News What are the potential impacts of public confidence on the economy's recovery?

[mheslep]

Umm... According to Forbes, we have one of the lowest tax burdens on the planet.
http://www.forbes.com/global/2008/0407/060_3.html

Which lists total income taxes as 10%? That is detached from reality somewhere.

 

[OmCheeto]

Which lists total income taxes as 10%? That is detached from reality somewhere.

I don't know how they get that number either.

But this supposedly right wing website seems to think we've got it pretty good also:

http://www.heritage.org/index/Default.aspx"

Covers 183 countries across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights.

They list us 6th overall out of 183 countries.

They do mention that our taxes are "burdensome", but the number they quote overall is the same as Forbes: 28.2%

I think the reason we show up below the average on the "Heritage" tax scale(Fiscal Freedom) and number 5 from the top on the "Forbes" scale is that the Heritage people have included most every country in the world, whereas Forbes only lists 30 countries.

I wonder how effective the other 153 countries are at collecting income tax.

 

[WheelsRCool]

Umm... According to Forbes, we have one of the lowest tax burdens on the planet.
http://www.forbes.com/global/2008/0407/060_3.html

Overall, perhaps, that doesn't mean our tax burden still is not too high in many ways. Remember, it isn't just Federal income tax. There's state tax, county tax, local tax, property tax, etc...and we have among the highest corporate and capital taxes, oftentimes which businesses pass on to others. Businesses can pass on their taxes to their workers through lower wages or worse working conditions or less benefits, etc...or their shareholders through lower dividends, or to their customers through higher prices, and so on.

I think it's viable.

None of them, wind, solar, geothermal, etc...are viable right now. Both must be subsidized financially and power-wise (have a reliable 24/7 plant to back them up in case the wind stops or the sun dies or whatever).

Wind farms kill birds. They're also ugly. Could you imagine the rolling fields of America, the great plains, all filled with huge wind turbines?

Solar power isn't reliable enough if the sun is blocked by clouds and weather, and it also requires huge amounts of water, which is a problem as how to supply fresh water out West is a problem unto itself coming up.

Even nuclear power is limited. There's only so much uranium we have available. And most of it we have to import, so nuclear power doesn't make us energy independent per se I don't think.

And none of these solve the problems of oil. Many seem to think we can just magically create this paradise of no more coal powerplants and instead an economy powered by wind and solar, and it's just evil oil and coal companies stopping this, but that is not the case. The technology isn't there.

I hope you're not talking about the bubble that just popped.

1980 to 2008 was a period of great prosperity that had three bubbles: one under Reagan that popped in 1987, the Dot Com bubble that popped under Clinton in 2000, then the housing bubble under Bush that just popped.

But a real-estate bubble is a HARD blow to an economy is a thing, unto itself. Japan's government played a very large role in their economy (still does I think) and for most of the 1980s, it was the economy many said America should copy. Then their real-estate bubble popped on them. Since then their incursions in trying to "fix" their economy have created in a sense a lost decade for them.

 

[mheslep]

http://michaelscomments.wordpress.c...day-unemployment-rate-increases-by-only-0-1/"

 

[mheslep]

It couldn't have been a serious question. We have had tons of information about this.

It was serious, though I'll specify further I was referring in particular to the CDS clause. If you believe there's so much information it should be easy to quickly support the the unqualified assertion that

...a normal recession turned disasterous because of the hidden CDS losses ...

- about a complex subject.

One thing that is rather amusing: We keep hearing from Republicans how the stimulus plan hasn't worked. The fact is that only about one-third of the available money has been spent.
http://www.recovery.gov/?q=content/report-progress

By all accounts that I've heard, the money is only now really beginning to move.

Well please explain then what the endless refrain of 'shovel ready' meant.

The recovery spending is not anywhere close to one-third of the $787B budgeted in the Act, spending is currently less than 10% of the total. Less than http://www.cnsnews.com/PUBLIC/content/article.aspx?RsrcID=43708" .

One of the fundamental problems with stimulus spending as Keynes warned, and for which much criticism was levelled at the Recovery Act during debate: government does not get the spending out fast enough, accurately enough:

Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle.

http://thinkmarkets.wordpress.com/2009/01/25/keynes-as-public-works-skeptic/

If the Obama admin had recklessly rushed the money out, the Republicans would be complaining about that.

Not would be, did, and with good reason. That's an inherent flaw of recession stimulus spending as was pointed out at the time. They certainly did rush out the Act with no more than a couple weeks of debate. Some part of that is unavoidable - at least the 2009 spending has to have been legislated quickly. The whole point (flawed in my view but many economists support it) is to get the money out fast, which requires ill-considered action in haste, and then government machinery is still to slow.

Anyway, no need to query the Republicans, the $787B stimulus package so far has not worked as the Obama administration said it would: http://otrans.3cdn.net/45593e8ecbd339d074_l3m6bt1te.pdf".

 

[Phrak]

Is it hard to understand that prosperity is created not by employing people to be engaged in activities dreamt up by nonconsumers, but by producing what people want as dictated by their voting capital.

 

[mheslep]

GAO report card just out on the Recovery Act:
"[URL
Highlights[/URL]
Most of the spending (~90%) has gone to state governments who used it to pay off their Medicaid and Education obligations.

 

[Astronuc]

This is a growing concern. Chinese companies are accumulating substantial resources, and in some cases, near monopolies.

http://www.usnews.com/articles/news...new-energy-dependency-chinas-metals_print.htm

Dominance. The strategic implications of this growing imbalance are vast, particularly for defense and energy. Wind turbines and electric cars have become clean energy symbols, but they are merely final products, the visible results of a supply chain that spans international borders and, for the most part, is largely overlooked by policymakers. At the bottom of this chain, at its most basic level, are rare-earth metals mined from the Earth's crust and made into magnets or other parts, then put into motors or batteries.

China's dominance in this arena, and its displacement of American leadership, are not accidental. In 1992, Deng Xiaoping, then the country's most powerful politician, outlined a plan. "The Middle East has oil; we have rare Earth's," he said. "We must develop these rare Earth's." Today this phrase is emblazoned, like a campaign slogan, across the roof of at least one Chinese factory.

Deng's call to arms has been carried out nearly flawlessly. China dominates the world market and in recent months has taken control of mines in Brazil and Australia, thereby eliminating potential competitors. It is poised to do with rare Earth's what the Organization of Petroleum Exporting Countries has done with oil: make the world dependent. In 2002, China exported about 60,000 tons of rare-earth metals. In 2008, it exported about 45,000 tons. In 2009, based upon preliminary estimates, that will drop into the 30,000s.
. . .
As Jack Lifton, a longtime metal analyst, says, "The Chinese are depending, as they always do, on the myopia of the American investment community that only sees to the end of its nose."
. . .

Meanwhile, IBM is apparently doing research on Li-air (or Li₂O₂) batteries.
http://www.evworld.com/news.cfm?newsid=21277

Research is being done at University of St. Andrews
http://ch-www.st-and.ac.uk/staff/pgb/group/lio.html

 

[mheslep]

This is a growing concern. Chinese companies are accumulating substantial resources, and in some cases, near monopolies.

http://www.usnews.com/articles/news...new-energy-dependency-chinas-metals_print.htm
Meanwhile, IBM is apparently doing research on Li-air (or Li₂O₂) batteries.
http://www.evworld.com/news.cfm?newsid=21277

Research is being done at University of St. Andrews
http://ch-www.st-and.ac.uk/staff/pgb/group/lio.html

The St. Andrews work claims 1220 mAhg^-1 are possible. For a 3V cell that is 3600 Wh/kg, or ~13MJ/kg, compared to 46 MJ/kg gasoline, remarkable. A practical battery w/ that density would tip over gasoline and diesel based transportation - cars, trucks, trains - all of it.

 

[mheslep]

...They do mention that our taxes are "burdensome", but the number they quote overall is the same as Forbes: 28.2%

That is the tax revenue as a percentage of GNP. The federal income tax alone is 35%, so is the top corporate rate.

U.S. tax rates are burdensome. Both the top income tax rate and the top corporate tax rate are 35 percent. Other taxes include a property tax, an estate tax, and excise taxes, and additional income and sales taxes are assessed at the state and local levels. In the most recent year, overall tax revenue as a percentage of GDP was 28.2 percent.

Overall, perhaps, that doesn't mean our tax burden still is not too high in many ways. Remember, it isn't just Federal income tax. There's state tax, county tax, local tax, property tax, etc...and we have among the highest corporate and capital taxes, oftentimes which businesses pass on to others. B...

Here are the numbers from the Tax Foundation incorporating the 5.4% surcharge called for in the health plan just released by the US House of Representatives. In most of the 50 states (including mine) combined income tax will exceed 50% in the top bracket.
http://www.taxfoundation.org/publications/show/24863.html

Edit: http://gregmankiw.blogspot.com/2009/07/top-tax-rate-may-soon-exceed-50-percent.html" low as they don't include sales taxes, another 5% on average.

I don't know the tax rate at which the Laffer curve predicts revenue actually starts falling with increasing revenues due to behavioural changes, but this must begin to close in on it.

 

[Phrak]

It couldn't have been a serious question. We have had tons of information about this.

One thing that is rather amusing: We keep hearing from Republicans how the stimulus plan hasn't worked. The fact is that only about one-third of the available money has been spent.
http://www.recovery.gov/?q=content/report-progress

By all accounts that I've heard, the money is only now really beginning to move.

If the Obama admin had recklessly rushed the money out, the Republicans would be complaining about that. Honestly, this is a great example of why I am no longer a Republican. If they want to save their party, then they need to quit assuming that Americans are all idiots. Spin only works for so long and people eventually get wise to it.

I don't believe we have a single thing in common to discuss. don't bother responding. I wont.

 

[OmCheeto]

In most of the 50 states (including mine) combined income tax will exceed 50% in the top bracket.

Thank god I don't make enough to be in that tax bracket.

Otherwise I'd only be bringing home in one year as much as I've brought home in the last 30.

...

Jeez. What a burden that would be.

...

OMG! My state is number 1!

Rank #1
Oregon
57.54%

I knew we were good at something.

But that means I'll have to work a whole 'nother month before I can retire. As soon as someone realizes I'm worth a million dollars a year of course...

 

[tchitt]

I smell a little wealth envy.

I don't think I'll ever understand why some people seem to feel resentful of people more wealthy than they are... is it because you believe they don't deserve to keep all of the money they make? You feel as if you deserve some of the sweat of their brow? That's essentially what over taxing the rich is. Just because they have the ambition to get out there and hustle their way into a comfortable financial situation and you don't?

Taxing the rich is not the way to economic recovery. Taxing ANYONE is not the way to economic recovery. Government has never been good at turning a dime into a dollar and I don't see them figuring it out any time soon.

The rich employ the middle class... relieving them of their money and giving it to people who'd rather not work doesn't make sense.

 

[OmCheeto]

I smell a little wealth envy.

I would say, it is more like, I don't feel sorry for them.

I don't think I'll ever understand why some people seem to feel resentful of people more wealthy than they are... is it because you believe they don't deserve to keep all of the money they make? You feel as if you deserve some of the sweat of their brow? That's essentially what over taxing the rich is. Just because they have the ambition to get out there and hustle their way into a comfortable financial situation and you don't?

You shouldn't have used the word hustle. It makes them sound like hustlers.

Taxing the rich is not the way to economic recovery.

Nor is undertaxing the rich the way to economic recovery.

Taxing ANYONE is not the way to economic recovery.

So no one should pay taxes?

Government has never been good at turning a dime into a dollar and I don't see them figuring it out any time soon.

If I've said it once, I've said it twice...
I like sewers, roads, schools, water and electricity piped to my house, having gone to the moon, having had my liberties defended by our military, having not had our society disintegrate because people were starving, etc, etc, etc.

The rich employ the middle class... relieving them of their money and giving it to people who'd rather not work doesn't make sense.

Maybe the rich people should stop laying off the poor people. They're just going to breed with so much more time on their hands.

 

[tchitt]

Nor is undertaxing the rich the way to economic recovery.

Like I said, the rich employ the middle class. The more money business owners have available the less likely it will be that they have to lay off their employees. Lowering taxes does have a stimulative effect on the economy... much more-so than spending which doesn't make a lot of sense at all. I suppose you could make the argument that the government is a consumer like anyone else but they're not exactly going out and buying fleets of american cars with that money. You think the government can spend your own money better than you can? Much of the stimulus package has nothing to do with jobs at all.

So no one should pay taxes?

I didn't say that... at all. Taxes are necessary to provide sewers, roads, schools, the space program, the military, social welfare etc, etc, etc. But in what universe does it make sense that taking more of people's money from them is good for business in this country? In case you haven't noticed a lot of people are financially strapped in this country these days... and considering a third of their income is gone before they even get a paycheck a lot of them are going to decide to put off buying that new car for a few years. Get it yet?

Maybe the rich people should stop laying off the poor people. They're just going to breed with so much more time on their hands.

No employer wants to have to lay off their employees. When an employer has to cut their workforce it means that business is slowing down... which means everyone is making less money. You talk as though business owners are all heartless greedy evil people who don't care about the welfare of their employees. I don't believe this to be the case based on my own personal experience. I don't even understand your breeding comment.

 

[russ_watters]

One thing that is rather amusing: We keep hearing from Republicans how the stimulus plan hasn't worked. The fact is that only about one-third of the available money has been spent.
http://www.recovery.gov/?q=content/report-progress

By all accounts that I've heard, the money is only now really beginning to move.

If the Obama admin had recklessly rushed the money out, the Republicans would be complaining about that.

There's no need to split them up, Ivan, they are two parts of the same fundamental flaw that Republicans pointed out when it was first proposed: It simply isn't possible to do what Obama said he'd do. You can't spend such a huge amount of money on capital projects in such a short time because it takes years to do a large capital project. That's as obvious of a reality as gravity.

Obama attended a groundbreaking of a construction project soon after the stimulus was announced as proof that the money was going where he intended it to go. But that kind of opportunity just doesn't exist on a large scale. People don't design buildings and then sit on the designs. Generally, they don't design buildings until the construction funding is already in place, especially with government funded infrastructure projecs.

Honestly, this is a great example of why I am no longer a Republican.

And with economic ideas like that, we thank you for leaving!

 

[russ_watters]

Thank god I don't make enough to be in that tax bracket.

Otherwise I'd only be bringing home in one year as much as I've brought home in the last 30.

...

Jeez. What a burden that would be.

Huh? The top income tax bracket in the US $375,000+ for married couples. Have you been making minimum wage for the past 30 years straight?

In any case, the first big jump in tax brackets happens for the middle class: For a married couple at $67,000 (or single at $34,000), it jumps from 15% to 25%.

If I've said it once, I've said it twice...
I like sewers, roads, schools, water and electricity piped to my house, having gone to the moon, having had my liberties defended by our military, having not had our society disintegrate because people were starving, etc, etc, etc.

Welfare doesn't build sewers and that's the flaw in it. When the government spends money on "entitlements", it gets nothing in return and that decreases the GDP. A trillion $$ given to entitlements is a trillion $$ off the top of the GDP.

Maybe the rich people should stop laying off the poor people.

How can you not get this? If you increase their taxes (including, especially, business taxes), they have to lay off "the poor people"!

 

[OmCheeto]

Huh? The top income tax bracket in the US $375,000+ for married couples. Have you been making minimum wage for the past 30 years straight?

We were discussing the new "sock it to the richies" tax

http://www.taxfoundation.org/publications/show/24863.html
5.4 percent surtax on AGI beyond $1,000,000 (singles beyond $800,000)

Which is what pushes the top tax bracket into the high 50's for some of us.
Which is where I got the $1M/yr.
I suppose my math was a bit off. Not to mention I'm single, so I'd only be making $800k/yr. I think I'd have to work a full 2 years at a 57% tax rate to bring home what I've made in 30.

Welfare doesn't build sewers and that's the flaw in it.

So you like the idea of public works projects?

How can you not get this? If you increase their taxes (including, especially, business taxes), they have to lay off "the poor people"!

I actually agree with you here. I was looking over the proposed new health coverage requirements for moderate sized businesses yesterday and almost puked. I was like, "and they think unemployment is bad now?"

But I'm not an expert on tax collection and distribution. And it's all opinion, in my mind, as to what is too high and what is too low. If you go back a page in this thread, you'll see where the https://www.physicsforums.com/showpost.php?p=2259557&postcount=30". Having one of the lowest overall tax burdens in the developed world might be one reason the government seems to be broke all the time. But now that them stinkin' commie democrats are in control, it's obvious that things are going to be different for awhile.

 

[russ_watters]

So you like the idea of public works projects?

Yes, I'm also in favor of gravity.

Having one of the lowest overall tax burdens in the developed world might be one reason the government seems to be broke all the time. But now that them stinkin' commie democrats are in control, it's obvious that things are going to be different for awhile.

Spending is popular, taxes are not. Hence: debt.

 

[OmCheeto]

Spending is popular, taxes are not. Hence: debt.

Speaking of debt, my new bank just informed me yesterday that I'm overdue on my first payment for my new truck. I have to run away now and make the payment.

Recovering this economy is expensive. But it sure is nice not having to take a shopload of tools with me everywhere I go. My old cars really sucked.

 

[maverick_starstrider]

I'm not american but Canada's taking a similar approach by trying to buy their way out and I'm quite floored by it. In basic macroeconomics isn't the main example of the failure of keynesian government policy (a policy where the gov't tries to heat up or cool down the economy by adjusting its spending level, i.e. hitler building roads and such) was the stagflation of the 70's where we had both massive inflation AND unemployment (which goes against the philip's curve). Now here's the rub. Wasn't stagflation in the 70's CAUSED by increasing oil prices? So our classic example of when government spending will fail to heat up the economy is when the recession/depression if being fueled (so to speak) by rising oil prices? Is that not the exact same bloody situation we're in now?

 

[mheslep]

...Recovering this economy is expensive. ..

Why is it expensive? Who is doing this 'recovering'? Where?

 

[Astronuc]

Who is doing this 'recovering'? Where?

Goldman Sachs, JPMorgan Chase, Bank of America, Citibank - they should be able to pay bonuses this year.

Meanwhile - Treasury cancels plans to hire cartoonist
http://news.yahoo.com/s/ap/us_treasury_cartoonist

They needed a senator to question the merit of the idea?

Afterall - there is Dilbert!

 

[OmCheeto]

Goldman Sachs, JPMorgan Chase, Bank of America, Citibank - they should be able to pay bonuses this year.

Meanwhile - Treasury cancels plans to hire cartoonist
http://news.yahoo.com/s/ap/us_treasury_cartoonist

They needed a senator to question the merit of the idea?

Afterall - there is Dilbert!

Wow. I didn't realize they were doing so well. Sachs and Chase stocks look like where they should be, if you chop out that big 05-08 bubble. If anyone had asked me if I'd invest in those companies six months ago, I'd have laughed in their faces.

And I assume that since you said they might be getting bonuses, that they've all paid back their stimulus $$$, yes? Cause if they didn't, it's pitchfork time again...

 

[Astronuc]

Wow. I didn't realize they were doing so well. Sachs and Chase stocks look like where they should be, if you chop out that big 05-08 bubble. If anyone had asked me if I'd invest in those companies six months ago, I'd have laughed in their faces.

One has to look behind the numbers. Citibank made money by selling assets. Meanwhile, Citi is being hurt by rising credit card and commercial loan defaults (credit crisis part 2).

Meanwhile - CIT to Avert Bankruptcy With $3 Billion Loan
http://dealbook.blogs.nytimes.com/2...-deal-for-3-billion-loan-to-avert-bankruptcy/

CIT is involved with small and medium size business, and well as providing financing to the transportation sector.

. . .
The company spent the last week appealing unsuccessfully to Washington regulators for more financial help while scrambling to try to raise as much as $3 billion from investors. Still, ratings agencies slashed its debt and its stock was in a virtual free fall. If CIT does not reach a deal by Monday morning, it plans to file for Chapter 11 protection as soon as Monday afternoon, people briefed on the situation said.

Under the terms of the proposal, CIT would receive $3 billion from some of its main bondholders. The money is meant to give the company several weeks to set up an exchange of bondholders’ debt for equity, alleviating some of the pressure from billions of dollars in obligations.

CIT’s board approved the proposal at a meeting Sunday evening.

The plan was formed after days of round-the-clock negotiations between CIT, its financial and legal advisers and a group of large bondholders. Jeffrey Peek, CIT’s chief executive and the architect of the 101-year-old company’s aggressive yet ill-timed push into subprime mortgages and student loans, was actively involved in the financing talks, according to people briefed on the matter.
. . . .
It is also uncertain how much — if any — of the $2.33 billion in taxpayer money that CIT received late last year will be recouped.

If the plan does not succeed, CIT, with $75 billion in assets, could be the biggest failure of a financial institution since the collapse of Lehman Brothers last fall. Since then, federal regulators have been pumping billions of dollars into numerous banks across the country to prop them up and create some stability in the nation’s financial system.
. . . .

Under the terms of the deal, CIT would receive $3 billion from some of its main bondholders, though at an initial rate of about 10.5 percent. The money, arranged by Barclays Capital, is meant to give the company several weeks to set up an exchange of bondholders' debt for equity, alleviating some of the pressure from billions of dollars in obligations.

 

[OmCheeto]

Meanwhile - CIT to Avert Bankruptcy With $3 Billion Loan
http://dealbook.blogs.nytimes.com/2...-deal-for-3-billion-loan-to-avert-bankruptcy/

Looks like something went through. The stock is up ~100% this morning. Not too difficult though I guess, given it was a penny stock two hours ago.

 

[Ivan Seeking]

The DJIA just broke 9000.

 

[OmCheeto]

The DJIA just broke 9000.

And what's this? A profitable auto maker?

10:14 AM ET Jul 23, 2009
SAN FRANCISCO (MarketWatch) -- Ford Motor Co. shares jumped 8% Thursday after the automaker said it swung to a surprise second-quarter profit on the back of a lighter debt load, market-share gains and vastly improved cash flow.

Who's been buying Fords?

 

[Astronuc]

And what's this? A profitable auto maker?

Who's been buying Fords?

Apparently new home buys are up, and folks on Wall Street are excited.

Ford, AT&T and EBay all look better than expected. Throw in some good home resales data and an apparently encouraging weekly jobs figure and the corks are popping all over Wall Street.

http://www.publicradio.org/columns/marketplace/scratchpad/2009/07/bustin_out_1.html#more

Meanwhile - Subprime lenders return as loan fixers

It could be a jobless recovery
http://marketplace.publicradio.org/display/web/2009/07/23/am_jobless_recovery/

and

Watch out for high oil/energy prices
http://marketplace.publicradio.org/display/web/2009/07/21/pm_gas_q/
I think Chris Steiner is a bit pessimistic, but we'll see.

 

[OmCheeto]

It could be a jobless recovery
http://marketplace.publicradio.org/display/web/2009/07/23/am_jobless_recovery/

hmmm...

I just hired someone on Monday, and he was happy to make minimum wage...

gulp.

But hey. That's how I got started back in '83.

He's a college student, just like I was. I hope he sticks to it though. The college part, not the minimum wage thing.

hmmm... I was 4 years old when the following movie came out. I think it's true what they say. What is past, is prologue.

https://www.youtube.com/watch?v=<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/VH4nVMJEopU&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/VH4nVMJEopU&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>