Why debt is a good thing

PkrBum wrote:"they may have lost more if the Fed not acted." sry... but that irritates me. The leftists should be pissed by it.

Well, none of the equity holders in the banks lost everything nor did bondholders lose as much had the bailout and Fed intervention not occurred. Fact.

Margin Call wrote:

PkrBum wrote:"they may have lost more if the Fed not acted." sry... but that irritates me. The leftists should be pissed by it.

Well, none of the equity holders in the banks lost everything nor did bondholders lose as much had the bailout and Fed intervention not occurred. Fact.

Whoa... who won?

Margin Call wrote:And there's this too, Bob:

*PORSCHE MARCH U.S. VEHICLE SALES ROSE 41%

Only the 1% are buying thoes. When people are buying 41% more Fords, Chevys and other mid range cars, I will be convinced things are better.

BTW, just paid off TWO credit cards yesterday. Hopefully, I will get the third down to zero by the new year.

Ghost_Rider1 wrote:

Bob wrote:
First we had neoconservatism which had it's share of people in positions of authority and influence to tell us the way to conduct foreign policy is to adopt this ideology that we need to become the policeman for the world.
And now we have something we could call neoeconomics which has people in positions of authority and influence (the krugmans, the summers etc) with this crap that tells us debt is good for us.

Both are predicated on some really bold assumptions. The first, that the world is gonna tolerate us being it's policeman and cowtow to it.
And the second theory, that this debt fueled attempt to rescucitate the economy is going to restore us to economic greatness.

I'm certain we'll get to test the second theory because the Washington politicians WILL keep adding to the debt.
And all I can say about the first theory is "how's that workin out for you".

Bob, I hate to admit it, but I really have no damn idea what you are talking about

It's not hard to understand. I'm referring to the neocon foreign policy which gave us the ten year occupations of Iraq and Afghanistan. And I'm asking you "how is that workin out for you".

Maybe it's that you're not familiar with the phrase "how is that workin out for you".

"how is that workin out for you" is a colloquialism which is now in widespread usage.
To help you understand what it means, the Urban Dictionary defines it as...

A sarcastic phrase used when you can tell that things may not be going according to plan

PkrBum wrote:That's a shame GR.

Why? I'm trying to understand this, help me out here instead of saying that it is a shame.

Well I explained it in the post before yours. But if you need more help with it I'll be glad to try again.

Ghost_Rider1 wrote:

PkrBum wrote:That's a shame GR.

Why? I'm trying to understand this, help me out here instead of saying that it is a shame.

Sry... I shouldn't have said that.

Ghost_Rider1 wrote:

PkrBum wrote:That's a shame GR.

Why? I'm trying to understand this, help me out here instead of saying that it is a shame.

....................................

How's that working out for you...?


You're welcome...

PACEDOG#1 wrote:

BTW, just paid off TWO credit cards yesterday. Hopefully, I will get the third down to zero by the new year.

Good luck. I know it's no fun having to pay that monthly fee and interest when you carry a balance.

Just as it's no fun for me to see my tax dollars go to this...

http://www.usnews.com/news/articles/2012/11/19/how-the-nations-interest-spending-stacks-up

And it's even less fun to read people on here defending it.

Don't hate Bob.

Bob ain't haten... He has a razor fine edge for common sense from a lifetime of dealing w people.

Bob wrote:I think you've about convinced me that continuing to pile up government debt is a good thing.
And it's got me to wondering why the states have constitutionally mandated balanced budgets. So many of the states are hurting for money and it seems to me they should start running huge deficits and pile up debt like Washington because there's no doubt that would fix their money problems. Especially states like California and Florida.

Florida, as you know, is doing just fine. Our retirement fund is fine too. You need to look at the Democrat run states for serious problems, like New York.

Sal wrote:

Bob wrote:


And now we have something we could call neoeconomics which has people in positions of authority and influence (the krugmans, the summers etc) with this crap that tells us debt is good for us.

You're fucking nutz.

Krugman is a voice in the wilderness.

Austerity is the order of the day, which is why the economy remains in the shitter.

Look at Europe.

Paul Krugman is a voice in the wilderness alright, his "theories" change with whatever administration is in office along with his policies.

Here is what he had to say when President George Walker Bush was digging us out of the Dot.Com recession and the 9/11 recession.

Here is your beloved Paul Krugman being interviewed about the 2003 economy.

On October 31, 2003 this is what your Paul Krugman said about the current 3.1% growth rate at the Liberal Oasis.


From the former adviser to ENRON and Socialist darling, of the far, far left, Paul Krugman. This from October 31, 2003. Wow…talk about a different tune today. For reference, the GDP for 2011 was 1.7%. The GDP for the third quarter of 2012 was 3.1%, the forth quarter for 2012 was PLUS 0.1% that is A SHRINKING ECONOMY.


Progressives and Democrats may want to revisit the LiberalOasis interview with Paul Krugman from August 2003, after the last GDP number was released:
###

Interview:
LiberalOasis: Second quarter GDP was just revised to 3.1% annual rate of growth. That’s near the point where many economists say job creation will kick in. Does that mean the economy is turning around, and Bush can credit the tax cuts for doing it?


Paul Krugman: Well, it’s quite possible that we will see some positive job growth.


But, I still don’t see anything in there that says we’re going to have jobs growing fast enough to keep up with the growth in the population, let alone make up all the ground that’s been lost.


And the main thing to say is: gosh, if you let me run a 500 billion dollar deficit, [President Barack Hussein Obama’s has been over $1.2 TRILLION EACH YEAR FOR FOUR YEARS] I could create a whole lot of jobs. That's roughly [$500 BILLION DEFICIT] equal to the wages of 10 million average workers.


So the fact that we've managed to go from a 200 billion surplus to a 500 billion deficit, while losing three million jobs, is actually a pretty poor verdict on the policy.

http://www.liberaloasis.com/krugman.htm


If it wasn't for the stimulus (which was too small given the situation), we'd be sitting at 12% unemployment or worse.

By the way, the unemployment rate was 6% in 2003 when this interview was made and went unemployment went DOWN to 4.6% wow, tax cuts worked!

Sal wrote:

Bob wrote:

We're adding trillions to the debt every year and Sal honestly believes the Washington politicians are engaged in "austerity" and debt cutting.
Good god if they weren't doing "austerity", I shudder to even think what the fucking deficit would be then. lol

ALL what Sal calls "austerity" is pure rhetoric and nothing else. Neither the republican politicians nor the democrat politicians are actually doing anything to bring this borrowing and spending binge under control. They're afraid to because the public wants them to borrow and spend every dollar and they know it.

Bush did not count the cost of the Iraq and Afghan wars in their bookkeeping. Obviously these huge expenditures that were not accounted for, but the money was spent.

Obama properly put these two wars on the books.

Bush passed, but never funded the cost of the Medicare Part D drug benefit, another huge unaccounted for expense.

The Obama administration does fund the Medicare Part D drug benefit.

The Bush Tax Cuts were unfunded and unaccounted for.

The Obama Administration temporarily continued the tax cuts due to economic hardship in the country, and Republican intransigence to have wealthy Americans pay their fair share.

The Great Recession inherited upon assuming office necessitated emergency stimulus to keep the country from falling into a depression. It worked.

The recession's job losses resulted in a significant decrease in tax revenue to the Treasury since January of 2009 President Obama took office.

These are the driving forces behind the national debt.

Spending under Obama has risen at the slowest pace since WWII.

That's too bad.

The situation calls for borrowing and spending on infrastructure projects nationwide, or better yet a new WPA program.

Unemployment is the biggest problem facing the economy, not deficits and debt.

As you know, the War on Terror was not in our budget BUT was in our DEBT.

Also, the Democrats plan for Prescription drugs was far more expensive than is the current, unsustainable, Medicare Part "D". The one passed is the lesser of two evils.

Margin Call wrote:

Bob wrote:

Margin Call wrote:

Obviously, that response worked in 1921. I wonder how well it would've worked with synthetic collateralized debt obligations and some pretty messed up accounting rules in the mix???

Go back and find that link to the Stockman interview and watch it. Because that question is exactly what he addresses.

Watched it.

AIG was not a contagion?? Huh? It was very glaring that he didn't mention Lehman..something I believe TPTB will never let happen again.

$20Trillion in insolvent balance sheets wouldn't be disastorous? WTF? It's not just US banks, but the foreign banks that the Fed continues to bail out.

He's talking about how the economic fallout isn't bad (using post-bailout observations), but says we shouldn't have had the bailouts. Maybe I need to watch it again, but that didn't make sense.

Savers got screwed. He's correct, in a way. However, they may have lost more if the Fed not acted.

He mentioned the stock market bubble, but corporate profits are at record highs. There is not a stock market bubble.

Corporate profits are at record highs because of the mass uncertainty this administration has created in the economic world including their future taxes and future health insurance costs.

At the same time, Ben Bernanke is printing money at a record rate, devaluing the dollar and increasing the cost of fuel to the price of stocks. The money being printed, where is it going to go? Nothing is paying any sort of rate other than the stock market. If someone doesn't see a bubble developing or already there, they are ignoring history...again....

Below, as you know, is the money in circulation. Whew....

Margin Call wrote:

PkrBum wrote:"they may have lost more if the Fed not acted." sry... but that irritates me. The leftists should be pissed by it.

Well, none of the equity holders in the banks lost everything nor did bondholders lose as much had the bailout and Fed intervention not occurred. Fact.

The bond holders with GM and Chrysler lost their butts and the Unions were rescued, but that's okay.

Sal wrote:

Bob wrote:

We're adding trillions to the debt every year and Sal honestly believes the Washington politicians are engaged in "austerity" and debt cutting.
Good god if they weren't doing "austerity", I shudder to even think what the fucking deficit would be then. lol

ALL what Sal calls "austerity" is pure rhetoric and nothing else. Neither the republican politicians nor the democrat politicians are actually doing anything to bring this borrowing and spending binge under control. They're afraid to because the public wants them to borrow and spend every dollar and they know it.

Bush did not count the cost of the Iraq and Afghan wars in their bookkeeping. Obviously these huge expenditures that were not accounted for, but the money was spent.

Obama properly put these two wars on the books.

Bush passed, but never funded the cost of the Medicare Part D drug benefit, another huge unaccounted for expense.

The Obama administration does fund the Medicare Part D drug benefit.

The Bush Tax Cuts were unfunded and unaccounted for.

The Obama Administration temporarily continued the tax cuts due to economic hardship in the country, and Republican intransigence to have wealthy Americans pay their fair share.

The Great Recession inherited upon assuming office necessitated emergency stimulus to keep the country from falling into a depression. It worked.

The recession's job losses resulted in a significant decrease in tax revenue to the Treasury since January of 2009 President Obama took office.

These are the driving forces behind the national debt.

Spending under Obama has risen at the slowest pace since WWII.

That's too bad.

The situation calls for borrowing and spending on infrastructure projects nationwide, or better yet a new WPA program.

Unemployment is the biggest problem facing the economy, not deficits and debt.

There was no reason to "fund" the Bush Tax Cuts, as you know, they led to record revenues.

Progressives, if what you whine about the Bush Tax Cuts were true, how did this happen?

The Clinton Dot.Com recession began in March of 2000. If you recall, we also had a massive terrorist attack on 9/11/2001 which further crippled the economy and plunged us deeper into recession.

UNEMPLOYMENT REACHED 6% before the Bush tax cuts went into effect and brought DOWN unemployment to 4.6% in 2006 and 2007 before the Democrat driven Housing/Mortgage/Financial meltdown led to this current crisis.

The DEBT over the eight years of the Bush Administration increased by $4.4 TRILLION. That’s FAR less than the damage done by the Democrats since Nancy Pelosi took over the House in 2007.

What happened when the "tax cuts you revile so much were implemented?

Revenues to IRS AVERAGED $1.875 TRILLION during Bush's first 3 years in office. (FYI, that was BEFORE the BUSH TAX CUTS took effect.) Gee...that's just over President Barack Hussein Obama $1.3 TRILLION DEFICIT each year since Obama took office.

AFTER the BUSH TAX CUTS TOOK EFFECT, REVENUES AVERAGED $2.306 TRILLION his last FIVE years. That's $431 BILLION more per year or $2.155 TRILLION increase over five years.

WOW…how did that happen? Those evil tax cuts resulted in a $2.155 TRILLION INCREASE IN REVENUES?

Markle wrote:

Florida, as you know, is doing just fine. .

Actually I didn't know that until you pointed it out but after you did I took a look at it and you're right. I haven't been keeping up with Florida. Didn't know it had made such a turnaround starting in 2010.

Markle wrote:

There was no reason to "fund" the Bush Tax Cuts, as you know, they led to record revenues.

Progressives, if what you whine about the Bush Tax Cuts were true, how did this happen?

The Clinton Dot.Com recession began in March of 2000. If you recall, we also had a massive terrorist attack on 9/11/2001 which further crippled the economy and plunged us deeper into recession.

UNEMPLOYMENT REACHED 6% before the Bush tax cuts went into effect and brought DOWN unemployment to 4.6% in 2006 and 2007 before the Democrat driven Housing/Mortgage/Financial meltdown led to this current crisis.

The DEBT over the eight years of the Bush Administration increased by $4.4 TRILLION. That’s FAR less than the damage done by the Democrats since Nancy Pelosi took over the House in 2007.

What happened when the "tax cuts you revile so much were implemented?

Revenues to IRS AVERAGED $1.875 TRILLION during Bush's first 3 years in office. (FYI, that was BEFORE the BUSH TAX CUTS took effect.) Gee...that's just over President Barack Hussein Obama $1.3 TRILLION DEFICIT each year since Obama took office.

AFTER the BUSH TAX CUTS TOOK EFFECT, REVENUES AVERAGED $2.306 TRILLION his last FIVE years. That's $431 BILLION more per year or $2.155 TRILLION increase over five years.

WOW…how did that happen? Those evil tax cuts resulted in a $2.155 TRILLION INCREASE IN REVENUES?

It's true that revenues increased after Bush, Reagan and Kennedy cut the tax rates...



... but I think an argument can be made that it might be a little misleading, at least for the Bush years. Because the real estate bubble was creating a lot of artificial income which was also contributing to growth in revenue.
It's too long ago for me to even remember what was at play in the Reagan or Kennedy eras so I don't know if the same might hold true for that.

What's really remarkable about looking at that chart, however, is actually seeing that we had a 91% income tax rate prior to 1964. Jesus.

Corporate profits are at record highs because of the mass uncertainty this administration has created in the economic world including their future taxes and future health insurance costs.

This has to be the most ignorant statement you have made on the PNJ or these forums. Would you care to attempt to qualify what appears to be utter ignorance, or can I magically have record profits in my business because of uncertainty on what this Administration is going to do with future taxes and health insurance costs........I hope you can understand what that funny keyboard does in front of the computer screen and actually respond.....or will you simply cut and paste more utter partisan nonsense, and think by not replying to something as ignorant as the statement above, it will magically be a true reflection of reality.........reality is that Forest Gump could explain better why we have record corporate profits better than above.....life is like a box of chocolates.....you always know what you are going to get when you post.

Yep, seaoat. Markle-bot's post was indeed one of the more idiotic statements I've ever read. Markle-bot is better off cutting and pasting. He doesn't do so well when he's left to his own imagination.

What's as idiotic about his post is that he ignores record corporate profits as a driving factor in the stock market, as if corporate profits are no factor in stock prices. PROFITS AND PROFIT EXPECTATIONS DRIVE STOCK PRICES, DUMMY!!!!!!!

In a way, he is tacitly admitting that quantitative easing has worked.

I just read through several different webpages to try to help me get an answer to the question "why are corporate profits so high when the economy is barely growing".

What I got from the reading is...

1. After the corporations layed off so many workers during the great recession, they then learned how to become more efficient and productive with that smaller work force so they aren't finding a need to rehire the layed off workers. For example, the work force at United Technologies (one of the 30 Dow stocks) with 218,000 employees, is virtually unchanged from seven years ago, even though annual revenue increased to $57.7 billion in 2012 from $42.7 billion in 2005.

2. When they have increased their employment levels, much of that is hiring workers overseas. Another Dow company, 3M, is an example of that. Of the 11,438 workers it's hired in the last few years, only 608 were in the United States.
Which is the case for many of these large Dow multinational corporations whose profits and earnings are derived more and more from markets overseas.

So they're increasing earnings and profits, but doing it with both fewer workers and with hiring more workers overseas.

So now maybe some of you government debt lovers can explain to me how the $700 billion borrowed-money pork-barrel spending (stimulus) is supposed to have any lasting effect in an economic environment like that?

And even beyond that, it doesn't bode well for any meaningful economic recovery for the American public for the foreseeable future that I can see.
Seems to me THAT is now headed for a long period of stagnation if not further decline.

Corporate debt has soared too....fueled by QE.

Corporate debt has soared too....fueled by QE.


We just got a call from PNC who we have a mortgage with one of our properties we rent. The person said we were eligible for refinancing based on some program. I explained that we were renting the property. He said it did not matter because Freddie had given them a waiver on our property and they could renegotiate our mortgage where we owe 146k. Our current rate is 6.75% and the home was new in 2007 and had an appraised value of 240k when the original loan was given. He said their database estimated the value of the house at 135k and that without appraisal or income verification they would refinance the home with a 4% loan, it would have been 3.2% if it was owner occupied. It saves us $250 bucks a month, and they take the cost of refinancing.....$2,500 and add it on principal......we are looking at a 10 month period to recoup our cost, and a net gain of $250 each month thereafter.

Why in heavens name did they not do this instead of Tarp when the crash was developing. Folks would have lost equity temporarily, but they would have cash flowed and never would have left their homes. We have been losing $1,800 a year on this home, but now we will be showing a profit, and when combined with depreciation while I am still working, we get a nice tidy cash flow on this property. Debt is relative to the collateral. The house to rebuild excluding land would be in excess of the land would exceed the new mortgage amount. Land consistently throughout history has increased, so why did the government transfer wealth to bankers, wall street and their boards and shareholders while gutting America? It was an incredible short term solution, where modifications across the board would have soften the recession and would have returned equity to Americans.....not allowed bankers and wall street to sack America.