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The Debt Spiral

Well as you know China (#1) and Japan (#2) hold the most US debt. Things are not looking rosy for those folks either and although China is now inexorably tied to the US now, I am sure there is a limit as to how far they can go. There are not a lot of other options out there in the trading partner/investor department.

It was only a week of so ago that I watched a news cast where this very topic was being addressed and where they claimed that China and Japan were already showing signs that they were concerned about the amount of US debt they were carrying.

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The Debt Spiral

I'm going to atempt to answer in reverse order for as long as I can.

Ya China and Japan are woried, wouldn't you be? The US can keep on printing as long as it is the world's currency of last resort. We are where you go when you are worried about it all hitting the fan. Japan is in deep do do, they live by export more than China even. China is already having unreast. China had a deal with the proletariat, no politics and everyone will keep making more money. Well when everyone recently returned from new year there weren't jobs. Many places have bigger headaches than we do.

So we print it. Which decreases the value of the $ we have.

They figure the banks have around 2 or 3 trillion bad debt. Not just mortgages, everything, stocks, bonds, the whole ball of wax is worth much less than it used to be.

I don't know who your circle of freinds are cowgal but if they aren't self sufficient farmers who don't need the rest of the world they should be taking another look at the economic remedies offered. Stimulous and bailout are two very different things. Both cost tons but that's where the similarity ends.

People were amazed that at Obama's presser he had to explain why we couldn't just let capitalism follow it's course. He had all of you in mind when he explained the obvious. Anyone who has had an ecenomics course since 1940 knows that in a recession the fed spends for stimulous. We've done it in every recession since the great one. The only difference between liberal and conservative is on what. Before 1980 there wasn't even an arguement about what type, only what states or programs. Since 1980 Repubs preffer to spend on rich folks. (tax and corprate tax breaks) The problem is you don't get 100% of stimulous for every dollar spent, whereas on infrastructure you get greater than 100%. This is all very very basic, and every educated person knows it. Not rocket science but long established economics. It does make financial sense. http://en.wikipedia.org/wiki/Keynesian_economics

No one is taking anyone's money away. We are the government. Taxes are being cut, not raised? ? ? ?

If you don't work and earn your keep you deserve nothing in return.
Uh huh. What about someone who just lost a job? Or little kids. Should little kids work? What about babies, they can't even walk until they are one? What about my next door neighbor, she's 93, she can barely come to the door when we bring her casserols and stuff. Actually the idea of stimulous is work. Put people to work, like making stuff.

f the Banks fail then you are insured by the Government for $100,000 + so only the "rich will be affected.

Very good one. So true. I knew this and deposited accordingly despite my broker telling me how long it might take to get money back or any of the other arguements people use to try to get you to invest rather than the bank. Many people aren't that astute, (financialy speaking) look what confusion there is over stimulous. Many think 401ks are insured. Remember when GW and the Repubs wanted to get rid of Social Security and get people to put it in the market?

Banks do much much more than take deposits and lend money. Did you read that post I had about the investment bills? Banks also lend large amounts to business and foreign countries. Businesses borrow not just to do something but also for ongoing expenses. Quarter to quarter revenue goes up or down, but businesses use loans to alleviate having to keep cash reserves on hand to cover ongoing expenses. It actually costs less to borrow the money and pay for things like payroll, construction, purchases etc. That money has stopped. No one can get loans. Many foreign countries can't even get loans. I'm talking about entities worth in the many tens or hundreds of millions.

Every week a few small banks go into recievership. The govt takes them over pays off all the depositors and sells off the assets etc. Bankrupt. I'd like to see this happen to big banks. In the meantime though we need someone to lend money to lubricate the wheels of capitalism. Loans to creditorthy big businesses. We have to have it or we wake up and find no electricity or gasoline or milk. The whole thing shuts down. Everyone knows this, extreme right or left, Bush or Ombama.

JTapia's sloppy mechanic analogy is exactly the same one being made by everyone else liberal or conservative. The shareholders in the bank is a major part of the reason they aren't being allowed to fold. The number of banks too big to fail is small, maybe fifteen or so. But they are big. A lot of smart folks are saying put the big ones in recievership, but you know what that means don't you? When the govt takes over a bank and manages it people call that socialism, and America isn't ready for govt control of banks. Yet. What ever we do we still need to make a way for credit worthy businesses to borrow money. We can do that by paying off the bad debts the banks have, or by taking over the banks, the stock will be worthless then, same with the bonds, and then sell off the bad loans pennies to the dollar and start lending to the creditworthy customers. Socializing any bank that can't fend for itself is a step American's don't seem ready to do yet. So smile and pay the at least 2 trillion.

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The Debt Spiral
civetcat wrote:
No one is taking anyone's money away. We are the government. Taxes are being cut, not raised? ? ? ?

I got bad news for you civetcat, according to my paycheck that was part of my salary that was taken from me. If it was MY government then why doesn't it listen to me?
Giving people who don't pay taxes a ?refund? is NOT cutting taxes.

civetcat wrote:
If you don't work and earn your keep you deserve nothing in return.
Uh huh. What about someone who just lost a job? Or little kids. Should little kids work? What about babies, they can't even walk until they are one? What about my next door neighbor, she's 93, she can barely come to the door when we bring her casserols and stuff. Actually the idea of stimulous is work. Put people to work, like making stuff..

I said that anyone who just lost their job should be given everything they need to get back on their feet.
Little kids don't pay taxes nor do they receive any. Their parents do but not them. If their parents don't/won't work then they should not have kids, oh yeah that's how they determine how much free money they get though isn't it? More kids = more money and benefits. If they can't afford to take care of their kids then they should have them removed and taken care of by relatives or adopted out to those who want kids but can not have them and can take the responsibility to teach them morals and self respect and self reliance.
Did 93 year old neighbor work at all in their life? Did their spouse work any at all in their life? Don't try and take the imagined high ground and use the elderly and kids as human shields to try and defend your socialist point of view. You knew full well I was not advocating letting the kids starve and the Elderly die off, which by the way is exactly what will happen to the elderly when the new Government health care system is put into place. It'll cost too much to save them and there'll be no return on the investment. IIt'll be all about votes then.

civetcat wrote:
f the Banks fail then you are insured by the Government for $100,000 + so only the "rich will be affected.

Very good one. So true. I knew this and deposited accordingly despite my broker telling me how long it might take to get money back or any of the other arguements people use to try to get you to invest rather than the bank. Many people aren't that astute, (financialy speaking) look what confusion there is over stimulous. Many think 401ks are insured. Remember when GW and the Repubs wanted to get rid of Social Security and get people to put it in the market?

I believe in investing and I think that it is necessary to do so. I just also believe that it is clear that there is risk in investing and things don't always go good for you but that's the risk you take.
You are correct though, most people either don't know or don't take the time to know what they are doing on alot of things.
GW is not the Pres anymore and the repubs are not in control anymore, time to start asking yourself what is Obama gonna do and is what he doing really in the best interest of the Country.

civetcat wrote:
Socializing any bank that can't fend for itself is a step American's don't seem ready to do yet. So smile and pay the at least 2 trillion.

As noted in the news today and yesterday, what the American people want is of no concern to the politicians in DC.

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The Debt Spiral

The money's not being taken away? How do you figure that? It's national DEBT -- which means it has to be paid back at some point. If that money doesn't come out of your paycheck, it comes out of our economy. And when we start printing more money, that money will come out of you in via inflation that'll reduce your spending power. Less consumer spending slows down the economy, which reduces revenue to the government. So we print more money...

Any way you cut it, this stimulus business is a dog that'll hurt the economy more than it'll help it in the long run. If it's so good, why does the Dow dive every time they pass another stimulus? If it's so good, where are all the economists praising it?

What we're seeing is the collapse of American economic power. That'll create enormous secondary effects throughout he world, to include a reshuffling of national power between nations. If this continues, the chance of international conflict rises substantially -- if they screw this up, we'll be thinking about the good old days in Iraq.

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The Debt Spiral

why does the Dow dive every time

Might actually be a good thing. Means Wall Street Bankers aren't getting what they wanted, nor did large brokerage firms.

Another thing to consider, some of these companies have scores of people making over 7 figures, it aint just the chief execs. They loby your reps and the pres, it's a close knit club and their interests aren't necessarliy mine.

The big thing Wall Street wants is for taxpayers to cover the banks butts. If they lose the price of all the stocks and bonds for these banks they lose a lot of money. Remember this is rich people socialized risk. Banks fail we pay, banks succeed they make money. Wall street cares about stimulous because it means the economy will get moving sooner, they care about bailouts because it's their butts on the line. Two very different things.

Of course if these banks were in another country as has happened many times ovet the past 15 years our response (as relayed by our lap dogs at the IMF) would be immediate and unambiguous. We've seen it in Korea, Thailand, Russia, younameitstan. Bankrupcy, take them over, sell assets to vultures, refinance, raise taxes. We demand it before we give them IMF loans. We have people that specialize in doing these things. Heck my favorite ecomomist, that guy who just got his Nobel, specialized in studying failed ecomomies. I guarantee you wouldn't like what he says.

JTapia everyone pays taxes. Look at that cash register reciept next time you buy something. Look closely at that pay check too. Everyone who works pays 6.2% Social Security and 1.45 % Medicare or medicade, unseen your employer pays the same amount. You probably pay some sort of municipal tax and county tax too, through real estate, sales, tabaco, gasoline, liquer. There's lots of different taxes. Hard to imagine someone paying none.

I"ve no idea if the 93 year old neighbor or her hubby worked, don't care. I also don't care to tell people they have to put their kids up for adoption because you say so, sounds weird to me. People don't have babies to make welfare anymore, welfare isn't such a great deal. I can't punish kids for the sins of their folks anyway, nutty. If nationalized medicine or universal coverage is so bad why does every other developed country have it, and I never hear of anyone wanting to give it up. People probaly thought the wheel was a bad idea too.

One last quote.
Any way you cut it, this stimulus business is a dog that'll hurt the economy more than it'll help it in the long run
Every administration since Roosvelt and every ecomomist in the world is wrong and Expat is right.

Running up the debt isn't forever, remember Obama's a Dem, the party of fiscal discipline, we balance budgets and make surpluses. We have a lot of house cleaning to do right now but give us longer than 3 weeks. Look, you hold a big drunken bash and mess up the living room, you can't tell the folks cleaning it up how to do it, you are the ones with the big party in the first place.

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The Debt Spiral

Well I know my view of the world has been altered radically after reading the last few big posts. Clearly there are way too many of us on here that do not understand how any of this works, listen to the wrong economic gurus and have learned nothing in the school of hard knocks.

Time will tell.......................and I am sure glad that besides making some money from hunting I am one of those magical "self sufficient farmers who don't need the rest of the world". I can see a lot of knowledge about rural US and Canada and the agricultural world in that statement.

Actually it is not the world I don't need..............it is vast numbers of the genetically inferior bi-pedal inhabitants I don't need. It is our entire global economy and the fact that it is based on continuous growth that has us all in such a mess...........

We need less mouths to feed and house and consume the natural resources, not more.

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The Debt Spiral
civetcat wrote:
why does the Dow dive every time
Running up the debt isn't forever, remember Obama's a Dem, the party of fiscal discipline, we balance budgets and make surpluses. We have a lot of house cleaning to do right now but give us longer than 3 weeks. Look, you hold a big drunken bash and mess up the living room, you can't tell the folks cleaning it up how to do it, you are the ones with the big party in the first place.

Oh, wait a minute there pal, the history of the USA economy (at least for cvc, cowgal, expat, and that makwa feller) began exacty three weeks ago. Anything prior to that is ancient history kinda like them temples in South America and Egypt. Don't bring anything up prior to Jan 09 or else civet and remember this all started then, Jan 09 and is thus the fault of the Democrats. Yeah that's it.

By the way great couple of posts.

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The Debt Spiral
Makwa wrote:
Well I know my view of the world has been altered radically after reading the last few big posts. Clearly there are way too many of us on here that do not understand how any of this works, listen to the wrong economic gurus and have learned nothing in the school of hard knocks.

Time will tell.......................and I am sure glad that besides making some money from hunting I am one of those magical "self sufficient farmers who don't need the rest of the world". I can see a lot of knowledge about rural US and Canada and the agricultural world in that statement.

Actually it is not the world I don't need..............it is vast numbers of the genetically inferior bi-pedal inhabitants I don't need. It is our entire global economy and the fact that it is based on continuous growth that has us all in such a mess...........

We need less mouths to feed and house and consume the natural resources, not more.

You know reading the obnoxious tone of your post, I can't help but to recall the last eight years the guys whose ideology you obviously support were the ones running the show here in the good ol USA. I'm not quite sure what that says about your credibility on the matter.

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The Debt Spiral

If that is what you got out of my post then I guess I did a poor job of it. Obnoxious tone.........oh my. As to my credibilty....well I guess if I cared about what you thought that might be an issue, but that is simply not the case and I won't lose any sleep over it.

Actually, I didn't have much use for Bush. I really could care less about who specifically is the US president and more about the actual substance of the policies that are introduced, how they are implemented and how they affect the rest of us. It is an unfortunate truth that what your government does directly affects my country and others.......and the policies that are sometimes rammed down our throats because we simply have no choice in the matter, such as the recent bail out attempt for the auto industry.

So if you think my tone is obnoxious well you can just stick in there with the sanctimonious, all knowing and patronizing tones in some of the rest of the posts.

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The Debt Spiral
Makwa wrote:
If that is what you got out of my post then I guess I did a poor job of it. Obnoxious tone.........oh my. As to my credibilty....well I guess if I cared about what you thought that might be an issue, but that is simply not the case and I won't lose any sleep over it.

Actually, I didn't have much use for Bush. I really could care less about who specifically is the US president and more about the actual substance of the policies that are introduced, how they are implemented and how they affect the rest of us. It is an unfortunate truth that what your government does directly affects my country and others.......and the policies that are sometimes rammed down our throats because we simply have no choice in the matter, such as the recent bail out attempt for the auto industry.

So if you think my tone is obnoxious well you can just stick in there with the sanctimonious, all knowing and patronizing tones in some of the rest of the posts.

You are correct, I did jump the gun a bit and for that I apologize. In rereading your post, I do understand it more clearly. I tend to agree we as a species are very akin to a cancer cell in my opinion replicating at a terrific rate and burning up resources until the host is killed. In the end it's not right or left just the nature of man.

Again, my apologies and take care.

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