and you're arguing with derps over them? LOL!

A currency swap is a foreign-exchange agreement between two parties to exchange aspects (namely the principal and/or interest payments) of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency; see foreign exchange derivative. Currency swaps are motivated by comparative advantage.[1] A currency swap should be distinguished from a central bank liquidity swap.

Let me google that for you !

If we had been able to tell big banks they couldn't rebundle GOVERNMENTAL debt in derivatives, this all would have been avoidable.

Yes, I'm mocking his silly claim.

 

[asterism]

Why?

Because the Fed failed to adequately police its member banks.

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

That's an excellent summary. Also, the myriad of regulations passed to prevent such activities has failed every time. It's impossible to legislate criminal activity out of existence. What's needed is less regulation and more oversight.

The current buzzword seems to be Glass-Steagall. However there were fundamental issues before that, and I think we can all agree that Sarbanes-Oxley didn't stop fraud. Dodd-Frank won't either. Neither "party" in this debate has it right and that's a shame.

 

[Erand7899]

You can't even get them to admit that tax cuts are no different than spending.

Tax cuts put money into the hands of productive people (those who pay taxes), while spending puts the money into the hands of non-productive people and political cronies.

All spending is not equal as to its effect on the economy.

The national economy is not a static entity where one can simply add and subtract the tax rate to determine the effect on revenue. The government is always better off getting a smaller slice of a bigger pie than it is when getting a bigger share of a shrinking pie.

 

[OohPooPahDoo]

Because the Fed failed to adequately police its member banks.

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

That's an excellent summary. Also, the myriad of regulations passed to prevent such activities has failed every time. It's impossible to legislate criminal activity out of existence. What's needed is less regulation and more oversight.

The current buzzword seems to be Glass-Steagall. However there were fundamental issues before that, and I think we can all agree that Sarbanes-Oxley didn't stop fraud. Dodd-Frank won't either. Neither "party" in this debate has it right and that's a shame.

The myriad of regulations that were passed to prevent this from happening failed because they were REPEALED. "less regulation and more oversight" - what the fuck does that even mean? Dodd-Frank won't stop it because it doesn't go far enough!

 

[OohPooPahDoo]

You can't even get them to admit that tax cuts are no different than spending.

Tax cuts put money into the hands of productive people (those who pay taxes), while spending puts the money into the hands of non-productive people and political cronies.

All spending is not equal as to its effect on the economy.

The national economy is not a static entity where one can simply add and subtract the tax rate to determine the effect on revenue. The government is always better off getting a smaller slice of a bigger pie than it is when getting a bigger share of a shrinking pie.

Why is it you define "productive" based on the tax code?

 

[buckeye45_73]

That's true, and I would agree with you on that.

However, though deregulation certainly contributed to the crisis, the fundamental problem was the mis-pricing of credit. The Fed sets the price for credit. The list of the Fed's mispricing of credit and it's proclivity to bailing out the financial markets is long, and fundamentally was at the heart of this problem. Of course, the Fed denies this.

Even Wall Street - which deserves a whole lot of blame - took much of its cues from the Fed and the market in general. Institutions such as pension funds and insurance companies have return targets they must hit. Because the Fed kept interest rates so low for so long, institutions began reaching for yield, and demanded the structured products from Wall Street. For a time, European institutions demanded nothing but structured products from the Street. So Wall Street was happy to comply. Institutions were yield pigs, willing to pay an extra 20-30 basis points for AAA-paper above Treasuries.

That's an excellent summary. Also, the myriad of regulations passed to prevent such activities has failed every time. It's impossible to legislate criminal activity out of existence. What's needed is less regulation and more oversight.

The current buzzword seems to be Glass-Steagall. However there were fundamental issues before that, and I think we can all agree that Sarbanes-Oxley didn't stop fraud. Dodd-Frank won't either. Neither "party" in this debate has it right and that's a shame.

The myriad of regulations that were passed to prevent this from happening failed because they were REPEALED. "less regulation and more oversight" - what the fuck does that even mean? Dodd-Frank won't stop it because it doesn't go far enough!

Like which ones? Sarbanes-Oxley and Dodd-Frank are still around.

 

[buckeye45_73]

You can't even get them to admit that tax cuts are no different than spending.

Tax cuts put money into the hands of productive people (those who pay taxes), while spending puts the money into the hands of non-productive people and political cronies.

All spending is not equal as to its effect on the economy.

The national economy is not a static entity where one can simply add and subtract the tax rate to determine the effect on revenue. The government is always better off getting a smaller slice of a bigger pie than it is when getting a bigger share of a shrinking pie.

Why is it you define "productive" based on the tax code?

Becasue tax payers generally hire people and get shit done, ie production, how do you define it? I cant wait

 

[OohPooPahDoo]

Currency swaps are derived from debt issues?
Please explain further.

? Seriously ?

You don't even know what a currency swap is and you're arguing with derps over them? LOL!

A currency swap is a foreign-exchange agreement between two parties to exchange aspects (namely the principal and/or interest payments) of a loan in one currency for equivalent aspects of an equal in net present value loan in another currency; see foreign exchange derivative. Currency swaps are motivated by comparative advantage.[1] A currency swap should be distinguished from a central bank liquidity swap.

Let me google that for you !

If we had been able to tell big banks they couldn't rebundle GOVERNMENTAL debt in derivatives, this all would have been avoidable.

Yes, I'm mocking his silly claim.

Not sure what "this" refers to in Derp's statement, but his claim that you can use currency swaps to a least confuse someone trying to determine a banks true exposure to debt would seem to hold water. If I wanted to hold debt in the Czech Republic, for instance, but wanted to hide it, I'd by debt in U.S. bonds and then buy the appropriate currency swap between U.S. and Czech debt, thus constructing a synthetic position with near identical properties to actual Czech debt. I have no idea what derp is in particular talking about - just showing a hypothetical where it could be done.

 

[OohPooPahDoo]

Tax cuts put money into the hands of productive people (those who pay taxes), while spending puts the money into the hands of non-productive people and political cronies.

All spending is not equal as to its effect on the economy.

The national economy is not a static entity where one can simply add and subtract the tax rate to determine the effect on revenue. The government is always better off getting a smaller slice of a bigger pie than it is when getting a bigger share of a shrinking pie.

Why is it you define "productive" based on the tax code?

Becasue tax payers generally hire people and get shit done, ie production, how do you define it? I cant wait

I pay taxes and I don't hire anyone. Do I have to be employees to be considered productive in your strange world?

 

[OohPooPahDoo]

That's an excellent summary. Also, the myriad of regulations passed to prevent such activities has failed every time. It's impossible to legislate criminal activity out of existence. What's needed is less regulation and more oversight.

The current buzzword seems to be Glass-Steagall. However there were fundamental issues before that, and I think we can all agree that Sarbanes-Oxley didn't stop fraud. Dodd-Frank won't either. Neither "party" in this debate has it right and that's a shame.

The myriad of regulations that were passed to prevent this from happening failed because they were REPEALED. "less regulation and more oversight" - what the fuck does that even mean? Dodd-Frank won't stop it because it doesn't go far enough!

Like which ones? Sarbanes-Oxley and Dodd-Frank are still around.

Glass-Steagall is the biggest.


Dodd-Frank doesn't go far enough. What we need is to break up the big banks. Those banks that are "too big to fail" are going to continue to operate as if they have implicit taxpayer backing because they do - or everyone loses (and history shows that investors rarely make plans around the contingency of the entire system falling apart).