July 01, 2008

PIMCO bond guru Bill Gross, a Republican, writes an open letter to President Barack Obama - "You have inherited a mess"



Dear President Obama:

You have inherited a mess. Your predecessor, fixated on emulating a former Republican icon from a far different economic era, chose to emphasize tax cuts for the rich and excessive consumption for all Americans. He promoted deregulation and free markets when, in fact, the markets and their institutions needed tough love. Over eight years, he failed to put forth a coherent energy policy. He needlessly invaded Iraq and lowered worldwide esteem for this nation as a symbol of freedom and benevolence.

But enough about W’s spilt milk. I’ve already ticked off so many readers that they’re questioning my Republican Party voter registration. What do I think you should do as the new President to rectify this mess? All I know is that any solution will come with a high price tag. Although your campaign slogan says “Yes we can,” I have my doubts.

(read the rest here)

82 comments:

keith said...

Got gold?

Here's Gross predicting the outcome. Starts with a "T"...

"But you’ll have your tax bill and your healthcare bill and your housing fix, and somehow it’ll all be paid for by wealthy hedge fund managers, oil companies or, pray tell, a robust economy that’s creating good jobs at home instead of exporting them abroad. Uh, I don’t think so, Mr. President. That’s where the “yes we can” morphs into “no we can’t.” Not that you won’t accomplish most of that – the robust economy and the good jobs notwithstanding. It’s just that you won’t be able to pay for it and it’s better to admit it now as opposed to later. No David Stockman confessions in your administration. You’re smarter than Ronald Reagan and too nice of a guy to distort reality like King George. So let’s start out by dropping all of that “budget neutral” rhetoric and admit where we’re headed. Your administration will produce this nation’s first trillion dollar deficit!

According to that old C + I + G formula (scratch the trade deficit for now) when C + I is reduced by $500 billion, then G should increase by that amount in order to fill the gap. The G, Sir, is you – the government deficit, the fiscal stabilizer popularized by Keynes following the Depression. And since the fiscal deficit for 2008 is likely to press $500 billion even before you take the oath of office, well there you have it: $500 billion + $500 billion = $1 trillion big ones, probably by sometime in 2011 or so. It takes time to spend those types of bucks."

chslaxcoach said...

Undoubtedly, President Obama will inherit a pile of crap without precedent. This country is going to feel some serious pain over the next four years, particularly Joe-Sixpack-types.

One thing we will learn in those four years is whether or not racism is alive and kicking, because when people are out of work and losing their houses, they are going to be blaming anyone they can. And when that happens, Obama is going to take the abuse. Sadly, I expect to hear a lot of racist crap at that time and for the next twenty when another minority attempts to run for major public office.

I hope I'm wrong.

If the next president wins again in 2012, It will be a HUGE surprise.

keith said...

The pain will come..

unless..

wait for it..

We spend out way out of this mess. Run up deficits that will amaze you.

That's what Gross says is coming and I'm thinking that way too.

Watch Obama:

1) Lower taxes especially on middle class to stimulate spending and the economy while hopefully at the same time the GOP blocks his tax increase plans for 'the rich'

2) Dramatically increase government spending on infrastructure (hey, at least we get something for that kind of spending vs. pissing it away like Iraq). Call it what it is though - a big fat government jobs program

3) Bail out the housing gamblers (hopefully not - this would be the stupid part)

So, if (when) this happens, what does that mean for the US dollar and interest rates?

Checkmate.

Time to blow a hole in the US deficit folks. $53 trillion ain't nothing - that's just a starting point.

Anonymous said...

Gold to $4000/oz and then confiscated (bought) by the Government for $4000 cash or $10,000/oz if proceeds used to buy real estate.

In the end, they want the ultimate trading medium. (How are you gonna carry a barrel of oil on your back) All they have to do is literally print money to get the gold back.

They really *can* print all they want if you think about it...it's only paper and ink.

Dunno why CB's and Governments like gold but there has to be some reason.


Just a wild ass guess. The government knows you bubblesitters are holding gold and renting.

Paul E. Math said...

Obama will be a 1-term president. I do feel a bit bad for him since none of this is his doing. But he will be blamed for failing to accomplish the impossible. Then again, maybe I don't feel bad for him since he is the one promising the impossible.

The election of Barack Obama will stand as yet another testament to the grand delusion of the American people. Just like the housing bubble. We thought we could get rich by over-extending ourselves on houses and condos and redecorating them. We thought we could borrow our way to prosperity. We thought that if we elected a man promising 'change' then we would all agree on what change meant.

Change, sure, but change to what?

Anonymous said...

well gee a republican supports Obama. therefore Obama must be the right choice. i mean shit man, you can find thousands of dems who are supporting mccain too. doesn't mean anything.

Anonymous said...

Lower taxes especially on middle class to stimulate spending and the economy while hopefully at the same time the GOP blocks his tax increase plans for 'the rich'

=============

Oh Qweefie, you show your lack of knowlegde once again my friend. The middle class can't have their taxes lowered. They pay no taxes to begin with. Sure they have income tax deducted form their paychecks, but they get most if not all of it back at the end of the year. And some even pay a negative tax rate in the form of the EITC. Not only do they pay $0 in taxes, the govt sends them a check at the end of the year too.

What you libs never seem to want to admit is that 10% of income earners pay 70% of all federal income taxes. That is a fact. Look up the numbers yourself if you don't believe it, it's all available from the IRS.

The bottom 50% of income earners pays 3% of income taxes. No that is not a typo, 50% pays 3%. So how exactly are you going to give those people a tax cut? Instead of paying 3%, they'll pay 2%?

Since only the rich pay taxes, then by definition any tax cut will be a tax cut for the rich. The poor and middle class do not pay taxes, therefore a tax cut for the poor or middle class cannot exist.

Anonymous said...

Had Kerry been prez right now with the same economic situation the media and leftists like Keith would be celebrating. Low unemployment, low interest rates, booming exports. But since a republican is in office, it's doom and gloom 24/7. Same thing happened when Clinton was elected. All through 1992 the world was coming to an end . Then as soon as he took office all was wonderful and on a dime the economy went from a depression to booming, even though none of his policies had been enacted yet.

And of course all through the late 90s, the .com bubble was the greates thing in the world. And when it popped just as Clinton left office you dolts couldn't put 2 and 2 together and figure out it was all a scam and Clinton's economic miracle was nothing more than a mirage.

Anonymous said...

Keith,

Just missed Schiff this morning at 7:40 am est on CNBC.

can you post the clip?

the big-crash has arrived said...

I would like to take this proud moment to congradulate our elected officials for destroying America.

The USA is run by a bunch of assholes and idiots and there is nothing we can do about it...

But, it sure would be nice if we could just construct a maximum-security fence around Washington DC and parts of Texass.

Anonymous said...

Republicans are still better than Democrats at EVERYTHING. My mom, Rush and the bible told me so.

fast actin tinactin said...

I've got bad news for you.

Obamas energy policy is 'use less oil' which the market will enforce thru higher pump prices.

Beyond that there will be some drivel about bio-fuels, wind and solar. We know what will come of that, nada.

That's it. Show's over folks. Oh, and the housing gambler bailout will become law if he makes it to the WH.

Anonymous said...

Bah! Doom and Gloom, Doom and Gloom, please - things are just fine. The new iPhone is rolling out soon, and the Starbucks are all still full at 7:50 in the morning. The stock market even ticked up yesterday.
This is just a little bump in the road as all the "Irrational Exuberance" is worked out of the system.
Even the President said the fundamentals of our economy are still strong, and when has he ever be wrong about anything.

-Snowden

Anonymous said...

From NY Daily News:

>Records show that four out of Obama's top five contributors are employees of financial industry giants - Goldman Sachs ($571,330), UBS AG ($364,806), JPMorgan Chase ($362,207) and Citigroup ($358,054).


Guess they want that bailout.

Anonymous said...

What you libs never seem to want to admit is that 10% of income earners pay 70% of all federal income taxes. That is a fact. Look up the numbers yourself if you don't believe it, it's all available from the IRS

And that 10% of earners are exploiting the others to get that money. Taxes are the price to pay for peace and quality of life. When the rich pay taxes, they don't need gated communities.

And what you republicans seem to forget is that Bush increased the national debt by more than all other presidents put together.

keith said...

It's funny to see "Obama will NEVER get elected! Hillary has it clinched! McCain is the man" and all that stuff, to even Obama haters resigned to the fact that he's got this thing wrapped up.

Three words come to mind.

Told you so.

That said, we'll have a fight on our hands stopping his stupid plan to save social security by taxing the 'rich'. And any stupid plans to bail out failed housing gamblers.

Supporting President Obama doesn't mean supporting everything he does or everything he stands for. It's that kind of fox-news-type blind loyalty that destroyed the GOP. All leaders need a strong opposition voice, even when it comes from their supporters.

Meanwhile, we're about to saddle your kids and their kids and their kids and their kids with unimaginable debt, in a desperate attempt to keep our party going.

That's unethical, it's immoral, and it shows just how shallow and near-sighted the current residents of America are.

Anonymous said...

And Bill Gross was not part of the problem? Of all people, that guy was the one who wanted rates cut the most.

They're going to throw McCain to the sharks. Then they'll say: look it wasn't the neocons fault. McCain is a moderate and he lost. So, the same people you lament will then continue control of the republican party.

I resent democrats on the war in Iraq. They voted for the war. And after the election they still fund the war. And the democrat congress has just passed funding for convert action in Iran.Do you think Bush is some kind of deceptive genius when your wrong? But a dolt when your right?

I'm sure the Arabs thinks its not their war in Iraq either. Driving car bombs into crowds has no appeal.

democrats = republicans.

If you haven't noticed yet. Wars don't stop because you have elections. Particularly with muslims. And this economy resembles a war economy. Your currency devalued and commodities going up. Its a war economy but people are so potty trained they can't realize it.

Anonymous said...

2) Dramatically increase government spending on infrastructure (hey, at least we get something for that kind of spending vs. pissing it away like Iraq). Call it what it is though - a big fat government jobs program

--------

That's why inflation is here to stay for a while anyway. We've just gone through 30 years of consumer spending at the expense of every thing else. Me, myself and I, that was the prevailing mantra. What do we have to show for this? 90% of that supposed wealth creation now in dumps and crumbling infrastructure everywhere in North America.

Instead of maintaining our infrastructure and our environment we just let it rot. Now we have 10times more finance people than engineers, scientists and qualified trades people. More chiefs than indians!

Am I the only one who sees the irony when luxury SUV driving parents pick up their kids at the 1950s run down school? I feel like taking pictures of their car with the school in the background. Wouldn't that make a good GM sales brochure?

In the 50s, we were building new schools like they were going out of style. Today, I don't see one single hospital being built in our area. It's not as if we haven't had the data to warn us that we will be needing them. The Boomers are screwed and they don't know it yet.

michael said...

"...the fiscal stabilizer popularized by Keynes."

i'm no expert but i think keynes basically said the government should spend in bad times and save in good times.

we spend in both...that's our problem.

kilgore said...

It really is incredible that at the exact moment that the baby boomers start retiring we have back to back presidents (Bush-Obama) who are looking to spend MORE per capita on healthcare. Totally incredible!

There's been a big debate over the past few years of whether or not state and municipal governments should be required to disclose their "off balance sheet" liabilities related to the costs of retired workers. So far the states have won the debate and it's still a mystery. Unfortunately for the state and municipal governments, they don't have the ability to print money and at some point, investors won't be buying these bonds.

What will be fascinating to see is what the federal government feels responsible to bail out California when it goes bust. (In L.A., cops retire after 20 years with full medical benefits and 50% pay + cola for life.) Come to think of it, why hasn't that question been asked of both candidates yet? Maybe it's because it's not that important.

michael said...

...ok keith, based on your "told you so" analysis of obama's presidency then why are you voting for him again?

consultant said...

If I were Obama, on the first day after I was elected, I would set up CSPAN in an office, invite the networks (they would decline), and webstream this event.

I would then tell the public, live on air, that I am going to void EVERY single decision the Bush Administration has made over the last 8 years. Every one.

I would sit there and sign documents voiding everything. I'd tell the American people that we are corrupt, broke and despised by most of the world. Bush did it, but I'm going to end it. To get out of the disaster he left us with, I'm going to get rid of all of the Bush junk.

That's what I would do.

consultant said...

The far right wants to suppress the truth (you know, people are stupid and can't handle it) and the far left wants everyone to know the(ir) truth (because they know what's true).

What's Obama to do? 1st. Win the damn election. Everything on his plate come Jan. '09 will be reality check stuff. All the fantasy, fun, "I'm going to Disney world!" stuff is out the window. We're broke and up the creek without a paddle.

The best Obama will be able to do is guide the smart folks, twits, racists, wealthy, poor, middle-class, hypocrites, criminals and good folks through a series of increasingly difficult shocks to our American way of life.

Think of Obama as the elevator going down. McCain (and most Republicans and the Democratic Party (not Democratic voters))is the elevator in free fall.

You make the choice.

Obama, '08 & '12 (if we're still holding elections).

bitterrenter said...

That's how republicans are. They want to see the country fail if they can't get their way. This guy would just as soon see this country destroyed than see liberals in control.

It's like the majority of people who post here. Most are republicans disappointed that they didn't buy a house before the boom and are now hoping for a collapse so they can afford one. No thoughts about the damage a crash will cause, no concern for their fellow man. Just bitterness and rancor based on sour grapes. A few people here are concerned for society but they're drown out by the drumbeat of gloom from republicans who missed the boat and now want it to sink.

Skaven said...

Got gold? Are you kidding me, Keith? Inflation has been raging for 6 years, and the price increases that you are seeing are a symptom of policy, not the cause of it.

Gold already had its rise, that is over.

If you would have actually read the article that you posted, you'd know that what he's talking about, and what is coming, is a 30's style deflation.

And, by the way, there aren't any good answers. I hate to be a doomsayer because it's against my nature, but we're beyond the point of fixing the problem and purely in damage control now. Our best hope is to rebuild after the Ponzi scheme comes crashing down.

Anonymous said...

Hey Bill Gross of PIMPCO--

YES--Barack will inhert a mile-high MESS, but don't expect that he is going to turn around 8 years of corruption on the part of the last Republican administration that gave tax cuts to the rich and watched as Rome burned.

Some big banks, insurers, etc. have made BAD bets, and they are going to have to go tits up my friend, just like any other individual that makes bad bets. I feel absolutely horrified for whoever takes office next--but one man cannot save us from this crap that is 8 YEARS in the making!!

Anonymous said...

hey Keith,

Obama just announced that he wants to expand bushes federal funding of faith based organizations. And he wants to expand the hiring/firing of employees based on faith.

what is up with this guy? clearly pandering to the religious right, i guess.

Anonymous said...

And that 10% of earners are exploiting the others to get that money. Taxes are the price to pay for peace and quality of life. When the rich pay taxes, they don't need gated communities.

And what you republicans seem to forget is that Bush increased the national debt by more than all other presidents put together.

-------------------------------

typical lib, change the subject and then end with a "bush did this" statement that is unrelated to the previous comment.

sigh. so predictable.

Anonymous said...

That said, we'll have a fight on our hands stopping his stupid plan to save social security by taxing the 'rich'. And any stupid plans to bail out failed housing gamblers.
-----------------------------

oh but Keith, if the dems get their over-ride numbers in congress then look out.

thingamajig said...

>Told you so.

Sure, fair enough, you may be right. But there are some important circumstances.

For one, Obama is a one man gaffe machine. That's why his campaign is keeping him away from anything except teleprompeted speeches.

He's doging interviews in tough venues and avoiding debates with McCain (Ok, he agreed to a debate on the Friday before July 4th weekend. HA!).

Anyone who thinks there's nothing to be concerned about with this dodging thing is kidding themselves.

k.w. - Southern Ca. said...

You're correct.

Also, the religous fanatics will be out in full force (wolf's in sheeps clothing) to fleece anyone they can.

We've spent so much time - in this country especially - "looking out for #1", but that mindset is what will lead to the downfall of this country.

Bushco championed this philosophy, but he wasn't talking about the masses (us worker bees), he was refering to his ultra-rich friends who put him in office.


chslaxcoach said...
Undoubtedly, President Obama will inherit a pile of crap without precedent. This country is going to feel some serious pain over the next four years, particularly Joe-Sixpack-types.

One thing we will learn in those four years is whether or not racism is alive and kicking, because when people are out of work and losing their houses, they are going to be blaming anyone they can. And when that happens, Obama is going to take the abuse. Sadly, I expect to hear a lot of racist crap at that time and for the next twenty when another minority attempts to run for major public office.

I hope I'm wrong.

If the next president wins again in 2012, It will be a HUGE surprise.

michael said...

"Told you so."

you also told us to buy stocks...what...not even a month ago.

leftwing retards said...

While you leftwing idiots are whining and demanding more welfare from a bankrupt government, I am stashing more assets away and will leave this socialist paradise behind. Let's see how much more blood you can squeeze out of the dried up old bone known as the USA. Once you finish gutting out the businesses and send the wealthy people fleeing to other countries, you can fight with the welfare queens in the streets for the scraps.

casey said...

Does anyone know were I can find american idol reruns? Is starbuks offering free wifi yet?I have to run to jamba juice for a shot of wheat grass.

Anonymous said...

I have to take everything Bill Gross says with a grain of salt, since he's the idiot that was crying for a big-time bailout of the bond market back when things started getting messy last year.

He's one of those guys that is a capitalist when he's making money and a socialist when he's losing it. I really detest this guy.

keith said...

Buy low sell high

stocks will be on sale all summer - come and get 'em - there's some great ones out there if you look hard enough (i.e. get beyond the indexes as I recommended)

The US is dead. But there's a whole big world out there sloshing in oil riches

Anonymous said...

I live in Omaha, NE. Unemployment is low (3.5%), real estate is stable (up 2% vs. one year ago), and we have a metro area of roughly 1.2 million people. Bottom line, we aren't experiencing a bad economy. Are you guys? I mean, those of you who live in states other than CA, FL, & NV?

Life is good, here in Nebraska.

Anonymous said...

Yeah, but you have to live in Omaha. I'd rather be poor on the west coast than live in boredom central.

Anonymous said...

keefer et al, your sounding like PC brain washed dinbats....Obama (actually Axelrod and his sock puppet) have said all things to all people, so you project your beliefs onto him ( clever!) enough to win, he is both high tax and lowtax at the same, pro war at the same time, etc etc , but there is this troublesome thing called reality that even retard Americans must face, Andrew Hac..08!!!

BMW driving sex machine said...

President Obama?

Bwhahahaha!!!

Bill Gross only has one agenda. Making Bill Gross richer by manipulating the bond market to be most profitable for himself.

Anonymous said...

Gross ends his letter with "All the best, and a fist bump to ya!" - is her a stereotyping racist? Seems like to me...so do you agree with a stereotyping racist? What other thoughts of his are behind the times?

Anonymous said...

the big crash has arrived:

You have no idea how gratifying it is to read another HP wunderkind follow "congradulate" with a statement about "idiots"...

Anonymous said...

"And that 10% of earners are exploiting the others to get that money. Taxes are the price to pay for peace and quality of life. When the rich pay taxes, they don't need gated communities."

The rich do pay, and have paid. Why do we still need gated communities? Is it because taxes don't buy anything except more failed bureaucracies?

keith said...

"The Dow" is not "Stocks". It's 30 laggards out of the thousands and thousands worldwide ready to be bought

Get away from the narrow view of the indices. Get away from thinking you can only buy US companies. And go make yourself some serious money. There are massive trends breaking out right now if you look hard enough. Think about what $140, $150 or $200 oil does for some companies. Think about what it does for some countries. Think about the devastation this will cause the US (and short accordingly).

Or not.

Meanwhile, Gross spoke the truth - the going is gonna be tough for years and years to come. If you want to stay ahead of the curve, you're gonna have to work at it.

Bob Richards said...

Anybody who is going into in the white house is going to have a lot of problems, especially with the real estate industry the way it is.

devestment said...

You can wipe up a mess but it will still leave a stink.

Panic is setting in.

I am having trouble extracting money from this economy and am sure this is only the beginning.

Even if you do bail out housing gamblers and banks, the downstream jobs are still gone, hundreds of thousands of them.

Combine all this with the inevitability of higher taxes on incomes and big breaks for those buying real-estate and you have a serious contraction of “DISPOSABLE INCOME”.

Move your repairs around all you like, we are in a LONG recession.

Anonymous said...

Poor St. Barry

Sitting there with a challenge, and all he can do is put one thumb up his ass and the other in his mouth. Except he forgets which is which.

Bitterrenter, you seem to have experience living like this. How have you survived living like this for however long you have?

edd said...

As much as I appreciated the
Gross letter, he did not
seem to include a few important
factors in comparing Japan's
crisis to what we face.

Japan had large trade surpluses and
cash reserves to support deficits.
Consumption was largely internal;
investment was largely internal;
deficit financing was largely internal.
Government budgets were "small",
so a ten percent deficit was "small".

With our huge trade deficits, huge
budget deficits, and huge foreign
debt, C, I, & G for us all
largely have external sources.
Additional budget deficits are very
cancerous, dangerous, and pricey.

DIE U PIG said...

Panic is setting in.

Enjoy.

DIE U PIG

Frank@Scottsdale-Sucks.com said...

Whoops, I typed housingpanic.com into my browser, not sure how I landed on CNN. Gonna click my 'back' button now.

hopingbig said...

"matically increase government spending on infrastructure..."

that sounds good but small towns, like rochester, mn, couldn't afford the blacktop to fix roads since it contains oil. in fact, all infrastructure projects require lots of energy so if you have all these inflation problems (higher cost of living, higher materials cost, etc...) we either run huge deficits or accept recession.

Reality said...

"And that 10% of earners are exploiting the others to get that money. Taxes are the price to pay for peace and quality of life. When the rich pay taxes, they don't need gated communities."

The top 10th per centile tax filer makes about $105k AGI a year (combined if filing jointly). A person making that amount pays about $23k in personal income tax and $15.5k in payroll/self-employment tax. That's $38-39k taken out of the local economy that would have been spent on local restaurants, theaters, cleaning services, lawn care, etc. etc. that would have created local jobs. Instead, that money is taken out of the local economy via taxes, spent on wars over seas, building bridges after spending money blowig them up, building bridges to nowhere, paying tax collectors to make sure that the $105k tax filer crosses her t's and dot her i's, paying welfare case workers to verify that the welfare applicant receiving the $5000 or so out of the $38500 tax collected actually qualify with a valid social security number, not a dead person or ineligible person . . . Instead being hired to do productive work and earn that $38.5k, now that person has to join the welfare roll and go through hoops to get a tiny fraction of the money . . . while the bulk of the money is lost in paper pushing, war mongering and paying well-connected entities that get the government contracts.

Any wonder why the more taxes are collected, the crummier the economy gets, the higher the crime rate and the more need for private gates and fences? Government is not god; real people, people with flaws and people who need to be paid actually do the real work behind that magic curtain. The government-worshipping folks are acting like those silly Easter Island dwellers: the harvest is down, more blessings from the giant stone statues must be required . . . which means more trees have to be cut down to transport and erect the stone monoliths . . . which means further devastation of the island eco-system . . . the cycle went on until what had been a lush tropical island turned into a barren wind-swept desert . . . all because the folks couldn't figure out that it was their statue-worshipping religion that was causing the problem to begin with.

Reality said...

Bitterrenter,

"It's like the majority of people who post here. Most are republicans disappointed that they didn't buy a house before the boom and are now hoping for a collapse so they can afford one. No thoughts about the damage a crash will cause, no concern for their fellow man. Just bitterness and rancor based on sour grapes. "

With a moniker like "Bitterrenter," and you are accusing other people being bitter or having sour grapes? Aren't you just a wee bit out of character?

As for concern for fellow man, I have plenty of that. Years ago, I did not feel like out-bidding a few fellow men on houses even though I had plenty resources to do that . . . within the next year or two, I may actually put some my resources to good work and taking some houses off the hands of fellow men who can no longer afford them. Unlike, say some unscrupulous REIC droids who tried to squeeze as much money out of the homedebtors as possible by promoting competitive bidding wars, and when that apple cart turned over, now trying to squeeze money out of everyone else who were not involved in the fiasco.

Comes to think of it, anyone who advocates big government and higher taxes obviously has no concern for fellow men whatsoever. They want a Leviathan to lord over fellow men.

Anonymous said...

Bill Gross is just selling his bonds, as usual.

Reality said...

Keith,

"2) Dramatically increase government spending on infrastructure (hey, at least we get something for that kind of spending vs. pissing it away like Iraq). Call it what it is though - a big fat government jobs program"

Government can not build infrastructure in this country any better than than it can do that in Iraq. Massive infrastrcture building by the government always leads to economic stagnation: the resources would have to come somewhere, where the market place has already decided that is more important than whatever infrastructure the government is putting together. In a normal functional market place, an infrastructure piece worth building would find private funding already. The economic stagnation resulting from government jobs programs often lead to wars . . . because sooner or later, the some government official figures out that drafting people into slavey and get them wasted overseas is much more "cost-effective" (to the government) way to reduce statistical unemployment.

Global markets have been in a funk too in the last 10 months. Some of the high-flying emerging markets are down by over 50% from their recent peak. Methinks global depression as a result of protecionist policies is quite possible.

bitterrenter said...

Reality bites,

Your fixation on the magic of the private sector is astounding. The government can't do infrastructure? That's who has done most of it! Perhaps the actual work was done by private contractors, but the investment and prioritization was done by GOVERNMENT.

So tell us- in the absence of the government funding or promoting infrastructure projects (which led us to the disrepair/decay situation we're stuck with) where is your magic private sector? How come you and your friends haven't had that charity Bake Sale for Bridges, raising the billions needed to keep cars from falling in rivers?

See how fast your idiotic theories of anarchy fall apart?

balls to the wall said...

"Since only the rich pay taxes, then by definition any tax cut will be a tax cut for the rich. The poor and middle class do not pay taxes, therefore a tax cut for the poor or middle class cannot exist."

Yes! And if we piss off those nasty rich folks by raising their tax rates to confiscatory levels, guess what they do? They pick up and go live somewhere else. If only 5% of the "rich" people leave the U.S., the remaining 99% of the workers will see their taxes increase by 20% or more to make up the deficit. So sure, go after those rich bastards, make 'em pay. See how long the little victory dance lasts.

Anonymous said...

"...there's nothing to be concerned about with this dodging thing..."

Heh.

Anonymous said...

The reset button was already pushed. The end is near - the end of an unsustainable, polluting, wasteful, inharmonious world. The new beginning is going to be Green and humane. A new accounting system will show that we all won the cosmic lottery and we have a "planet of six billion billionares", to quote Bucky Fuller. You (and, likely, Obama) don't understand now, but if we play our cards right, all will become clear.

Col. Roger

Anonymous said...

.


he inherited a pair of ears as well!


.

bitterrenter said...

Balls to the Wall,

When tax rates were at 90% the rich stayed here. They know that there is no other livable country where they'll fare better than here. Since we've lowered taxes this country is nothing but a magnet for rich assholes escaping the burden of paying their fair share in their home countries.

Get off your knees. Worshipping the wealthy will get you nowhere.

Anonymous said...

Reality:

Do you really think that your tax dollars were taken out of the economy? Get real! Where do you think the doubling of the national debt came from? Your war was financed with debt. Every single one of your tax dollars flowed through your economy and participated in the largest misallocation of capital ever.

Anyway, why can't you Americans stop navel gazing? Do you actually think your govenment has anything socialist about it? Your government has failed you. Your system is failing you.

If you actually looked beyond your borders, you'd find many socialist countries with a much better quality of life than yours.

But you wouldn't believe me anyway and that suits me just fine. Less for you and more for us.

Mike Hunt said...

Hi Keith,

If you haven't seen this before an interesting article:

http://biz.yahoo.com/bizwk/080630/jun2008bw20080627320852.html?.&.pf=taxes

Lower tax revenue for all!

-Mike

Anonymous said...

The right wingnuts will turn on Bill Gross, accusing him, like Paul Volcker, Warren Buffet, George Soros, Colin Powell, Stan O'Neil, Scotty McClellan of being an America hating far-left libtard.

Democratic Objectivist said...

I am a life long Democrat and don't give a damn that I did not cash in on the boom. I am looking foreward to buying a house when the market corrects to realistic levels but as far as society goes let the damage come. Western Society has been behaving very stupidly for the past 28 years and is in serious need of a major dope slap. We have been rewarding the wrong people for doing the wrong jobs for too long and punishing the people that drive this economy for expecting to benefit from their labor.

An earlier poster said we had too many people in finance and not enough engineers and skilled tradesmen. Which is a huge problem but then he said there were too many chiefs and not enough indians. People in finance are not chiefs and engineers and skilled tradesmen are not indians. The correct analogy is finance=parasites:engineers and tradesmen=producers.

If all you have made after a days work is money you are a parasite. That money you made was made off of money made from someone else's labor.

My hope for whatever is to come from this mess that there will be a reevaluation of which jobs our society values and which are considered parasitical.

The finance people are not "the Master's of the Universe" and I think Atlas has Shrugged, let's let the pieces fall and try to put them back together in an arrangment that actually works.

bitterrenter said...
It's like the majority of people who post here. Most are republicans disappointed that they didn't buy a house before the boom and are now hoping for a collapse so they can afford one. No thoughts about the damage a crash will cause, no concern for their fellow man. Just bitterness and rancor based on sour grapes. A few people here are concerned for society but they're drown out by the drumbeat of gloom from republicans who missed the boat and now want it to sink.

Bucky Fuller Brushman said...

Col. Rodger said-

"to quote Bucky Fuller"

Now we are getting into the serious tin foil hat territory.
Dymaxion cars and Geodesic Domes for everybody

Anonymous said...

Obama will do the impossible. Make Jimmy Carter look competent by comparison. I look forward to his presidency. It will ensure that no demoRAT gets elected for the next 50 years. 4 years of pain for decades of gain. Worthwhile trade off.

Reality said...

Bitterrenter,

Roads, bridges, rails, and even canals existed long before the government got involved. So did utility companies. In fact, if you read up on railroad history in the US, the government sponsored and subsidized railroads all went bankrupt in the late 19th century; it was the privately built, privately funded and privately managed railroads that thrived at the same time . . . because they were run efficiently. The statist answer when they couldn't compete? government take-over of all railroads!

As for repair and maintenance, we already covered that topic. The public utility components that are blowing up all over the country due to lack of maintenance and replacement are the same components that had been placed into service in the 19th century by private utility companies on 30-50yr schedules. Apparently, they never got replaced after public utility took over.

Why isn't any private sector player stepping into the breach, you ask? Because roads, bridges and utilities are government sanctioned monopolies now. Private companies are not allowed by law to enter and compete. There is one sector of communication/utility in recent years that developed outside the existing government monopoly purviews: that's the internet. As you can see, the private sector built up and expanded the internet infrastructure at a spectacular pace in the past decade and half. As little competition as that emerged between the cable company and the phone company, each of which had previously been government sanctioned geographical monopolies in their respective fields, was enough to compel the two to deliver internet service at much faster paces of improvement and with rapid price reduction. I'm getting faster connection for $75/mo than what would have cost me more than $3000/mo a little over a decade ago.

Your idea that government is best at prioritizing is completely false. Prioritizing is one thing that the market place is especially good at; that's why the price mechanism was invented! If government were good at prioritizing, Stalinist Russia would have been the industrial giant that all the socialist fellow-travellers thought it was.

Reality said...

Bitterrenter,

"When tax rates were at 90% the rich stayed here."

When the top income tax bracket was at 90%, the rich simply showed very little visible income. The companies simply gave the CEO's company cars with drivers attached instead of money to buy their own cars. How dumb do you think the compensation committees were? that they would throw away 90% of the money? The reduction of top tax bracket from 90% to below 40% was a way to collect more taxes: 40% of $1 is a lot more than 90% of zero!

"rich assholes escaping the burden of paying their fair share in their home countries."

What is a "fair share"? In Cuba, that means everything one earns, minus the food, shelter, and healthcare waiting list number that the government assigns him . . . a situation remarkably similar to what a slave owner thought a slave's "fair share" owed to the plantation.

Please explain to us why it is more efficient for the government to take money from the individual, after spending much on tax collection, program lobbying, welfare qualification, and much internal paper pushing to keep corruption of the previous three activities in check . . . why is that more efficient than say having the individual spend the money as he/she wishes and thereby creating jobs directly in the process. Say for example, for a person making $100k a year, why is it better to tax him $40k and give perhaps $7k or so to the welfare recipient, instead of having the $100k/yr person spend that $40k and create a $30-40k job! Why is it better to deprive the poor person his $30-40k job and tell him to file papers and get $7k/yr in welfare checks? Aside from, you know, the usual diversion of funds to pay off well-connected entities to blowing up innocent civilians overseas and building bridges to nowhere.

Mike Hunt said...

Reality,

I like your posts. They are well thought out and an informative read.

Bitter Renter,

While I do agree that government needs to spend on the necessary infrastructure to enable the growth of services you have to agree that government running services often proves to be the most inefficient use of resources. This is due to the lack of competition and lack of a profit motive to drive efficiency.

The balance lies in having the government set the rules of the marketplace that is then run by private organizations. The invisible hand of capitalism is a great way to build efficiencies but the rules of the marketplace should be set to avoid exploitations and abuse.

Examples of efficient marketplaces:

Ebay
Trading of commodities
Trading of stocks

Poorly designed markets

The quagmire of the mortgage industry backed by the FED

I believe Obama has actually mentioned something along these lines but it was so vague that I don't know what he has in mind.

-Mike

Anonymous said...

The top 10th per centile tax filer makes about $105k AGI a year (combined if filing jointly). A person making that amount pays about $23k in personal income tax and $15.5k in payroll/self-employment tax.

----------------------------

oh, and don't forget the bottom rung, that pays no taxes but yet still gets a tax refund (if they bother to file). Kind of hard to cut taxes further for the that group!

Reality said...

Anon 2:28AM,

"Do you really think that your tax dollars were taken out of the economy? Get real!"

I said it was taken out of the local economy, and spent on wars overseas and buiding bridges to where (on the other end of the continent). Talk about misallocation of resources.

"Where do you think the doubling of the national debt came from? Your war was financed with debt."

What does debt mean in our fiat money system? Dilution of the purchasing power of money that real workers earn through their hard work.

"Every single one of your tax dollars flowed through your economy and participated in the largest misallocation of capital ever."

Taxation and government spending is the most egregious case of that misallocation.

"Do you actually think your govenment has anything socialist about it? Your government has failed you. Your system is failing you."

Just as every single socialist system inevitably does. Yes, unfortunately, the US is becoming more and more socialist . . . more and more useful idiots are clamoring for more government even as the failures of govoernment intervention is showing up every where. Isn't that the very symptom of socialism? That people have bought into the government regulation-cult: more regulatory failures and corruptions, the more demand for further regulations . . . just like those poor souls on Easter Island who bought into the Moai (huge monolith statues) cult.

"If you actually looked beyond your borders, you'd find many socialist countries with a much better quality of life than yours."

Such as? Yes, there are many countries in the world where people have higher standard of living than in the US. However, they are not more socialist than the US at all.

But you wouldn't believe me anyway and that suits me just fine. Less for you and more for us.

Lost Cause said...

My tax cut amounted to three cents per paycheck. True story.

As far as the cash money that is being handed out now -- the stimulus checks -- that has to be paid back, dear taxpayer. It is not free money. You are going to have to deduct that from any future refund that you would get next year.

Americans are f'ing stupid.

Lost Cause said...

The top 10% own 90% of all the wealth, yet pay ony 70% of all the taxes. I guess there is something unfair about it -- I agree with you there.

Anonymous said...

Lost Cause said...
My tax cut amounted to three cents per paycheck. True story.



========

Then that means you make about $25K a year. You are pathetic.

As for your 10% own 90% of the wealth comment...care to back that up with any statistics? And even if it were true, taxes are paid on income, not wealth. But you make $25K a year so I don't expect you to understand such complex issues.

Reality said...

Lost cause,

"The top 10% own 90% of all the wealth, yet pay ony 70% of all the taxes"

The top 10% in wealth is not the same top 10% in taxable income. You may as well levy extra tax on the top 10% in height or weight :-) You end up punishing the wrong group of people.

BTW, because the government owns so much land and so much property all over the country and outside the country, if you believe it's all "owned" by everyone . . . there's no where the top 10% in wealth can possibly own 90% all wealth out there. If you don't believe public property is jointly owned by everyone, then you have just chopped down the very foundation of socialist commonwealth thinking.

Anonymous said...

Reality could save lots of time by simply typing:

GOVERNMENT BAD.

And being done with it.

THe infrastructure you believe appeared through the magic of the private sector never existed. The decision, organization and funding of infrastructure has always come from some unifying body, whether it be the town elders, the feudal lord or in modern times, the GOVERNMENT.

Government has had many definitions over time. Did you flunk citizenship or government class? Someone ALWAYS takes on the role of leadership to direct the resources of a society. ALWAYS. You seem to want to ascribe some foreign attributes to government when in fact it is simply PEOPLE electing leaders who are also PEOPLE that make decisions and lead the PEOPLE who elected them.

The leaders then extracted SOMETHING from the people to produce the goods and services being provided. That something could have been labor, fees, taxes, etc etc etc. There is no free lunch. Yes, I know you fantasize that this first rate country would have sprung forth on its own (with NO need for you to pay for it!! a libertarians DREAM!) but it wouldn't have turned out that way.

No group, whether a country, a corporation or a family, operates without a central organizing force that provides something (services, paycheck, shelter & food) in exchange for something else (taxes, labor, chores/affection). Since we don't get paid by the government or have the obligation of being related, we pay TAXES for the things we are provided with.

And once again, let me reiterate that your way has NEVER been tried in this country to a large extent. NEVER. The short 30 year foray into the world of libertarian republicanism has led to decay and decline which is why they are being soundly REJECTED by the people. It happens every time selfish, greedy, indifferent people with your limited vision gain power. It looks good on the surface but then fails miserably and the people look to GOVERNMENT to restore order and balance.

Anonymous said...

Reality could save lots of time by simply typing:

GOVERNMENT BAD.

And being done with it.

THe infrastructure you believe appeared through the magic of the private sector never existed. The decision, organization and funding of infrastructure has always come from some unifying body, whether it be the town elders, the feudal lord or in modern times, the GOVERNMENT.

Government has had many definitions over time. Did you flunk citizenship or government class? Someone ALWAYS takes on the role of leadership to direct the resources of a society. ALWAYS. You seem to want to ascribe some foreign attributes to government when in fact it is simply PEOPLE electing leaders who are also PEOPLE that make decisions and lead the PEOPLE who elected them.

The leaders then extracted SOMETHING from the people to produce the goods and services being provided. That something could have been labor, fees, taxes, etc etc etc. There is no free lunch. Yes, I know you fantasize that this first rate country would have sprung forth on its own (with NO need for you to pay for it!! a libertarians DREAM!) but it wouldn't have turned out that way.

No group, whether a country, a corporation or a family, operates without a central organizing force that provides something (services, paycheck, shelter & food) in exchange for something else (taxes, labor, chores/affection). Since we don't get paid by the government or have the obligation of being related, we pay TAXES for the things we are provided with.

And once again, let me reiterate that your way has NEVER been tried in this country to a large extent. NEVER. The short 30 year foray into the world of libertarian republicanism has led to decay and decline which is why they are being soundly REJECTED by the people. It happens every time selfish, greedy, indifferent people with your limited vision gain power. It looks good on the surface but then fails miserably and the people look to GOVERNMENT to restore order and balance.

Reality said...

Thanks, Mike.

Skaven said...

Sorry, I must be dense, I still don't get it.

Housing prices are going down. Deflation.

Equity markets are going down. Deflation.

No one is borrowing any more money. Even more money is being sucked into a black hole and disappearing forever. Deflation.

Mr. Dollar, Helicopter Ben, is about to start raising rates.

Tell me again why gold is going to go up? I bought at $480, just sold at $940.

bitterrenter said...

The 3:54 comment was from me.

Anonymous said...

"oh, and don't forget the bottom rung, that pays no taxes but yet still gets a tax refund (if they bother to file). Kind of hard to cut taxes further for the that group!"

Which would you prefer paying, 0% tax on $15,000 earned flipping burgers 40 hours a week or 90% on $1,000,000 of capital gains and dividends made while you're sitting poolside sipping your Martini? Can you see who still comes out ahead?