patrick.net

Troy says

House Financial Services Committee hearing, Sept. 25, 2003:
Rep. Frank: I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing.

Barney Frank's "friend" at Fannie Mae also benefitted to the tune of millions in bonuses. But we really don't want to say such things. Barney is exempt when it comes to any criticism or accountability when it comes to his very significant contribution to the housing collapse.

"Wage-price spirals only work when labor is organized and work is available. This isn’t the 70s anymore, back then Indians might as well had been living on the moon and China was still in mass disorder under the Gang of Four, not the current high-tech powerhouse providing the bulk of our goods it is now."

Massive inflation isn't the product of a wage price spiral. Wage & price spirals are a product of inflation. How organized was the labor in all the Latin America countries. How about the Soviet Union? How organized was the labor in Zimbabwe? A bankrupt government trumps any sort of labor movement. But if you really want a good example, take a look at unionized government workers. They aren't taking any pay cuts.

theoakman says

But if you really want a good example, take a look at unionized government workers. They aren’t taking any pay cuts.

Central to my point. Some sectors have pricing power with wages, most don't.

I listed government services in my list above (in addition to energy and health care) about sectors that are inflation-protected. But AFAICT the takehome pay from Walmart sets the base of the entire real estate sector.

How about the Soviet Union?

aha haah hah aha hah hah. Do you really have to ask that question about how "unionized" the Soviet Union was?

A bankrupt government trumps any sort of labor movement

This nation is far from Chapter 7. Chapter 11, OTOH. . .

Troy says

This nation is far from Chapter 7. Chapter 11, OTOH. . .

Not too far. When a government has $100 Trillion in obligations and continues to run huge annual deficits, bankruptcy isn't out of the realm of possibility.

RayAmerica says

Not too far. When a government has $100 Trillion in obligations and continues to run huge annual deficits, bankruptcy isn’t out of the realm of possibility.

Now, now, now. We've been over this. The government doesn't have $100 Trillion in obligations... Let's try to limit the number of falsehoods that you post, please.

tatupu70 says

Now, now, now. We’ve been over this. The government doesn’t have $100 Trillion in obligations… Let’s try to limit the number of falsehoods that you post, please.

Now, now, now .... AGAIN. Former Sec. of the Treasury Paul O'Neill said that when referring to our "national debt" without adding the off budget obligations of the government is false and dishonest. Bush didn't appreciate such honesty and showed him the door after only about 1 year at Treasury. I think an honest former Treasury Secretary has more knowledge and credibility than both of us combined. I rest my case.

RayAmerica says

When a government has $100 Trillion in obligations and continues to run huge annual deficits, bankruptcy isn’t out of the realm of possibility.

1. Single Payer Reduces the $70T Medicare A&B shortfalls to $0.
2. Renegotiate Medicare Part D to eliminate the $15T giveaway to Big Pharma.
2. Make a FICA donut (hold the FICA limit at $125,000 and add a 3% surcharge on incomes over $250,000) to cover the $15T Social Security funding gap.

$100T problem solved.

But I agree, the way things are going is BK, due to a rather dysfunctional political environment if not polity itself. Too many retards, not enough workers. We don't have the national smarts to get there from here. To the History Book we go . . .

Troy says

But I agree, the way things are going is BK, due to a rather dysfunctional political environment if not polity itself. Too many retards, not enough workers. We don’t have the national smarts to get there from here. To the History Book we go . . .

I read once but forgot the source regarding another disfunctional country: "Those that are willing, can't. Those that can, won't." i.e. there are people that know WHAT to do but can't because they don't have political power; those that are in power won't because they won't risk losing their power. Seems to me like an accurate description of the times we're living in.

RayAmerica says

Now, now, now …. AGAIN. Former Sec. of the Treasury Paul O’Neill said that when referring to our “national debt” without adding the off budget obligations of the government is false and dishonest. Bush didn’t appreciate such honesty and showed him the door after only about 1 year at Treasury. I think an honest former Treasury Secretary has more knowledge and credibility than both of us combined. I rest my case.

Let's see. I have two young kids. They will eventually be going to college--hopefully at the local state school that their Daddy graduated from. So, do you consider me to be in debt for the $80+K now? When I go get to apply for a loan, is that considered a liability? Consider your case to be unrested.

tatupu70 says

Let’s see. I have two young kids. They will eventually be going to college–hopefully at the local state school that their Daddy graduated from. So, do you consider me to be in debt for the $80+K now? When I go get to apply for a loan, is that considered a liability? Consider your case to be unrested.

Not remotely close to the same thing and you know it. But nice try. I'm resting peacefully, thank you.

RayAmerica says

Not remotely close to the same thing and you know it. But nice try. I’m resting peacefully, thank you.

Really? Please explain why they aren't even "remotely" close?

RayAmerica says

I already made my point. I stand by what an honest, fired, former Treasury Secretary said about the national debt.

So, what you're saying is you don't know...

tatupu70 says

So, what you’re saying is you don’t know…

So what you're saying is you can't read ...

Ray-- You said:

RayAmerica says

Not remotely close to the same thing and you know it.

I asked why my analogy wasn't "remotely close". Repeating what a former Treasury Secretary said does not answer the question. The Secretary certainly wasn't addressing my analogy, was he?

tatupu .... do you intend on financing your kids' college education without the funds available to pay for the loans? Do you have a printing press in your basement that you're not telling us about? Sec. O'Neill was referring specifically to UNFUNDED liabilities. That fact that there are not ample tax credits in place to fund these liabilities does not make those debts and liabilities magically disappear.

RayAmerica says

do you intend on financing your kids’ college education without the funds available to pay for the loans

I do not have the $80K in the bank today. So yes, it is an unfunded liability.

RayAmerica says

Do you have a printing press in your basement that you’re not telling us about?

I don't, but I'm not sure how that's relevant to the discussion. The amount of debt that a country (or person) has does not depend on whether it owns a printing press.

RayAmerica says

That fact that there are not ample tax credits in place to fund these liabilities does not make those debts and liabilities magically disappear.

No it doesn't. The fact that we don't actually owe this money at present does, however.

tatupu70 says

I do not have the $80K in the bank today. So yes, it is an unfunded liability.

There's hope for you after all. You're beginning to understand what an unfunded liability is. It's nice to see I'm having a positive effect on you.

RayAmerica says

tatupu70 says

I do not have the $80K in the bank today. So yes, it is an unfunded liability.

There’s hope for you after all. You’re beginning to understand what an unfunded liability is. It’s nice to see I’m having a positive effect on you.

Good, then you realize that it's not part of my debt then? And that the US debt is NOT $100T?

tatupu70 says

Good, then you realize that it’s not part of my debt then? And that the US debt is NOT $100T?

I don't agree with you at all. First and foremost, yours is a silly argument because you haven't incurred any debt yet, whereas, the federal government does have actual ongoing obligations that are unfunded. Social Security, for an example, is an obligation. There are no surpluses due to the fact that every administration since LBJ has stolen the surplus money and replaced them with special IOU T-bonds that are by law, unsellable. Question: what are those IOUs? They are debts owed by the federal government, to the tune of over $300 Billion per year, and are NOT counted in the general budget.

tatupu70 says

Good, then you realize that it’s not part of my debt then? And that the US debt is NOT $100T?

AGAIN, I stand by what former Treasury Secretary O'Neill stated. It is part of our debt because it is UNFUNDED liabilities and obligations.

RayAmerica says

I don’t agree with you at all. First and foremost, yours is a silly argument because you haven’t incurred any debt yet, whereas, the federal government does have actual ongoing obligations that are unfunded. Social Security, for an example, is an obligation. There are no surpluses due to the fact that every administration since LBJ has stolen the surplus money and replaced them with special IOU T-bonds that are by law, unsellable. Question: what are those IOUs? They are debts owed by the federal government, to the tune of over $300 Billion per year, and are NOT counted in the general budget.

Ray--again, you make my point without realizing it. Here's the difference. The IOUs that you mention is debt. The POTENTIAL liabilities IN THE FUTURE are not. Yes, they are unfunded--as of now. But so is my kids education. Presumably I will find a way to save money by spending less or getting raises at work--just as the government will by spending less or raising taxes (such as eliminating the cap on social security tax). That's why it is not debt yet. Not until money is actually owed to someone.

RayAmerica says

AGAIN, I stand by what former Treasury Secretary O’Neill stated. It is part of our debt because it is UNFUNDED liabilities and obligations

The Secretary was likely trying to make a point--that we need to do something about our current account deficit. By providing an example with future liabilities in it, the numbers become more alarming. And would hopefully get Congress to actually do something. But it is still factually incorrect to include it as debt.

tatupu70 says

Presumably I will find a way to save money by spending less or getting raises at work–just as the government will by spending less or raising taxes

You bring up another point. What are the chances the government will spend less? How can they raise taxes in an economy that has hit a wall, which will only remove more capital needed to fuel growth?

RayAmerica says

You bring up another point. What are the chances the government will spend less? How can they raise taxes in an economy that has hit a wall, which will only remove more capital needed to fuel growth?

I notice you didn't respond to my point, but it's OK. I'll assume you agree.

I think the government will reduce spending in the future. They will have no choice.

And it's easy to raise taxes without killing growth. You just have to target the right people. ie--removing the cap on FICA. Or reinstating the old captial gains tax rate....

RayAmerica says

which will only remove more capital needed to fuel growth?

ahaha ahaha ha hah. All the tax cutting of 2001-2003 didn't do sh--.

90% of the capital market is Las Vegas and downright harmful to the economy.

The Tishman Speyer deal to spend $5.5B to kick out rent control people out of 11,000 units being a prime example.

Capitalism is self-devouring. It works great when there is a continent free for the plundering, not so great when all the easy investments have been made.

tatupu70 says

RayAmerica says

AGAIN, I stand by what former Treasury Secretary O’Neill stated. It is part of our debt because it is UNFUNDED liabilities and obligations

The Secretary was likely trying to make a point–that we need to do something about our current account deficit. By providing an example with future liabilities in it, the numbers become more alarming. And would hopefully get Congress to actually do something. But it is still factually incorrect to include it as debt.

This is silly. You have a moral obligation to send your kids to college. You could opt out without any implications other than being sent to a really bad nursing home later on. SS and medicare represent a legal obligation written into the law. They are debt unless repudiated by changing the laws, just like repudiating tbills would require a legal change (a vote would have to be taken to default on tbills). Either could be done, but it would be very ugly. If you have a legal obligation to pay money it's debt plain and simple. If you are saying it's not debt because the law could be changed then any money owed by the government isn't debt because the law could be changed. Voila America just became debt free.

bob2356 says

If you are saying it’s not debt because the law could be changed then any money owed by the government isn’t debt because the law could be changed. Voila America just became debt free.

I'm saying it's not debt because it's not actually owed to anyone yet. It's a projection based on our current understanding of lifespan, demographic trends, estimates of tax receipts, etc. Obviously, it's important to have an idea of what the future financial picture will be, but it's not debt until you've BORROWED money to pay the benefits. Then it's debt.

tatupu70 says

I think the government will reduce spending in the future. They will have no choice.

I've been hearing this since the Carter days. The only thing that will force Government to dramatically reduce spending will be either a march on Washington with millions carrying pitch forks or a complete economic collapse. In Washington, a "cut" in spending is a reduction of spending expansion.

bob2356 says

This is silly. You have a moral obligation to send your kids to college. You could opt out without any implications other than being sent to a really bad nursing home later on. SS and medicare represent a legal obligation written into the law.

Excellent point.

bob2356 says

They are debt unless repudiated by changing the laws, just like repudiating tbills would require a legal change (a vote would have to be taken to default on tbills). Either could be done, but it would be very ugly. If you have a legal obligation to pay money it’s debt plain and simple.

For one, there's no legal obligation for anything, government bennies that have been created can be abolished (not that this is politically feasible).

What is, however, more feasible is simply restructuring how these benefits are delivered. Ten to fifteen trillion of the estimated $100T infinite-horizon actuarial shortfall is due to Medicare Part D. Renegotiating prices down to what the rest of the world is paying for meds would eliminate this. Limiting free meds to medicines out of patent (generics) would save twenty trillion or so, a not insignificant chunk of the total.

Similarly, Medicare proper has around a FORTY TRILLION actuarial deficit. If you haven't noticed, we've been trying to restructure the nation's health care system over the past year, to mixed results. As things are going now, medicine is simply too high-profit.

This will have to change too. Or not, since we are apparently too stupid as a nation to learn from the experiences of others.

Troy says

For one, there’s no legal obligation for anything

If laws are not legal obligations then what exactly are they? Last time I checked government bennies are created by lawmaking, getting rid of the self same bennies is also done by lawmaking. Someone proposes a bill, two chambers pass it, the president signs it, the bill is now a law.

For example contracts of any kind are in force because of laws governing them. If contract law didn't exist contracts would be useful only as toilet paper. If laws are not legal obligations because they can be changed then all contracts would also lack obligation because laws governing contracts could be changed. Any law concerning any type of business transaction could be changed, so you are saying that none of them have any legal status because they could be changed at some point? How about criminal laws? Are there no crimes because the law could be changed in the future? Explain the difference.

To change medicare part D would require passing a law to amend the act. Right now by law medicare cannot negotiate lower prices (thanks mr bush, how much did pharma kick in for that one?) . Therefor medicare has a legal obligation to pay a higher price (or at least to not negotiate for a lower one).

What do you consider a legal obligation? I say if there is a law stating something must be paid then it's a debt. Laws can be changed, but so can contracts. Is your mortgage not a debt since it can be modified, refinanced, or walked away from? By your definition debt doesn't exist.

^ My future tax burden is not a present debt. Same thing.

The wise man plans ahead and accrues the funds necessary for future expenses, but the unfunded liability on the infinite horizon is not, necessarily, a future expense.

Health reform to single payer, where we'd likely SAVE money overall by increasing efficiency of delivery, would largely remove the Medicare actuarial deficit as a side-effect. The FICA deficit has largely been solved by the Greenspan Commission forcing FICA payers to overpay into the system, resulting in more money being kept and wisely invested by non-FICA payers (who will be good to return that money when we need it starting later this decade).

IF we don't fix things, then the economy will revolve around health care, even more so than it is now compared to other systems of social insurance that work better than ours. What an ugly ugly state of affairs to run ourselves into.

I just heard Obama is going to announce in his State of the Union "huge cuts in spending" that will save $250 Billion over the next 10 years. Sounds like the proverbial drop in the bucket, and a very big bucket at that. I knew it all along, because liberals can’t lie, Obama would make good on his campaign promise to "balance the budget" in his first term." LOL

RayAmerica says

Obama would make good on his campaign promise to “balance the budget” in his first term.” LOL

You're thinking of McCain.

""Senator Obama has outlined a plan that says given the hole we've dug, it's not realistic to balance the budget in the next four years. But we can reduce the deficit that he inherits," Goolsbee said. "The financial crisis complicates that in the first two years."

http://www.reuters.com/article/idUSTRE49K0BH20081021

Is it enjoyable or is it frustrating, being wrong all the time???

bob2356 says

What do you consider a legal obligation? I say if there is a law stating something must be paid then it’s a debt. Laws can be changed, but so can contracts. Is your mortgage not a debt since it can be modified, refinanced, or walked away from? By your definition debt doesn’t exist.

The difference is that there was an actual transaction where money changed hands. Your mortgage was already paid out--therefore it's a debt. You received the money and paid it to the previous owner.

If/when the government has to borrow money in order to pay out the social security benefits, then it's a debt.

Troy says

Is it enjoyable or is it frustrating, being wrong all the time???

You got me. I WAS WRONG. I got the liberal Obama mixed up with the liberal McCain.

That's cool. Apologies for the snideness. I was trying to turn over a new leaf this year . . .

Troy says

The FICA deficit has largely been solved by the Greenspan Commission forcing FICA payers to overpay into the system, resulting in more money being kept and wisely invested by non-FICA payers (who will be good to return that money when we need it starting later this decade).

What in the world are you talking about? The fica over payments have been used by the general budget for years. They just write an IOU to social security every year. The money is spent. Gone. The general budget that's 1.5 trillion dollars in the hole this year isn't going to start sending money back to fica in 10 years.

Where are all the jobs that the stimulus bill was supposed to create? Obama promised unemployment would not exceed 8% if the bill was passed. "Official" unemployment continues in double digits. When factoring in the underemployed, those that have lost their benefits (and are now counted as employed), those that have simply given up, etc,, the real rate is about 20%. This is looking more and more like another Keynesian market manipulation failure.