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The Basement
Gibson raided
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<blockquote data-quote="John Roberts" data-source="post: 39168" data-attributes="member: 126"><p>Re: Gibson raided</p><p></p><p>The latest supporter for taxing the "rich" is Warren Buffett and as some will observe he has already got his, so taxing other high earners (income, not wealth) will mostly hinder those trying to catch up to him. If Warren felt that government could spend his wealth wisely he would give it to them instead of his own or his buddy Bill Gate's charities. </p><p></p><p>The class warfare is a political calculation that far more people view themselves as not wealthy so will embrace taxing other people to reduce their responsibility while keeping the gravy train rolling. I remain optimistic that the majority will not fall for this openly divisive strategy and pursue more sensible, long term solutions. </p><p>======</p><p></p><p>Right now there seems to be a laser like focus on is the economy growing or shrinking, with a overwhelming importance placed on net increase or decrease (recession). Whether we are growing at 1.001x or shrinking at .999x doesn't really matter much to anybody other than the politicians and by extension economic managers. Recall that "borrow and spend" stimulus can increase GDP on paper only slightly, since the debt does not show up in those calculations, just the spending. Keeping us out of technical recession by more borrowing and spending, is only managing the visuals for politics, while increasing our debt without improving the real situation on the ground, arguably making things worse. </p><p></p><p>The economy is often viewed as some "confidence" game where we just need to get consumers or business feeling good about about the future and they will spend, and hire, and magically everything will work out. This is the thinly veiled logic behind stimulus programs , priming the pump so to speak, but at the end of the day it doesn't really change anything. Does whether consumers bank or spend their marginal dollars really make a difference? In the short term perhaps, but in the long term no it balances out. </p><p></p><p>We are still trying to recover from a decade long spending spree, where consumers felt "too good" about the future. Inflated home values and easy credit fed on itself, to generate wildly increased spending that rippled through the economy, making everybody look good, until the music stopped. It seems we still have a long way to go to, pay for all that unjustified spending. While it is hard to get accurate numbers, estimates range as high as 20% of home mortgages are still underwater. This is the flip side of the former "house rich" that fueled the decade of drunk sailor consumer spending. Now instead we have "house poor" driving prudent saving and frugality. This is not really a bad thing and reflects reality. </p><p></p><p>While our fearless leader has instructed Fannie and Freddie to help home buyers in an attempt to reflate housing, the conservators in charge of F & F have just raised fees charged by F&F to bring them more in line with non-government backed financing, in an effort to reduce taxpayer (us) losses. </p><p></p><p>We will still have a prolonged period of slow growth while consumers continue to de-leverage (reduce debt/increase savings) from their decade of wanton borrowing and spending. The government can change the visuals in the margin as we teeter around zero growth, but for long term recovery they need to reduce the friction on job creation and private sector productivity. </p><p></p><p>If you don't want people speeding, you fine them, if you don't want people smoking you tax them. If you don't want people creating wealth and jobs you tax/fine them. This is economics 101 (incentives/disincentives). I don't believe our government is thwarting recovery on purpose, but their intent doesn't matter when the result is so damaging. While trickle down economics seems discredited, does anybody think dis-incentivizing the productive sector with simple redistribution will end well? Apparently some do. </p><p></p><p>We need to be more clear headed about cause and effect. All of our actions have consequences. If they keep doing what they are doing, they will keep getting what they are getting. </p><p></p><p>JR</p></blockquote><p></p>
[QUOTE="John Roberts, post: 39168, member: 126"] Re: Gibson raided The latest supporter for taxing the "rich" is Warren Buffett and as some will observe he has already got his, so taxing other high earners (income, not wealth) will mostly hinder those trying to catch up to him. If Warren felt that government could spend his wealth wisely he would give it to them instead of his own or his buddy Bill Gate's charities. The class warfare is a political calculation that far more people view themselves as not wealthy so will embrace taxing other people to reduce their responsibility while keeping the gravy train rolling. I remain optimistic that the majority will not fall for this openly divisive strategy and pursue more sensible, long term solutions. ====== Right now there seems to be a laser like focus on is the economy growing or shrinking, with a overwhelming importance placed on net increase or decrease (recession). Whether we are growing at 1.001x or shrinking at .999x doesn't really matter much to anybody other than the politicians and by extension economic managers. Recall that "borrow and spend" stimulus can increase GDP on paper only slightly, since the debt does not show up in those calculations, just the spending. Keeping us out of technical recession by more borrowing and spending, is only managing the visuals for politics, while increasing our debt without improving the real situation on the ground, arguably making things worse. The economy is often viewed as some "confidence" game where we just need to get consumers or business feeling good about about the future and they will spend, and hire, and magically everything will work out. This is the thinly veiled logic behind stimulus programs , priming the pump so to speak, but at the end of the day it doesn't really change anything. Does whether consumers bank or spend their marginal dollars really make a difference? In the short term perhaps, but in the long term no it balances out. We are still trying to recover from a decade long spending spree, where consumers felt "too good" about the future. Inflated home values and easy credit fed on itself, to generate wildly increased spending that rippled through the economy, making everybody look good, until the music stopped. It seems we still have a long way to go to, pay for all that unjustified spending. While it is hard to get accurate numbers, estimates range as high as 20% of home mortgages are still underwater. This is the flip side of the former "house rich" that fueled the decade of drunk sailor consumer spending. Now instead we have "house poor" driving prudent saving and frugality. This is not really a bad thing and reflects reality. While our fearless leader has instructed Fannie and Freddie to help home buyers in an attempt to reflate housing, the conservators in charge of F & F have just raised fees charged by F&F to bring them more in line with non-government backed financing, in an effort to reduce taxpayer (us) losses. We will still have a prolonged period of slow growth while consumers continue to de-leverage (reduce debt/increase savings) from their decade of wanton borrowing and spending. The government can change the visuals in the margin as we teeter around zero growth, but for long term recovery they need to reduce the friction on job creation and private sector productivity. If you don't want people speeding, you fine them, if you don't want people smoking you tax them. If you don't want people creating wealth and jobs you tax/fine them. This is economics 101 (incentives/disincentives). I don't believe our government is thwarting recovery on purpose, but their intent doesn't matter when the result is so damaging. While trickle down economics seems discredited, does anybody think dis-incentivizing the productive sector with simple redistribution will end well? Apparently some do. We need to be more clear headed about cause and effect. All of our actions have consequences. If they keep doing what they are doing, they will keep getting what they are getting. JR [/QUOTE]
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