US News
Fed slashes US rates in emergency action
Jan 22, 2008, 15:01 GMT
US Secretary of the Treasury Henry Paulson gives a speech on the state of the US economy at the US Chamber of Commerce in Washington, DC USA on 22 January 2008. The Federal Reserve, responding to an international stock sell-off and the threat of recession in the US, cut its benchmark interest rate by three-quarters of a percentage point. EPA/MATTHEW CAVANAUGH
Washington - In a dramatic bid to shore up the US economy, the Federal Reserve on Tuesday slashed its benchmark interest rate by three quarters of a percentage point to 3.5 per cent.
Stocks in Europe rallied after the Fed's emergency move, two days into a massive selloff on global markets on fears that the United States is headed for recession. An economic stimulus plan unveiled by President George W Bush last week has failed to impress investors.
The Fed lowered the federal funds rate 'in view of a weakening of the economic outlook and increasing downside risks to growth,' a statement by the central bank's policy-making committee said.
The announcement came before Wall Street reopened for the week and a week ahead of the Fed's next scheduled meeting on January 29-30, where analysts had expected a cut of half a percentage point.
But the decision also bared concern that the Fed may be panicking under market pressure. One of the 10 Federal Open Market Committee members voted against Tuesday's cut, saying action could have waited until next week's regular meeting.
Financial markets have broadly 'continued to deteriorate and credit has tightened further for some businesses and households,' the Fed said. It also pointed to a deepening US real-estate slump and a spike in unemployment in December.
Bush on Friday proposed about 140 billion dollars in tax relief for US individuals and businesses in an effort to boost consumer spending, the US economy's driving force.
But stock markets continued their slide after the announcement. Wall Street was closed Monday for a federal holiday.
The cut in the federal funds rate was the Fed's sharpest since a 1980-81 US recession. Fed policymakers also lowered the discount rate to 4 per cent from 4.75 per cent.
© 2008 dpa - Deutsche Presse-AgenturCOMMENT
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Older Talkback
page: 1
Chicken Little: The sky is falling!
Whats the big hurry?
Election day?
Is that who they are doing it for?
Nah, this is the only way that they can bail out the banks without a huge infusion of cash, which would be hard to hide. The next step will be some kind of moratorium on foreclosures in the US, plus a few tax gimmicks and some walking around money for Bubba Jones and his old lady.
Who will pay for it? American citizens, the Chinese and OPEC. How? Through inflation. What will China and OPEC do? They might well switch over to the Euro and dump dollars. That will not help them or us or the Europeans.
The lid has been torn off of Hell, folks. Get ready.
I'll buy some of that, but face it, stocks are not going to go up indefinitely, and neither is land. Since when is a recession some kind of emergency?
We've had seven spectacular years of growth, and a forecst of a recession by the liberal press EVERY year. Even a broken watch is right twice a day.
It has been rumored that Judah Ben-Hur, Ambassador to The American Republic will be the Presidential candidate for America in 2012. Their Party Platform will be published soon, with a website soley for that purpose. Another example of American History being made by someone aganist all odds...
Since when is a recession some kind of emergency?
Since October 29, 1929 seems a good starting point !
RE:'I'll buy some of that, but face it, stocks are not going to go up indefinitely, and neither is land.'
And you can't borrow money forever!
RE:'Since when is a recession some kind of emergency?'
When you are out of job and can't pay your bills because you didn't save any money.
RE:'We've had seven spectacular years of growth, and a forecst of a recession by the liberal press EVERY year. Even a broken watch is right twice a day.'
This is the real McCoy, SP4, not a hopeful mirage that only the newspukes can see. We HAVE had some really good times. Did Americans save enough money to be called real savings? NO! Rich folks collect interest. Poor folks pay it. The banks like poor folks because they pay interest. The politicians like having everyone ninety days from bankruptcy for a reason. That condition makes it easier for them to control you. Think about it.
RE: Chicken Little: The sky is falling! Whats the big hurry? Election day? Is that who they are doing it for?
===========
I can see this is someone without the least education in economics; and possibly paid to carry Bush's baggage - since no one could be this outright dumb and feed himself successfully.
This is a very serious moment, as the Fed waited far too long to act. The Fed was going to wait for the next regular meeting, and dummy-in-chief was going to wait for the State of the Union.
Foreign markets saw this as an absence of understanding of the situation, and a failure to understand how a global economy operates. The reaction was a selloff across foreign markets Monday, and despite the Fed's 3/4 point cut, further selloffs in overseas markets today.
This is a crisis of confidence. No one believes that Bush can do anything useful at this late date. $150 billion or so will be about half of what would be needed to make an impact, and that impact would be three months out past passage of legislation. Bush has already removed the disconnect to continuation of the existing tax cuts, and this jerk NEVER yields; so it's a perceived problem even in the never-never land of the West Wing.
The Fed will have to cut rates more, and everyone knows it. The DOW gapped down sharply this morning, recovered, and is again falling; because the fundamentals continue to get worse, like SP4's native intellect.
The discussion has moved from 'recession' to 'bear market', since there's now a complete lack of confidence in the paper that banks and other institutions hold, and banks do not even lend to each other. The Northern Rock deal in Britain is a saver for them, but the problems are far from over, with many foreclosures due for 2008, and buying power sapped by lower home values and upcoming mortgage rate increases.
SP4, just shut up. You're tolerable as the daily jackass in normal times, but now you're just a leaky faucet - drip, drip, drip.
This is a media overreaction, but it indicates how seriously the financial community sees the problem, and for Bush it's another photo-op in which to accomplish zilch. While there are those blindly loyal to Bush in the U.S., he has no reputation left at all overseas, and those markets feel the lack of U.S. leadership; as well as the overhang of more potential Mideast problems and the relationship to energy prices. After the Monday drop, normally there'd be some recovery the next day overseas, but it's not taking hold.
www.forbes.com/markets/2008/01/22/asia-stock-update-markets-equity-cx_v k_0122markets05.html
The shadow of a bear market loomed large Tuesday as stocks in Europe and Asia failed to halt the equity sell-off, with major indices down again following Monday's worldwide slide.
Benchmark indices across Europe failed to cross over into positive territory during afternoon trading on Tuesday, despite an attempt at bargain-hunting in the beleaguered financial sector.
The traditional definition of a bear market is a drop of 20%, from a previous high, in the space of one year.
The global sell-off came on the back of prolonged fears of a recession in the United States, which the U.S. Federal Reserve tried to calm on Tuesday by cutting the federal funds rate to 3.5% from 4.25%.
The U.S. cannot cut rates while everyone else remains as-is. Interest rates are what attract investment, and other countries in the Euro area would have an advantage in attracting investors. In addition, banks are not freely lending, and rate cuts could help. A stronger Euro and weaker dollar impairs Euro and German exports further, and slows the global economy. Stagflation becomes a threat, eventually, with needed rate cuts potentially permitting inflation to rise.
'European inflation at a six-year high of 3.1 percent, breaching the ECB target of just below 2 percent, is limiting policy makers' room for maneuver. President Jean-Claude Trichet said Jan. 10 that the bank is ready to act ``preemptively'' to raise rates to contain consumer prices.'
If the ECB and Britain are forced to act earlier than their regularly scheduled session, it signals a real problem.
www.bloomberg.com/apps/news?pid=20601087&sid=aT6mSXgLBTT8&refer=home
Jan. 22 (Bloomberg) -- The European Central Bank and the Bank of England may have to follow the Federal Reserve and cut interest rates as the risk of a U.S. recession threatens to drag down a global expansion, economists said.
``From a European and a U.K. perspective, the Fed cut adds to the risk of more and quicker rate cuts,'' said Amit Kara, an economist at UBS AG in London. Kara, a former economist at the U.K. central bank, predicts four cuts from the Bank of England this year and two by the ECB.
The Fed today lowered its benchmark rate in an emergency move for the first time since 2001 after global stock markets tumbled amid signs the world's largest economy is sliding into recession. The move spurred a rally in European stocks, though failed to stem a decline in U.S. indexes.
The widening interest-rate gap between the U.S. and Europe may spur gains in the euro, worsening the outlook for an economy already showing signs of a slowdown by hobbling exports. German investor confidence dropped to the lowest since 1992 in January and European manufacturing growth slowed in December.
G.W Bush its down to you, The WORST President in US history.
(While the primaries and economic news hog the headlines, the violence continues in Iraq in the northern regions, and the Shia have been battling their own fanatics in the south. Suddenly, al Sadr is the guy to work with in Iraq, instead of al Maliki. In an appearance on NVC News, General Petraeus refuses to see the light at the end of the tunnel, since it might be an oncoming train)
www.fednews.com/transcript.htm?id=20080122t3019
NBC 'TODAY' INTERVIEW WITH GENERAL DAVID PETRAEUS, COMMANDING GENERAL, MULTINATIONAL FORCE-IRAQ INTERVIEWER: RICHARD ENGEL
7:18 A.M. EST, TUESDAY, JANUARY 22, 2008
MR. ENGEL: The security situation here has certainly improved, but Commanding General David Petraeus told NBC News the gains are not yet self-sustaining and could be reversed.
www.bostonnow.com/blogs/fija/2008/01/21/gen-petraeus-too-generous
'There was a report on the NBC Monday night news showing Gen. David Petraeus handing out military medals and negotiating cash gifts to tribal war lords in Iraq who have stopped attacking the US military. Experts credit the giving of financial support to Sunni militants with the recent decrease in attacks on American forces.'
===========================
news.monstersandcritics.com/middleeast/news/article_1387962.php/School_ attacked_teachers_abducted_in_northern_Iraq__Roundup_
Baghdad - A suicide bomber attacked a school in the Iraqi city of Baquba on Tuesday, killing a guard and injuring 20 students and teachers while a policeman was killed and two teachers were kidnapped in two separate incidents in Tikrit, according to witnesses and security sources.
news.monstersandcritics.com/middleeast/news/article_1387662.php
Baghdad - At least 22 people were killed in acts of violence in Iraq, including gunmen from the al-Qaeda terrorist network, while at least 90 terrorist suspects were rounded up in raids by US and Iraqi forces across the country, Iraqi and US officials said Sunday.
This kind of piecemeal approach will take time to have an effect, which we cannot afford, and particularly borrowers cannot afford. Possibly the ECB and Bank of England are reluctant to see us act quicker, because they would have to move as well, and are not in the habit of being forced to act ahead of schedule.
It looks as though the usual INACTION by the White House and the Fed have allowed this to fester to the point that people don't believe that it can be resolved without pain. Bush was LATE on Katrina, LATE with the Iraq surge, LATE getting serious about Palestine, and LATE in placing Petraeus with a working strategy in Iraq. Now, he's LATE on the economy. If ignorance is bliss, the White House must be ecstatic.
The Democratic candidates should be feasting on this incompetence by the GOP, and the GOP's higher spending 2001-2006, and the runup in the National Debt, which ALSO makes other countries nervous about our long-term financial situation, particularly the oil producers whose oil is priced in dollars.
We are dependent on about $2 billion in funds EVERY DAY coming from China and other nations, and also sovereign funds investing in U.S. corporations. A weaker dollar does not attract investment, but it CAN attract bargain-hunters looking for cheap U.S. stocks and the chance to take an ownership position in U.S. corporations.
www.marketwatch.com/news/story/fed-isnt-finished-rate-cuts/story.aspx?g uid=%7BFE058836-414C-4CC9-8F04-866CF0AB29DE%7D
'Don't take today's move ... to mean that the FOMC is through,' said Richard Moody, chief economist at Austin-based Mission Residential, in a note to clients. 'We expect another funds rate cut at the scheduled January 29-30 meeting, with possibly more to come in the spring.'
Nigel Gault, chief U.S. economist at Global Insight, believes the central bank will eventually get rates as low as 2.5% before the current easing cycle draws to a close. The Fed's likely to cut rates again by another quarter of a percentage point at their formal meeting next week, he said in a telephone interview. Scott Anderson, senior economist at Wells Fargo Economics, said the Fed 'will cut another 75 basis points by the end of April, bring the fed funds target rate to 2.75%.' He said the Fed won't be keen to move below that level in order to keep some ammunition in reserve 'for a rainy day.'
(B of A is a particularly well-run bank, but writedowns are unavoidable at this point. The problem extends beyond subprime mortages, as all housing prices are impacted. Mort Zuckerman might well have been conservative.)
www.mclaughlin.com/library/transcript.asp?id=623
'MR. ZUCKERMAN: No, I think there is reason for some optimism. But I have to tell you, I think we're facing the worst financial crisis in the last 40 or 50 years, maybe since the Great Depression. You have a situation where we have two and a half trillion dollars of paper, of which the estimate is that 25 percent of it is going to be wiped out in value. That's $600 billion. And that's just the estimates today. Those estimates get worse and worse as this paper gets to be worth less and less. And nobody knows what the consequences of that is. We've never been in that kind of situation.
Amongst other things, nobody knows who owns the paper. I mean, nobody -- Merrill Lynch announced that they were losing roughly $5 billion. It then went to $8 billion within a matter of three weeks, which they are the biggest seller of this kind of paper. They're off by 60 percent. I mean, if they're off by 60 percent, who knows what the real value is?'
--------
www.bloomberg.com/apps/news?pid=20601087&sid=a7GHIS5K.A9M&refer=home
Jan. 22 (Bloomberg) -- Bank of America Corp. and Wachovia Corp., the second- and fourth-largest U.S. banks, said earnings plummeted after more than $6 billion of combined mortgage- related writedowns. Bank of America's fourth-quarter profit dropped 95 percent to $268 million, while net income at Wachovia was almost wiped out, plunging 98 percent to $51 million.
``The revaluation of assets that initially looked like a very exclusive subprime problem is emerging to be something much more,'' Kevin Fitzsimmons, a New York-based analyst at Sandler O'Neill & Partners, said today in an interview. Kenneth Lewis, Bank of America's chief executive officer, said market conditions are the ``most stressful'' since 2001 and forced the Charlotte, North Carolina-based company to double reserves for potential loan losses to $3.3 billion in the fourth quarter. The bank said earnings will improve this year. Lewis and Wachovia CEO Kennedy Thompson said they don't expect to cut their dividends.
``The Fed can alleviate the amount of losses they take and make a recession shorter-lived, but the problem with Fed cuts is that it takes three to four quarters for it to pass through to the real economy,'' said James Ellman, who oversees $200 million at Seacliff Capital in San Francisco.
Wachovia and Bank of America reported the lowest quarterly profits in at least six years during the country's worst housing slump in more than two decades. The world's biggest banks and brokerages have disclosed more than $120 billion of writedowns and credit losses since June, mostly caused by the collapse of the subprime mortgage market.
Lewis, 60, and Thompson, 57, said today that the companies were battered by the fixed-income markets. Lewis said he expects economic growth to ``be anemic at best in the first half.''
RE:'Lewis, 60, and Thompson, 57, said today that the companies were battered by the fixed-income markets. Lewis said he expects economic growth to ``be anemic at best in the first half.'
No big surprise here. Inflation, a universal sneak-attack-tax, has been ongoing for years now. The people it hurts the worst are those living on fixed incomes. Who might that be?
Well, there are a lot of elderly stuck in this particularly nasty bit of aspic, but there is also the working class, whose wages have not only failed to rise, but have actually declined in real terms. Why the decline? This unceasing tide of illegal immigrants from south of the Rio Bravo.
Now we have a recession. Which corporations get hurt first and worst by a recession? Small to mid-sized companies. Who employs the majority of working class Americans and illegal aliens? Uh-huh, that's right. Small to mid-size corporations. Guess who they are going to lay off first? Oh, come on! You can figure it out. That's right! The illegal aliens! Most of them cannot file for unemployment benefits so the small to mid-size firms don't take such a horrible hit on their unemployment insurance.
What are the aliens going to do? Go home? Maybe a tiny few, but most of them won't because there is nothing in their native countries for them to return to. If the US economy is sour, you can just imagine how bad it is in say, Guatemala or San Salvador. Why go home? It would be long, dangerous expensive trip at the end of which you wuld go hungry.
No, most of them will stay here and they will do whatever they must to survive until the economy rebounds.
Desperate people take desperate measures, George.
...I may be the dumbest bastard on this planet, but I've been investing for over 30 years, and....this is the hard part so pay attention....markets, and economies are cyclical. Presidents and politicians have been blaming each other for the economy since there has been one.
This president is a free trade, free market guy and he's no going to change in the next 30 days, so pucker up. It worked on his watch, with record employment, low inflation, record tax receipts and record household wealth, but it's not going to go on forever.
There is no way, in the face of lower profits and higher taxation looming from a dem president, that Wall St., or any other street, is going to pay more for stocks. That being the case, they will got to a level where people will pay for them. This is a good thing, not bad.
Add to that a Mortgage mess, lower consumer spending and you have all the makings for a real slowdown. These were bad loans by unscrupuolus investors and folks who lied on their applications, so boo hoo.
There is no way real estate is going to sell for more when the buyers are dumping as fast as they can to get out. I thought everyone knew this.
So go home, pour a drink, sit on your ass and realize that a curve is not a curve unless it has a downside.
What did you think, this economic juggernaut was going to go on forever???????
RE:'Add to that a Mortgage mess, lower consumer spending and you have all the makings for a real slowdown. These were bad loans by unscrupuolus investors and folks who lied on their applications, so boo hoo.'
The banks and realtors have had people out searching for people to apply for these mortgages. Those people were on commission so they have been more than willing to help people fill out their mortgage applications.
Now the chickens have come home to roost. It made the mortgage lenders sick and, as is usually the case, the disease has spread to other lenders. The problem is grievously worsened by a government that has done nothing to encourage American citizens to save any money beyond pouring everything they acquire into real estate. The tax system does not leave many of them enough money to feed a savings account. The few who have managed to save a little will now have to tap their savings to service their debt--often that is debt incurred to pay for a gorramned house that is declining in value. We seem to have forgotten that houses are actually a consumer good.
You are dismissing this one too lightly, SP4. The problem lies with the fundamentals of our economy and our stupid, incomprehensible, unfair and counterproductive tax code. It hasn't helped any that our immigration policy has depressed wages while our economic policies have allowed inflation to continue while encouraging people to run up a forty-foot float of debts.
This is supposed to be a country of economic opportunity, but between the Dems and the Goopers there hasn't been much.
you're the dumbest bastard on this planet.
bush is not a free trade president. bush is the chief 'outsource jobs' president.
OF COURSE the long term action is cyclical - but now we're seeing greater rises and greater drops in a short period of time, and that makes investors nervous.
The fundamentals absolutely SUCK right across the board. The banks have no idea of the value of what they hold, and are reluctant to lend. That's one reason for the Fed action; a 3/4 point cut, with more to follow.
A list of problems ... from the Mideast security linked to their importance as oil producers; to the ongoing failures in Iraq requiring a large long-term financial commitment by the U.S.; to Bush's bellicosity towards Iran which was NEVER this kind of problem with a strong Iraq next door; to the fanatics in Pakistan gaining influence, and the same in Afghanistan; to the needs of China for commodities (which is one reason commodity prices have not dropped even more, and the price of gold is nearing $900 as a reaction to the mess).
There's zero good news, and a host of serious problems. If you're alive in 50 years, this will level out on a historical basis; but RIGHT NOW we are facing significant problems in an election year, and that causes Presidents to act precipitously, if not outright stupidly. The White House is ALREADY suggesting an increased rebate. They should freeze foreclosures for 90 days, and do what they can for the banking system - bad earnings are on the way, and more reluctance to lend to businesses.
Eventually the Fed will have to react to inflation, which is being gunned by oil prices and linked speculation, as well as China and India buying up raw materials, which was NEVER a competitive problem in the past.
Looking to the past's 'average' market performance as a guide to the next year is absolutely infantile. It's complacency that's the enemy, whether it's the economically uninformed prattling away in a public forum, or the President whose ass that poster's head inhabits who does not comprehend economics, and refuses to listen to those who do; and who is incapable of dealing with crises in a timely manner, as I noted earlier. If you weren't such an ass-kisser, you might be listened to more seriously.
(Does this sound like a PLAN???)
ap.google.com/article/ALeqM5h19_YeGzwzlmJhx42iIA7nJF0_UAD8UB09F00
'Discussing the White House's options, press secretary Dana Perino told reporters: 'I'm not going to close the door, but I'm not suggesting that anyone believes it has to be bigger' than the $150 billion figure already bandied about.'
voanews.com/english/2008-01-22-voa9.cfm
Islamic militants attacked and killed five Pakistani soldiers in the country's tribal mountainous region near the border with Afghanistan as analysts say the al-Qaida-linked fighters appear to be gaining more control of the region. VOA's Nancy-Amelia Collins in Islamabad reports.
Violence has increased in the past week between Pakistani security forces and militants. The latest attack, before dawn Tuesday, left five Pakistani soldiers dead.
Last week, the al-Qaida-linked militants attacked and briefly captured a military fort in South Waziristan. Two days later the military claimed up to 90 militants were killed in two separate clashes in the same area, but a spokesman for the militants denied the heavy loss of life.
======================
(Municipal bonds may suffer a ratings hit, forcing them to pay higher interest rates, impacting state budgets. Note that Spitzer is proposing tax HIKES in New York, and New Jersey is selling off infrastructure)
www.bloomberg.com/apps/news?pid=20601109&sid=a30y_cTn2Mz4&refer=news
The crisis has been brewing for about six years, ever since the insurers discovered collateralized debt obligations. These securities, part of an area known as structured finance, were created by Wall Street by repackaging assets such as mortgage bonds and buyout loans into new obligations for sale to institutional investors.
Attracted by top ratings from Standard & Poor's, Moody's Investors Service and Fitch and by lucrative premiums, the insurers agreed to pay CDO holders -- many of them banks that created the securities -- in the event of a default. Insurers backed $127 billion of CDOs that relied at least partly on repayments on subprime home loans, according to a Dec. 19 report by S&P, the No. 1 credit rating company.
``It looked so profitable and so easy that they let the portfolio shift too far toward structured finance,'' says Robert Fuller, who runs Capital Markets Management LLC, a Hopewell, New Jersey-based firm that advises municipalities and nonprofits. ``It morphed into this monster that is devouring them.''
(Commodity prices are falling in fear of a worldwide slowdown; but China will use the opportunity to stock up)
www.reuters.com/article/weekAheadWallStreet/idUSN2124763620080121
NEW YORK, Jan 21 (Reuters) -This week could mark the end of the bull market for Wall Street, with U.S. stocks likely to join a global equity market plunge triggered by fears of a U.S. recession. Investors said last week a $150 billion White House rescue plan was too little too late, as more and more data signaled the U.S. economy was headed for recession.
If U.S. stocks open at the levels futures were indicating, it would push major indexes dangerously close to bear market territory -- or a 20 percent drop from their peak in October. That would mark the death of the bull market that was born in early October 2002.
...he passed two free trade acts.......
Outsourced jobs???? The dems have virtually destroyed the Steel, Aluminum, forest products, chemical, textile, energy, and domestic auto industries in the US and somehow, ol GW is the one outsourcing jobs...
All this after ol Billy Clinton and his wife, in name only, took Chinese campaign funds and then got NAFTA, GATT, WTO passed and MFN for china.
Outsourced jobs???? We laid prostrate over liberal congressmens desks to stop NAFTA in the 90's and they told us it was good for jobs.
Wnat to know what?
They were right, but don't blame the republicans...they were completely out front and not the ones who sold out the unions.
Noharness is starting to sound like a communist!
'Did Americans save enough money to be called real savings? NO! Rich folks collect interest. Poor folks pay it. The banks like poor folks because they pay interest. The politicians like having everyone ninety days from bankruptcy for a reason. That condition makes it easier for them to control you. Think about it.'
or at least a liberal.
Gee, people living on credit, refinancing their homes over and over to pay for toys. Now real estate is falling, soon banks will be next. No money from Israel to help us out, all the good paying jobs are in China. The State of Michigan is now a parking lot for Canadians. The on going war run by a President that ran to the Air National Guard that did not do anything, and a Vice President that dodge the draft 3 times. No military experience to run a war between the both of them, 'Zero'. More drain on borrowed money by our government. Oil will hit $150.oo a barrel to help pay for new Military Equipment Bush sold to the Saudis. People put their money in paper accounts, just a bunch of numbers on paper. While gold hit $900.00 per ounce in the US. Month's ago a lot of you laughed at me. Your paper investments are in steep decline. My gold is at $1,200.00 per ounce US in Peru and still going up..........
So end's the United States...............
..no one told them to borrow like they did. In America, it's almost impossible to fail, unless you try.
Isn't it interesting how everyone loves free enterprise until it bites their asses, then it's the presidents fault?
Cheney may have not been a soldier, but he was a helluva Sec Def, saving billions in taxpayer money on bloated programs he cut. He ought to get a medal just for that.
If you're going to live in a free nation, with freedoms, free trade and free enterprise, you need to grow up.
Regarding: 'In America, it's almost impossible to fail, unless you try.'
What's your excuse loser, you didn't try at all? Or is it someones else's fault?
SP4 I(d like you to explain to me how record tax earnings rhyme with record tax cuts ?Doesn't it strike you as somehow a contradiction ?Yet you claim Bush managed both ?That is only the most erratic manifestation of your contribution .I'm so sorry your kbasic understanding of economy is so poor,best you refrain from making too much comments .Too little knowledge .
'SP4 I(d like you to explain to me how record tax earnings rhyme with record tax cuts ?Doesn't it strike you as somehow a contradiction ?'
Only to the clueless.
'That is only the most erratic manifestation of your contribution .I'm so sorry your kbasic[sic] understanding of economy is so poor,best you refrain from making too much comments .Too little knowledge .'
Tax cuts stimulate economic growth, economic growth stimulates income tax revenue. Sorry your understanding of economy is so poor, best you refrain from making too much comments.... In other words shuddup, idiot.
Any statistics to back up your claim that the lost taxes are compensated by additional revenues ?I guess not ...Your demonstration of reagonomics are not a valid economical theory,just an expression of wishful thinking,obsolete .Hence I 'll continue to speak.Noticed that it is always the people that have no arguments that want others to shut up?For obvious reasons.
However you were partly right...increased consumer spending led to higher investments ....in China !
That is a very good question Tonny, and I'm happy for you to accept my tutelage.
Bush's tax cuts in 2001 were in order to...surprise...stimulate the economy (sound familiar?). By every standard, they did exactly that. The result:
More tax revenue than at any time in history. $436 billion over projections at the last scoring.
By lowering taxes and feeding that money into the US earnings machine the resulting tax revenues were above projections for 6 of the last 7 years. It is the mile marker for supply side economics, the gold cup.
What happens when you raise tax levels? Money goes into shelters. It comes out of legitimate for-profit investment and does not stimulate the economy. When taxes are so high it's cheaper to shelter than invest, it, naturally slows your ability to produce. We saw that in the 1970's with Carter's failed policies. Reagan came in and dismantled them and the result was the economy we've enjoyed for the last 27 years.
Bush, whether he understood this, or not, believed in supply side economics, deliberately acted on it like he usually does, and the result has been spectacular.
In fact, it's so good at producing results, the dems are getting into the act now and proposing their own stimulus in the way of a tax cut. That alone is proof positive. Best of all, they can blame the republicans for doing it when they run for office!
This is nothing really new either. If you go to predominantly liberal state and local governments, you will see a plethora of local tax relief plans for special companies. In Oregon, we've had liberal government for 3 decades and they give numerous tax breaks to Nike, Intel and other notables, mostly on the basis of who they back at election time.
Liberals tax for social and political reasons, not really to raise practical revenue (kind of like the caholic church!). Their policies bear this out and so do the tax receipts. Rep. Chucky Rangell is in the middle of trying this right now, and the press is gagging it, in their typical slavish tradition and the other dems are running for cover.
Bush, on the other hand, correctly feels that, if it works for the dems special friends, why not just give it to everyone and then we all share in the results. His philosophy of 'it's not how much you tax, it's how much you get' is a wise-course policy, and has benefited everyone.
The results speak for themselves: record tax receipts, record employment, low inflation, historic high household wealth, all with lower taxes. 1% of americans pay 34% of tax reveue. 5% of americans pay 65% of revenue! If that's not graduated taxation, I can't tell you what is! All of that money not paid in taxes went to earn for the owners and IT was taxed! The results were stupendous by any standard.
The reason the dems hate this? It unhinges their image as government for the little guy! Their pandering to the Culture of Grievance just falls apart in the face of this! Interesting isn't it that the dems actually do more special interest tax relief than the republicans and get stamped with being for the 'little guy'?
Go ask yourself what the result of higher taxation would be for all the social programs Bush has funded, to the point of protest from real conservatives. His policies fed the libnazi pork machine and he didn't care! Wild, huh?
You see, Tonny, it's not that hard to understand at all. Other useful suggestions: read something financial and buy a calculator!
Re:'...or at least a liberal.'
Good grief! You're just now figuring that out?
couldn't have come from SP4-F. There are far too many words for the monosyablic buffon. This is more along his lines, taken from his web-site: 'Braking these rules will result in me sulking and moaning at you for at least an hour, so be warned'
Notice the spelling and petulence. THAT is SP4-F
SP4 will be calling you a libnazi.
Instead of 'monosyablic' I meant monosyllabic.
RE: 'Tax cuts stimulate economic growth, economic growth stimulates income tax revenue.'
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Once upon a time, when Laffer drew the curve on a dinner napkin, tax rates were too high, and cutting those rates promoted more revenue growth from taxes than the lost revenue from existing taxes.
Those days are over, and Laffer himself has said so. That's why it's a 'curve'; not a straight line. At the bottom of the curve, rates are low enough already for investment; and incremental cuts cost MORE than any potential revenue gains. Remember that if rates were reduced, A PROPORTIONATELY LARGER GROWTH IN BUSINESS IS REQUIRED TO GENERATE THE SAME REVENUE, AT LOWER RATES!
If there were a way to discriminate high-dollar earners who CONTRIBUTE to the economy by opening or growing businesses, or by direct hiring, that group deserves a stimulus. On the other hand, a high-dollar 'employee' also making gains from bonuses and stock options does NOT deserve a break - they should be paying taxes at a higher rate than the middle-class worker. Tax cuts for the wealthy should be directly linked to their contributions to the economy, since their paying of taxes is necessary in an economy where the American public have to support massive military expenditures.
Read CAREFULLY what Laffer proposed. We ran into a similar problem with Greenspan not taking into account higher GOP spending after 2001, eliminating the then-surplus.
en.wikipedia.org/wiki/Arthur_Laffer
Laffer is best known for the Laffer curve, a curve illustrating tax elasticity which asserts that in !CERTAIN! situations, a decrease in tax rates could result in an increase in tax revenues.
The gist of the theory is that tax revenues would be zero if tax rates were either 0% or 100%, and !SOMEWHERE IN BETWEEN 0% AND 100% IS A TAX RATE WHICH MAXIMIZES TOTAL REVENUE!
Laffer's innovation was to conjecture that the tax rate that maximizes revenue was at a much lower level than previously believed: so low that current tax rates were above the level where revenue is maximized. Before Laffer's claim, it was widely supposed that the revenue-maximizing tax rate would be only slightly below 100%.
This garbage is being propounded, even though rates are likely BELOW the point where economic growth would generate enough tax revenue to make up for the cuts - from the same people who brought you 'Democracy in Iraq' complete with a totally failed strategy, and other Neocon goodies of this century.
Hell, even Conservapedia gets the definition right:
www.conservapedia.com/Laffer_curve
'If the tax rate is !HIGHER THAN T*! in the Laffer curve below, then increasing taxes causes government revenue to decrease. Few dispute the underlying principle of the Laffer curve, but the debate centers on where to set the tax rate to obtain the maximum revenue.'
SP4 is stuck in the past, while the world whizzes past. All the GOP has is imagined past glories, and current failures. All he can do is chatter about Bill Clinton, while the problems of Iraq, Iran, Afghanistan, Pakistan, recession, economic problems in the banking system, reliance on imported energy, lack of health care for working people due to cutbacks in employer coverage, and other issues go unspoken in his delusional universe.
A candidate with the testicles to stand up and declare tax cuts for those earning below, say, $60,000, and a tax increase for those earning above $250,000 who are NOT DIRECT CONTRIBUTORS to the economy, gets my vote. Small businesspeople would get cuts for WHAT THEY DID - hiring, expansion, productivity improvements, energy conservation. If you don't directly hire and grow your own company, raise those people's taxes to pay for the current expenses of the Bush era.
Tax policy also badly needs revision for those being taxed at lower capital-gains rates for longer-term investments, who have not earned that break, and partners are walking away with hundreds of millions of dollars for deals where companies are stripped, and employees are laid off.
THEN, a fair discussion can take place about lower capital gains taxes for Venture Caps and others who actually CREATE something on a net basis.
'Cheney may have not been a soldier, but he was a helluva Sec Def, saving billions in taxpayer money on bloated programs he cut. He ought to get a medal just for that.'
=======
Cheney, Rumsfeld, and others had tight ties to defense contractors and companies like Carlyle who pushed expensive military projects that went nowhere. That's why it took so long to get the RIGHT weapons and troop carriers to Iraq, and Rumsfeld will be remembered for a sneering reply to a soldier on the order of 'you fight a war with what you have'. He can explain that to the families of those who would have survived inside armored vehicles.
(from 2002)
www.villagevoice.com/news/0218,gray,34384,6.html
Late this March, as part of the post-9-11 military buildup, Donald Rumsfeld gave United Defense, Carlyle's subsidiary, the full monty: over $470 million to continue development on the problem-riddled Crusaders, puzzling some military analysts.
'The Crusader has been the GAO's poster child for bad weapons development,' says Eric Miller, an analyst who watches defense for the Project on Government Oversight. 'Influence is tough to measure, but it's certainly had a friend somewhere.'
Make that a very close friend. Two internal Defense Department documents—letters between Carlyle and Rumsfeld—recently made available to the Voice show the intimate relationship between the Bush administration and the Carlyle Group.
Still, Judicial Watch, the right-wing group that got the memos through a Freedom of Information Act request, says the connection between the Pentagon and the Carlyle Group —whose advisers include the first president Bush—creates the 'appearance of conflict' and violate the public's trust. 'Under normal circumstances, it would be advisable for Rumsfeld to meet with his former secretaries to talk shop,' says the group's president, Tom Fitton. 'But when [you're] working for a defense contractor, it's probably not a good idea.'
www.thirdworldtraveler.com/Corporate_Welfare/CarlyleGroup_HMOWD%3F.html
The revolving door between the government and weapons contractors isn't new, but it has reached new heights (monetarily) and depths (ethically), in recent years.[Richard] Cheney's relationship with Halliburton is a perfect case study of all that is wrong with the relationship between our democratic form of government and the corporations that finance our elections and feed at the government trough on a daily basis.
Halliburton's biggest 'cash cow' during his [Cheney's] tenure was definitely in the area of military support services, and the company's ability to earn so much in this area was directly tied to a decision Cheney had made back when he was secretary of defense in the first Bush administration. It was under Cheney's watch that the decision was made to privatize not only specific services in support of U.S. troops overseas-such as food services, or doing the laundry, or repairing vehicles-but to privatize the actual planning process that went into providing logistics for U.S. troops when they had to be sent into an inhospitable foreign hot spot on short notice.
In 1992, near the end of Cheney's tenure as defense secretary, Halliburton won a contract from the U.S. Army's Logistics Civil Augmentation Program (LOGCAP), which P.W. Singer has described as a deal to 'work with the military in planning the logistical side of contingency operations.' Singer notes that 'it was the first time the U.S. military had ever contracted such global planning to a private organization.' In a pattern that would mark both Halliburton's and Cheney's business paths, the firm got the LOGCAP contract after conducting a top secret $3.9 million report for the Pentagon on how private companies could essentially provide the bulk of the logistics involved in major U.S. contingency deployments, from transportation and base-building to cooking the food and doing the laundry. The initial study contract called for a plan for how a private company could bear the bulk of the logistical burden for deploying 20,000 troops to 5 separate bases overseas within a 1 80-day period. Later in the year, Halliburton got a $5 million follow-on study contract to outline how a private firm might supply logistics for a series of more specific contingencies. By the end of the year, Halliburton had been selected to receive a five-year contract to be the U.S. Army's 'on call' private logistics arm.
Halliburton's growth under Cheney's leadership is nothing compared to what it has done since he became vice president. In 2001, it won back the Army's LOGCAP contract, just in time to cash in on the logistical bonanza involved in providing facilities and provisions for U.S. troops in Afghanistan, Uzbekistan, Qatar, Kuwait, Iraq, and all the other far-flung outposts of the Bush administration's war on terrorism. The company is also in charge of making the cages used to house Taliban members and terror suspects at Guantanamo Bay, Cuba. A late August 2003 analysis in the Washington Post estimated that Halliburton had raked in $1.7 billion in military contracts in Iraq, Afghanistan, and beyond since the start of the Bush administration.
The company's biggest prize-which it was awarded on a no-bid basis by the Army Corps of Engineers after Halliburton officials had helped the Defense Department write the specs for the contract-was an open-ended, two year contract worth up to $7 billion for putting out oil fires and repairing oil infrastructure in Iraq.
It was only after dogged questioning from Rep. Henry Waxman that it was revealed that the no-bid Halliburton contract was not merely for putting out oil fires, but for rebuilding and operating Iraq's extensive oil infrastructure.
Halliburton has been quick to show its gratitude to its Republican friends, earmarking 95 percent of its more than $708,000 in campaign donations from 1999 to 2002 to Republican candidates. And there's plenty more where that came from, heading straight for the Bush/Cheney 2004 campaign and the campaigns of their former CEO's Republican colleagues in the House and Senate.
While SP4 relives the glorious past 7 years due to his eyes being in the back of his head; the Fed is concerned about the liquidity crisis, and NOT just about interest rates. The trick is to get banks lending, and at this point they feel that they need to build up reserves to cover newly failing mortgages and new foreclosures. Tax rebates in April will NOT relieve the current problems, and the amounts are a pittance compared to needs. The idea is to induce spending; but much of the 2001 rebates went into the bank. What people DID spend was the case from mortgage refi's, and some of that has led to today's problems with increases in mortgages for variable-rate lending.
The Fed is hoping that reducing rates will reduce the risk of variable-rate mortgage increases in 2008 by allowing banks to ease off. However, the credit-card companies have rates of 25-30% in some cases, and will not follow the Fed in lowering rates.
www.bloomberg.com/apps/news?pid=20601087&sid=a2lFPOm.XWwg&refer=home
Jan. 22 (Bloomberg) -- The Federal Reserve signaled today that it has grown increasingly concerned over the reluctance of banks to provide credit to companies and consumers, restrictions that may exacerbate an already slowing economy.
The central bank, executing a record emergency reduction in its benchmark interest rate, said in its statement that ``credit has tightened further for some businesses and households.'' The Federal Open Market Committee also noted that ``strains in short- term funding markets have eased somewhat.''
``Consumers don't have the wherewithal to borrow much except in the credit-card market,'' said David Resler, chief economist at Nomura Securities International Inc. in New York. ``Rate cuts help lower the cost of refinancing'' and also aid lenders by ``widening the gap between what they lend and what they borrow,'' he said.
The Fed's first steps in addressing the August credit collapse were to buttress liquidity to keep financial markets stable. Officials cut the charge on direct loans to banks on Aug. 17 in an unscheduled conference call. Last month, the central bank introduced a new tool to inject funds into banks through two monthly auctions of cash.
Today, Chairman Ben S. Bernanke presided over the first so- called inter-meeting reduction of the Fed's benchmark rate since 2001. The FOMC cited a ``weakening of the economic outlook and increasing downside risks to growth'' even after 1 percentage point of rate reductions since September. Bernanke hinted at the rationale in a Jan. 10 speech, when he cited a need for ``decisive and timely'' action. ``We also see considerable evidence that banks have become more restrictive in their lending to firms and households,'' Bernanke said this month. ``More-expensive and less-available credit seems likely to impose a measure of financial restraint on economic growth.''
Now here's an Federal Government Department to close up >>>> The US Treasury, never had any money in it and never will. Henry Paulson the figurehead of this said department, can talk all he wants, his hands are tied to the Jews that control our banks.............Follow the money, to afraid to do it !! Major arms deal from the US to the Middle East, so they raised the price of oil to pay for it...Thanks Pres. Johnson, remember his words to the Saudis when they couldn't afford our arms package back then. Raise the price of your oil to pay for it he said,,,,they did and continued to do so to this day !!
Could this up and coming very big recession we are headed, is being controlled by the Jews Banking Empire. 'Yes', we will be departing Iraq soon, and yes this war was run by a handful of draft dodgers, looking for a way to take out 1 of the last 2 army's that are a threat to Israel. So when we depart all hell is going to happen in Iraq. Iran will then move in and control Iraq { lets face it, they already are }, just what Israel wants in their back yard. Money was flowing into the the US from Israel, { The World Bank } as we took out every major army around Israel. Now we can't get quality military recruits, or military is to the point of no return, desertions are at an all time high of 27,000 and growing as reported by the our military leaders....The US economy is getting it's butt paddled by the World Bank, lets face it their money to run our government comes with strings attached to it !! The US needs lots of $$$ to pay for overseas investments, the people of the US need oil to get to work...We are by now being controlled, by Middle Eastern Governments. We do have the worlds biggest military { well maybe China, but that depends which paper you read }but with no $$$ and oil, we are at the knees of the Middle East. This is what happens when you use Jewish money that comes with strings attached to run your government, then turn around and sell arms to the rag-heads that want to blow their hears off. If I was a Jew { or on the Board of Directors of the World Bank } you would not loan the US any more money
Think about it..................And so it is !
Talk amongst yourselves, so we can see contrasting nutcases at work.
Its what is is 4PS, you must be a JEW...............
... and I doubt that you do, either.
I'd tell you to keep making an ass of yourself, but I doubt that you need any encouragement.
The problem with the theory behind SP4's stolen thesis is that it projects the USA as a closed system,nothing can go in or out .Not the slightest hint on a global market anywhere in this simplistic view of the market .Reality is somehow more complicated .In a world where consumer goods are imported from Taiwan,Korea,China lowering taxes (for the richest part of the population anyway,as demonstrated by so many on this site with statistics ) ,the money liberated for additional purchases is flowing abroad,to China,Taiwan,Korea,etc .Hence the massive hoard of US dollars in China .Easy to understand,right ?Another problem is raised prices of the basic commodities for living .The price of food has risen with about 20 percent in one year ,these figures are calculated by consumer organizations,they differ somewhat from the official statistics ,at least here in Europe .Additional problem in the USA is the enormous budget deficit made by Bush .TRillions of dollars of debt don't really rhyme with the pretended record tax earnings .This situation is to be imputed to Bush only,Clinton left a clean slate . mirrored by SP4 .Well hello Bush,thanks for invading Iraq and digging that hole in the wealth of your nation ,the legacy of Clinton.
And we haven't been talking of the most recent manifestation of the economical crisis yet,the collapse of the mortgage and financial markets yet .But frankly that is the least interesting part to me .Just open your umbrellas when walking through Wall Street to avoid bankers jumping out of the windows.
www.nytimes.com/2008/01/23/washington/23database.html
WASHINGTON — Students of how the Bush administration led the nation into the Iraq war can now go online to browse a comprehensive database of top officials’ statements before the invasion, connecting the dots between hundreds of claims, mostly discredited since then, linking Saddam Hussein to Al Qaeda or warning that he possessed forbidden weapons.
Warnings about the need to confront Iraq, by President Bush, Vice President Dick Cheney, Secretary of State Colin L. Powell, Defense Secretary Donald H. Rumsfeld, the national security adviser, Condoleezza Rice, and two White House press secretaries, among others, can be combed line by line, and reviewed alongside detailed critiques published after the fact by official panels, historians, journalists and independent experts.
The database is online at www.publicintegrity.org
You didn't learn a thing. Golly, what a surprise...
I'm not quite sure where you came up with that hallucination about a closed system. On the contrary, one of America's chief strengths is it's trade and trading partners. There is a relationship with taxes here but it really isn't relevant to the tax theory we discussed.
Taxes are leveled on citizens and businesses in America. A successful tax and tax policy raises revenues, because that is the only practical reason for a tax.
Tax revenues are what taxes are supposed to be about and that being the case, the tax reductions were wildly sucessful for the reasons stated. Tax revenue is through the ceiling for the last seven years, no matter how you gauge it. It is above even the CBO's and White House budget projections. By every standard it is a success, and it came forth from a clear thinker, even if he is not a great thinker.
Now, you can talk about the value of money i.e inflation, etc., and that has been kept pretty low, considering the destruction of the manufacturing base in America i.e. metals, chemicals, wood and paper, and countless other industries, due to the liberal agenda, their trial lawyers, unions and eco-nazi policies, but, in the end taxes are still taxes, and that being the case, the policy worked, and worked spectacularly.
If you wish to discuss dollar strength, trade or the weather, we can do that too, but it has little to do with taxation.
Schools out.
RE: Tax revenues are what taxes are supposed to be about and that being the case, the tax reductions were wildly sucessful for the reasons stated.
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Have you even BOTHERED to read the information posted re the Laffer Curve on which the entire theory is based, you brainwashed twit? We are long past the point where further reductions in rates are made up for by increased business paying taxes at lower rates. That would require a geometric increase in the amount of added business, since the tax revenue from that increased business would be taxed at lower rates per unit of production. Tax cuts dribbling in over years do NOTHING for the lower and middle classes, and of course many just pay FICA and no income tax due to total earnings below the limits. Since the poorest SPEND what they're given, any plan to boost spending should include a temporary offset to those FICA payments as well for the lowest earners.
Any cuts received by the middle class have been absorbed already by energy price hikes. The 'wealthy' are wealthy because they don't spend it all.
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As Bob Hormats noted yesterday in an interview with the BBC, taxpayers raised $600 BILLION IN 2006 from mortgage refinancing, NOT tax reductions.
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(A pretty good prediction from 2005)
www.nytimes.com/2005/02/24/opinion/24friedman.html
Given the number of people who have refinanced their homes with floating-rate mortgages, the falling dollar is a kind of sword of Damocles, getting closer and closer to their heads,' Mr. Rothkopf said. 'And with any kind of sudden market disruption - caused by anything from a terror attack to signs that a big country has gotten queasy about buying dollars - the bubble could burst in a very unpleasant way.'
Why is that sword getting closer? Because global markets are realizing that we have two major vulnerabilities that this administration doesn't want to address: We are importing too much oil, so the dollar's strength is being sapped as oil prices continue to rise. And we are importing too much capital, because we are saving too little and spending too much, as both a society and a government.
'When people ask what we are doing about these twin vulnerabilities, they have a hard time coming up with an answer,' noted Robert Hormats, the vice chairman of Goldman Sachs International. 'There is no energy policy and no real effort to reduce our voracious demand of foreign capital. The U.S. pulled in 80 percent of total world savings last year [largely to finance our consumption].' That's a big reason why some '43 percent of all U.S. Treasury bills, notes and bonds are now held by foreigners,' Mr. Hormats said.
(Had this situation been handled before the 2004 elections, Bush would have been the hero he always pictured himself as. Now, Iraqi expenditures are a large drain on the economy, and will continue to be).
Here's an updated graph of war costs BY YEAR; and of course future costs and VA costs are not included, as well as the loss of income by Guard members serving, and the attendant loss of tax revenues to their home districts:
zfacts.com/p/447.html
THE TOP ONE PERCENT OF EARNERS WILL RECEIVE TAX CUTS OF $477 BILLION BY 2010. THE COST OF THE WAR THUS FAR IS $458 BILLION.
================
This particular attack has nothing to do with al Qaeda, but rather Sunni militants:
www.guardian.co.uk/Iraq/Story/0,,2245529,00.html
Seven people were killed and up to 70 wounded in a bomb attack on a residential building in Iraq's northern city of Mosul today.
The blast occurred as police arrived at the building to investigate a tip-off that weapons were being stored in the block. Women and children were among the casualties, police said.
Witnesses told Reuters it was one of the biggest explosions they had ever heard in Mosul, which is 240 miles north of Baghdad.
A militant Sunni group is thought to be responsible for the blast
GEE dear old SP4, call me a nutcase !! Very sorry you don't investage.
Bush and Cheney are draft dodgers. Bush ran to the Air National Guard and pushed a broom, while Cheney was deferred 3 times. Between them they have 'ZERO' war experience. The US is borrowing more money then it is taking in. Where is the money coming from? A kid I know, did a book report on the subject of World Bank Money, received an A, he's only 14 years old. His next class project is Johnson's great Society. Pres. Johnson did say what he did, well the next day the stock market was in the toilet, so NAFTA was in the works and Johnson's great society was starting to be dismantled, gone as of a few months ago...
SP4, get off the media that is owned and controlled by the Jew's. Maybe you would like to travel to South America with me, to see the results of your Free Trade Agreements. I think the UN would allow you some time to dig in one of many mass-graves that are being uncovered, and never reported in the US. The grave I was in contained Union leaders, Teachers and the usual far-left political wannabes...There is room in the pit.......
And so it is.......................
The nutcase SP4 just said that the strenght of the US deficit is caused by it being a part of the global market.Last time I checked the USA had an enormous trade DEFICIT .Does that ring a bell to you ?
Lower tax means more consumption,more consumption means more import (for everything that is manufactered cheaper outside of the USA àMore import means loss of monetary mass and concentration of debts in other countries .Is that so difficult to understand .Your knowledge of the world is so poor that you have to invent completely ridiculous schemes to protect your neocon buddies from being exposed .The only outcome of the Bush era is a bottomless pit,it is called budget deficit,in other words debts .For every head in the USA more than 30.000 dollars .Which wil have to be paid .By whom?Any idea ?
Small correction ,the first line should read ...the strenght of the US economy,etc;etc
RE: 'On the contrary, one of America's chief strengths is it's trade and trading partners.'
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Much of what America uses for components, for example in building of automobiles, is imported from overseas. They can make cheaper quality parts overseas because of lower wages, lower cost of living, and graduating, in some countries, far more engineers that we do. The Japanese, for example, learned modern manufacturing techniques from 'westerners', including people like Peter Drucker.
How can SP4 applaud this while complaining about U.S. companies moving manufacturing moving overseas in order to take advantage of the above listed benefits???
This kind of conflict comes from the fact that he's a damned parrot reading Conservative web sites, while not understanding what he's reading.
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The U.S. is a large purchaser of imported goods, both components and subassemblies that are part of our branded products, and finished goods like a Sony DVD player. Our economy is now thriving on exports, and the drop in the dollar vs. other currencies is making that happen. At the same time, countries like Germany are very upset, because they can no longer compete on exports, and the Euro may now be too strong vs. the dollar. Oil is priced in dollars, and the oil-producing states take a beating whenever the dollar drops, or we cut interest rates.
The U.S. has to borrow $2 billion a day to remain in business. Lowering interest rates makes it more difficult to attract foreign purchases of Treasuries, as countries can get better rates elsewhere, and the Euro now is a very stable currency. That was not true years ago; and if the U.S. credit rating suffers, some who hold U.S. Treasuries could refuse to 'roll over', and could move funds elsewhere - very easy to do these days.
Sovereign funds hold trillions of dollars, and are making investments in U.S. companies. No problem with minority shares where they don't exercise control, but that could change, as it does not take a huge share to exert pressure on the BOD. The public shareholders have relatively little influence, compared to large institutional holders like CREF.
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JohnJan 22nd, 2008 - 15:25:17
SP4 - watch out for those chickens returning to roost
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