News Can the market alone fix the economy?

[Astronuc]

Something to look forward to.

When Consumers Cut Back: A Lesson From Japan
http://www.nytimes.com/2009/02/22/business/worldbusiness/22japan.html

TOKYO — As recession-wary Americans adapt to a new frugality, Japan offers a peek at how thrift can take lasting hold of a consumer society, to disastrous effect.

The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.

Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

The Takigasaki family in the Tokyo suburb of Nakano goes further to save a yen or two. Although the family has a comfortable nest egg, Hiroko Takigasaki carefully rations her vegetables. When she goes through too many in a given week, she reverts to her cost-saving standby: cabbage stew.

“You can make almost anything with some cabbage, and perhaps some potato,” says Mrs. Takigasaki, 49, who works part time at a home for people with disabilities.

Her husband has a well-paying job with the electronics giant Fujitsu, but “I don’t know when the ax will drop,” she says. “Really, we need to save much, much more.”

Japan eventually pulled itself out of the Lost Decade of the 1990s, thanks in part to a boom in exports to the United States and China. But even as the economy expanded, shell-shocked consumers refused to spend. Between 2001 and 2007, per-capita consumer spending rose only 0.2 percent.

Now, as exports dry up amid a worldwide collapse in demand, Japan’s economy is in free-fall because it cannot rely on domestic consumption to pick up the slack.

In the last three months of 2008, Japan’s economy shrank at an annualized rate of 12.7 percent, the sharpest decline since the oil shocks of the 1970s.

. . . .

I read somewhere that average Americans (i.e. the middle class), particularly the current generations should adjust to a lower standard of living than the baby boomer generation. I'll have to find that commentary.

 

[Ivan Seeking]

Today on This Week, there was a rather interesting exchange between Paul Krugman, and George Will. Will was pointing to the fact that many nations are now borrowing. The interest has to be paid on that debt and there is only so much money to go around. Krugman responded by saying that there is a tremendous amount of capital floating around but no one trusts the markets or banks. So in effect the bailout, the stimulus package, and the housing relief bill are just another conduit to recycle that capital through credit.
http://abcnews.go.com/Video/playerIndex?id=6932460

So it almost seems that the investors are forcing the hand - they are willing to extend credit publically but not privately.

 

[Astronuc]

More on the 'clawback' -

After Huge Losses, a Move to Reclaim Executives’ Pay
http://www.nytimes.com/2009/02/22/business/22pay.html

SHOULD executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke?

As the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish.

Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation.

Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst.

Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.

“There is a line that separates fair compensation from stealing from shareholders,” said Frederick E. Rowe, a money manager in Dallas and a founder of Investors for Director Accountability, a nonprofit group. “When managements ignore that line or can’t see it, then hell, yes, they should be required to give the money back.”

Corporate boards that awarded lush executive pay packages almost always justified them by saying they encouraged superior performance and were directly tied to benchmarks like profitability.

But now, with a public backlash against excessive pay and taxpayer lifelines extended to crippled companies, the idea of recouping compensation, known as “clawback,” is gaining traction.

Currently there is no legal mechanism for forcing the regurgitation of past pay, so such efforts would need to be bolstered by new legislation. Clawbacks also promise to be a hot-button issue at shareholder meetings in coming months.

. . . .

Superior performance in 2008? 2007? 2006? . . . . ? ? ? or fudged books.

It would appear that the recent prosperity is illusory. I believe the outstanding debt in the world currently exceeds the capital or cumulative wealth at the moment. It may not be obvious, but that seems to be the case.

 

[WhoWee]

...and yet no strings were attached before TARP1...too big to fail, no time to think...haste makes waste

Will what should have been internal company matters between shareholders, boards and executives now going to become indictable...slippery slope.

Maybe we should keep Gitmo for all of the executives that wasted bailout funds...and a few Congresspersons responsible for "oversight".

 

[edward]

I stumbled on to a program on CNBC last week titled House Of Cards.

Alan Greenspan admitted that he could not understand the math involved in the CDO's. Even worse he couldn't find a mathematician or economist who did. It seems like that should have been a big red flag.

 

[WhoWee]

I read (back in Sept/Oct) that our Tres Sec and Fed Chair were being tutored by a variety of Hedge Fund managers regarding derivatives trading from Spring until Fall of 2008...because (the market is unregulated and) they didn't understand the instruments/trading concepts/valuation/rules of engagement, etc.

 

[OmCheeto]

There was a thread started by a seemingly naive person a few months ago regarding a [ctrl][alt][del] solution to the world economic crisis.

Does anyone else remember it?

It seemed quite silly at the time.

But now it's starting to seem like a prescient question.

 

[mheslep]

More on the 'clawback' -

After Huge Losses, a Move to Reclaim Executives’ Pay
http://www.nytimes.com/2009/02/22/business/22pay.html

Superior performance in 2008? 2007? 2006? . . . . ? ? ? or fudged books.

It would appear that the recent prosperity is illusory. I believe the outstanding debt in the world currently exceeds the capital or cumulative wealth at the moment. It may not be obvious, but that seems to be the case.

Regards the pay cap on institutions directly in receipt of TARP money: I had originally not had much objection to that plan, but now more details have come out. Of the 11-12 big US bank CEOs that attended the mandatory meeting called by Paulson and Bernanke late last year, some of them apparently protested loudly saying they did not want the money, and were forced to take it anyway. That being the case the govt has no business instructing them on salaries.

 

[Ivan Seeking]

Poll: Politicians trusted more than business leaders on economy

30 percent express confidence Wall Street will make right decisions to end recession
75 percent say President Obama will make the right moves regarding recession
Obama has more Republicans trusting him than Wall Street has
Majority opposes providing rest of bailout money to banks

http://www.cnn.com/2009/POLITICS/02/23/poll.economy/

 

[z0rn dawg]

Guess how many congressmen (or women) have a degree in economics.

Spoiler

ZERO!

If they are supposed to be fixing things and they don't have a full understanding of what is going on, how can they fix it? Obviously there are more factors, but I found it interesting.

As for fixing the economy...I like the 'New New Deal' idea. Maybe get out of war to raise some Consumer Confidence a bit.

 

[WhoWee]

Guess how many congressmen (or women) have a degree in economics.

Spoiler

ZERO!

If they are supposed to be fixing things and they don't have a full understanding of what is going on, how can they fix it? Obviously there are more factors, but I found it interesting.

As for fixing the economy...I like the 'New New Deal' idea. Maybe get out of war to raise some Consumer Confidence a bit.

Is not being trained to understand economics why nobody read the Stimulus Plan Spending Bill before they voted?

Here's the big story of the day for a lot of people

http://money.cnn.com/2009/02/23/markets/markets_newyork/index.htm

...look out 5,000 ->>>here we come!

 

[Ivan Seeking]

You don't suppose that they consult with economists?

 

[WhoWee]

You don't suppose that they consult with economists?

Consult with them about what...they didn't read the Bill.

 

[mheslep]

Another polling technique, DJIA, tracking since Jan 20.
Significant dates:
Feb 10, Geithner speech before Congress
Feb 18, Mortgage plan released.

 

[Ivan Seeking]

why nobody read the Stimulus Plan Spending Bill before they voted?

Where does it say that?

 

[Ivan Seeking]

Another polling technique, DJIA, tracking since Jan 20.
Significant dates:
Feb 10, Geithner speech before Congress
Feb 18, Mortgage plan released.

What is that supposed to show? How about if we start with about Jan, 2008, and see what the Republican programs got us?

With an economy in a Republican freefall, a few short-term dips and peaks mean nothing. If anything, Wall Street wants the government to spend more money.

 

[Ivan Seeking]

I get a laugh when I hear the Republican pundits crying "trust the markets!".

The markets are what caused this disaster!

 

[mheslep]

...With an economy in a Republican freefall, a few short-term dips and peaks mean nothing.

Thats a dip of 14% from its Jan 28 peak since Obama took office. A Republican freefall? Let me guess, it becomes Obama's economy only when and if things turn around?

 

[z0rn dawg]

I get a laugh when I hear the Republican pundits crying "trust the markets!".

The markets are what caused this disaster!

We're not a truly capitalistic country/economy anymore. It doesn't make sense why we should treat it as a real capitalistic economy. Aren't some of the Republicans saying that just to oppose Democrats right now?

You don't suppose that they consult with economists?

I hope they do. It just seems odd that we put so much pressure and reliance on these people to fix the economy if they really don't have an idea of their own. I've studied economics and half the things that politicians say are bogus. I hope they don't make economic decisions based on bad info.

 

[WhoWee]

Where does it say that?

http://www.foxnews.com/politics/2009/02/13/congress-readies-final-vote-b-stimulus/

Vigorously disagreeing, House Republican leader John Boehner of Ohio dumped a copy of the 1,071-page bill to the floor in a gesture of contempt.

"The bill that was about jobs, jobs, jobs has turned into a bill that's about spending, spending, spending," he said.

Obama, addressing a White House group, noted that lawmakers had a "spirited debate" and said the legislation is "only the beginning" of what he considers necessary "to turn our economy around." The president did not get all he wanted out of the bill.

The 1,071 page measure -- eight inches thick -- was posted on an overburdened congressional Web site late Thursday, giving lawmakers just a few overnight hours to read it before debate resumed in both the House and Senate Friday morning. Just on Tuesday, the House voted unanimously to recommend that lawmakers and the public have at least 48 hours to read the legislation before a vote.

 

[Astronuc]

Some idea of what needs to fixed. Obama may address these matters in his speech tonight. Apparently he is going to indicate that the US will have to sacrifice things we want to do in favor of doing things we must do. I wonder how much discretionary spending, e.g. R&D, will be cut.

Commentary: This is not your father's country anymore
http://www.cnn.com/2009/POLITICS/02/24/cafferty.america/index.html

. . . .
The interest on the national debt will approach $500 billion a year this year or next. Our country is sinking into the quicksand of insolvency as surely as the victims of subprime mortgages who have lost their jobs and their houses and watched their savings evaporate in the stock market decline.

The current national debt is soaring past $12 trillion. The costs of the stimulus packages and bailouts (and stimulus package is just another word for bailout) are being tacked on and passed on because they are being paid for with money we don't have.

We are staring at unfunded liabilities for Medicare and Social Security in the tens of trillions of dollars. Where's that money going to come from? We have to either raise taxes or cut benefits. There are no other options.

The baby boomers are starting to retire and will consume an ever larger share of these entitlement programs. They will also age in sufficient numbers to drive the political agenda for the foreseeable future. Think they're going to want less Social Security and less Medicare? Think again.

The generation coming along behind them that will be asked to pay for all this can't. There are not enough good jobs left in this country to pay those kinds of bills.
. . . .

 

[WhoWee]

I wonder how he (we) will pay for this.

http://uk.news.yahoo.com/18/20090224/twl-us-to-give-gaza-900-million-in-aid-r-3cd7efd.html

 

[mheslep]

I wonder how he (we) will pay for this.

http://uk.news.yahoo.com/18/20090224/twl-us-to-give-gaza-900-million-in-aid-r-3cd7efd.html

Cheap if helps keep Iranian influence out of Gaza, and it remains a one time outlay.

 

[mheslep]

Mankiw recommends this Michele Boldrin, U. Washington, piece for the con side of the stimulus spending plan:
http://www.noisefromamerika.org/index.php/articles/Seven_Myths._Nay:_Seven_Follies_(III)

First: it is a fantasy that the economic profession at large finds the "stimulus" and the "bank bailout" plans sensible and adequate. Most economists I know oppose them: fiscal stimuli either do not work or work too slowly, and bailing out bad managers is never a good idea...

Second, a very large fiscal stimulus plan is potentially damaging because it raises the outstanding amount of debt, and we are already deeply in debt: being deeply in debt has brought us to this crisis, nothing else...

Third: not every fiscal measure is wrong, just most. For example, the extension of unemployment benefits is not controversial; in fact we may even need more of that. The tax cuts are deficient because they do not reduce tax rates. Research recommends cutting the Social Security and income tax rates for low earners...

Fourth: tax cuts are a better way to stimulate the economy, particularly this time. Research shows that supply-side miracles are voodoo economics, hence I do not expect miracolous jumps in GNP following the tax cuts. Simply, I claim they are the most useful fiscal policy tool in this moment...

Fifth: Is there a case for public borrowing now to finance a stimulus package? People are worried about the future and are sensibly reducing their spending. Does this imply the government should step in and do the spending for them?...

Sixth: The money being spent to aid state budgets will prevent cutbacks in existing services. This should have some positive effects. Still, it encourages the states to continue to be irresponsible in their budgeting, which is why they are in so much trouble. It should have been accompanied by stringent requirements imposed on the states to get their budgets in order, but it wasn't...

Edit: Admittedly the reasoning for and against fiscal stimulus is complicated; there are arguments on both sides by economists. I post this critique because it is particularly comprehensive, and I personally find it persuasive based on the little I understand on the subject.

 

[WhoWee]

Cheap if helps keep Iranian influence out of Gaza, and it remains a one time outlay.

I agree with your point except for 1 thing...Israel blew it up, let THEM rebuild it.

 

[mheslep]

I agree with your point except for 1 thing...Israel blew it up, let THEM rebuild it.

The animosity might make that impossible. Probably will be difficult for even the US to do.

 

[mheslep]

Redirecting a misplaced post.
https://www.physicsforums.com/showpost.php?p=2094020&postcount=44

 

[LowlyPion]

http://www.mcclatchydc.com/215/gallery/62646.html

 

[WhoWee]

http://www.mcclatchydc.com/215/gallery/62646.html

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

 

[Ivan Seeking]

Today on Wolf Blitzer's show, on CNN, Bill Bennett was surprisingly positive about Obama's plans so far. While he acknowledges that Obama's goals and actions will be the subject of debate for the next eight years, he praised Obama for having "big ideas". He even likened Obama to Reagan [one of Bennett’s heroes], who did big things very early in his administration.

I am a big Obama fan who expected action, but wow! He is trying to move heaven and earth. Risky, yes, and this will all surely play down over time, but it takes risk and big ideas in order to make big things happen. I couldn’t be more impressed! There is no doubt in my mind that [so far] we have the A-Team running the show.

Relating to a number of interviews over the last few days, including one with Geitner: The notion of a ten-year plan is excellent. They are implementing a long-term strategy that balances the current needs against the long-term GDP and national debt. While they acknowledge that the current bailouts will significantly increase debt, to do less, they argue, would result in a higher debt to GDP ratio by suppressing the GDP for up to a decade in a so-called L-shaped recovery. We can only hope they get it right, but these guys are aces.

 

[mheslep]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

If it makes you feel any better, the administration's budget clearly shows it proposes to increase taxes on everyone to one degree or another, no exceptions, though the wealth(ier) do get hit the hardest. The President's 'I repeat: not one single dime' statement in Tuesday's speech was disingenuous.

 

[WhoWee]

Today on Wolf Blitzer's show, on CNN, Bill Bennett was surprisingly positive about Obama's plans so far. While he acknowledges that Obama's goals and actions will be the subject of debate for the next eight years, he praised Obama for having "big ideas". He even likened Obama to Reagan [one of Bennett’s heroes], who did big things very early in his administration.

I am a big Obama fan who expected action, but wow! He is trying to move heaven and earth. Risky, yes, and this will all surely play down over time, but it takes risk and big ideas in order to make big things happen. I couldn’t be more impressed! There is no doubt in my mind that [so far] we have the A-Team running the show.

Relating to a number of interviews over the last few days, including one with Geitner: The notion of a ten-year plan is excellent. They are implementing a long-term strategy that balances the current needs against the long-term GDP and national debt. While they acknowledge that the current bailouts will significantly increase debt, to do less, they argue, would result in a higher debt to GDP ratio by suppressing the GDP for up to a decade in a so-called L-shaped recovery. We can only hope they get it right, but these guys are aces.

Not real surprising...

http://www.huffingtonpost.com/2009/01/26/bennett-limbaugh-wrong-to_n_160825.html

He's at odds with Limbaugh.

 

[WhoWee]

If it makes you feel any better, the administration's budget clearly shows it proposes to increase taxes on everyone to one degree or another, no exceptions, though the wealthy do get hit the hardest. The President's 'I repeat: not one single dime' statement in Tuesday's speech was disingenuous.

It was a big mistake...remember "READ my lips"...it cost him re-election.

I think Obama's bigger mistake is denying the presence of earmarks...about 9,000 in the budget...explained away as "old business".

Obama even had one... http://voices.washingtonpost.com/sleuth/2009/02/obama_catches_grief_for_spendi.html?hpid=topnews

 

[Astronuc]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

Isn't the tax on adjusted (net) income?

The discontinuities in tax rates do bother me, among other things.

 

[Ivan Seeking]

During his speech before the Congress, Obama said he was increasing taxes to the top 2% of earners...the next day his spokesperson said the top 5%...families earning over $250,000.

This whole idea of "taxing the rich" makes me crazy. A "rich" couple with investment income of $20,000, primary earner wages $150,000 and spouse wages $80,000 = $250,000 gross income.

A 39.6% federal rate = ($99,000) in federal taxes = $151,000 net BEFORE state, local, Social Security and property taxes...maybe another 8% (?) = ($20,000) = $131,000 net.

Does anyone really think $131,000 is "RICH"?

A lot of government jobs pay $131,000 to $150,000 ...maybe the "rich" government workers should ALL get 50% pay cuts...this would save money.

Um, two people making $250K have no deductions? It doesn't work that way. You have to look at taxable income.

If I do things right, I can have a 200K year and only pay taxes on half of that, or less.

 

[mheslep]

Isn't the tax on adjusted (net) income?

The discontinuities in tax rates do bother me, among other things.

The actual tax bracket starts at $208k net (adjusted gross after deductions).

 

[WhoWee]

The 39.6 is nearly 42% with the deduction changes.

http://online.wsj.com/article/SB123561551065378405.html

As for the "tax cut for 95% of all American families"...the "Cap-and-Trade" is intended to pay for it...but as one congressperson happily explained yesterday...we can use our $800 per year per household to offset the higher electric costs the utilities will need to pass on (because of "Cap-and-Trade")...Obama giveth - Obama taketh away?

 

[mheslep]

The 39.6 is nearly 42% with the deduction changes.

Yep, equivalent rate.

http://online.wsj.com/article/SB123561551065378405.html

As for the "tax cut for 95% of all American families"...the "Cap-and-Trade" is intended to pay for it...but as one congressperson happily explained yesterday...we can use our $800 per year per household to offset the higher electric costs the utilities will need to pass on (because of "Cap-and-Trade")...Obama giveth - Obama taketh away?

Specifically the budget calls for collecting additional tax revenues of $80B/yr through carbon taxes. Everybody that takes trains, planes, and automobiles will pay that tax regardless of income.

 

[WhoWee]

Isn't the tax on adjusted (net) income?

Did that on purpose...to pay for all of the spending...elimination of (even more) deductions and applying the federal rate to gross is the only way I can determine his projections will work.

 

[WhoWee]

Yep, equivalent rate.

Specifically the budget calls for collecting additional tax revenues of $80B/yr through carbon taxes. Everybody that takes trains, planes, and automobiles will pay that tax regardless of income.

This is not a conventional/accepted news link...read at your own risk...
http://www.openmarket.org/2009/02/26/the-energy-tax-budget/

 

[Alfi]

Energy companies will have to pay the government for permits for each ton of carbon dioxide or equivalent they emit in the generation of power. They will pass on these costs to the consumer,

awwwww those poor poor energy companies.

is this a 'You're slowly poisoning my planet and you should PAY attention to the problem' tax?

Good! Don't pass it on to the consumer. Adapt! or die. ( adapt or kill us all ? )

 

[OmCheeto]

This whole idea of "taxing the rich" makes me crazy. .

The whole idea of feeling sorry for the rich makes me crazy.

Does anyone really think $131,000 is "RICH"?

Poor people like I do.

Your poor little rich person over 30 years compared to me:

poor little rich person
$131,000: post tax income
$25,000: annual expenses
$106,000: excess put in bank
$3,180,000: saved in 30 years
127: years poor little rich person can live off savings

poor little me
$30,000: post tax income
$25,000: annual expenses
$5,000: excess put in bank
$150,000: saved in 30 years
6: years I can live off savings​

Oh look! After saving for 30 years I now have more in the bank than the poor little rich person took home in a year! I'm feeling richer already.

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

Btw, did you know I'm thinking of starting my own $250,000/yr business?
With an extra $100,000 per year of disposable income, I can do lots of things I can now only dream about. Not to mention the government will pay for my new $50,000 SUV. :!)





Now let's whistle a song. There's not enough music in this thread.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

 

[WhoWee]

The whole idea of feeling sorry for the rich makes me crazy.


Poor people like I do.

Your poor little rich person over 30 years compared to me:

poor little rich person
$131,000: post tax income
$25,000: annual expenses
$106,000: excess put in bank
$3,180,000: saved in 30 years
127: years poor little rich person can live off savings

poor little me
$30,000: post tax income
$25,000: annual expenses
$5,000: excess put in bank
$150,000: saved in 30 years
6: years I can live off savings​

Oh look! After saving for 30 years I now have more in the bank than the poor little rich person took home in a year! I'm feeling richer already.

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

Btw, did you know I'm thinking of starting my own $250,000/yr business?
With an extra $100,000 per year of disposable income, I can do lots of things I can now only dream about. Not to mention the government will pay for my new $50,000 SUV. :!)





Now let's whistle a song. There's not enough music in this thread.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/1loyjm4SOa0&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

I'm sure those poor rich people have expenses above $25,000...(the mortgage alone may exceed $30,000) plus student loans, utilities, food, insurance, (stock market losses), new car payments, clothes, family vacations, college funds, etc.

Nonetheless, let's take a further look at your situation...not considering any reinvestment rates...you are correct...you've only managed to save enough for 6 years of retirement:

$30,000 at 8% (estimated high) = $2,400 per year contributed x 30 years = $72,000.

$72,000 / ($1,000 per month x 12 months) =$12,000 = 6 years of benefits.

After 6 years WE HAVE TO PAY to supplement YOUR retirement.


It sound like starting that business is a good idea.

 

[OmCheeto]

I'm sure those poor rich people have expenses above $25,000...(the mortgage alone may exceed $30,000) plus student loans, utilities, food, insurance, (stock market losses), new car payments, clothes, family vacations, college funds, etc.

I have an acquaintance with over a million$ in various assets and investments. She lives as frugally as I do. Though she spends 6 months of the year traveling to different spots on the planet.

After 6 years WE HAVE TO PAY to supplement YOUR retirement.

Not to worry. I'd have saved more if I didn't have a good retirement plan.

It sound like starting that business is a good idea.

Actually, it doesn't matter how much I make, I just want the free SUV.

 

[WhoWee]

But I should get back to the subject rather than just being snitty.

How does tax rearrangement rhetoric fix the economy?
Attitude.
The middle class is the backbone of this country, and without them, there would be no poor little rich people.
The middle class wants some scapegoats. They want those scapegoats to pay. When they are satisfied that they have payed, then things will get back to normal.

Simple as that. The economy will be fixed.

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

Thousands of government workers are paid in excess of $100,000 per year and auto workers aren't far behind...many nurses make over $50,000 per year. The middle class isn't $30,000...that's closer to the poverty line for a family.

 

[Astronuc]

Warren Buffett still optimistic after rough 2008
http://news.yahoo.com/s/ap/20090228/ap_on_bi_ge/buffett_letter

OMAHA, Neb. – Warren Buffett says the economic turmoil that contributed to a 62 percent profit drop last year at the holding company he controls is certain to continue in 2009, but the revered investor remains optimistic.

Buffett released his annual letter to Berkshire Hathaway Inc. shareholders Saturday morning, and detailed the worst of his 44 years leading the Omaha-based company. But in between the news of Berkshire's sharply lower profit and its nearly $7.5 billion investment and derivative losses, Buffett offered a hopeful view of the nation's future.

He said America has faced bigger economic challenges in the past, including two World Wars and the Great Depression.

"Though the path has not been smooth, our economic system has worked extraordinarily well over time," Buffett wrote. "It has unleashed human potential as no other system has, and it will continue to do so. America's best days lie ahead."

. . . .

Keep your eyes on Warren.

http://www.berkshirehathaway.com/letters/2008ltr.pdf

 

[Ivan Seeking]

The actual tax bracket starts at $208k net (adjusted gross after deductions).

So we could easily be talking about people who gross 300K or more. After they deduct their million dollar home, the 35-foot sailboat used for customers, the business trips to Hawaii, the new car used for business... then we start to tax their income.

 

[Ivan Seeking]

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

Couples who gross 250k likely wouldn't be effected by the expiration of the Bush tax cuts.

Note that Obama's plan takes rates back to what they were under Clinton, when we had a budget surplus and a robust economy.

 

[OmCheeto]

I'm not sure what your definition of middle class is...$250,000 for 2 college educated people with some type of investment income is not "rich".

I would define the middle class as those who live above poverty level and below the lower level of the 5th quintile of household income: ~$30k - $90k.

Given that only 1.9%http://pubdb3.census.gov/macro/032007/hhinc/new06_000.htm" of households make more than $250,000 a year, I'd say 98.1% of the people in America would disagree with you about who's rich. I think it was Joe the Plumber that popularized the myth that people making that much are really just plain old poor folk.

But I really don't see how arguing over who specifically to call "rich" is going to solve any problems.

If you look at the http://www.forbes.com/global/2008/0407/060_2.html" , you'll see that Americans pay some of the lowest taxes on the planet.

Might be about time the wealthiest aggregate group of people on the planet picked up a bit more of the tab.

I say hooray for Barack's tax hike.

 

[Astronuc]

Hopefully the Obama administration will fix the SEC.

The Inside Story on the Breakdown at the SEC
http://www.time.com/time/magazine/article/0,9171,1881989,00.html