How would you fix the economy and budget issues?

[firstdown]

Originally Posted by dmek25

isnt the SS taxes capped at 109000 per year? that could be one change to increase the total revenue

They are capped around that number and there is talk about removing the cap to help fix the SS problem. Its just another way to not fix the real problem. Its what they do in congress. God forbid we fix SS with real solutions. Its a spending problem not a money problem.

[saden1]

Originally Posted by Schneed10

Yeah well, duh. But WHY was consumer confidence eroded so badly?

Don't forget, people are reactionary beings. Consumer confidence got crushed because suddenly layoffs were popping up and housing prices were on the decline. When loans can't be had as readily and jobs are hard to find, of course consumer confidence erodes.

Consumer confidence is the ultimate SYMPTOM of a flagging economy. It's never the cause. But it can be the cause of LAG in recovery. A recovery won't happen until people are willing to open their wallets. But they won't open the wallets until they're convinced things are improving, which requires substantial improvements in the job market first and foremost.

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

[Schneed10]

Originally Posted by saden1

The loss of confidence in the housing marked is primarily responsible for the current economic downturn. It's that simple.

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

[saden1]

Originally Posted by Schneed10

I disrespectfully disagree. That's an incredibly incorrect statement. And to think anything in economics is simple is laughable.

I'm glad you feel that way...now let's show work:

The year is 2002ish and the economy is doing reasonably.

1. Schneed has a job and makes decent money.
2. Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
3. Schneed buys a house he can only afford with a 5 year ARM loan.
4. It's 2007ish; Everything is peachy and economy is still doing reasonably well.
5. Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
6. Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
7. Banks stop getting paid and consequently stop lending.
8. Companies can't get money to fund growth and start preparing for the worst.
9. Mass lawyoffs ensue and corporate spending freezes.
10. Poor ol' Schneed gets laid off and his house goes under.
11. His neighbors house's value drops. No more equity to borrow against.
12. Consumers brace themselves for the worse and stop spending.
13. More layoffs ensue and Schneed's neighbor gets laid-off.
14. Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced.

[Schneed10]

Originally Posted by saden1

I'm glad you feel that way...now let's show work:


The year is 2002ish and the economy is doing reasonably.

1. Schneed has a job and makes decent money.
2. Banks are lending at favorable terms and LIAR loans are ready to be consumed by Schneed.
3. Schneed buys a house he can only afford with a 5 year ARM loan.
4. It's 2007ish; Everything is peachy and economy is still doing reasonably well.
5. Poor ol' Schneed's mortgage changes to less favorable terms and he can't pay.
6. Investors get wind of Schneed and his ilk's LIAR loans, lose confidence in the banks and the credit market freezes.
7. Banks stop getting paid and consequently stop lending.
8. Companies can't get money to fund growth and start preparing for the worst.
9. Mass lawyoffs ensue and corporate spending freezes.
10. Poor ol' Schneed gets laid off and his house goes under.
11. His neighbors house's value drops. No more equity to borrow against.
12. Consumers brace themselves for the worse and stop spending.
13. More layoffs ensue and Schneed's neighbor gets laid-off.
14. Schneed loses his mind and starts making retarded arguments about stuff he's not well informed on.

I know you're averse to linking but this whole mess is well documented and sourced.

Yeah dude you totally misread me. The fact that consumer confidence shows up in item 12 above only proves my point.

Consumer Confidence was not the cause of this economic downturn. There were 11 causes you listed before it. Consumer Confidence is just another domino, it was not nearly the first.

That was my whole point.

[NC_Skins]

Originally Posted by 12thMan

What do you guys think about repealing ethanol subsidies? That could be another $6 bil?

A study from CATO, a conservative think tank done in 1995. I'm curious what our free market conservatives think about ethonal subsidies.

http://www.cato.org/pubs/pas/pa-241.html

Thanks for bringing this up. I'm going to read this at work tomorrow while it's slow and I'll get back to you on this.

[12thMan]

Schneed, there are many symptoms and causes to this fragile economy. It's like a sickly patient who comes into your office sneezing like crazy. The first thing the doctor wants to know if they're allergic to anything. If the answer is yes, he/she will keep diagnosing beyond the obvious before they prescribe medication. My basic premise is that the weakness of the housing market is the most glaring undermining confidence and recovery, not the only thing.

I wholeheartedly agree that the the rate of unemployment is linked to housing prices. I've mentioned this in at least one other thread around here. However, my point of contention with the Obama administration, as it relates to the foreclosure crisis, is that they've nursed the banks back to health, the auto industry is back on it's feet, yet they've left the middle class to endure the most brutal housing recession to hit this nation, perhaps ever.

You seem to lay much of the blame at the feet of the American consumer. Government can't solve all the problems, people need to save more, homes are expensive, etc. While all of your statements are true, it's also true that real wages have stagnated over the past 20 years while the cost of living continues to go up. The average American is working longer, retiring later, and the exorbitant cost of health care have driven many into bankruptcy, all while being barraged with ads selling the American dream and easy credit.

It's not that government can -- or should be expected to solve everything, but they should at least uphold their end of the bargain.

[Schneed10]

Originally Posted by 12thMan

You seem to lay much of the blame at the feet of the American consumer. Government can't solve all the problems, people need to save more, homes are expensive, etc. While all of your statements are true, it's also true that real wages have stagnated over the past 20 years while the cost of living continues to go up. The average American is working longer, retiring later, and the exorbitant cost of health care have driven many into bankruptcy, all while being barraged with ads selling the American dream and easy credit.

But WHY have real wages stagnated? It's not enough to just say they have, you have to understand why they've stagnated if you expect anyone to do anything about it. You can't prescribe medicine for the disease if you don't understand how it's attacking the body.

Globalization. That's the cause.

Real wages have stagnated because the American dream as we used to know it has evaporated. It used to be enough to graduate from high school and get a job at a factory. That could support the American family just fine. But companies have found ways to make many products for cheaper overseas largely because of lower wage rates in foreign countries. Companies shut down factories here and moved them to China. And now as India has become stronger from an education perspective, companies are finding they can eliminate American call centers and do it cheaper in India.

So when you have so many jobs headed overseas, and a growing population here in the states, you get a greater supply of workers. Natural market forces will of course prevent wages from growing.

Understanding that, what praytell do you ask of Obama or congress or anybody? What the hell can you do about it? China and India have cheaper labor, are you going to tell your American companies they can't ship jobs overseas to those countries? If you do, those American companies won't last long against competition that is allowed to tap into the cheaper labor pool.

Obama hasn't done anything about it because there is no answer. It's up to the people. You want to live the American dream, be better than your Chinese or Indian counterpart, because if you don't then they'll live the American dream. Work and deserve it, earn it to own it.

[NC_Skins]

Originally Posted by 12thMan

What do you guys think about repealing ethanol subsidies? That could be another $6 bil?

A study from CATO, a conservative think tank done in 1995. I'm curious what our free market conservatives think about ethonal subsidies.

http://www.cato.org/pubs/pas/pa-241.html

Hell yes get rid of this shit..lol

[Schneed10]

Originally Posted by NC_Skins

Hell yes get rid of this shit..lol

But isn't there a return on investment case to be made on this?

You can mix ethanol at up to 10% levels into gasoline and cars will still run fine. I haven't done the math, but the financial analyst in me says:

- You have a cash outlay of $6 Billion
- You have savings on gasoline of 10% x Gallons of Gas Sold at Pump x (Price of Gasoline per Gallon - Price of Ethanol per Gallon)

So the question becomes, without the Ethanol subsidy could we still realize the savings on the 10% of gasoline that's displaced by Ethanol?

I'm sure this is overly simplified, but somebody somewhere needs to do an ROI on this before recommending cutting the subsidy.

[NC_Skins]

Originally Posted by Schneed10

But isn't there a return on investment case to be made on this?

You can mix ethanol at up to 10% levels into gasoline and cars will still run fine. I haven't done the math, but the financial analyst in me says:

- You have a cash outlay of $6 Billion
- You have savings on gasoline of 10% x Gallons of Gas Sold at Pump x (Price of Gasoline per Gallon - Price of Ethanol per Gallon)

So the question becomes, without the Ethanol subsidy could we still realize the savings on the 10% of gasoline that's displaced by Ethanol?

I'm sure this is overly simplified, but somebody somewhere needs to do an ROI on this before recommending cutting the subsidy.

Not sure how.

In 1986 the U.S. Department of Agriculture estimated the average cost of producing ethanol at $l.60 a gallon, more than double the then wholesale gasoline price of 60 cents a gallon (the current wholesale price is roughly 55 cents).


Ethanol has done poorly on its own largely because it is a relatively lousy fuel. An Agriculture Department report observed,

Each gallon of ethanol contains about two-thirds as much energy as does gasoline, resulting in reduced fuel economy. One would expect vehicles using gasohol to show about a 3.3 percent reduction in miles per gallon since ethanol constitutes 10 percent of the ethanol-gasoline blend. In a recent report on the performance of alcohol-gasoine blends, the DOE concluded that gasohol-fueled vehicles averaged 4.7 percent fewer miles per gallon than gasoline-fueled vehicles in automobile fleets.(35)

The comparatively feeble fuel value of ethanol is a large part of the reason why the fuel is so discounted from its cost of production. The USDA report further noted,

Fuel ethanol sold for about $0.90 per gallon in July 1986. This price does not reflect its free market value because gasoline blenders qualify for Federal and State ethanol subsidies. After deducting the value of the subsidies ($0.60 per gallon for the Federal subsidy and some $0.30- $0.40 average for State subsidies) the net cost of ethanol to blenders is about zero. This indicates that ethanol producers could not survive without the subsidies, and suggests that most will need even larger subsidies to stay in business unless petroleum prices increase sharply. Net of applicable subsidies, ethanol is selling for about $0.30 per gallon less than the wholesale price of gasoline.(36)

Yet, while ethanol was selling (net of subsidies) for half the price of gasoline, it cost more than twice as much to produce as gasoline. Obviously, government intervention is necessary.

[Schneed10]

Originally Posted by NC_Skins

Not sure how.

Compelling case. As you can tell, I did not read it!

[firstdown]

I saw this and thought about this thread. We really don't unstand the cost to run our gov. and the cost to just fight rust was amazing.

The Pentagon Confronts New Enemy: Rust | Danger Room | Wired.com

[Slingin Sammy 33]

I don't know the details of the latest due to lots of work/family stuff going on but.......one thing I know I wouldn't do to try to fix the economy/budget is walk out of negotiations to work on the budget/defecit/debt ceiling. Maybe I'm just naive, but no one said this was going to be easy, and you can't get anything done if you're not talking.

[firstdown]

Originally Posted by Schneed10

But isn't there a return on investment case to be made on this?

You can mix ethanol at up to 10% levels into gasoline and cars will still run fine. I haven't done the math, but the financial analyst in me says:

- You have a cash outlay of $6 Billion
- You have savings on gasoline of 10% x Gallons of Gas Sold at Pump x (Price of Gasoline per Gallon - Price of Ethanol per Gallon)

So the question becomes, without the Ethanol subsidy could we still realize the savings on the 10% of gasoline that's displaced by Ethanol?

I'm sure this is overly simplified, but somebody somewhere needs to do an ROI on this before recommending cutting the subsidy.

First off the 10% enthanol level in gas does cause cars not run as effecient as they should. On the marine side its been a nightmare and caused millions of damage to boats. Enthanol is also more expensive to produce then gas so it does not save money it cost money. Those weed wackers and gas blowers you have that seem to not run as good its probably because of E10.