The tennis guy
Hall of Fame
Partisan aside, how many of you believe this country is headed toward right direction economically? Seriously.
Economic issue
- Thread starter The tennis guy
- Start date
The tennis guy
Hall of Fame
Can you give me reasons why it is headed toward right direction, ECONOMICALLY ONLY? I am just curious to know. Thanks.
The tennis guy
Hall of Fame
I know this is not as exciting as partisan fight. However, this is the bottom line of this country.
Tennis guy,
These Presidential debates are getting old. It's over already, but the economy has been rough, but IS headed in the right direction.
The economy has grown 4.8% in the last year. That is as fast as any year in 2 decades.
Productivity has grown in the fastest 3 year in more than 50 years.
8-10 families in the US own their own home. Be of good cheer my friend!
These Presidential debates are getting old. It's over already, but the economy has been rough, but IS headed in the right direction.
The economy has grown 4.8% in the last year. That is as fast as any year in 2 decades.
Productivity has grown in the fastest 3 year in more than 50 years.
8-10 families in the US own their own home. Be of good cheer my friend!
The tennis guy
Hall of Fame
I always assume tennis players are more intelligent than average population. If this group can't see the economic problem in this country, it is hopeless.
Just post a few facts about our country's financial status. Actual problems are far beyond these numbers.
US GDP in 2003 $11 trillion, US current debt $7.5 trillion, that's about 70% of our GDP. Average national debt per family share is $118,305 well above average family income.
Just post a few facts about our country's financial status. Actual problems are far beyond these numbers.
US GDP in 2003 $11 trillion, US current debt $7.5 trillion, that's about 70% of our GDP. Average national debt per family share is $118,305 well above average family income.
The tennis guy
Hall of Fame
Jonas,
You are talking about short-term. I am talking about long term. This year presidential debates didn't discuss long term economic problems at all. All they talk about is unemployment and jobs.
I am glad you can put some numbers there. That's partisan slogan, not economic reality.
You are talking about short-term. I am talking about long term. This year presidential debates didn't discuss long term economic problems at all. All they talk about is unemployment and jobs.
I am glad you can put some numbers there. That's partisan slogan, not economic reality.
Phil
Hall of Fame
We'll all be losers as the debt continues to balloon. It hit the ceiling a few weeks ago, and the govt. is planning to RAISE the ceiling (hence, more borrowing) to over $8 trillion. When will it end? And you voted for more tax cuts (during a protracted war/occupation that will go on for 5-10 years more-which you also voted in favor of)? Now how stupid and self-destructive is that? Really?
Our friggin' grandchildren will be paying this one off. Economics is a lot of bull, but NO economist can condone this fiscal irresponsibility. And yet the Bush team continues to spin rosy news on the economy. It's shi-at. Screw your partisianship, Don Knot-this issue doesn't acknowledge parties. We will ALL pay for it.
Our friggin' grandchildren will be paying this one off. Economics is a lot of bull, but NO economist can condone this fiscal irresponsibility. And yet the Bush team continues to spin rosy news on the economy. It's shi-at. Screw your partisianship, Don Knot-this issue doesn't acknowledge parties. We will ALL pay for it.
The tennis guy
Hall of Fame
don knot said:
I even don't care who wins or loses as long as they address the long-term (10-15 years) economic problems of this country. No one did. I even didn't vote.
With ballooning deficits and debts, and immediate retirement of baby boomers, we are headed for bankrupcy. Someone in this country have to sacrifice to be able to solve this problem. No politician are addressing this because the stupid people in this country will not elect someone who is honest enough to tell the truth, to ask people to sacrifice. All stupid people in this country want to argue about social and culture issues, paint rosy pictures while watching this country down the drain economically.
Ross Perot wasn't presidential material. At least he brought the issue up front in the 90s. The problem is still there, only worse in the last 4 years.
I hope you save enough money for yourself. Many people in this country are going to cry 10-15 years from now. Enjoy yourself now!
Camilio Pascual
Hall of Fame
I voted wrong direction. My vote has nothing to do with our total wealth or how well or badly the stock market is doing. My concern is with increasingly high wealth disparity. It is the #1 cause of the very high crime rate in this country, imo. Wealth disparity corrupts our personal freedoms.
A dream of mine would be to fill in every privately owned cement-in-the-ground swimming pool in the country until we accomplished President Bush's stated goal of leaving no child behind in education. I would also add in that no child should be malnourished. Then, and only then, would one be allowed to enjoy the use of a privately owned swimming pool.
This election has made me realize my right wing views on abortion, the 2nd amendment, international trade, and militarism have helped cause me to overlook the corruptive and corrosive effects of vast personal wealth on our country and government. I think we missed a bet by not electing John Kerry. He could have brought back those 8 nightmarish years of peace and prosperity we suffered under the Clinton regime.
A dream of mine would be to fill in every privately owned cement-in-the-ground swimming pool in the country until we accomplished President Bush's stated goal of leaving no child behind in education. I would also add in that no child should be malnourished. Then, and only then, would one be allowed to enjoy the use of a privately owned swimming pool.
This election has made me realize my right wing views on abortion, the 2nd amendment, international trade, and militarism have helped cause me to overlook the corruptive and corrosive effects of vast personal wealth on our country and government. I think we missed a bet by not electing John Kerry. He could have brought back those 8 nightmarish years of peace and prosperity we suffered under the Clinton regime.
atatu
Legend
Well, most of the people who frequent this board are 1) employed, 2) upper middle class and 3) male. Therefore, I think you're poll is going to be a little biased. In Texas the Republicans have just about taken away every social service program for the disenfranchised over the past four years. Maybe you should poll some of the unemployed, economically disadvantaged folks on the street and ask them what they think.
ty slothrop
Semi-Pro
Cam, in the immortal words of Morpheus (Matrix, not our beloved Pembroker), Welcome to the world of the Real.
It would be humorous reading all the opinions about whether Bush or Kerry are going to drive the economy in the right direction or the wrong direction if some of the statements made weren't so naive and dumb. What exactly is the "right direction" and the "wrong direction" regarding the economy? What exactly does the President do to cause the economy to change direction?
As far as "those 8 nightmarish years of peace and prosperity we suffered under the Clinton regime". Name three things Clinton did to bring about all the perceived prosperity. I can speak from personal experience that they were NOT all prosperous years and in fact from about 1993 to 1997 pretty much stunk. On the peace issue, he buried his where the sun don't shine when it came to dealing with any type of foreign conflict, hence perceived peace.
Let's just forget about that U.SA. embassy that was bombed or the USS Cole that was bombed under Clinton's watch.
The economy is a dynamic and fluid and no one, Bush, Kerry, or anyone else is going to flip a switch next week and mollify all the disgruntled Kerry lovers so they feel the economy is going in the so-called "right" direction. To assign blame or give credit to a president for all the good things or bad things that happened to the economy in a four year period he happened to be in office is ridiculous.
If you want to pick one thing that is hurting the economy the most today and for the past year it is real simple - oil is over $50.00 a barrel. As long as oil prices remain at current levels the economy is not going to get much better than it is, and it is not all that bad right now. No U.S. president is going to make the price of oil go down short of sending U.S troops into the places that have it and just taking it. Instead the U.S. is at the mercy of OPEC and its members and they know it. What about the strategic oil reserve the U.S. has you may ask? Well, we could tap into that and blow through it in a few months and then what?
Some of you people need to look past the office of the President to think about where solutions to economic issues the U.S. is facing really need to come from.
As far as "those 8 nightmarish years of peace and prosperity we suffered under the Clinton regime". Name three things Clinton did to bring about all the perceived prosperity. I can speak from personal experience that they were NOT all prosperous years and in fact from about 1993 to 1997 pretty much stunk. On the peace issue, he buried his where the sun don't shine when it came to dealing with any type of foreign conflict, hence perceived peace.
Let's just forget about that U.SA. embassy that was bombed or the USS Cole that was bombed under Clinton's watch.
The economy is a dynamic and fluid and no one, Bush, Kerry, or anyone else is going to flip a switch next week and mollify all the disgruntled Kerry lovers so they feel the economy is going in the so-called "right" direction. To assign blame or give credit to a president for all the good things or bad things that happened to the economy in a four year period he happened to be in office is ridiculous.
If you want to pick one thing that is hurting the economy the most today and for the past year it is real simple - oil is over $50.00 a barrel. As long as oil prices remain at current levels the economy is not going to get much better than it is, and it is not all that bad right now. No U.S. president is going to make the price of oil go down short of sending U.S troops into the places that have it and just taking it. Instead the U.S. is at the mercy of OPEC and its members and they know it. What about the strategic oil reserve the U.S. has you may ask? Well, we could tap into that and blow through it in a few months and then what?
Some of you people need to look past the office of the President to think about where solutions to economic issues the U.S. is facing really need to come from.
PugArePeopleToo
Rookie
The long term prospect of nation's economy is very bright. This is not because of any government's policy, and neither Bush nor Clinton should take any credit or blame, but because of the private sector. The US private sector is lean and efficient when compare to the rest of the world, and our Private sector created more jobs than people realize. Even with all the out sourcing, nation's unemployment rate is in the low 5%. Recalling the double digit inflation and double digit unemployment of the 70s, the US has done a remarkable job. As recent as 10 years ago, most economists believed at 5% unemployment rate US economy is as close to full employment as possible, now people without perspective are saying that is unacceptable. It is important to know the US's economy has been growing at a healthy rate of 2% to 3% per year. With our 10 trillion dollars economy, two years worth of growth is greater than the entire GDP output of South Korea, in another word, every two years we create an economy size of South Korea. Another way to look at it is with 2% of the world population, we create a third of the total wealth of the entire globe. As long as there is no drastic change in government policy, in the long term, there is nothing to stop the US from sustaining this growth rate, which of course point to a very bright future.
The budget deficit ran up during the last four, while high and inexcusable, is not enough to break the nation's back, yet. Obviously, if the trend continues, then soon or later, the camel's back will be broken. However, we are far from that point. The deficit per year is about 3% of GDP, and the total debts are less than one time of GDP. Again to put thing in perspective, if you have a mortgage that is greater than your income, you are carrying more debts in percentage than the US. Having said that, the Republican had made a fiscal mess during the last four years, and many of the pork had nothing to do with the war in Iraq or fighting terror, it was just shameless old fashion coffer raiding. To those who said the nation is more conservative, they overlooked the fact those Republicans bought the election with tax payer’s money, not that the Democrats would be any different if they were in charge. I voted for Kerry hoping for checks and balances, but now we are at the mercy of Republican domination for another 4 years. The debts was not a factor in this election, but if the Republican continue to be fiscally irresponsible, when the inevitable interest rate started to rise, and voters became angry, their slim majority can easily become minority.
The budget deficit ran up during the last four, while high and inexcusable, is not enough to break the nation's back, yet. Obviously, if the trend continues, then soon or later, the camel's back will be broken. However, we are far from that point. The deficit per year is about 3% of GDP, and the total debts are less than one time of GDP. Again to put thing in perspective, if you have a mortgage that is greater than your income, you are carrying more debts in percentage than the US. Having said that, the Republican had made a fiscal mess during the last four years, and many of the pork had nothing to do with the war in Iraq or fighting terror, it was just shameless old fashion coffer raiding. To those who said the nation is more conservative, they overlooked the fact those Republicans bought the election with tax payer’s money, not that the Democrats would be any different if they were in charge. I voted for Kerry hoping for checks and balances, but now we are at the mercy of Republican domination for another 4 years. The debts was not a factor in this election, but if the Republican continue to be fiscally irresponsible, when the inevitable interest rate started to rise, and voters became angry, their slim majority can easily become minority.
What is the deal with the wealth disaprity crowd? Redistribution is a communist idea. It is wrong, unless of course you want only those in power to have money. To suggest that filling in pools is any kind of solution is pure fantasy. I guess instead of paying good money to somebody for building a pool, the government could just take the money from the pooler and give to the poolee 20 cents on the dollar. As it is, the democrats would have the guy building the pool give up 50 cents on the dollar. So much for employee employer economy. You feel gooders cause more damage than good.
Seriously, can you expound a little more eloquently on the idea that there would be less poor people if there were less rich people. I can't imagine making a living working for people that can't afford to pay. May I'm the bad guy. If you want to help people get off your butt and solicit for charity. In my own personal experience, private charities are much better than government programs.
Pascal, either you are joking, which is what I think is probable, or, your insane. I'm sure your not some depressed kid looking at the pool your parents have and thinking "all the wasted money." That pool has to be cleaned. people actually earn a living making products just for that. The pump may need to be fixed. Many people make good money doing that as well. If you really want to help out the needy, get the pool tiled. Don't you ever see yachts or cars and think, wow, instead of buying that car we could have just helped. I mean come on.
Seriously, can you expound a little more eloquently on the idea that there would be less poor people if there were less rich people. I can't imagine making a living working for people that can't afford to pay. May I'm the bad guy. If you want to help people get off your butt and solicit for charity. In my own personal experience, private charities are much better than government programs.
Pascal, either you are joking, which is what I think is probable, or, your insane. I'm sure your not some depressed kid looking at the pool your parents have and thinking "all the wasted money." That pool has to be cleaned. people actually earn a living making products just for that. The pump may need to be fixed. Many people make good money doing that as well. If you really want to help out the needy, get the pool tiled. Don't you ever see yachts or cars and think, wow, instead of buying that car we could have just helped. I mean come on.
The tennis guy
Hall of Fame
I put this poll not to gauge objective view, but a sense how much the more educated, employed tennis palyers know about the real issue of this country's economic future. I am very disappointed - we are in more trouble than I thought.
"Government has nothing to do with the economy".
Really? The government deficit and debt are big factor in draggfing down private sector's long-term economic growth.
"Our debt is like mortgage".
It couldn't be more wrong. Our debt is more like credit card debt, not mortgage debt. The former is pure debt like our national debt, the later is property debt - if you can't pay your mortgage, the property can be sold to pay the debt.
"If we are bankrupt, we have all those big companies, they will pay".
Yes, they will pay, so will you.
Our national debt masked lower than it is actually is. The reason is the government collected more social security tax now than they are paying out benefit - essentially now we are borrowing from social security. The reason long-term economic healthy in this country is in big trouble is 10-15 years from now, after the retirement of baby boomers, the government will collect less in social security tax than it has to pay out in benefit. That's a huge amount of money. Where we are going to borrow? We borrowed enough from Japan and China already. The result is either huge tax hike which will stymied the private sector economic growth, or print more money which will lead huge inflation like in Argentina.
"Government has nothing to do with the economy".
Really? The government deficit and debt are big factor in draggfing down private sector's long-term economic growth.
"Our debt is like mortgage".
It couldn't be more wrong. Our debt is more like credit card debt, not mortgage debt. The former is pure debt like our national debt, the later is property debt - if you can't pay your mortgage, the property can be sold to pay the debt.
"If we are bankrupt, we have all those big companies, they will pay".
Yes, they will pay, so will you.
Our national debt masked lower than it is actually is. The reason is the government collected more social security tax now than they are paying out benefit - essentially now we are borrowing from social security. The reason long-term economic healthy in this country is in big trouble is 10-15 years from now, after the retirement of baby boomers, the government will collect less in social security tax than it has to pay out in benefit. That's a huge amount of money. Where we are going to borrow? We borrowed enough from Japan and China already. The result is either huge tax hike which will stymied the private sector economic growth, or print more money which will lead huge inflation like in Argentina.
The tennis guy
Hall of Fame
The US dollar has devalued 20% in the last two years. If this had lead to reducing the trade deficit, it would be OK because it means it stimulated export (growth). It didn't. Our trade deficit actually grew bigger. Along with budget deficit, these twin deficits are killing US long-term economic growth. It will inevitably lead to decline of living standard in US.
Save a little bit money, put in a safe foreign bank for a rainy day is my advice.
I am neither Republican nor Democrat. I support part of both principles. The heated partisan argument have blinded most people in this country.
I ask Repulicans, not as a partisan, have Repulican party become a social issue party only? What happenned to key Repulican principle of fiscal reponsibility, which I agree?
If Bush and Repulican congress continues its fiscal policy of the last 4 years, all Americans are screwed big time. Reduce tax, I'm fine with it as long as you cut spending drastically to offset, consider our current economic condition. However, Bush and the Repulican congress don't have courage to slash spending drastically, they are afraid of angering large portion of the public.
The result, everyone in this country is screwed.
Save a little bit money, put in a safe foreign bank for a rainy day is my advice.
I am neither Republican nor Democrat. I support part of both principles. The heated partisan argument have blinded most people in this country.
I ask Repulicans, not as a partisan, have Repulican party become a social issue party only? What happenned to key Repulican principle of fiscal reponsibility, which I agree?
If Bush and Repulican congress continues its fiscal policy of the last 4 years, all Americans are screwed big time. Reduce tax, I'm fine with it as long as you cut spending drastically to offset, consider our current economic condition. However, Bush and the Repulican congress don't have courage to slash spending drastically, they are afraid of angering large portion of the public.
The result, everyone in this country is screwed.
Camilio Pascual
Hall of Fame
I'm exaggerating about the swimming pools to make a point. Luxurious lifestyles come at a cost to the poor.
Wealth redistribution is not exclusively a communist idea at all. It would be almost impossible for any government to levy any tax without wealth redistribution resulting. It is often the very point of a tax. Wealth redistribution that concentrates the wealth in the hands of the few is hardly a communist idea, either.
Another President Bush was right when he called the scheme of lowering taxes and reducing the deficit at the same time "voodoo economics." "Tax and Spend" Democrats are doing something far more responsible than "Borrow and Spend" Republicans.
A friend of mine argued with me when I was all for going to war in Iraq. He said we would win the war and lose the peace. So far, he is dead wrong. We haven't won the war yet.
Wealth redistribution is not exclusively a communist idea at all. It would be almost impossible for any government to levy any tax without wealth redistribution resulting. It is often the very point of a tax. Wealth redistribution that concentrates the wealth in the hands of the few is hardly a communist idea, either.
Another President Bush was right when he called the scheme of lowering taxes and reducing the deficit at the same time "voodoo economics." "Tax and Spend" Democrats are doing something far more responsible than "Borrow and Spend" Republicans.
A friend of mine argued with me when I was all for going to war in Iraq. He said we would win the war and lose the peace. So far, he is dead wrong. We haven't won the war yet.
The tennis guy
Hall of Fame
"The euro rose to a new record close to 1.30 dollars with analysts warning of gloomy prospects for the US currency as markets focus on the swelling US trade and budget deficits.
Dealers are worried about how the United States will attract the necessary capital inflows to fund the deteriorating trade balance and budget deficit. The fear is that overseas investors might lose confidence in the debt-ridden US economy, placing their money elsewhere."
Dealers are worried about how the United States will attract the necessary capital inflows to fund the deteriorating trade balance and budget deficit. The fear is that overseas investors might lose confidence in the debt-ridden US economy, placing their money elsewhere."
PugArePeopleToo
Rookie
The tennis guy, you are being way too pessimistic. You made a point regarding government action impacting the economy. In theory government borrowing competes with private sector’s credit needs and deficit increases interest rate and thus reduces long term economic growth. It is a simplification of real life. We currently have a large deficit, yet we also have record low long term interest rates. Clearly, with or without our deficit, interest rate is not going to be much lower, and therefore its impact on economic activity remains relatively constant. In theory, Reagan’s Presidency would have been a total economic disaster. Back then, we had higher percentage deficit, higher interest rate, higher oil price, higher unemployment, yet in reality we had a booming stock market and a growing economy that continue to today. It doesn’t matter if you want to view our debts as credit card debts or mortgage, as long as you can pay it, you are fine. If you cannot, whether your house is being foreclosed, or our credit cards are being taken away, you are in trouble.
If we are talking about the long term, then I fail to see why the exchange rate of last two year is relevant. Sure, Dollar lost 20% of its value against Euro during the last two year, but Dollar also gained about 20% during the preceding period. During the last two years Dollar lost even more against the Canadian Dollar, our biggest trading partner, but in the long term, Canadian Dollar lost ground against the US Dollar. In the long term, say since WW II, dollar has been depreciating against D Mark, Yen, Singapore Dollar, and Swiss Franc; against most other currencies, dollar had gained. When you quoted FX dealers about Dollar, you should know they not talking about long term, for them coffee break is long term.
On a related subject of trade, our trade deficit is being kept artificially high because some of our trading partners kept their currencies artificially low. I don’t know about you, but if someone wants to sell me something cheaper than market price, I’ll say I am getting a bargain. The added benefit is that these same sellers have to turn around and buy our paper, otherwise their currencies will appreciate against the Dollar which is what they don’t want. What they are doing is they reduced our inflation, and they kept our interest rate low. I think it is a win win situation for the US. Many have argued, soon or later they will stop buying our debts, yet it never occurred to them, then what? If you are China, Korea or Japan, you cannot afford to not buy US debts because if you stop your huge holding of US paper wealth will be reduced to nothing. They had created a perpetual situation that they have to continue to sustain because of their stupid policy. The funny thing is that they proudly show off their wealth in the form of massive Dollar reserves.
If we are talking about the long term, then I fail to see why the exchange rate of last two year is relevant. Sure, Dollar lost 20% of its value against Euro during the last two year, but Dollar also gained about 20% during the preceding period. During the last two years Dollar lost even more against the Canadian Dollar, our biggest trading partner, but in the long term, Canadian Dollar lost ground against the US Dollar. In the long term, say since WW II, dollar has been depreciating against D Mark, Yen, Singapore Dollar, and Swiss Franc; against most other currencies, dollar had gained. When you quoted FX dealers about Dollar, you should know they not talking about long term, for them coffee break is long term.
On a related subject of trade, our trade deficit is being kept artificially high because some of our trading partners kept their currencies artificially low. I don’t know about you, but if someone wants to sell me something cheaper than market price, I’ll say I am getting a bargain. The added benefit is that these same sellers have to turn around and buy our paper, otherwise their currencies will appreciate against the Dollar which is what they don’t want. What they are doing is they reduced our inflation, and they kept our interest rate low. I think it is a win win situation for the US. Many have argued, soon or later they will stop buying our debts, yet it never occurred to them, then what? If you are China, Korea or Japan, you cannot afford to not buy US debts because if you stop your huge holding of US paper wealth will be reduced to nothing. They had created a perpetual situation that they have to continue to sustain because of their stupid policy. The funny thing is that they proudly show off their wealth in the form of massive Dollar reserves.
PugArePeopleToo
Rookie
Camilio, taxation does not redistribute wealth. How gevernment spend the money can redistribute wealth. Regressive taxes such as VAT or sales tax do not redistribute any wealth. In fact they place a heavier burden on the poor.
Your believe that tax and spend is better than borrow and spend fail to take into the consideration that money in private sector is more productive than in public sector. Either way, it is better to spend less and waste none.
Your believe that tax and spend is better than borrow and spend fail to take into the consideration that money in private sector is more productive than in public sector. Either way, it is better to spend less and waste none.
Camilio Pascual
Hall of Fame
Taxation immediately redistributes wealth from the public to the government. I would say it would be virtually impossible for the government to spend the money in such a way as to not redistribute the wealth. The very term "regressive tax" describes a redistribution of wealth. The fact that it places a burden on the poor is proof of this redistribution of wealth. Taxing or borrowing money by the government both remove money from the private sector and put it in the public sector. I'm not convinced money is always more productive in the private sector. Imagine a military administered by the private sector. I'd bet dollars to donuts we would find this new military to be less productive. I'm afraid that, without the government involved, it would devolve into a gouging contest by various corporations. Who would adjudicate these competitive practices? Anyway, I see we disagree, that's okay, you are a thoughtful poster.
The tennis guy
Hall of Fame
PugArePeopleToo,
I agree with you. However, it is in doubt whether we can pay our debt or not. As I said, our debt is inching to 80% of our GDP. With HUGE problem with social security in 10-15 years, where do we get more money to pay? In private sector, no one would lend you money if your pure debt to income ratio is 80%.
Yes, Reagan had huge deficit, but the DEBT itself was no where near they are now, which makes us in trouble.
The problem with your theory is that yes we got a bargain, but our economy don't grow as fast because what constitue trade deficit is they don't buy enough of our products even with drastically depreciated dollar. With huge trade surplus China and Japan have over US, they don't buy much of our output, they use that money they got from US to finance (lend) US debt and deficit. Someday, they will want those money back.
As I said before, devalued US dollar is fine if you can reduce your trade deficit. But it hasn't. The reality of devalued US dollar is lower foreign investment in US. China has become the country that attacts most foreign investment. It used to be US.
I agree with you. However, it is in doubt whether we can pay our debt or not. As I said, our debt is inching to 80% of our GDP. With HUGE problem with social security in 10-15 years, where do we get more money to pay? In private sector, no one would lend you money if your pure debt to income ratio is 80%.
Yes, Reagan had huge deficit, but the DEBT itself was no where near they are now, which makes us in trouble.
The problem with your theory is that yes we got a bargain, but our economy don't grow as fast because what constitue trade deficit is they don't buy enough of our products even with drastically depreciated dollar. With huge trade surplus China and Japan have over US, they don't buy much of our output, they use that money they got from US to finance (lend) US debt and deficit. Someday, they will want those money back.
As I said before, devalued US dollar is fine if you can reduce your trade deficit. But it hasn't. The reality of devalued US dollar is lower foreign investment in US. China has become the country that attacts most foreign investment. It used to be US.
The tennis guy
Hall of Fame
NEW YORK - Former U.S. Treasury Secretary Robert Rubin warned Monday night that the dollar's recent decline could accelerate and interest rates could rise if politicians in Washington don't act quickly to narrow the federal budget deficit.
"If markets begin to fear long-term fiscal disarray and if foreign providers of the capital inflows upon which we have now become so enormously dependent share this fear and also develop a concern about our currency, then the markets may begin to demand sharply higher interest rates on long-term debt and possibly even create conditions of serious disruptions in our financial markets, with all the problems that that can lead to for our economy," he said.
And he added, "We have a lot of work to do in a very difficult political environment."
While he noted his disputes with the Bush administration about portions of its tax-cutting policy, Rubin was careful to suggest that both political parties need to address the deficit issue sooner than later.
"Dramatic change in fiscal policy is imperative. And I think that reality is likely to increasingly assert itself on the political system, however unwilling or reluctant on a bipartisan basis that system may be to actually deal with the actual hard choices that restoring fiscal discipline imposes," he said.
Rubin also said he expects that in the years ahead, "China is likely to be the largest economy in the world and a tough-minded geopolitical power equal to any other geopolitical power on the globe." He also said he expects continued slow growth in Europe and that "Japan has not done most of what seems to me it has to do" to shake off years of subpar economic growth.
"If markets begin to fear long-term fiscal disarray and if foreign providers of the capital inflows upon which we have now become so enormously dependent share this fear and also develop a concern about our currency, then the markets may begin to demand sharply higher interest rates on long-term debt and possibly even create conditions of serious disruptions in our financial markets, with all the problems that that can lead to for our economy," he said.
And he added, "We have a lot of work to do in a very difficult political environment."
While he noted his disputes with the Bush administration about portions of its tax-cutting policy, Rubin was careful to suggest that both political parties need to address the deficit issue sooner than later.
"Dramatic change in fiscal policy is imperative. And I think that reality is likely to increasingly assert itself on the political system, however unwilling or reluctant on a bipartisan basis that system may be to actually deal with the actual hard choices that restoring fiscal discipline imposes," he said.
Rubin also said he expects that in the years ahead, "China is likely to be the largest economy in the world and a tough-minded geopolitical power equal to any other geopolitical power on the globe." He also said he expects continued slow growth in Europe and that "Japan has not done most of what seems to me it has to do" to shake off years of subpar economic growth.
PugArePeopleToo
Rookie
The tennis guy, I think "Someday, they will want those money back." is the million dollar speculation that nobody truly know when is someday. Look at Japan, back in 1971, the exchange rate was one dollar to 357 yens, and now the same dollar buys 105 yens. In another word, money invested in US bonds in 1971 by the Japanese realized a 70% drop in its value. Yet, they continue to buy US bonds, today their foreign reserves grow to more than $800 billion. So the question is why would they sell their goods at a discount, and then lose more money by holding on to US debts? Either they are total idiots, or they have a very mercantile trading philosophy. Either way, the old saying of "if you owe bank a million dollars, you are in trouble, if you owe bank a billion dollars, your bank is in trouble" couldn't be more applicable.
I also doubt China will be the largest economy in the world unless they can solve their (many) internal problems. Most of the people who are predicting such thing never can explain why 35% of Chinese college grads cannot find work in that booming economy.
I also doubt China will be the largest economy in the world unless they can solve their (many) internal problems. Most of the people who are predicting such thing never can explain why 35% of Chinese college grads cannot find work in that booming economy.
The tennis guy
Hall of Fame
PugArePeopleToo said:
It is very simple. why they buy US bond? It is the belief that US dollar is the most durable currency in the world - it has been. Plus to be able to manipulate exchange rate to their advantage for export to create jobs in their own countries. Both China and Japan economies are export oriented economies. China attracts most foreign investment right now. Becasue of that, sooner or later, their economy will become consumption oriented economy like US - Japan is making that transition now. At that point, they don't need to manipulate the exchange rate anymore. They will have less incentive to buy US bond and treasury bills. Then US dollar interest rate will skyrocket, will choke US economic growth. US consumers just spend money, but don't save enough to cover the loss of international investment starting now.
As of your old saying, US can never default on its debt. Otherwise, the financial market will collapse, and everyone in this country will suffer. If we can't default, and we have to pay back (in other words they simply buy less of our bonds and bills after the old ones mature), guess who are going to pay them? US tax payers, you and me.
Every serious economists know huge deficit and debt will slow long-term economic growth - no one argues about this. The only difference is some of them believe US government will change ways of deficit spending. However, if the public don't put pressure on our government, they will never act in a responsible way. Look at the last 4 years when the public don't pay attention to deficit and debt. It grew more than $1 trillion. It will grow more with the war in Iraq no ending in sight, the presciption drug benefit for seniors kicking in in 2006, and continued tax cut. Once social security funds in deficit in 10-15 years, we are on the verge of bankruptcy.
10-15 years are a long time to most people in this country. Not many care. They will be the ones who suffer.
The tennis guy
Hall of Fame
mlee2 said:
They are different, and they are related. Trade deficit, budget deficit, and debt will affect domestic economy in the long run. The combination of twin deficits (trade and budget) is deadly in the long run combined with our entiltlement programs.
Ross Perot made this the biggest debate in 1992 - it did force Clinton to make balance the budget his top priority. Now everyone forgot about it. Bush and current congress never made balance the budget their priority. With our huge debt, WE ABSOLUTELY HAVE TO. Otherwise, we are screwed big time in the long run.
Moral issues and partisanship are the biggest debate now.
Pascal, no matter what you do, there will be poor. High tax rates make it harder to get out of poordom. Most poor people are poor because of the choices they make in their lives.
Perot didn't make a balanced budget Clinton's top priority. Ross Perot was the republicans Nader. Newt Gengrich(spelling?) with the "Contract with America" was the force behind the balanced budget. The president can only propose, the congress hold the reigns on spending policy.
I'm not an economist, but one thing I do know, they(Japan, China etc.) wouldn't keep buying our debt, if they didn't think we were worth it or good for it. The world has a vested interest in a good American economy. We have the Saudi's over a barrel(ha ha get it) to, they need us to buy their oil as much as we need their oil. Capitolism rules.
Luxurious life styles are good. Every single thing luxurious is there because somebody probably made good money providing it. If it was readily available and cheap, it probably wouldn't be a luxury. Most of the things we consider necessity, others consider luxuries. Hot and cold running water is luxurious. Air conditioning is luxurious. How would getting rid of them be beneficial?
Redistribution is just a bad idea. Why give politicians the power to give away money. They will always give it to family, friends, and politcal allies. Our income tax system, called progressive taxation does redistribute. Flat taxes and sales taxes do impact the poor more overtly. Imo, the poor need to be impacted overtly by taxes. They are paying taxes they don't know they're paying now. The people shouldn't be allowed to vote to raise someone elses taxes unless they are willing to pay the same rate. Equal protection under the law.
Perot didn't make a balanced budget Clinton's top priority. Ross Perot was the republicans Nader. Newt Gengrich(spelling?) with the "Contract with America" was the force behind the balanced budget. The president can only propose, the congress hold the reigns on spending policy.
I'm not an economist, but one thing I do know, they(Japan, China etc.) wouldn't keep buying our debt, if they didn't think we were worth it or good for it. The world has a vested interest in a good American economy. We have the Saudi's over a barrel(ha ha get it) to, they need us to buy their oil as much as we need their oil. Capitolism rules.
Luxurious life styles are good. Every single thing luxurious is there because somebody probably made good money providing it. If it was readily available and cheap, it probably wouldn't be a luxury. Most of the things we consider necessity, others consider luxuries. Hot and cold running water is luxurious. Air conditioning is luxurious. How would getting rid of them be beneficial?
Redistribution is just a bad idea. Why give politicians the power to give away money. They will always give it to family, friends, and politcal allies. Our income tax system, called progressive taxation does redistribute. Flat taxes and sales taxes do impact the poor more overtly. Imo, the poor need to be impacted overtly by taxes. They are paying taxes they don't know they're paying now. The people shouldn't be allowed to vote to raise someone elses taxes unless they are willing to pay the same rate. Equal protection under the law.
PugArePeopleToo
Rookie
Source: http://www.atimes.com/atimes/Global_Economy/FC06Dj01.html
By the way, GDP for 2004 was about $11.8 trillion, and budget deficit at $412.55 billion was smaller than expected; at 3.5% of GDP, it was big, but not the biggest. It is interesting to note that even if we put back Bush's tax cut, there will still be a deficit. Therefore, no matter what, we need to cut spending. Since the largest budgetary expenditure was domestic (mostly middle class) entitlement, my other million dollar question is do we have the collective will to curb, not to mention cut, social program? If we want our politicians to cut the pork, then stop asking them to bring home the bacon. Since these officials were elected by us, we can blame no one but ourselves for our fiscal mess.
The tennis guy
Hall of Fame
PugArePeopleToo,
That's political analysis of US economy, not economic analysis. It is classic political economic analysis that spins the existing number to the best rosy picture. Here is why:
1.
It is ridiculous to use that growth rate as gauge. Anyone who knows how growth rate is calculated knows it is misleading. The reason it was 6% in 2003 is because the year before US economy wasn't growing at all. Now US economy is growing a little bit, at about 3-4% relative to 2003.
2.
It seems very convenient for him to mention the deficit alone, but not the debt. Yes, our deficit for one year is not that big as percentage of GDP. However, our debt is big which is 70% of GDP. Even if our economy grew at 5% as he suggested - we aren't - but our debt is growing much faster than 5%.
Let's take his optimestic view of our deficit down to $242 billion in 2007 - Bush adminstration projected to be that much in 2009 only - we would have added another trillion dollars to our debt from now to 2007 already. In reality, we are going to have more debt than GDP very soon within 10 years.
3. The other reason it is a political analysis not economic analysis, in nowhere did he mention about the future of social security which will bring US to the edge of bankruptcy.
4.
I agree with you completely. Increase tax or not cutting tax alone is not going to resolve this problem. Cut spending has to go alone with either one of them.
Bush's tax cut was political not economic based. If it were economic based, he would have cut spending to offset it already with our deficit and debt. He didn't because he wanted people to see the benefit of tax cut without realizing the consequence of drastic cut of spending. You can't have both ways in economics.
Some day people in this country are going to wake up wonder why we didn't hold our president and congress responsible for fiscal irresponsibility. Without public pressure, they would never be fiscal responsible! In reality, people in this country have to sacrifice sooner or later with our almost $8 trillion debt. The later, the bigger sacrifice it will be.
That's political analysis of US economy, not economic analysis. It is classic political economic analysis that spins the existing number to the best rosy picture. Here is why:
1.
It is ridiculous to use that growth rate as gauge. Anyone who knows how growth rate is calculated knows it is misleading. The reason it was 6% in 2003 is because the year before US economy wasn't growing at all. Now US economy is growing a little bit, at about 3-4% relative to 2003.
2.
It seems very convenient for him to mention the deficit alone, but not the debt. Yes, our deficit for one year is not that big as percentage of GDP. However, our debt is big which is 70% of GDP. Even if our economy grew at 5% as he suggested - we aren't - but our debt is growing much faster than 5%.
Let's take his optimestic view of our deficit down to $242 billion in 2007 - Bush adminstration projected to be that much in 2009 only - we would have added another trillion dollars to our debt from now to 2007 already. In reality, we are going to have more debt than GDP very soon within 10 years.
3. The other reason it is a political analysis not economic analysis, in nowhere did he mention about the future of social security which will bring US to the edge of bankruptcy.
4.
I agree with you completely. Increase tax or not cutting tax alone is not going to resolve this problem. Cut spending has to go alone with either one of them.
Bush's tax cut was political not economic based. If it were economic based, he would have cut spending to offset it already with our deficit and debt. He didn't because he wanted people to see the benefit of tax cut without realizing the consequence of drastic cut of spending. You can't have both ways in economics.
Some day people in this country are going to wake up wonder why we didn't hold our president and congress responsible for fiscal irresponsibility. Without public pressure, they would never be fiscal responsible! In reality, people in this country have to sacrifice sooner or later with our almost $8 trillion debt. The later, the bigger sacrifice it will be.
The tennis guy
Hall of Fame
thejerk said:
Unfortunately, I don't think you know anything about economics. Our trade deficits are expanding even with our devalued dollar.
PugArePeopleToo
Rookie
The tennis guy, I don't think the author intended to imply US economic is going to grow 6% a year. In the paragragph where he menetioned the 6% growth during the second half of 2003, his point was that US is the growth engine for the rest of the world, and without trade surplus to the US, EU, Japan, and China would have little or no growth in 2003, not US can sustain a 6% growth rate.
The main point of the article is that with "deep and flexible capital markets, a flexible labor market featuring the world's best-educated labor force, and a regulatory regime and tax structures highly conducive to entrepreneurial initiative" US economic future is very bright. On this I totally agree with the author.
On the subject of Social Security, apparently Bush is going to push for the partial privatization plan he spoke of 4 years ago. Without a doubt he is in for a tough fight, and no matter what the outcome is, there will be a painful transition period. If he reformed Social Security, then for me at least, he would have one of the better presidents in recent history.
The main point of the article is that with "deep and flexible capital markets, a flexible labor market featuring the world's best-educated labor force, and a regulatory regime and tax structures highly conducive to entrepreneurial initiative" US economic future is very bright. On this I totally agree with the author.
On the subject of Social Security, apparently Bush is going to push for the partial privatization plan he spoke of 4 years ago. Without a doubt he is in for a tough fight, and no matter what the outcome is, there will be a painful transition period. If he reformed Social Security, then for me at least, he would have one of the better presidents in recent history.
The tennis guy
Hall of Fame
The problem with social security is not social security itself. The problem is in the last 20 years, the government has spent the social security fund surplus almost every year. Bush has spent them in just one term more than any other presidents in the last 20 years. The problem is government deficit and debt.
If people who were promised social security when they were young, they should get social security when they are older because they paid their dues.
If people who were promised social security when they were young, they should get social security when they are older because they paid their dues.
The tennis guy
Hall of Fame
WASHINGTON (AFP) - Trimming the record US budget deficit should be the top economic priority for the second term of President George W. Bush (news - web sites), a survey of economists showed.
A Wall Street Journal survey of 55 economists showed more than half felt the budget deficit would be the biggest economic challenge for the second term of the Bush administration.
The deficit -- which hit a record 413 billion dollars in the just-ended fiscal year -- was placed ahead of social security, health care and tax reform in the survey.
On Wednesday, International Monetary Fund (news - web sites) managing director Rodrigo Rato voiced similar concerns about the US budget, saying the imbalance creates risks for the global economy.
"We have been insisting that the external US deficit creates a risky situation in the global economy," Rato said.
"This situation can be corrected by economic policies in the US and also in other countries, among them Europe, or through the markets without governments intervening ... We believe that the US government, with which we have had recent meetings, fully agrees with this analysis and is conscious of the need to implement a fiscal policy that will reduce the public deficit in the next few years consistently throughout this next administration."
A Wall Street Journal survey of 55 economists showed more than half felt the budget deficit would be the biggest economic challenge for the second term of the Bush administration.
The deficit -- which hit a record 413 billion dollars in the just-ended fiscal year -- was placed ahead of social security, health care and tax reform in the survey.
On Wednesday, International Monetary Fund (news - web sites) managing director Rodrigo Rato voiced similar concerns about the US budget, saying the imbalance creates risks for the global economy.
"We have been insisting that the external US deficit creates a risky situation in the global economy," Rato said.
"This situation can be corrected by economic policies in the US and also in other countries, among them Europe, or through the markets without governments intervening ... We believe that the US government, with which we have had recent meetings, fully agrees with this analysis and is conscious of the need to implement a fiscal policy that will reduce the public deficit in the next few years consistently throughout this next administration."
The tennis guy
Hall of Fame
ANN ARBOR, Mich. (Reuters) - U.S. budget deficits pose a problem for both the domestic and world economies, but there seems little political will to fix them, Federal Reserve (news - web sites) Board Governor Edward Gramlich said on Saturday.
"We have big deficits now and the politics of deficit reduction, if you want to call it that, are terrible. If you even dare talk about raising anybody's taxes, that's political death," Gramlich said in a speech at the University of Michigan.
"In 10 years when the huge baby boomer cohorts begin to retire, we will really have problems," he added, saying the national savings rate was at a record low and would only weaken further when demographics shifted.
"This is a significant problem," he said.
Gramlich urged a return to the budget limits of the late 1990s that have since expired. "I thought that was quite successful," he said.
The Fed governor said many Asian countries, particularly Japan and China, are fueling their export industries by supporting the dollar and keeping their own currencies cheap.
"How long can they do that? If they begin to have inflation in their own countries, which is getting close in China, they are going to probably have to stop," Gramlich said.
"So we have a pretty unstable world situation ... right now," he said.
The route to stability is through faster growth in the domestic economies of U.S. trading partners, coupled with an increase in the U.S. savings rate.
"The way to get our saving up is by reducing budget deficits. I personally would like to see us get back to something like a balanced budget as soon as we possibly can," Gramlich said.
The Bush administration has pledged to halve the shortfall, which hit a record $412 billion in fiscal 2004 ending Sept. 30, over five years through spending controls and economic growth.
However, concerns that the budget gap -- and U.S. trade shortfalls -- will grow further in a second term for President Bush (news - web sites) have exacted a heavy toll on the U.S. dollar in recent days.
European officials, worried about the drag a soaring euro will create in their economies, are expected to raise the issue next week with Treasury Secretary John Snow at a meeting of finance chiefs from the Group of 20 wealthy and emerging economies in Berlin.
"Foreign countries will have to stop trying to stimulate themselves by exports ... and stimulate their domestic demand. This would all possibly have to be worked out internationally," Gramlich said.
"But I think there is a way out of it. It involves fiscal austerity for the United States and it involves demand stimulation for the rest of the world," he added.
"We have big deficits now and the politics of deficit reduction, if you want to call it that, are terrible. If you even dare talk about raising anybody's taxes, that's political death," Gramlich said in a speech at the University of Michigan.
"In 10 years when the huge baby boomer cohorts begin to retire, we will really have problems," he added, saying the national savings rate was at a record low and would only weaken further when demographics shifted.
"This is a significant problem," he said.
Gramlich urged a return to the budget limits of the late 1990s that have since expired. "I thought that was quite successful," he said.
The Fed governor said many Asian countries, particularly Japan and China, are fueling their export industries by supporting the dollar and keeping their own currencies cheap.
"How long can they do that? If they begin to have inflation in their own countries, which is getting close in China, they are going to probably have to stop," Gramlich said.
"So we have a pretty unstable world situation ... right now," he said.
The route to stability is through faster growth in the domestic economies of U.S. trading partners, coupled with an increase in the U.S. savings rate.
"The way to get our saving up is by reducing budget deficits. I personally would like to see us get back to something like a balanced budget as soon as we possibly can," Gramlich said.
The Bush administration has pledged to halve the shortfall, which hit a record $412 billion in fiscal 2004 ending Sept. 30, over five years through spending controls and economic growth.
However, concerns that the budget gap -- and U.S. trade shortfalls -- will grow further in a second term for President Bush (news - web sites) have exacted a heavy toll on the U.S. dollar in recent days.
European officials, worried about the drag a soaring euro will create in their economies, are expected to raise the issue next week with Treasury Secretary John Snow at a meeting of finance chiefs from the Group of 20 wealthy and emerging economies in Berlin.
"Foreign countries will have to stop trying to stimulate themselves by exports ... and stimulate their domestic demand. This would all possibly have to be worked out internationally," Gramlich said.
"But I think there is a way out of it. It involves fiscal austerity for the United States and it involves demand stimulation for the rest of the world," he added.
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