This ain’t no chicken, it’s a 30 foot tall, raging T-Rex. When it comes to roost it’ll be ugly.
Ba-da-bingo! Do you recall that first news briefing with our boy Bernanke, the day the market tanked? That look of stark fear on his face wasn’t from concern about us or the economy. He was terrified that he had failed his masters. All those really rich and influential people who were losing fortunes. How mad they were going to be. Pure & simple.
Look, the bailout plan as it exists is about the dumbest thing we could do. It squanders our limited resources in a way that doesn’t solve the problem. So step back a little and strip away the explanations. Assume that the Fed weenies are not stupid. Now, what problem does the bailout really solve? Rich people losing fortunes. They play, we pay.
I have to think that a lot of the market pessimism we are seeing is just the masses finally waking up to smell the slime. Unfortunately I can see the problem but not the solution. If anyone has any brilliant ideas I’d be fascinated.
Why, do the same thing as always of course! Strap on the explosive belt, walk in the international financial market screaming “Buy my debt or we all go up in smoke!” So the world takes the punch buys the US debt to prop it up and once more a few billion poor sods that actually produce something with their labour will again work through a life of misery and privation to achieve diddly squat to show for it.
Don’t worry, someone, as always, will be paying for you.
Hah. Nobody is paying for me. I’m one of the sheep getting shorn.
I hope you’re not under the impression that the average American has any control over this situation. I’ll let you in on a little secret: they didn’t ask me and they never will. If they did, there would be a few sudden executions and the surviving government fucks would suddenly remember their duties.
And yes, I do feel sorry for all the folks around the world who are also getting burned right along with me. It’s embarrassing to say the least. Especially after decades of our pious and very annoying lectures about the virtues of the free market.
I should have seen this coming. My basic mistake was underestimating the power of stupidity. I thought I had included a generous factor for that in my estimates but I should have doubled it. I won’t make that mistake again. I always try to make fresh new mistakes.
It was a generic you, not pointing at your persona specifically (or necessarily)
As has already been pointed out, it’s already roosting, and it’s sitting up on the roof and causing it to sag.
The fundamental problem with debt is you keep paying interest on it. In the case of a government, what that means is that, practically speaking, a certain percentage of the government’s budget will be perpetually consumed by interest payments.
If you assumes interest payments are currently about $400 billion per year, that means that about twelve percent of the U.S. federal budget is consumed by debt. Doubling the debt - which, if this $10 trillion number is right, will happen - would therefore raise interest payments to $800 billion (at current rates) and consume almost a quarter of the US budget, which means you simply don’t have the money you used to for social spending, defense spending, and the various other things Washington does.
So the problems are - again, simplifying:
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National debt forces the government to pay very large amounts of money in interest, practically reducing the government’s ability to spend money on useful things.
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This problem is bad now, with interest rates very low, but can become much worse if interest rates need to go up.
Canada, your friendly neighbour to the north, finally reached a point in the 1980s when over a quarter of the national budget went to interest payments. It was absolutely crippling. The government finally did an about-face in the 1990s and slashed spending to fight the problem, but it wasn’t easy. The U.S. political system is structurally different from Canada’s in a way that will make that harder to do.
Just out of curiosity, what is Obama’s position on all this?
Since it is going to run the country into the ground, I would assume he opposes it, right?
I pledge more than that to the local state trooper station once a year to get them off the phone. When they actually start spending all this money (which, for the record, we don’t have), I’ll start paying attention.
Hell, most of the original $750 bn. bailout is still sitting in the Treasury while they figure out what to do with it.
From your link:
Welllllll…most likely not. See, we’re borrowing the money from other countries. It’s like a really large bank loan where the bank is an entire foreign government. Like a bank loan, we pay interest on the loan and it works out well for both parties. They get a regular repayment of funds and we got to use money upfront for things we need.
But the bank can recall the loan at any time. If the bank’s feeling cash strapped or you’ve violated the terms of the loan or, sometimes, for any reason put into the contract, the bank can say “give us ALL the money we’ve loaned you. NOW.”
Foreign countries don’t do that and it’s not just because we make regular repayments. The health of the US economy is so crucial to the health and stability of most every other industrialized nation, that to have us collapse would mean a worldwide economic collapse.
So we’re safe from having the loan called in. For now.
Maybe we won’t always been in such a firm economic decision. Maybe other countries will see the handwriting on the wall, slowly ween itself away from US economic interests, and then, a decade or two from now when they’re safe, declare that they now want their loan paid back. Maybe this will happen and maybe it won’t. It’s really hard to tell right now. Personally I don’t see it happening.
But if it does happen, we’re fucked. Pure and simple, that’s the end of the road for the US.
I was wondering what was going to happen to all that money pulled out of the stock market the past few months. Now we know: it’ll be invested in T-bills.
While I’m not quite ready to invest in a tinfoil hat, this whole mess has me wondering if this is just Bush’s parting gift to Big Business.
This thing has become so stupefying that I’m speechless.
Poor Obama. In another time, he might have had an opportunity to bring us some modest, but solid, progress. Now we’ll be lucky if he can keep the country from turning into a howling wilderness infested with neurophagic zombies.
That’s bullshit. The government sells bonds which mature at a certain date. Neither bond holders nor banks can ‘recall’ loans when they want to. Just because Citicrop is hurting doesn’t mean they can demand that their mortgage holders settle up on their mortgages today; the loan is a contract with built in repayment terms over years.
See, to me this sounds like fun.
I see somebody else here vacations in Nebraska…
No maybe about it. Canada was having a great time, healthy, robust economy, low jobless rates, everyone fat and sassy, and you guys wrecked it for us. Don’t think for a minute we didn’t notice, and our politicians didn’t notice. Every other country in a similar position also noticed. If your President-Elect does something as stupid as bringing NAFTA to the re-negotiation tables, that could free Canada up for negotiating with countries who WON’T collapse our economy with their greed and short-sightedness.
There was a G20 meeting of 20 industrialized nations; while they didn’t seem to make any plans, the fact that they had a meeting and they agreed there is a financial crisis was a step forward towards a global economy where the US has only as much power as any other nation (I hope). I think the most damaging thing that comes out of all of this is that the US has lost its reputation as the upholders of all that’s good and right forever.
That’s silly. Europe has all the same problems and made all the same mistakes, and the Canadian economy isn’t “collapsed.” Save us your hysteria.
Canada’s already negotiating trade deals with other countries.
If for some reason Obama were to cancel NAFTA, of course Canada would look to other markets. That has nothing to do with the banking crisis. It would be as true if the banks weren’t failing as it would now that they are. You seem strangely eager to get into some sort of fight over NAFTA.
The United States will have only as much power as any other nation when their economy is no bigger than any other nation. I hope you don’t think the point of the G20 summit was somehow limiting American economic power.
That’s what they say every ten years or so. Like everyone though the United States was upholders of all that was good and right in the midst of the Vietnam War.
That wasn’t hysteria, it was hyperbole.
I love the line “on behalf of the American taxpayers.” Funny, I haven’t gotten a call from Secretary Paulson, asking my opinion on this matter. :rolleyes:
I weep. Why is it the only people who don’t see what a bad idea this is and continues to be work for the federal gov’t? :smack:
I’ve heard other suggestions that we give the money to the taxpayers, which would cut the amount considerably. So you’re going to go further into debt to give money away…and that’s supposed to help how?