Anybody following the global financial meltdown?

[The Vulcaniser]

it seems now that because of the U.S bail out of the banks that are going bust, the price of crude oil sky rocketed AGAIN just after it started to fall.......... the cost of the financial miss-management over there will have world wide repercussions unfortunately.

[aKorn]

Here is some text from the bailout legislation:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

This is not on the up-and-up.

[RichLockyer]

Originally Posted by aKorn

So in your own life, personal debt does not matter? All you have to do is make more money. I think you might be buying the party line when you say deficits don't matter. (a famous Darth-Cheney quote)

Oh no... of course it makes a difference, BUT, I'm saying that in a growing economy, it is manageable. If you're making $50k this year and putting $10k on plastic, and next year you are making $60k AND keep your outlays in check, then you are now on a balanced budget with $10k in outstanding debt.
Next year you make $70k... if you continue to keep your outlays in check, then you would be able to retire your debt entirely.
Of course, with inflation factored in, to actually do that would require some cutbacks in your lifestyle, but I hope you see my point.

Yes, we are passing a HUGE debt to future generations, and we aren't going to grow out of it any time soon... and we will never grow out of it if government expenditures are not reigned in.

Originally Posted by Musgofasa

One thing I have always asked is this. If the >$500K people are the ones who create jobs and drive economy, what would they do if the <$500k people couldn't afford the products they make? In the end, I always thought the consumer was what drove the economy and there are a hell of a lot more people making $30K a year or less than $500K or more.

We need both. Without those to provide the jobs and invest in our industry, there will be no jobs. And no, without the consumer, there will be no need for products to be on the market.
Regarding direct benefits from the Bush tax cuts? I've mentioned this before, but a good friend of mine used the money from his tax cuts to hire TWO additional people on his staff. That's two people no longer drawing unemployment... and now, 5 years later, one of them is making $100k+
Yes, payroll and office expenses are tax deductible... but that doesn't mean that if you pay an employee $30k you are going to get $30k back from the Fed... it just means that you won't owe tax on that $30k... it'll only save you about $10k.

Regarding the people making $30k and lower, which DOES represent the majority of the work force... with earned income credit, standard deductions, and other programs for low-wage earners, a family of 4 making $26k actually gets more BACK on their federal refund than they paid in. Their actual tax burden is pretty much limited to Social Security and various state, local, and sales taxes.
My spreadsheet does not take any of these programs into consideration, it is based solely on adjusted/taxable income.

Also, consider the Alternative Minimum Tax. That impacts pretty much anyone over $150k who has any significant business deductions (which most do). Short story, you made $500k, after deductions you claim an adjusted gross income of $300k. The IRS says "Nope, sorry... you're paying taxes on $400k"
If you get audited, the IRS won't even look at years you paid AMT, because if they do, and they find that your deductions were legitimate, then they owe YOU the difference and AMT is thrown out the window.

[aKorn]

This is a hoot:

Sept. 23 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke signaled that the government should buy devalued assets at above-market values to make its proposed $700 billion rescue package most effective in combating the financial crisis.

Bloomberg.com: Economy

And they have been working on it for months?

Fratto insisted that the plan was not slapped together and had been drawn up as a contingency over previous months and weeks by administration officials. He acknowledged lawmakers were getting only days to peruse it, but he said this should be enough.

//www.rollcall.com/news/28599-1.html?type=printer_friendly

US taxpayers bailing out banks that bet incorrectly. Gee I once bought some stock that went down. Shouldn't I be compensated?

Bend over America.

[aKorn]

Rich

You are making good points and I respect your opinions. I just feel that high debt and an economic downturn could spell real trouble. If our debt service payments go to 10 or 12 percent interest, our country is screwed. I feel all the numbers coming out of Washington paint a much too rosy picture and all they predict is growth. What happens when we hit a recession, interest rates spike and the economy shrinks. Then the numbers look really scary.

Personally, I hate debt and I avoid it as much as possible. In my life debt reduces options, and I like to have my options open.

[RichLockyer]

Originally Posted by aKorn

Here is some text from the bailout legislation:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

This is not on the up-and-up.

As disturbing as it is, and as insidious as it appears, I made a couple of calls and it's not unexpected.

These things fall under SEC regulations governing insider trading and they cannot be made public. If they were, you'd see a LOT of people making a LOT of money off of the situation and it would undermine the whole effort.

No... I don't trust it either, but we have no choice.

[RichLockyer]

Originally Posted by aKorn

Rich

You are making good points and I respect your opinions. I just feel that high debt and an economic downturn could spell real trouble. If our debt service payments go to 10 or 12 percent interest, our country is screwed. I feel all the numbers coming out of Washington paint a much too rosy picture and all they predict is growth. What happens when we hit a recession, interest rates spike and the economy shrinks. Then the numbers look really scary.

Personally, I hate debt and I avoid it as much as possible. In my life debt reduces options, and I like to have my options open.

I don't disagree with you at all. We ARE in trouble and the trouble has been in the making since 1965. It's finally come to a head, and our only option IS to grow out of it... we're simply in too deep. Anything else would completely cripple the economy and make matters much worse.

Keep history in mind with respect to tax cuts. When taxes are increased, government revenue falls. When they are cut, revenue actually increases.
Pete Wilson raised taxes in California. He felt (and still believes) that he had no choice. The result was that California's recession was extended by nearly 2 years.

Now with our current situation, the "r word" is being thrown around a lot, but the definition of "recession" is defined as a period of two consecutive quarters of NEGATIVE growth in GDP. That has not happened. We've slipped and slowed down, but we are not in a recession by the classic definition.
Just because a talking head on Fox or CNN says it doesn't make it true

The mortgage situation? Only 2% of all current mortgages are impacted by pending foreclosure. In most areas of the country, it is a complete non-issue. The problem is, the way the mortgages were sliced up and resold (300 payments on your mortgage, theoretically 300 different banks could own a piece of it), the risk was spread so wide, and since the trading was done on 30:1 margin, it has put all of the banks in a tight spot.

[Nomadken]

Evidently Obama was an attorney along with others who pressured banks to make bad loans to people who could never pay them off.
This the case then Freddie and Frannie bought up the bad paper and ended in a downward spiral.
Do a search on what Acorn did and what President Carter made happen under his administration and perhaps you will find there is more dirt on Obama then anyone cares to admit. Certainly not he!

[aKorn]

Why do we now need a nationalized financial system?

All of this is why I own my house outright. Last summer I finally finished the floors in our addition, though they had been plywood for 6 years. I do almost all of the construction myself.

We have 4 cars that are 8 to 16 years old and have 100,000 - 225,00 miles on them, but they are all paid off. Would I like to drive a fancy brand-new car? Sure, but I would never take the depreciation hit.

To a large extent, I don't have too much sympathy for the people losing their homes.

Sure I would Love to live in a big fancy house that I can't afford but the reality is we all have to live within our means. Just because a shyster puts a bad deal in front of you doesn't mean you should sign it. A couple of years ago when I heard about 50 year - interest only loans I knew the end is near.

The problem w/ the $700b deal is it further consolidates power into the executive branch which IMHO has done a poor job w/ transparency and truthfulness. Given their 8 year record, It looks like another chance to line the pockets of their friends.

Again I believe the Fed keeping interest rates artificially low is a big cause of this mess. If allowed all of the debt financing of all the hedge funds and these piece-of-sh|t debt-based products. Many companies were running all of their short-term cash flow through debt. So W wants to put even more power into feds hands.

I actually look forward to a bit of a recession to calm things down a bit. The public is given the impression that economies only grow and the stock market only goes up. If that's the case than the markets are not anywhere close to free.

[aKorn]

Originally Posted by Nomadken

Evidently Obama was an attorney along with others who pressured banks to make bad loans to people who could never pay them off.
This the case then Freddie and Frannie bought up the bad paper and ended in a downward spiral.
Do a search on what Acorn did and what President Carter made happen under his administration and perhaps you will find there is more dirt on Obama then anyone cares to admit. Certainly not he!

Ahhhh... another Bush apologist. It's always Carter's fault even though Reagan and Bush are responsible for 90% of the deficit increase. And apparently 16 year old Obama was at the heart of it all. What a Hoot!

[aKorn]

Great Read. Ron paul is just about the only person in congress speaking the truth.

governmental measures, combined with the Federal Reserve's loose monetary policy, led to an unsustainable housing boom. The key measure by which the Fed caused this boom was through the manipulation of interest rates, and the open market operations that accompany this lowering.

Commentary: Bailouts will lead to rough economic ride - CNN.com

[Ole Yeller]

I am not for welfare for Wall street. These A holes are have been bribing congress for the past 25 years to get 'government of their backs' and now when their vaunted 'free market' turns on them, they want a government bailout.

[sl3slinger]

Originally Posted by Nomadken

Evidently Obama was an attorney along with others who pressured banks to make bad loans to people who could never pay them off.
This the case then Freddie and Frannie bought up the bad paper and ended in a downward spiral.
Do a search on what Acorn did and what President Carter made happen under his administration and perhaps you will find there is more dirt on Obama then anyone cares to admit. Certainly not he!

PUT YOUR HANDS IN THE AIR AND SLOWLY STEP AWAY FROM THE KOOLAID!
look heres the deal, this is either here nor there, since then both parties have had control and NEITHER of them did a damn thing, their all dirty on this!

[Gatogonow]

It all boils down to one single truth.

No politician believes they can be either elected or re-elected by telling the truth.

More taxes, not me!

Medicare cuts, no way!

Free healthcare, great!

Tax the rich, you bet!

Tax fairly, that's not fair!

Cut entitlements, not on your life!

I live in Florida where we have tried to reduce property taxes by small amounts. Tax revenues increased approximately 50 % over the last 4 years and now, no one can figure out how to cut the budget 5%. Not me, you can't cut my program, you can't cut Medicaid, you can't cut education, you can't cut the frail and elderly, you can't cut anything.

It's all BS and we along with the rest of the world need to get a grip and live within our means. It went south when we left the gold standard and we along with the rest of the world decided to back our currencies with a printing press and lots of ink. That's the only way to solve the problem and we are going to do it again and again and again and again and again!!!!!!

[ozyran440]

Originally Posted by Gatogonow

It's all BS and we along with the rest of the world need to get a grip and live within our means. It went south when we left the gold standard and we along with the rest of the world decided to back our currencies with a printing press and lots of ink. That's the only way to solve the problem and we are going to do it again and again and again and again and again!!!!!!

We quit backing the gold standard because foreign countries were redeeming our currency for our gold. If we had continued the gold standard we would have precisely none left in the Reserve by now.

[Gatogonow]

Between 1914-1919, most countries suspended the gold standard so they could print enough money to pay for their involvement in the war. In 1941, most countries adopted the Bretton-Woods system, which set the exchange value for all currencies in terms of gold. It obligated member countries to convert foreign official holdings of their currencies into gold at these par values. However, many countries simply pegged the value of their currency to the dollar, thus making the dollar the defacto world currency. The strong dollar led to inflation and a large balance of payments deficit in the U.S. which in turn helped to create stagflation. The U.S. started to deflate the dollar in terms of its value in gold to curb double digit inflation.

In 1971, gold was repriced, then again in 1973. As the dollar devalued, it motivated people to sell their greenbacks for gold. Finally, in late 1973, the U.S. government decoupled the value of the dollar from gold altogether. The price of gold quickly shot up. Many believe that the US should have nationalized gold at that time instead of just continuing to print more and more and more and more and more money.

The major misnomer is that anyone will actually pay for all of these bailouts in terms of real cash. We will just print more money, after all it's free. The result will be major world wide double digit inflation and the skyrocketing of gold prices to preserve the ravages of personal inflation. Then and only then will the US Nationalize their gold. We will also cancel all of our foreign debt and become an isolationist nation!

This is just my opinion. However, I do own gold and do not keep it in the US!

[RichLockyer]

Originally Posted by Gatogonow

amounts. Tax revenues increased approximately 50 % over the last 4 years and now, no one can figure out how to cut the budget 5%. Not me, you can't cut my program, you can't cut Medicaid, you can't cut education, you can't cut the frail and elderly, you can't cut anything.

It's an even bigger political football out here.
Years ago, a ballot measure was passed (backed by the Teachers' Union) that mandated that a specific percentage of the state budget be assigned to public education. I don't recall the exact number, but it's in the ballpark of 50-60%.

That means that ANY cut in the state budget (excuse me, any cut in budgeted INCREASES from year to year) means that public education will be cut by that same percentage.
So everyone screams "We can't hurt the children!" and the unions bus in their thugs to stand in front of the Capitol yelling "Shame on you!"

[Gatogonow]

I have two words for all special interest groups which acutual represent any special interest group because every interest seems to be special in todays world.

Shut Up

No, three words!

Just shut up

No four words

Shut the F-up

It is so disgusting to read the paper and see all the whining. Then again, I am whining about the whining so i guess I should just shut up.

[RichLockyer]

SIGs and PACs have their purpose in modern society.
Back in the days when a representative knew every one of his constituents on a first-name basis, we didn't need them. The people could voice their desires directly to their elected official, and if he didn't listen, he was out of office.

Today, they are nearly untouchable and flat out don't give a crap about their constituents as individuals... with a few exceptions. I often send letters to my rep and senators. The senators? Never had a response from one. One, after 3 months, I got a form letter response telling me that the web site blog and email was a better way to contact her. The representative? Within 2 weeks, I get a topical response, with references to other related bills... and with a wet signature.

SIGs and PACs like the NRA, Sierra Club, Blue Ribbon Coalition, AMA, etc... They allow individuals to lend their support to an organization comprised of like-minded individuals, so when it's time to contact congress, they don't hear 300 million tiny voices with no cohesion... they hear 5 or 6 very loud voices with well-prepared presentations in support of their desires.

But for the most part, the labor unions do NOT represent their members. We had a candidate for senate come and speak at a UAW rally at Douglas in the C-17 fabrication building. Told us how she was going to fight for our jobs.
She flew back to DC that evening and voted against the C-17 contract. The UAW never withdrew their support and continued to dump money into her campaign.