Now I'm not an economist but....... (USA)
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Now I'm not an economist but....... (USA)
Are there any bright economists on here who can explain why USA seems to think it is almost reasonable to increase debt levels to $16 trillion with some commentators saying no need to tax the super rich? I think for every dollar the govt spends 40 cents is on borrowed money.
Now I appreciate that the they have the lion's share of the world economy but even so that's a hell of a lot of debt?
I also admit that I can't fathom Republican thinking as they want to cut expenditure but are happy to pour money down the military drain.
dl
Now I appreciate that the they have the lion's share of the world economy but even so that's a hell of a lot of debt?
I also admit that I can't fathom Republican thinking as they want to cut expenditure but are happy to pour money down the military drain.
dl
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$16bn is a HELL of a lot of debt, yes.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
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Dave
#6
The US has plans to pull out of Iraq and Afghanistan, it's not like the Republicans want to start another war.
How come you don't mention Obamas huge welfare programs and heathcare?
How come you don't mention Obamas huge welfare programs and heathcare?
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$16bn is a HELL of a lot of debt, yes.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
Last edited by The Zohan; 03 August 2011 at 09:36 AM.
#9
An oxymoron in your first 5 words ... As far as I'm concerned we should ignore everything these people say as if they were really "bright" they would have seen the recession coming. The only thing to note is that countries are spending more than they earn and so need to cut what they spend. Trouble is the "experts" get so caught up in their own BS and 'nice little earners' that they have no grasp on reality. They really think they are "experts"
Dave
Dave
The American right question this and they are branded 'nuts'.
Where's this debt spiral going though? It's got no sign of end!
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What's a few thousand million between friends eh
Telboy - I agree with what you say except I am not sure that taxing the super rich would actually lose an election as there are a lot more poor people to vote than the super rich although I appreciate that they wield a lot of political influence. Some would say too much.
Mr Hutton, I think we have a shared view on economists
TdW, I am fully supportive of Obama's healthcare reforms but I suspect it's still a huge rip-off by the medical establishment. I was speaking to an old pal in Washington recently who had to pay around $10k to get her teeth fixed - I told her she could have come to Europe, got them fixed in Poland, have a holiday and gone home with some change
dl
Telboy - I agree with what you say except I am not sure that taxing the super rich would actually lose an election as there are a lot more poor people to vote than the super rich although I appreciate that they wield a lot of political influence. Some would say too much.
Mr Hutton, I think we have a shared view on economists
TdW, I am fully supportive of Obama's healthcare reforms but I suspect it's still a huge rip-off by the medical establishment. I was speaking to an old pal in Washington recently who had to pay around $10k to get her teeth fixed - I told her she could have come to Europe, got them fixed in Poland, have a holiday and gone home with some change
dl
#12
The Americans certainly get very uptight about any kind of tax increase. I well remember the unbelievable fuss they were likely to make if something like an increase in the price of petrol by a few cents a gallon! The sort of price rise we would hardly notice these days.
Increasing the allowable debt is a desperation measure of course and will only extend the time it takes for it all to come to a head. Politicians see that as an easy way out since they probably wont be around in the future to get seriously hassled about such a decision.
Our own government seems to have run out of the guts to take the really necessary measures and is also considering printing more money as yet another short lived escape from facing up to all our own problems.
Les
Increasing the allowable debt is a desperation measure of course and will only extend the time it takes for it all to come to a head. Politicians see that as an easy way out since they probably wont be around in the future to get seriously hassled about such a decision.
Our own government seems to have run out of the guts to take the really necessary measures and is also considering printing more money as yet another short lived escape from facing up to all our own problems.
Les
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$16bn is a HELL of a lot of debt, yes.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
But, in other terms, as a percentage of their GDP, it's about the same as the UK, but of course our economy is a lot smaller than America's.
The thing with the States is that economics is intrinsically linked with politics, there are a lot of competing demands for money. America's self-appointed World Military Vigilante status costs it dear. They are world leaders in terms of military technology but my goodness it comes at a price. Space travel eats money like there's no tomorrow. Welfare and healthcare costs have soared, largely due to Obama's mandates.
And it's all well and good, when the economy is growing. But when China, India and Brazil start spoiling the party, taking away American growth, pushing up commodity prices etc, then the sums start to fall apart. And that's why they've had such protracted and tense negotiations about how to cut spending.
And then you get to the political angle. Democrats and Republicans don't want to be the ones going into next year's elections seen as the "cutting" party. So they won't cut in areas where they think they're politically exposed. It's ridiculous.
But to answer the question, the theory behind raising the debt ceiling is so that there is room to pay the bills outstanding here and now, and allow a programme of debt reduction to be put in place. The problem is that they have reached a fudged compromise which doesn't go nearly far enough, and most people expect the US to lose its AAA rating, which would further add to their problems.
As for a super tax, well this is America, the land of the free that we're talking about. Yes it could happen, but the party to advocate it, let alone implement it, would be politically annihilated. The Americans simply have to go through a period of belt tightening. No economy welcomes it, as evidenced on the streets of Athens, but they simply have no choice, they're close to the 90% of GDP "tipping point", and that's a dangerous place to be.
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Having spent all day with a number of investment bankers I wouldn't plan on splashing the cash too much for the next ten years.
One interesting consensus is go short on the Swissie and long on Sterling!
One interesting consensus is go short on the Swissie and long on Sterling!
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We're in a totally different place, so much so we're even being talked about as a "safe haven" compared to the US, which is either reassuring or a sign of just how deep a mess America is in!
But we've made the difficult decisions. The coalition have been able to decide what to cut and by how much, largely unopposed, in direct contrast to the US where the House and the Senate are politically opposite. As a result, out national debt is being reduced (i could have said the over-spending of the last Labour administration but i'll avoid making it overly political) to safe(r) levels.
The UK is, for the moment, fine. We're not near the abyss. But we're not immune. Look at the stock markets today, they're being trashed, it will probably be headline news tonight. Italy is back in the spotlight, nobody thinks America have cut enough, Greece is still looming. It's a mess. We could do without it going nuclear, that won't help anybody except the newspaper sellers.
But we've made the difficult decisions. The coalition have been able to decide what to cut and by how much, largely unopposed, in direct contrast to the US where the House and the Senate are politically opposite. As a result, out national debt is being reduced (i could have said the over-spending of the last Labour administration but i'll avoid making it overly political) to safe(r) levels.
The UK is, for the moment, fine. We're not near the abyss. But we're not immune. Look at the stock markets today, they're being trashed, it will probably be headline news tonight. Italy is back in the spotlight, nobody thinks America have cut enough, Greece is still looming. It's a mess. We could do without it going nuclear, that won't help anybody except the newspaper sellers.
Last edited by TelBoy; 03 August 2011 at 04:26 PM.
#18
My method was simple: I looked at a house as a percentage of your wage, so if a house was £150k you would need to earn £42,000 per annum to afford it (3.5 x salary). Then I would look at the type of house and the type of person that should live in said house. i.e.
2 bedroom terrace house in crap area = low paid workers <£20k
3 bed semi in an ok suburb = £20k-£50k
4 bed detached in nice part of town £50k> your professional types (doctors, management, legal)
Now when these people can't afford to live in the type of house they should be able to afford, thats when you know its not sustainable and prices will need to adjust.
(note: these are north west prices not London, which is a whole other crazy ball game)
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I'm not an economist, far from it, but I saw the recession coming. So much so that I waiting to buy property until the market crashed/corrected.
My method was simple: I looked at a house as a percentage of your wage, so if a house was £150k you would need to earn £42,000 per annum to afford it (3.5 x salary). Then I would look at the type of house and the type of person that should live in said house. i.e.
2 bedroom terrace house in crap area = low paid workers <£20k
3 bed semi in an ok suburb = £20k-£50k
4 bed detached in nice part of town £50k> your professional types (doctors, management, legal)
Now when these people can't afford to live in the type of house they should be able to afford, thats when you know its not sustainable and prices will need to adjust.
(note: these are north west prices not London, which is a whole other crazy ball game)
My method was simple: I looked at a house as a percentage of your wage, so if a house was £150k you would need to earn £42,000 per annum to afford it (3.5 x salary). Then I would look at the type of house and the type of person that should live in said house. i.e.
2 bedroom terrace house in crap area = low paid workers <£20k
3 bed semi in an ok suburb = £20k-£50k
4 bed detached in nice part of town £50k> your professional types (doctors, management, legal)
Now when these people can't afford to live in the type of house they should be able to afford, thats when you know its not sustainable and prices will need to adjust.
(note: these are north west prices not London, which is a whole other crazy ball game)
You'd be lucky to get a 3 bed semi down in Kent for less than £170k!
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I.e. if you work in a warehouse on 18k a year then you can expect to live in a 2 bed terrace in a **** area.
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We're in a totally different place, so much so we're even being talked about as a "safe haven" compared to the US, which is either reassuring or a sign of just how deep a mess America is in!
But we've made the difficult decisions. The coalition have been able to decide what to cut and by how much, largely unopposed, in direct contrast to the US where the House and the Senate are politically opposite. As a result, out national debt is being reduced (i could have said the over-spending of the last Labour administration but i'll avoid making it overly political) to safe(r) levels.
The UK is, for the moment, fine. We're not near the abyss. But we're not immune. Look at the stock markets today, they're being trashed, it will probably be headline news tonight. Italy is back in the spotlight, nobody thinks America have cut enough, Greece is still looming. It's a mess. We could do without it going nuclear, that won't help anybody except the newspaper sellers.
But we've made the difficult decisions. The coalition have been able to decide what to cut and by how much, largely unopposed, in direct contrast to the US where the House and the Senate are politically opposite. As a result, out national debt is being reduced (i could have said the over-spending of the last Labour administration but i'll avoid making it overly political) to safe(r) levels.
The UK is, for the moment, fine. We're not near the abyss. But we're not immune. Look at the stock markets today, they're being trashed, it will probably be headline news tonight. Italy is back in the spotlight, nobody thinks America have cut enough, Greece is still looming. It's a mess. We could do without it going nuclear, that won't help anybody except the newspaper sellers.
#24
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A few years ago a similar house would be selling for over £300k. Unreal.
#25
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The US has some pretty shocking social metrics
1 in 7 on food stamps,
1 in 7 no or v limited access to healthcare
on the other hand -- just collected my little boy from Heathrow, flying back from Newark, he was staying with his school friend who's parents have beach house in New Jersey -- had a lovely time, so not all doom and gloom
1 in 7 on food stamps,
1 in 7 no or v limited access to healthcare
on the other hand -- just collected my little boy from Heathrow, flying back from Newark, he was staying with his school friend who's parents have beach house in New Jersey -- had a lovely time, so not all doom and gloom
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That's the risk in the trade.
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