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AndrewB

Debt ceiling fiasco

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I'm surprised there's no topic on this. I'm too lazy type up my own argument, so I'll just post a video that reflects my opinions on this.



The debt is something like 14.6 trillion now. America is increasing its debt load at a rate of about 2 trillion per year, while the two political parties are debating whether this increase should be reduced to 1.6 trillion per year or 1.8 trillion per year. An actual reduction of the debt is absolutely not being considered by anyone.

We are all screwed.

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It's times like these that I'm glad I don't owe any money. I really, REALLY, regret not buying American gold back in 2007 when an ounce was a mere seven hundred bucks, but I didn't have the cash to invest in it properly, anyhow. I tried to convince my father to invest in gold, which he regrets now.

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While to some degree the ship may have already sailed on physical gold (though only part way), the ship is still loading passengers on stocks in gold mining companies. I have about 25% of my net worth in these stocks. Given that the entire revenue stream for mining companies are based on the sell price of their materials, and given how low the p/e ratios (stock price divided by earnings per stock) have fallen (in some cases below 10:1), there's good reason to believe that mining stocks are in an extreme anti-bubble right now.

Really, the only explanation for mining stocks being as cheap as they are now is that investors are simply expecting the crisis to be solved and gold prices to collapse. Given the current dialogue going on in world political circles, that mentality just boggles my mind.

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I've been following this from afar (reading too much financial shit tends to be depressing for me) and can't help but notice that Wall Street is once again pressuring for immediate action (like they did back when this whole fiasco started, in order to receive massive bailouts).

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hex11 said:

I've been following this from afar (reading too much financial shit tends to be depressing for me) and can't help but notice that Wall Street is once again pressuring for immediate action (like they did back when this whole fiasco started, in order to receive massive bailouts).

Exactly the same thing. Just as they drummed up fear about how the world would end if they didn't bail out the incompetent banks and car companies, they're drumming up fear now about how the world economy will collapse if the US misses an interest payment or two.

The thing is, the world as we know it IS going to end, not because they'll fail to go deeper into debt, but because they'll succeed!

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i like how greece and portugal are mocked and spat on by rating agencies while usa still remains at AAA.

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Wow. That guy's an idiot. He's talking about tax cuts! Only in America! The taxes your rich pay are embarrassingly low and the solution of most American observers is to cut them more or do something really stupid like a flat tax.

There are almost too many things wrong with how America runs its economy to put together a cohesive argument, but I think most of it comes from this really weird reverence for business owners.
The people who are compelled (often legally) to provide short-term gains to investors can't or won't elevate the poor and cutting their taxes won't make them do it either.

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Aliotroph? said:

ost of it comes from this really weird reverence for business owners.


The irrational fear/propaganda that the only/any alternative to this status quo would be equal to hard-line, North-Korean, Soviet stalinism has surely played a role.

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Aliotroph? said:

Wow. That guy's an idiot. He's talking about tax cuts! Only in America!

Doesn't get much dumber than that, how's the government supposed to repay it's debts (or keep up the interest payments) if it's revenue base is being whittled away.

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GreyGhost said:

Doesn't get much dumber than that, how's the government supposed to repay it's debts (or keep up the interest payments) if it's revenue base is being whittled away.


It's not as simple as that. In Greece, tax raises have been so extreme that hey actually drove consumption, and therefore economy development down. Maybe for the USA such an extreme scenario may seem still far away, but if pushed far enough, it could happen there too.

Another factor that works against tax raising in Greece is the state's inability to enforce them against any actor with moderate to powerful connections and influence, and therefore they only end up affecting the working classes, which however in turn drive consumption and development down.

Again, I heard that in the USA the IRS is relentless and supposedly more fair (?) but even in that case I can't imagine that the lower classes have it any easier before a prospective tax raise.

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Perhaps the oil barons, telco lords, and the princes of media offer to "bail out" the government by buying up and privatizing various portions of it, in exchange of course for becoming permanently exempt from taxation and regulation.

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Maes said:

Another factor that works against tax raising in Greece is the state's inability to enforce them against any actor with moderate to powerful connections and influence, and therefore they only end up affecting the working classes, which however in turn drive consumption and development down.

BTW, a friend of my brothers was on a trip around Greece some time ago and told me that anywhere he went, the center of Athens included, all the shops and gas stations refused to let him pay with his card, wanting cash only and giving no receipts or anything whatsoever. Is the grey market so prevalent?

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Belial said:

Is the grey market so prevalent [in Greece]?


Yeah, sadly. Come to think of it, a medium-small businessman has nothing to gain by giving you a receipt: he simply weighs the benefits from hiding the (quite large) VAT from the state (which however he charges fully to the consumer), versus getting caught (virtually nil chances, unless he gets ratted out by a competitor or gets his ledger checked for an unrelated cause, again due to ratting out or setup by a competitor).

Your best chances at this point are to negotiate a 10-15% or so rebate (considering that VAT is currently 23%): you both "win", so to speak ;-)

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Repostin' my response to this question on Google+:

The guy's question:

Since I can't be blatantly political, here is my opinion on the whole thing: Why do politics and egos get in the way of making the ethical choice to save our great country?


My Answer:

Alright, this debate isn't about political compromise or saving this country, this is an orchestrated and purposeful failure of the system for the sole purpose of attempting to consolidate power in the Republican corner for the next election cycle. The name of the game is consolidating blame. Obama got elected on a platform of "Change," right? And what was that change from? Bush. In the eyes of Americans blame for the horrible state the economy is in tends to lie firmly in GW Bush's court, and whether or not he was the cause of all of this is besides the point; it's what the voters believe that counts.

So this is all a staged failure of the system, with the real intentions poorly masked: make Obama fail, make him take credit for the state of the economy, right before the election so we can get our guy in. Now it may seem like I'm being a conspiracy theorist here, or a rabid liberal, but let me make myself clear: if the Democrats were in the current position the Republicans are in, you can bet your bacon they'd be pulling the same crap. The majority of the people in congress don't particularly care how well the economy and the average American is doing. They care about staying in office and pampering enough lobbyists to bolster their eventual retirement package.

Cynical? Probably. True? Weigh the evidence and decide for yourself.

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Is that supposed to be your solution? I mean, when America crumbles, you really think all the Americans flushing into the next adjacent countries will make everything better?

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40oz said:

I mean, when America crumbles, you really think all the Americans flushing into the next adjacent countries will make everything better?


Well, the collapse of the former Easter Bloc helped fuel the mail-order bride (and other related) industry :-p

All those formerly well-fed American chicks will need some sugar-daddy to feed them and stuff, no? :-p

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Debtmageddonpocalypse! Yes! Let's get a crazy House bill that doesn't have a snowball's chance in Hell of passing in the Senate, just to say that we did something! Yeah! that's how to do it!

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TAXES? WHAT THA FUCK

In SWEDEN , THERE ARE TAXES LIKE FREEZING HELL

and still the club this football eater comes from fail it ...



ooh man it blows my mind how they managed to get to this point

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Best way to get out of the hole is to cut costs, esp. military spending, foreign aid, various subsidies, useless government organizations (DHS), etc.

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Sodaholic said:

America is fucked, and I couldn't care less. When we go down, I'll just go up to Canada.


Maybe just my paranoid thoughts, but I believe that this will effect Canada greatly. The US is Canada's biggest trade partner.

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Why are people getting hot and bothered over an imaginary number we've increased like, twice a year or more for the past 50 years?

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hex11 said:

Best way to get out of the hole is to cut costs, esp. military spending, foreign aid, various subsidies, useless government organizations (DHS), etc.

Why the fuck are they cutting social security and medicare before cutting military spending?

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Sodaholic said:

Why the fuck are they cutting social security and medicare before cutting military spending?

Because if we cut military spending, the terrorists win.

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Quast said:

Why are people getting hot and bothered over an imaginary number we've increased like, twice a year or more for the past 50 years?


Keywords.

The GOP has successfully tied debt to deficit. They are so desperate to tarnish Obama that they've taken something that is mundane and routine but still mandatory and critical and capitalized on it. Nothing more.

To anyone with rational thought, this is obviously partisan politics at its worst. The GOP have set up the following catch 22 via their base:

If a bill passes with no GOP support: It's Obama's/Reid's fault. Won't happen though.
If a bill passes with bipartisan support: Won't happen, again, unless the GOP admits they're doing this just to destroy the 2012 election.
If a bill passes with Dem compromise: Dem base is enraged, GOP slams the "Obama will raise your taxes" narrative until the election.
If Obama invokes the 14th and signs an executive order: NOBUMMER IS WRITING HIMSELF A BLANK CHECK WITH HIS STALIN STYLUS!!1

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My friend who loves conspiracies... says the media is really going out of its way to crash the market with all of this coverage, but luckily the market isn't biting.

Military = low class jobs.

Plus if we didn't have our muscles the oil prices would be $16 a gallon if we weren't in their faces saying NO.



So in Arkansas there's still a fund for civil war veterans... I wonder if it still gets any money donated to it.

Also... in Chicago our new mayor looked at a commitee in charge to decide how to watch over cable companies. Last year each boardmember was paid $20,000. They met once... The new mayor now pays them $1 saving the city $175,000.

Its oversight like that. I'd love to have a job finding bullshit like that. I've got a shovel and I'm not afraid to get messy finding people's friends that are getting stupid kickbacks.

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