Military History | How To Make War | Wars Around the World Rules of Use How to Behave on an Internet Forum
United States Discussion Board
   Return to Topic Page
Subject: The Mother of all Double Dip recessions, The impending economic collapse of 2011....
RockyMTNClimber    6/9/2010 7:46:42 PM
The current Regime has US on a collision course with it's tax policy. 2010 might seem like a rough year in the economy for jobs and investment, but better than 2009. This is only a short term respite. What will happen when taxes are increased in 2011? What will investors do when they know that income tax, capital gains, and new "health care" taxes are imposed for the first time. What will investors (job creators) do when they see the Sotero(aka: Obama) regime push for it's cap and tax energy policy and it's card check legislation? Lets see.....
 
Quote    Reply

Show Only Poster Name and Title     Newest to Oldest
Pages: 1 2 3 4 5 6 7   NEXT
buzzard       6/9/2010 8:18:05 PM
Oh, you mean this:
h--p://online.wsj.com/article/SB10001424052748704113504575264513748386610.html?KEYWORDS=laffer
 
Quote    Reply

earlm    Facts on the economy   6/9/2010 9:37:05 PM
The US economy is too skewed towards financial services and away from real production.  The only way the stock market gets back on track is with new industries.  There are two possibilities:  alternative energy and nanotechnology.  Alternative energy is mostly a loser due to something called the second law of thermo.  Nanotech is immature.  All the stimulus and stock market crap does is disguise the fact that without serious tech innovations we are set for slow/no growth for the foreseeable future.  There are other ways out.  One would be to do the Home Depot/Wal Mart thing and cheapen the cost of essential and other goods for the average person, freeing up money for other goods, investment (and of course taxes).  This is not what companies do.  They screw the customer with more expensive stuff.  For example, the local drug store stopped carrying the cheap single blade disposable razors that I run over my (dry, save money on foam) stubble every morning.  I live in an expensive neighborhood and I'm sure they can make more profit on fancier items.  However, by cranking up the price of this, consumers have less money for other stuff.  One has to realize the market is not truly free and this restraint of trade is hurtful.  Another example.  Some cyber do-gooders decided they wanted a $50 or $100 laptop for 3rd world kids to get connected (and post pro-Rafale stuff on the SP FBR board).  I want a $100 laptop and it's my right as a free consumer to have it but the computer industry SOB's forced them not to offer these in mature markets.  A third option is we go into places like Africa and Myanmar and force connections to the global economy, creating virgin places for investment and trade.  The whole pie gets bigger and everyone can eat more.
 
Quote    Reply

RockyMTNClimber    Bingo!   6/10/2010 4:53:57 AM

Oh, you mean this:

h--p://online.wsj.com/article/SB10001424052748704113504575264513748386610.html?KEYWORDS=laffer




People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.
 

Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.
[laffer]http://sg.wsj.net/public/resources/images/ED-AL636A_laffe_NS_20100606161254.gif" width="459" height="276" sb_id="ms__id877" />

Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income w

 
Quote    Reply

PlatypusMaximus       6/10/2010 7:43:39 AM

Peter Ferrara - American Spectator - June 10, 2010
 spectator.org
 
...Similarly, in his speech in Pittsburgh last week, Barack Obama said:

It has now been a little over 16 months since I took office amid one of the worst economic storms in our history. And to navigate that storm, my administration was forced to take some dramatic and unpopular steps. These steps have succeeded in breaking the freefall. We're again moving in the right direction. An economy that was shrinking at an alarming rate when I became President has now been growing for three consecutive quarters.

Consider exactly what Obama is implying in these words. When he came into office, the economy was in "freefall," "shrinking at an alarming rate." It was only because of the "dramatic and unpopular steps" he took that this was stopped, and reversed. Otherwise, without Obama's miracle Grecian formula elixir, the economy would have continued in freefall, all the way back to the stone age.

This claim is in perfect parallel to the claim by Twain's Connecticut Yankee that he was blocking out the sun during that solar eclipse on June 21, 528, wowing the Dark Ages yahoos. The economy was never going to remain in freefall absent Obama's miracle cure innovation of trillion dollar deficits. For centuries now, we have experienced the business cycle in market economies, where the economy goes down, and then recovers. We just don't remember that anymore because Reaganomics was so successful that it banished the business cycle effectively for a record 25 years, with only 2 short, shallow downturns during that time. Even the official scorekeepers at the National Bureau of Economic Research (NBER) have suggested that the period be considered one continuous, unparalleled expansion.

In fact, since World War II, the U.S. economy has suffered 12 recessions, lasting an average of 10 months. NBER reports 33 business cycles since 1854. The longest during the 75 postwar years, until now, has been 16 months. But here we are today, 30 months since the latest downturn officially began in December 2007, with unemployment still stuck at nearly 10% for months now.

Last Friday's jobs report for May shows that the agony continues, even though President Obama predicted in his Carnegie Mellon speech that "we expect to see strong job growth in Friday's report." Outside the government employment of 411,000 temporary Census workers, Obama's economy 30 months after the recession began created only 20,000 net new jobs.

More than 10 times that many new jobs are needed each month just to keep unemployment from rising over the long run. The unemployment rate dipped in May only because 322,000 potential workers hopelessly fled the flagging work force. The Bureau of Labor Statistics (BLS) reports, "there were 1.1 million discouraged workers in May, up by 291,000 from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them."

The BLS further reported that the army of the unemployed persisted at 15 million Americans in May. Nearly 7 million remained long-term unemployed for more than 6 months, another postwar record. African Americans continued to suffer depression level unemployment under Obama at 15.5%. The teenagers who supported him have similarly been punished with continuing 26.4% unemployment. Ditto Hispanics at 12.4%.

Herbert Obama's Great Depression

The magical economic policies of Obama the Magnificent have served only to delay and slow recovery. Given the severity of the recession, the recovery should exhibit booming growth for at least the first year. But the three quarters of growth President Obama touted have displayed less than half the growth in the first three quarters of the 1983 recovery, from the last recession of similar magnitude. Obama's three growth quarters came after 18 months of decline, which would be a postwar record recession in itself. But in an April, 2010 statement, the NBER concluded that it cannot yet identify the end of the recession........
 
(SNIP)

...........As Art Laffer predicted in Monday's Wall Street Journal, "When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe 'double dip' recession." Laffer recounts how the delay in Reagan's tax cuts to 1983 delayed that recovery, but once they became effecti

 
Quote    Reply

Aussiegunneragain       6/10/2010 8:15:30 AM
I'm amazed that Arthur Laffer is still doing the rounds, he was one of Reagan's main economic influences! Good for him, he is a great economist.
 
Quote    Reply

PPR    Double Dip   6/10/2010 11:12:54 AM
I agree that we're heading for a double dip for a lot of reasons.  The main reason is because the recent growth we've seen is artificial, coming mainly from the government borrowing a lot of money and throwing it around for people to spend on houses, cars, and and appliances.  This was not real growth and is not sustainable.  Now the spending is running out while the debt is dragging us down.  Oh, lets also not forget the debt bomb in Europe and the real-estate bubble bursting in China.  Add on the tax increases in 2011 and no amount of spin, slight-of-hand, or smoke-and-mirror will disguise the coming downturn.
 
Quote    Reply

Photon       6/11/2010 11:47:11 AM
Based on what OECD has been preaching lately, things could go south if the EU and the US follows their recommendation right now.  The worst time to go through contractionary economic policies is during and right after economic downturn.  And their pretext?  The threat of inflation.  They conveniently leave out that deflation is even worse.  Their insistence on protecting the old money (which is what this contractionary policies are ultimately aiming for) is going to further stratify our socio-economic landscape and could lead to people to become more open to radical and reactionary ideas in the future.
 
As for the burden of taxes?  The last time the US was under the greatest tax burden was right after WW2.  As for the financial burden associated with the healthcare?  I think the worst part of it is the way healthcare debates went on last year.  Way too much distraction over stupid labels like 'socialism', 'death panel', but not getting into the important details, such as -- which items should the universal coverage cover, how are we going to finance it, also how to work the numbers?  (Only a fraction of peole who contributes healthcare fund gets sick in any given time, so this is going to be a combo of socialism and risk analysis.)
 
To be fair, there is not a whole lot of bright ideas for the government to pursue.  For one thing, the easiest way of getting out of the current economic cellar is to have a export-led growth (which increases the tax base and hence tax revenue), but that is not likely to happen under the current global trade scenario.
 
Quote    Reply

buzzard       6/11/2010 12:31:27 PM
To be fair, there is not a whole lot of bright ideas for the government to pursue.  For one thing, the easiest way of getting out of the current economic cellar is to have a export-led growth (which increases the tax base and hence tax revenue), but that is not likely to happen under the current global trade scenario.
 
 It would be interesting to understand why so many people seem to think exports are the panacea for all economic ills these days. It must be tied into some silly zero sum game delusion or something. If a strong economy were as simple as 'export led growth', Japan would not have been an economic basket case for the last, oh, twenty years or so.
 
Quote    Reply

Photon       6/11/2010 3:58:19 PM
It would be interesting to understand why so many people seem to think exports are the panacea for all economic ills these days. It must be tied into some silly zero sum game delusion or something. If a strong economy were as simple as 'export led growth', Japan would not have been an economic basket case for the last, oh, twenty years or so.

The US, Japan, and the EU all suffer from the lack of means of increasing government revenues.  Belt-tightening would work, but if and only if their citizens would not mind further shrinking the middle class and lowering their standard of living, thereby reaching parity with 3rd world and developing economies.  Japan and the EU are facing more acute problem as their demographics are getting old.  (The US is roughly twenty years behind them insofar as demographic trends are concerned.)
 
An alternative to export-led growth would be to increase domestic consumption to jump-start our economy.  However,  this would be no less of a joke than dependence on export-led growth, as aging demographics does not have a lot of potential for increasing consumption by a wide margin, other than medical and retirement expenses.  As of right now, most of us are pretty darn short on cash, while those at the top with a plenty of cash are keeping it in their bank accounts.  In the meantime, since the real estate has imploded in such a spectacular manner, there is not even much credits left over.
 
Finally, capitalism is not without its own weakness:  It requires ever-expanding economy and the rate of expansion has to be large enough to have as many players participate as possible.  By contrast, a stagnant economy leads to stratisfication.
 
Quote    Reply

buzzard       6/11/2010 4:59:07 PM
The US, Japan, and the EU all suffer from the lack of means of increasing government revenues.  Belt-tightening would work, but if and only if their citizens would not mind further shrinking the middle class and lowering their standard of living, thereby reaching parity with 3rd world and developing economies.  Japan and the EU are facing more acute problem as their demographics are getting old.  (The US is roughly twenty years behind them insofar as demographic trends are concerned.)
 
 This is drivel. You are implying that the middle class is dependent on government support. That is rubbish. The western economic powers need to make government do some belt tightening. What needs to be reduced is the level of entitlements, and in Western Europe, they probably need to reduce some of the mandatory benefits. While those do reduce the level of comfort, it does not imply reduction in the size of the middle class.
 
An alternative to export-led growth would be to increase domestic consumption to jump-start our economy.  However,  this would be no less of a joke than dependence on export-led growth, as aging demographics does not have a lot of potential for increasing consumption by a wide margin, other than medical and retirement expenses.  As of right now, most of us are pretty darn short on cash, while those at the top with a plenty of cash are keeping it in their bank accounts.  In the meantime, since the real estate has imploded in such a spectacular manner, there is not even much credits left over.
 
 You are a complete and utter Keynesian which means you don't have the first clue about how an economy actually works. Economies are not demand driven. That's been proven repeatedly by the inability of Keynesian economics to predict events, diagnose solutions, or even analyze current events.
 
What actually drives an economy is productivity.  The better mousetrap makes it own market. Inventions create wealth from scratch, as do productivity increases. What the West needs to do in focus on boosting productivity to grow out of this mess. Of course this can only be done if get control of the growth of government and manage to shrink it. Government does not produce, it only re-distributes and consumes. Only by cutting back the share the government wastes can we get needed growth back on track.
 
While there is a credit crunch, that is not caused by what you are talking about.  The causes of the real estate bust have been well discussed here. At the root it was a matter of too loose money from the fed and too much pressure from the government to increase home ownership rates. The fact that people with money are not investing much is not due to their greed. That's a bunch of leftist nonsense. If they wanted to make money (you know, greed), they would invest it. It is the uncertainty which is causing people to hold money in low risk places. The fact that nobody knows what to expect from the government right now has a lot of people worried. The pattern of bending the law to benefit favored groups is doing nothing for investor confidence. Heck, the president even screwed up on the last jobs report which cases a major dip in the markets.
 
You are correct in that there is an issue of a great deal of wealth having been destroyed however.  Of course much of it was bubble wealth.
 
Finally, capitalism is not without its own weakness:  It requires ever-expanding economy and the rate of expansion has to be large enough to have as many players participate as possible.  By contrast, a stagnant economy leads to stratisfication.
 
 This is one of the odder statements I've seen. Every economy needs to grow for people to have opportunities and allow progress. This is not limited to capitalist economies. Capitalist economies just happen to be the best at it.
 
 Stratification is not inevitable in any economy, though it is more likely in those with more government interference since those with pull will use it to keep down those who might threaten their position and prerogatives.
 
Quote    Reply
1 2 3 4 5 6 7   NEXT



 Latest
 News
 
 Most
 Read
 
 Most
 Commented
 Hot
 Topics