Austerity begins (2013, real estate, credit card, debt)
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The pain of austerity has been something most Americans have only read about as a problem in Europe and other parts of the world.
Now it is finding a home right here in the US. Between the elimination of the tax cuts and the upcoming sequester, we are beginning a series of economic moves which will push an already shaky economy into a tailspin.
For Americans, Income Falls but Spending Goes Up Costs for goods are increasing even as incomes are decreasing. Freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.
If the "sequester" is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will "reduce job growth by 750,000 jobs".
Disposable income, or the money left over after taxes, dropped 4 percent after adjusting for inflation, the biggest plunge since monthly records began in 1959.
http://www.google.com/url?sa=t&rct=j...PxgI5F5UlEKEjg
Nearly half of Americans have more credit card debt than savings. This is clearly a sign that a large portion of the population are in a negative cash flow position that cannot be sustained.
When you look at the entire situation comprehensively it leads you to the conclusion that we have entered a situation where government’s inability to restart the economy by deficit spending must be admitted, and that it must now cut its spending and with it support that was artificially supporting the economy.
The results of this will be less food stamps, less support for already struggling state and municipal governments, hundreds of thousands of government layoffs, and most probably an equal number of civilian layoffs due to cancelation of government contracts and projects.
All of this results in less spending and less taxes being collected which means less revenues and the need for more cuts down the line. We have entered a downward spiral that now is feeding on itself, and the results of which will be an environment of lower wages, higher costs, and less and less government assistance as governments struggle to cope with lower revenues.
The government spends more every year; there are no real cuts overall. Waste, squander, and miss-allocation may be what is being reported.
The economy is not growing at the rate that is needed for many reasons so it is hard to fund a welfare state while competing in the world marketplace. Changes are needed and not on the horizon.
We have put a lot of resources, responsibility and faith in the government and then hire self serving salesman to run it... it is hard to expect better.
The government spends more every year; there are no real cuts overall. Waste, squander, and miss-allocation may be what is being reported.
The economy is not growing at the rate that is needed for many reasons so it is hard to fund a welfare state while competing in the world marketplace. Changes are needed and not on the horizon.
We have put a lot of resources, responsibility and faith in the government and then hire self serving salesman to run it... it is hard to expect better.
The point is that this is a very significant point in time as it marks a turning point in the policy of government. Up until this year, the Federal Government was pursuing a policy of higher spending and lower taxes regardless of circumstances in the mistaken belief they could restart or at least sustain the economy by encouraging spending.
It is now clear that this policy did not work, and that the economy can only be brought back into balance by the kind of measures that are going to be painful.
What we are now facing is a protracted period of lowering lifestyle for working people, as we go through cycle of high unemployment and steady inflation. Cuts in government spending will need to be a continuing reality as deficit spending has now seemed to run its course.
The overwhelming concern of the Federal Government is to maintain the dollars position as the world reserve currency. Any threat to that status would result in a radical devaluation of the dollar which would be disastrous for the US and entire world economy.
The pain of austerity has been something most Americans have only read about as a problem in Europe and other parts of the world.
Now it is finding a home right here in the US. Between the elimination of the tax cuts and the upcoming sequester, we are beginning a series of economic moves which will push an already shaky economy into a tailspin.
For Americans, Income Falls but Spending Goes Up Costs for goods are increasing even as incomes are decreasing. Freight shipment volumes have hit their lowest level in two years, and freight expenditures have gone negative for the first time since the last recession.
If the "sequester" is allowed to go into effect, the CBO is projecting that it will cause U.S. GDP growth to go down by at least 0.6 percent and that it will "reduce job growth by 750,000 jobs".
Disposable income, or the money left over after taxes, dropped 4 percent after adjusting for inflation, the biggest plunge since monthly records began in 1959.
http://www.google.com/url?sa=t&rct=j...PxgI5F5UlEKEjg
Nearly half of Americans have more credit card debt than savings. This is clearly a sign that a large portion of the population are in a negative cash flow position that cannot be sustained.
When you look at the entire situation comprehensively it leads you to the conclusion that we have entered a situation where government’s inability to restart the economy by deficit spending must be admitted, and that it must now cut its spending and with it support that was artificially supporting the economy.
The results of this will be less food stamps, less support for already struggling state and municipal governments, hundreds of thousands of government layoffs, and most probably an equal number of civilian layoffs due to cancelation of government contracts and projects.
All of this results in less spending and less taxes being collected which means less revenues and the need for more cuts down the line. We have entered a downward spiral that now is feeding on itself, and the results of which will be an environment of lower wages, higher costs, and less and less government assistance as governments struggle to cope with lower revenues.
When you look at the entire situation comprehensively it leads you to the conclusion that we have entered a situation where government’s inability to restart the economy by deficit spending must be admitted, and that it must now cut its spending and with it support that was artificially supporting the economy.
That is about the dumbest thing I have ever read. The math is pretty easy. The economy does not care where the money comes. Equity financing or debt financing is all the same to the seller. To get to a 4% unemployment rate we were creating $1 trillion a year in private mortgage debt with $500 billion deficits.
Does :
Even so, homeowners are reducing mortgages far more slowly than they added to them during the housing bubble. Borrowers took on $1 trillion in new principal and $90 billion in extra interest in 2006 alone, BEA data show. Shrinking mortgage payments are a sign of the economy resetting in the housing bust's aftermath.
So how is increasing the deficit by 500 billion supposed to replace a 1.2 trillion dollar mortgage debt? That 700 billion of money supply missing when at 4% employment which means it would take a 2 trillion dollar deficit to "restart " the economy.
A total failure to understand the monetary system.
That is about the dumbest thing I have ever read. The math is pretty easy. The economy does not care where the money comes. Equity financing or debt financing is all the same to the seller. To get to a 4% unemployment rate we were creating $1 trillion a year in private mortgage debt with $500 billion deficits.
Does :
Even so, homeowners are reducing mortgages far more slowly than they added to them during the housing bubble. Borrowers took on $1 trillion in new principal and $90 billion in extra interest in 2006 alone, BEA data show. Shrinking mortgage payments are a sign of the economy resetting in the housing bust's aftermath.
So how is increasing the deficit by 500 billion supposed to replace a 1.2 trillion dollar mortgage debt? That 700 billion of money supply missing when at 4% employment which means it would take a 2 trillion dollar deficit to "restart " the economy.
A total failure to understand the monetary system.
Your analysis is garbage. The issue is not and never has been the housing bubble. The housing bubble was created to distract people from the real issue of the ramifications of NAFTA.
The reason we cannot recover from the housing bubble is that we have only a fraction of the manufacturing base we had prior to it.
Your analysis is garbage. The issue is not and never has been the housing bubble. The housing bubble was created to distract people from the real issue of the ramifications of NAFTA.
The reason we cannot recover from the housing bubble is that we have only a fraction of the manufacturing base we had prior to it.
You don't even have an analysis, and you think to refute it with one line of your usual incoherence? There is no money to support the former size of the goods and service economy, and its easy to prove as I just did. Your opinion is comical beyond reason. NAFTA is a problem because of labor arbitrage. That can only exist because of differences in the cost of living. The cost of living is almost entirely a function of the real estate market. Therefore housing bubble = labor arbitrage via NAFTA . Where should I put my next factory? Where workers pay $100 a month rent or where they pay $2,000 rent? You are a laughing stock.
Government spending cuts, deficit reduction and (GASP) actualy debt paydown - BRING 'EM ON!!
Can 't pay down debt. Where did you get the idea that's even possible? How do you want the deficit is the question. Will it be by spending, reduced taxes or reduced revenue? There is no reducing debt unless we end up in a dark age.
Will it be by spending, reduced taxes or reduced revenue?
I don't want a deficit at all, I want a balanced budget, and it's not impossible. I remember it actually happening not all that long ago. I would eliminate the deficit through a series of across the board spending cuts and tax increases. Defense cuts, discretionary spending cuts, LOTS of foreign aid cuts, and serious entitlement reforms along with meaningful tax increases on the wealthy, moderate tax increases on the middle class, and minimal tax increases on the large portion of people who currently pay no taxes. That's about as balanced an approach as you can take. Once the budget is balanced, I would seek to make it permanent by constitutional amendment.
Quote:
There is no reducing debt unless we end up in a dark age.
That's totally ridiculous. Once the budget is balanced (see above), I would then impose a 1% national sales tax on everything except real estate, gasoline, healthcare services and prescriptions for the elderly and groceries. Everybody pays 1% on EVERYTHING else.
I would also impose a 1 cent per share stock market tax on individual stocks, ETFs and mutual funds. All revenue from these two taxes would be 100% dedicated to debt reduction. Both taxes would be written so that Congress can not divert their revenues from away debt reduction, and that they both expire completely upon final retirement of the debt.
The beauty of this plan is that as the debt is reduced, slowly at first but faster as time goes on, the government begins to realize billions of dollars in interest payment savings. The first 50% of the interest payment savings would be dedicated to further debt reduction, and the other 50% would be added back into the federal budget, allowing Congress to use the savings to increase the permanently balanced budget.
A simple plan - not easy, but simple. Anything is possible if we have the political will to do it. But so far, we the people haven't had that will, and so neither do our politicians.
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