PLEASE tell me why I should not be scared to death.

The two articles below are certainly OPINION pieces but they sure do strike a bad future for our economy.

The first is from a well known economist, who admittedly has a "horse in the race"......and from Bloomberg...

"With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper.

The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat."

http://www.bloomberg.com/apps/news?p...d=aTKrn1jUJwdE


The second article comes from the UK, and as I said, both of these articles are slanted a bit in my opinion and that is why I would love to hear the TOTV resident economic folks give comments.

"The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank "

http://www.telegraph.co.uk/finance/f...to-double.html

I would point out you refer to the possibility of another recession.....the current debate is whether the current recession has even bottomed out yet.
Perhaps you had another thought.

My contribution to your question: There is absolutely no discussion ever....by anybody....about repayment. In fact the trend is spend only.

Add to the spend only the willingness of the current administration to commit tremendous amounts of money with no accountability, no expectation of results, no discussion about repayment, no ability to track where the money went, continuous loss of employment.....the ONLY responsible financial conclusion is we will never be out of recession under this POTUS unless something drastic changes.

Now add the wild card of a terrorist attack on one or more of America's big cities and the future ranges from bleak to hopeless.

I hope to be proved wrong.....but doubt it.

btk

Originally Posted by billethkid

I would point out you refer to the possibility of another recession.....the current debate is whether the current recession has even bottomed out yet.
Perhaps you had another thought.

My contribution to your question: There is absolutely no discussion ever....by anybody....about repayment. In fact the trend is spend only.

Add to the spend only the willingness of the current administration to commit tremendous amounts of money with no accountability, no expectation of results, no discussion about repayment, no ability to track where the money went, continuous loss of employment.....the ONLY responsible financial conclusion is we will never be out of recession under this POTUS unless something drastic changes.

Now add the wild card of a terrorist attack on one or more of America's big cities and the future ranges from bleak to hopeless.

I hope to be proved wrong.....but doubt it.

btk

Your reference to a calamity of some sort just gives me so much angst. We discuss today on here..."silent majority" and participation on the forum...for the life of me I cannot understand how you cannot be concerned with our direction and financial woes, and only about Sarah Palin. It is as if we expect magic to happen. We have no money and are continuing to plan to spend.

We are basically giving this country away and nobody seems to care !

PS: To those who think that everything is anti Obama....HE is the President thus anything that is not good will be perceived that way...sorry, that is just the way it is. THIS IS NOT ANTI OBAMA.....JUST MY CONCERN FOR OUR COUNTRY AND ITS FINANCES ! I consider this more important than Sarah Palin !

http://www.youtube.com/v/N6vysBeCEaE..._embedded&fs=1

Originally Posted by Keedy

http://www.youtube.com/v/N6vysBeCEaE..._embedded&fs=1

Not sure what this has to do with our countries financial situation but whatever !

Originally Posted by Bucco

Not sure what this has to do with our countries financial situation but whatever !

I apologize Bucco...It has absolutely nothing to do with finance but I had this compulsion to post it somewhere..so I took the liberty..
And now back to our regularly scheduled post on finances....

PS. I had a good link this morning about the current situation...I'll see if I can find it...

nope, I agree, you should be scared.

Anybody shifting investments to TIPS?

Much of the effects of the deficit spending done by Congress in the last decade or so can be offset by increasing the marginal tax rates. We raise about $1.5 trillion in personal income taxes each year, so inceased taxes along with some reduced spending can resolve the deficit pretty quickly. No one will like a tax increase and such a move would be political suicide, but our fiscal problems are far from insoluable. Even if a significant tax increase was enacted, the result would likely be far from the highest marginal rates ever experienced in the U.S.

All I'm saying is that there is a solution to runaway inflation and skyrocketing interest rates--inreased taxation. Maybe it will take the political outcome of such a thing to return Congress to true fiscal conservatism.

The ship of state changes course slowly--but change it will.

Originally Posted by Villages Kahuna

Much of the effects of the deficit spending done by Congress in the last decade or so can be offset by increasing the marginal tax rates. We raise about $1.5 trillion in personal income taxes each year, so inceased taxes along with some reduced spending can resolve the deficit pretty quickly. No one will like a tax increase and such a move would be political suicide, but our fiscal problems are far from insoluable. Even if a significant tax increase was enacted, the result would likely be far from the highest marginal rates ever experienced in the U.S.

All I'm saying is that there is a solution to runaway inflation and skyrocketing interest rates--inreased taxation. Maybe it will take the political outcome of such a thing to return Congress to true fiscal conservatism.

The ship of state changes course slowly--but change it will.

I find it hard to give more money to the government when they are nothing more then spendaholics. Like you say , it would be easy to reduce the deficit but we part ways on how to accomplish it.
I know this is rather simplistic but if you have a household budget, you try to balance it at the end of every month, right? In most cases you cannot go to the source of your income, be it your employer or SS or pension, or a combination of all, and ask for more money to balance your checking right?
You know..deep down I think some or maybe the majority would like to pay a little more if they really thought the money wasn't going to go into a rat's hole.
Give an example from here in Massachusetts: Our state is in deep debt, just like many other states. Anyways, they just raised our sales tax and are looking for more ways to raise revenue. Well, guess what our esteemed governor tried to do a few weeks ago until it got out into the newspapers? He put his unemployed neighbor on the payroll for an annual salary of over $200,000 for a position that was vacant for over 11 years.
He got caught and the red-faced governor had to un-hire his buddy. This crap goes on and on and on..This is just a small time example of the billions of taxpayer money that is thrown around the USA.
My personal opinion is that we should not be feeding this monster. Government needs to tighten their belt and reorganize their budget just like corporations do when they are in trouble.
Don't feed the government....Restructure the government!!!!!

Originally Posted by Keedy

I find it hard to give more money to the government when they are nothing more then spendaholics. Like you say , it would be easy to reduce the deficit but we part ways on how to accomplish it.
I know this is rather simplistic but if you have a household budget, you try to balance it at the end of every month, right? In most cases you cannot go to the source of your income, be it your employer or SS or pension, or a combination of all, and ask for more money to balance your checking right?
You know..deep down I think some or maybe the majority would like to pay a little more if they really thought the money wasn't going to go into a rat's hole.
Give an example from here in Massachusetts: Our state is in deep debt, just like many other states. Anyways, they just raised our sales tax and are looking for more ways to raise revenue. Well, guess what our esteemed governor tried to do a few weeks ago until it got out into the newspapers? He put his unemployed neighbor on the payroll for an annual salary of over $200,000 for a position that was vacant for over 11 years.
He got caught and the red-faced governor had to un-hire his buddy. This crap goes on and on and on..This is just a small time example of the billions of taxpayer money that is thrown around the USA.
My personal opinion is that we should not be feeding this monster. Government needs to tighten their belt and reorganize their budget just like corporations do when they are in trouble.
Don't feed the government....Restructure the government!!!!!

Well put, Keedy. Don't think that anyone can argue with that advice.

Originally Posted by barb1191

Well put, Keedy. Don't think that anyone can argue with that advice.

Thank-you barb1191

California once boasted of having the 7th largest Gross Domestic Product in the world. Check out this link and note, also, that California has 365,000 "workers" and unions.
http://www.newgeography.com/content/...ornias-economy

Originally Posted by Keedy

...My personal opinion is that we should not be feeding this monster. Government needs to tighten their belt and reorganize their budget...Don't feed the government....Restructure the government!!!!!

Easier said than done, Keedy.

Total federal expenditures in 2008 amounted to about $2.55 trillion. Here's a real rough breakdown of where the money went...

• $660 billion in Social security payments
• $790 billion for the Defense Department, Veteran's Affairs and Homeland Security
• $550 billion for interest on the national debt
• $550 billion for everything else the government spends money on

So...taking your sound advice to heart, Keedy, where do we cut? We can't do much about Social Security and that problem will get worse as the baby boomers get older. Stop paying the interest on the national debt? Maybe issue IOU's like California? Substantially lower defense spending? Or cut back on Veteran's Affairs? Would we feel "safe enough" if we took a big cut out of Homeland Security?

Like I said, Keedy...it ain't that easy. Accomplishing the goal of a balanced federal budget would require almost a 100% cut in spending in those areas that are "controllable" (Defense, Veterans, Homeland Security and everything else). Not much we can do about interest on the national debt or Social Security, is there? Bill Clinton was pilloried, mostly by the conservative right, when he cut defense spending and the expenses of what is now Homeland Security. A look at the numbers shows pretty clearly why he chose those areas to cut. It's also pretty easy to see why George W. Bush handled the financing of the Iraq War outside of the normal budget process. To include those costs as we do now is simply too alarming!

And guess what? With the legislation passed recently and that being considered currently (the stimulus, the omnibus spending bill and now healthcare reform), the amount of annual federal deficit will skyrocket dramatically.

I invite everyone here to present a federal budget they'd be comfortable with, including how much more in taxes you'd be willing to pay. Don't skip the tax increase, because I guarantee you our fiscal problem cannot be solved without more revenue! You won't hear those words from any of our feckless members of Congress, but I can say these words with impunity because I'm not running for any office!

P.S. This may be the first time in modern U.S. economic history that getting out of wars has a more favorable impact on our fiscal problems and our economy than getting into them.

Well VK That 550 Billion for "everything else" sure leaves alot to play with. For example: California

http://www.dynamist.com/weblog/archives/003014.html

Because of unions and politics it cost $45,000 for every prisoner in the California Penal System.
About the same price annually to send a kid to an expensive college.

http://www.usdebtclock.org/

Originally Posted by Villages Kahuna

Easier said than done, Keedy.

Total federal expenditures in 2008 amounted to about $2.55 trillion. Here's a real rough breakdown of where the money went...

• $660 billion in Social security payments
• $790 billion for the Defense Department, Veteran's Affairs and Homeland Security
• $550 billion for interest on the national debt
• $550 billion for everything else the government spends money on

Medicare fraud was over $60Billion in 2007, so I doubt it was much less in 2008. Half of that alone in prevention and recovery is significant.

A 1-2% reduction in defense spending is realistic. This should be realistic, and as one example of that happening, the quadrennial Defense Base Closure and Realignment Commission (BRAC) recommendations show approximately $35Billion in savings over 20 years by the latest round of consolidations.

A single read-through of the Plum Book makes one wonder why many federally-funded organizations and agencies exist. Examples of some that could be eliminated (and their costs removed from the budget) include: Barry Goldwater Scholarship and Excellence in Education Foundation; Christopher Columbus Fellowship Foundation; Harry S Truman Scholarship Foundation; James Madison Memorial Fellowship Foundation; Japan-United States Friendship Commission; Millennium Challenge Corporation; Office of Navajo and Hopi Indian Relocation; President's Commission on White House Fellowships; Presidio Trust; and United States-China Economic and Security Review Commission.

That's some of the places where "efficiency in government" is obvious and necessary.

When you give the Congress more money, they spend it on pet projects before they will ever look at it as targeted solely for debt reduction. Just the vernacular they use when a tax reduction is proposed - How will we [the Congress] pay for a tax reduction? - indicates they have it backwards. So, a tax increase is actually counter-productive to the reality of government spending and budgeting.

Before another dime is sought from the taxpayers - regardless of which tax bracket is the target - the Congress and the Executive Branch need to take the paring knife to the federal monstrosity and get rid of what is no longer needed, really go after fraud and poor management, and
run it like the business it is.

Throwing more money at a problem by itself does not cure it. All that happens is that the problem just adds more gilt to its edges.