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Soflasnapper
02-05-2011, 02:37 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> Sorry, fiscal austerity doesn’t work. For evidence, look no further than the U.K.

This can’t be good news for the U.S. political right, whose mantra has been: cut spending, put a lid on deficits, and growth will improve.

All sorts of good things, it is claimed, will spring from a turn to austerity that stops all this stimulus nonsense and prevents the Federal Reserve from doing more quantitative easing. Reductions in spending, according to a theory known as Ricardian equivalence, will do no harm because lower borrowing will automatically lead to higher private spending. Plus, of course, there is the notion of crowding out, meaning that reining in the public sector leaves room for the private industry to step in and all will be well.

This is dangerous hogwash.

There is little historical precedent in the real world, though lots of fantasizing in the made-up world of economic theorists, to suggest that fiscal austerity works. The best example of austerity’s failure is the double-dip that occurred in the late 1930s in the U.S., when spending was reduced too soon in a nascent recovery. In contrast, the U.K. didn’t have a double-dip because it was engaging in classic Keynesian spending as it began re- arming.

Claims are often made that there are examples where fiscal austerity has worked. But it turns out that this is generally due to the monetary stimulus that accompanied it, as in the U.K. under Margaret Thatcher in the 1980s. The most frequently cited example is Canada, but it was able to cut interest rates while at the same time benefiting from the Clinton boom of the 1990s.

Back in Recession

Fiscal austerity has already been started in Greece, Ireland, Spain and Portugal, and this seems to be pushing all of them back into recession. Over the last four quarters, growth in Greece was negative and falling, and bond investors are once more demanding sky-high returns to compensate their risk. The excuse in these countries was that they have little choice because they are stuck in the European monetary union and don’t have the ability to depreciate their exchange rate. </div></div>

Conservative austerity policy fails (http://www.bloomberg.com/news/2011-01-28/conservative-austerity-idea-is-failing-commentary-by-david-blanchflower.html)

cushioncrawler
02-05-2011, 03:55 PM
Southy -- Yes -- zaktly - Krappynomix rules.
England iz going to go down the gurgler.
I will be watching.
I hav allmost zero in my superannuation portfolio nowadays -- so watching the death throes of krappynomix will be allmost enjoyable.
The rest of u out there might get burnt in lots of ways -- here i will get some satisfaktion koz lots of victims will be christians and republikans and steeler-fans.
mac.

http://www.keepandshare.com/doc/2577652/uss-enterprize-17k

LWW
02-05-2011, 05:42 PM
Perhaps one might look at Canadia and Germany?

Nah ... that doesn't support the agenda.

LWW

cushioncrawler
02-05-2011, 05:46 PM
I shood add.
Cutting spending iz bad news for employment.
But inkreecing spending iznt necessaryly good news (for employment).
Koz, there are two types of inkreeced spending -- funded and nonfunded.
I shood say two types of deficit -- funded deficit and nonfunded deficit.
To improov employment u need inkreeced spending, but the rezulting deficit haztabe a nonfunded deficit.
A funded deficit sux money out of the system (= zero nett good) -- a nonfunded deficit duznt suck out az much money (= nett good).
mac.

cushioncrawler
02-05-2011, 05:56 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Perhaps one might look at Canadia and Germany? ah ... that doesn't support the agenda. LWW</div></div>Any country (with a sick ekonomy) that kuts spending (and kuts its annual deficit) will get sicker.
I will be watching with interest.
I am thinking that TV news coverage of street protests and riots and burning and shootings and police and army etc will be in the Local News in England (and in the usofa), not in the Overseas News.
mac.

LWW
02-06-2011, 04:41 AM
Last month with 10% of the US population they produced twice as many new jobs.

Now ... the fallacy of your thinking.

The US gubmint is soaking up $1,500,000,000,000.00 per year in investment capital.

If the gubmint stops borrowing ... that money won't just go away.

What it will do is become new factories, malls, stores, homes, autos etcetera.

Also, being that the money will be borrowed by people without a printing press ... the money will actually bring a return, which will strengthen the dollar.

Strengthening the dollar will drive down imported commodity prices ... like oil ... which will further strengthen the economy.

LWW

cushioncrawler
02-06-2011, 04:56 AM
Dubb -- I dont know (understand) much about finance.
Iz your "they" canada.
Anyhow, England iz stuffed -- good.
The usofa will be in a bad way too very shortly.
What am i talking about -- the usofa iz allready in a bad way -- so, shortly, it will be worserer.
I would be happy to make a propozition bet of some sorts re which way england and usofa will go in the near future, and i will happyly throw in the far future for nix.
Pick a $$$$ figure.
mac.

Soflasnapper
02-06-2011, 01:50 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Last month with 10% of the US population they produced twice as many new jobs.

Now ... the fallacy of your thinking.

The US gubmint is soaking up $1,500,000,000,000.00 per year in investment capital.

If the gubmint stops borrowing ... that money won't just go away.

What it will do is become new factories, malls, stores, homes, autos etcetera.

Also, being that the money will be borrowed by people without a printing press ... the money will actually bring a return, which will strengthen the dollar.

Strengthening the dollar will drive down imported commodity prices ... like oil ... which will further strengthen the economy.

LWW </div></div>

The problem with that: even with the federal government borrowing at this unprededented rate (well, its now a couple years into it, so we do have a year or two precedent, but you know what I mean), the total amount of newly minted borrowing in this country the past year and this one, from governments to business to individuals, is DOWN.

Which is to say, nobody else is willing or able to borrow right now. Consumers are tapped out, and actually, PRIVATE DEBT is larger as a percentage of gdp than the massive federal debt. Still more, even those consumers who may want to borrow have had credit lines cut or canceled, same with equity lines of credit, and mortgage loan standards are so much higher so many cannot qualify. Businesses are sitting on a trillion or more in profits, so have no need to borrow, and no inclination to invest prospectively in a tepid economy with no prospects of consumption returning to pre-crisis levels. State governments are broke, except for N. Dakota (they have their own state-owned bank there.)

As the total amount of credit out there declines, so does the effective money supply, creating deflationary pressures and a self-fulfilling prophecy (why buy now? wait, and it will cost less), further worsening demand and consumption.

When the countries mentioned here tried to go the austerity route, it was a failed gambit, further reducing already slack demand, and spiraling those economies down into actual recession once again.

pooltchr
02-06-2011, 02:19 PM
People are able to borrow today. I just got a very attractive offer in the mail, with a very low interest rate from my bank extending a new line of credit.

So it would appear that there is money available for loans, although they may have decided that I am a better credit risk than some. I don't really know, as I did not call them up to ask them why they were making the offer.

Steve

Soflasnapper
02-06-2011, 02:51 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: pooltchr</div><div class="ubbcode-body">People are able to borrow today. I just got a very attractive offer in the mail, with a very low interest rate from my bank extending a new line of credit.

So it would appear that there is money available for loans, although they may have decided that I am a better credit risk than some. I don't really know, as I did not call them up to ask them why they were making the offer.

Steve </div></div>

Yes, some people can borrow, and some banks may be lending. In aggregate, on a net basis, however, all that activity is substantially down (not zero, which I didn't mean to say or imply).

Sev
02-06-2011, 03:12 PM
All the more reason to halt the government in its track and make it take a step or to back.

The less the government needs take from the population or print the better.

LWW
02-06-2011, 03:52 PM
I love how you prove me wrong by agreeing with me.

The only thing holding rates low is the fed is printing money it pumps into the banks at a charge of zero percent, the banks then buy treasuries at 1% +/- and keep the interest as profit ... with no actual investment.

A protion of that is returned to the regime to finance it's campaigns.

The same thing is now happening in the stock market.

The investment houses are selling stocks to the fed at inflated prices, which they will buy back once the fed's bubble pops.

This regime is as criminal as it gets.

LWW

cushioncrawler
02-06-2011, 04:05 PM
Sev -- I agree, i think we all agree, that The less the government needs take from the population or print the better.

Re the euphemizm of "printing money" -- i dunno how this works.
Duzz printing money apply if the gov haz a zero deficit (for that year)???
What about if the gov haz a deficit (that year) but the deficit iz balanced by borrowing (eg selling bonds)???
What if it iznt balanced by borrowing???
Or duz printing money apply mainly (or only) if there iz highish inflation???
What if the budget iz balanced, but there iz high inflation, iz that "printing money"???

Anyhow, iz printing money a bad thing, or iz it a good thing???
Iz chemotherapy a bad thing, or iz it a good thing???
mac.

Soflasnapper
02-06-2011, 10:20 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">I love how you prove me wrong by agreeing with me.

The only thing holding rates low is the fed is printing money it pumps into the banks at a charge of zero percent, the banks then buy treasuries at 1% +/- and keep the interest as profit ... with no actual investment.

A protion of that is returned to the regime to finance it's campaigns.

The same thing is now happening in the stock market.

The investment houses are selling stocks to the fed at inflated prices, which they will buy back once the fed's bubble pops.

This regime is as criminal as it gets.

LWW </div></div>

I love how you prove me wrong by agreeing with me.


Even certain agreed to facts do not determine one sole interpretation. I sometimes agree with your facts, but differ as to what they mean.

The only thing holding rates low is the fed is printing money it pumps into the banks at a charge of zero percent, the banks then buy treasuries at 1% +/- and keep the interest as profit ... with no actual investment.

??? This creation of money is supposed to cause the markets to revolt and demand a higher interest premium, since as smart actors in the market, they would know that the value of the dollars they are loaning will be drastically less down the road from hyperinflation. (Bond vigilantes, they call them.) That's the reasoning under which these European countries have decided they cannot borrow hugely and create money-- that the markets would slap them with huge demands for high interest and quash the economy that way.

The same thing is now happening in the stock market.

The investment houses are selling stocks to the fed at inflated prices, which they will buy back once the fed's bubble pops.

??? I don't think this is true. The Fed has bought mortgages, 30 year bonds, and maybe some TARP crap assets (derivative positions). Not stocks, in terms of big money, and not significantly with regard to their expansion of their balance sheet.

LWW
02-07-2011, 03:50 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: Soflasnapper</div><div class="ubbcode-body">The same thing is now happening in the stock market.

The investment houses are selling stocks to the fed at inflated prices, which they will buy back once the fed's bubble pops.

??? I don't think this is true. The Fed has bought mortgages, 30 year bonds, and maybe some TARP crap assets (derivative positions). Not stocks, in terms of big money, and not significantly with regard to their expansion of their balance sheet.

</div></div>

Ben Bernanke says it's happening.

OH DEAR! (http://www.businessinsider.com/why-is-anyone-surprised-that-the-fed-took-stocks-as-collateral-2010-12)

OH MY! (http://www.bloomberg.com/news/2010-11-03/bernanke-says-new-purchases-should-aid-economic-growth-with-lower-rates.html)

LWW

Soflasnapper
02-07-2011, 07:51 PM
Your link said the Fed took stocks 'as collateral.' That does not mean 'purchase.' Collateral is a pledged valuable against a loan, designed to secure the loan.

Yes, of course, it is well known the Fed enters the market from time to time, in what some call the 'plunge protection team.' That isn't buying stocks high from the primary dealers, but buying stocks that are low and plumetting lower, to prevent panic over-selling off the market.

The last link affirmed that the Fed is buying assets, but again doesn't say stocks.

LWW
02-08-2011, 02:39 AM
You are very adept at taling a sentence, using it out of context, and convincing yourself it supports your myth du jour.

If you had actually read the article past the opening sentence you would have learned:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">The only thing that surprises me is that people are surprised by the fact that the Fed backstops stock prices. Bernanke even announced in his Washington Post op-ed the night of the QE2 announcement that a key goal of QE2 was to push stock prices higher.</div></div>

and:

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">In Fedpoints on the NY Fed website, the Fed describes how “The Fed’s traders discuss with the primary dealers how the day might unfold in the securities market and how the dealers’ task of financing their securities positions is progressing.” It doesn’t say “not including equities.” They are very clear that they meet daily with the Primary Dealers (PDs) to rig the game, to tilt the game board in the direction they want. There it is in black and white. The smoking gun.</div></div>

LWW

Soflasnapper
02-08-2011, 01:11 PM
No, none of that says what you said it says-- that the Fed is buying HIGH PRICED STOCKS to pad the brokers pockets in a bubble.

What do you think 'backstop' stock prices means? Front run them?

It means saving them when they've fallen to LOWER prices than the Fed wants to see.

LWW
02-08-2011, 01:32 PM
Where was the Dow before this started?

Where is it now?

Where will it be 6 months after the madness ends?

LWW

Stretch
02-08-2011, 01:48 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Where was the Dow before this started?

Where is it now?

Where will it be 6 months after the madness ends?

LWW </div></div>

So your only arguments are endless questions. Typical. St.

JohnnyD
02-08-2011, 01:51 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Where was the Dow before this started?

Where is it now?

Where will it be 6 months after the madness ends?

LWW </div></div>Excellent post.

cushioncrawler
02-08-2011, 03:48 PM
The Down Joes -- a financial survey of financial parasites' prediktions of financial races.

Hmmmmm, I see Oils'aint'Oils iz running in Race 3 this arvo???? Hmmmm, The jockey iz the Wall St Mafia -- kood be good value.

Who else iz running -- Hmmmmm.
Dizaster, ridden by Oil Spill (forget about this one).
Mortgage Bubble, ridden by the Banks (still running).
Big'Gov, ridden by T Party (haz been very quiet lately).
Interest Rates, ridden by the Fed (zero last start).
Health Insurance, ridden by a Socialist (recovering from sickness).
Deficit, ridden by the GOP (looks fat).
Constitution, ridden by State Rights (needs resting).
Second Amendment, ridden by the NRA (allways there).
Made In China, ridden by High Dollar (failed drug test in previous start).
Unemployment, ridden by Globalization (going the wrong way).
Global Warming, ridden by Scientists (odds shortening).

Soflasnapper
02-08-2011, 04:29 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Where was the Dow before this started?

Where is it now?

Where will it be 6 months after the madness ends?

LWW </div></div>

Unless the Dow P/E ratio has gotten way out of whack, probably the Dow is where it is because of high corporate earnings.

Has the Dow P/E ratio soared to stratospheric heights, in your view?

Blue chip forecasters say economic growth will pick up, and profits will remain high. The Dow (and the stock market in general) reflects both current earnings levels and brings the likely future into today's prices as well.

LWW
02-08-2011, 04:38 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: JohnnyD</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">Where was the Dow before this started?

Where is it now?

Where will it be 6 months after the madness ends?

LWW </div></div>Excellent post. </div></div>

I can lead them to knowledge, I can't make them think.

LWW

Soflasnapper
02-08-2011, 04:51 PM
<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> New York Times, November 23, 2010:

Corporate profits have been doing extremely well for a while. Since their cyclical low in the fourth quarter of 2008, profits have grown for seven consecutive quarters, at some of the fastest rates in history. As a share of gross domestic product, corporate profits also have been increasing, and they now represent 11.2 percent of total output. That is the highest share since the fourth quarter of 2006, when they accounted for 11.7 percent of output.</div></div>

And Justin Fox of the Harvard Business Review noted in November 2010 that in the third quarter of 2010, corporate profits as a share of national income was “quite high by historical standards. … There is annual data to 1929, and the only time besides 2006 and (one can predict with some confidence) this year when the profit share topped 9% was 1929, when it hit 9.9%.”

Link here (http://mediamatters.org/blog/201102080036)

cushioncrawler
02-08-2011, 04:57 PM
Race 3.
Winner -- Low Inflation, ridden by Krappynomix Dogma (Low Inflation allways kums first).
Second -- Low Taxation, ridden by the Rich (the Rich own the track).
Third -- The Allmighty Dollar, ridden by CEO's.
Dead Last -- Global Warming.

LWW
02-08-2011, 04:57 PM
And the Wall Street banks are making record profits ... in spite of being broke just 2 years ago!

How is that ... other than they are doing exactly what I said they are doing. This regime is owned by Wall Street more than any in history and it is self evident of one just pulls one's head from the muck.

As I said, I can lead you to knowledge ... I can't make you think.

Even the Marxists see what is going down ... the institution of a fascist economy. (http://www.wsws.org/articles/2011/jan2011/pers-j18.shtml)

LWW

cushioncrawler
02-08-2011, 05:08 PM
1929. That woz a great race -- who can forget how the winner "Jump" came from nowhere to pip "Bank Run" at the post.
Up untill then the Down Joes must hav been at a record high.
mac.

Soflasnapper
02-08-2011, 05:10 PM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: LWW</div><div class="ubbcode-body">And the Wall Street banks are making record profits ... in spite of being broke just 2 years ago!

How is that ... other than they are doing exactly what I said they are doing. This regime is owned by Wall Street more than any in history and it is self evident of one just pulls one's head from the muck.

As I said, I can lead you to knowledge ... I can't make you think.

Even the Marxists see what is going down ... the institution of a fascist economy. (http://www.wsws.org/articles/2011/jan2011/pers-j18.shtml)

LWW </div></div>

The RE-SALE of stocks from third party holders to other third party holders does NOT make for profit for the corporations who originally issued those stocks. Even when they issued them, that was not a profit, either.

The corporations are making big, and nearly record, profits, because they fired 10 million workers and are saving the payroll and ancillary employee expenses.

I AGREE that the regime shows signs of being owned by Wall Street, although I think that has been the case all along for most presidents.

However, Bernanke does not work for Obama, and his policies do not stem from any Obama order.

cushioncrawler
02-08-2011, 05:13 PM
Banks dont make things, they make profits -- banks take money from workers -- workers make things.
mac.