Forum
#Topics
+Start a topic
?Search __________________________________

-Log In
-Register
Politics Free For A Month?
Log In to post a reply
Pages: 10 – [ Previous | 15 6 7 8 9 10 | Next ]

View: flat \ threaded
________________\________________________________________________\______________________________________

wracket
wracket
1427 posts

Caliboredom 101

[ed. note: Do not read if allergic to (rudimentary) finance.]


Just because their credit rating dropped doesn't mean they can't borrow more. It just means that they're going to have to offer a better yield or sell the new debt at a discount to face value. Half of the markets I cover are currently borrowing on the market with lower credit ratings than California's.

Having said that, the only real way out of this in the long term is to increase fiscal revenues. And that means increasing income and/or corporate taxes. Yes, they can cut some costs, but if you look at the state of the California budget it's quite obvious that they badly need to generate more revenues to stand a fighting chance.

Jun 22, 2009, 20:25


________________\________________________________________________\______________________________________

deadlyfingers
deadlyfingers
1224 posts

Re: schools

Half-cat half-dog? That sounds adorable! I'll take one!

What really scares me is the possibility of the feds running out of cash. As much as I approve of the way Obama is handling the job so far, it really bothers me that they're borrowing trillions of $$ and taking it as a given that we'll have the means to pay it back someday.

Jun 22, 2009, 20:36


________________\________________________________________________\______________________________________

cybele
cybele
736 posts

Re: schools

Lately, Counties, cities, and States have been having to do what they do to get out of their debt and reckless spending habits. For the most part, it has equated to tax increased DURING a recession.

When the Federal debt comes due. . .watch out. The responsible people that work for a living and the business that compete locally and globally are going to get it right in the jugular.

It will take us years to get out of this; and if the market climbs, it's going to be a slow "Japan in the 90's-style" white-knuckle struggle back to where it was.

Believe me--I don't want this. I'm just predicting.

Cybele

Jun 22, 2009, 21:42


________________\________________________________________________\______________________________________

cybele
cybele
736 posts

Re: Caliboredom 101

The credit rating will fall and it will be more expensive for California to borrow. Just paying the interest on the debt will be too difficult to maintain. The debt will go into default.

Also, less people will invest in state bonds if the rating of the state is shit.


How are the revenues of businesses going to grow when they're paying so much in taxes that they can't grow themselves--or even survivie? How could they contribute their taxes when they've contributed too much to stay alive?

What sort of consumers are citizens of California going to be when their employer is forced to flee the state and they have no income?

And this is going to happen at the Federal level when the magnitude of the deficit is realized and the debt comes due. So, they'll raise taxes during a recession (which is like smoking crack during a cardiac arrest).

Again, I don't want this to happen. This is why I didn't support all of the spending that Bush did and I surely didn't vote for Obama. His spending puts the Bush spending on steroids.

It's not the way out of our issues, it's a way further into having worse issues.

Cybele

Jun 22, 2009, 21:54


________________\________________________________________________\______________________________________

cybele
cybele
736 posts

Case In Point

There are some cities in Illinois that are trying to secede from Cook County. We have the highest taxes and the most corruption in the US. In Chicago, we've run up a major deficit and businesses are closing every day. That doesn't stop our mayor (with the help of Obama) from doing whatever it takes to get the Olympics--including putting the taxpayers on the hook.

Everyone - we can't afford it!

Cybele

PS - the argument for the Olympics will state that cities never loose money. Not here in Chicago. No civic project occurs here without indictments and major over-runs when it's all said and done. I doubt we'll even have a roof on the stadium on time.

Jun 22, 2009, 21:59


________________\________________________________________________\______________________________________

deadlyfingers
deadlyfingers
1224 posts

Re: Caliboredom 101

Ok-

I don't know jack about finance, so someone please explain to my why raising taxes during a recession is such a terrible thing? It's not like the government just sticks the money under a mattress and guards it like a dragon - they typically use it to pay teachers & police officers & contractors & invest in the type of infrastructure that promotes growth in our economy, no?

And there are so many different types of taxes: I'm sure that raising property taxes would have a very different effect on the economy than raising the sales tax - right? I find it suspicious whenever people lump all taxes together. To me, it sounds like they're just cheap bastards who don't want to pay for anything. Please correct me if I'm wrong.

Jun 22, 2009, 22:16


________________\________________________________________________\______________________________________

Mars Rover
Mars Rover
1337 posts

george bush is a poodle!

http://photos-b.ak.fbcdn.net/hphotos-ak-snc1/hs115.snc1/5155_613274166704_21303651_36372945_7503946_n.jpg

i wish you all could see these cards i have, hilarious.

Jun 22, 2009, 22:36


________________\________________________________________________\______________________________________

Labhead
Labhead
1868 posts

Re: Bush vs Obama deficit

cybele wrote:
Again, I don't want this to happen. This is why I didn't support all of the spending that Bush did and I surely didn't vote for Obama. His spending puts the Bush spending on steroids.


From the Congressional Budget Office...
re:http://www.nytimes.com/2009/06/10/business/economy/10leonhardt.html?_r=1

and: http://economix.blogs.nytimes.com/2009/06/09/how-we-crunched-the-deficit-numbers/?ref=economy


There are two basic truths about the enormous deficits that the federal government will run in the coming years.

The first is that President Obama’s agenda, ambitious as it may be, is responsible for only a sliver of the deficits, despite what many of his Republican critics are saying. The second is that Mr. Obama does not have a realistic plan for eliminating the deficit, despite what his advisers have suggested.

[...]

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.
About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.
[...]
========================================

I'll admit that I wish Obama was doing more to bring this down, even if he's only responsible for perhaps 10% of this debt... he is still responsible for bringing down Bush's spending, but I suspect he's screwed either way. If he tries to pull back from Iraq and Afghanistan too quickly, people will say he's soft on war. No matter what he does, someone will complain.

I personally think a lot of economic problems would be solved if he would modify the war on drugs in regards to the softer drug(s), but how many people would chastise him if he were to legalize mary jane?

Put that in your pipe and smoke it.

Jun 22, 2009, 23:10


________________\________________________________________________\______________________________________

wracket
wracket
1427 posts

Re: Caliboredom 101

The issue with raising taxes during a downturn is that, in classic economic theory, the marginal tax rate is inversely proportional to the long term growth potential. Therefore, if businesses are already experiencing weak or even negative growth due to the downturn, burdening them with higher taxes is going to make it that much harder for them to become profitable again. However, this classic economic theory does leave some things out.

When I previously suggested that California needed to improve its fiscal revenue policy that was only part of the story. What they really need is more bang for their fiscal buck. Investing in infrastructure can clearly attract business...the idea that businesses will always run from higher tax rates is simply not true. My job is working with investments in emerging markets, many of whom are considered third world countries, and one of the biggest difficulties they face in attracting businesses is their lack of infrastructure (alongside a secure legal framework). Some industries only want the cheapest labor, sure, but many are willing to pay a bit more in taxes if that means that their risk level (and therefore cost of capital) goes down. California was and still is, to some degree, a veritable garden of "knowledge capital", a place where businesses and the communities that were built around them could thrive. But they've let their infrastructure go to shit and now they have a hard time selling their wares over those of your average third world country.

Sorry, that last paragraph is kind of all over the place, but what it comes down to is that California can raise taxes in the short term if it has a real plan to effectively reinvest that money to build infrastructure, to improve education and to get an NFL team back into LA. Er, maybe scratch that bit about education. *rim shot* No, but as Cybele suggests and as I here tend to agree, the sad reality is that California wouldn't spend their money on the future. They would spend it on the quick political fix and in the end they would just dig a bigger hole than the one their already in.

So that's both the theoretical background (presented as a jumbled mess for your reading pleasure) and the harsh practical reality of California's fiscal situation. Feel free to apply it to many other portions of the United States as you see fit.

Jun 22, 2009, 23:49


________________\________________________________________________\______________________________________

Labhead
Labhead
1868 posts

Re: Wracket

Wracket,

You live in France? Your English is amazing, you post/type like a well educated liberal American with European sensibilities, were you born here & move there or do they just teach English really well over there?

When I was deciding where to go as an exchange student when I was in high school, I wanted to go to France but I needed to know the language first to go there, and they only taught German & Spanish in my school (so I grudgedly chose Spanish which is probably more useful for Chicago I suppose, but not so good for my Stereolab translating). :(

I ended up going to Denmark for 6 months. Never knew much about it before, but I'm glad I went, it was very eye-opening! They really had their shit together. We could learn a lot from them as a country.

Jun 23, 2009, 00:01

Pages: 10 – [ Previous | 15 6 7 8 9 10 | Next ]

add a reply to this topic
________________________________________________________________\______________________________________
stereolab table Index