Global Stimulus?

[AmScray 355]

How is our level of debt unsustainable? And how is that one of our biggest problems? It seems that we could easily sustain the level of debt that we have right now.Our biggest short term problem is obviously unemployment, and by a LONG shot. Our biggest long term problems are medical costs and energy sustainability. Debt is nothing to us. We're not Greece or Spain.

But for the fact that we aren't sustaining that level of debt. We're assuming more debt and inflating our way out of it. OK for the money changers, bad for Joe Sixpack and his savings, 401k, etc, not to mention our overseas bond holders who will eventually either start to demand higher levels of interest, or stop floating us all together. We aren't Greece or Spain, but we're rapidly heading there. Debt-laden 'service economies' haven't done too well, historically speaking and only in the past 30 years or so have we made the big sea change from producers to consumers. This has grave implications for our economy when almost all our trade accounts are deficient and the debt we've incurred is held by the very trading partners we're in hawk to. The fat we've been living off of- in terms of resources and sterling lines of credit- is starting to get lean... Medical costs and energy are huge, huge issues to be sure, however, medical costs are kissing cousin to debt (insomuch as we'll be auctioning off bonds to pay for whatever schemes are devised to remedy the situation and shipping all that interest over to whomever holds them). There is no escaping the fact that debt and debt service is going to become an enormous issue in the years to come. Since we no longer produce and export much and we're trade buoyant- at best- with a few meaningful partners, we have more wealth going out than we do coming in. Unless you believe the debt spigot runs forever, then the inevitable conclusion is that our standard of living has to decrease, somewhat drastically, ergo our levels of debt being 'unsustainable'.

[mk 11]

Because he has no understanding of history, no understanding of current economics, no understanding of economic theory, and his answer to every single problem, no matter what the casue, is "have the government spend more money." This is especially insane right now when one of the biggest problems we face is unsustainable levels of debt, and now the Keynesian economics has been show for the joke that it is.

I mean, in a word: no. If future expectations of our debt levels were seen as unsustainable by the universe, our interest rates would be much higher. As I sit in front of the screens here this morning, our 10y sits at 2.92%. Temporary measures in 2009 and early 2010 certainly made for ugly auction amounts, but H2 issuance is much lower, and 2011 lower still. There's been a headlong rush into USTs right around the same time that Treasury supply started to recede from record levels. Meanwhile, other high grade fixed income supply has been falling also, with negative net issuance in MBS and Agencies and a sharp decline in IG corporate issuance since Greece became more known for its debts rather than its olive oil. The flight higher in Treasury prices has been somewhat unabated since early April given this highly bullish mix of rising demand meeting shrinking supply. Our debt picture is really not so bleak going forward. Now if only we could stop sending hundreds of billions to Afghanistan and Iraq we'd really be getting somewhere.

[LongLiveYorke 38]

Now if only we could stop sending hundreds of billions to Afghanistan and Iraq we'd really be getting somewhere.

War: Government digging holes and filling them in, only on a massive scale and involving the death of our youth.

[dabetka 0]

I: agree. I, too, have longed for the collapse of modern finance and civilization for as long as I can remember.

Almost everything these bailouts/stimuls' did was just delaying the inevitable (SP?). We spent how much money to create so few jobs? Look at what is happening now with the financial sectors.

[Jeepster80125 0]

It's going to be hard to take the rest of your post seriously after this introduction. Yeah, Paul Krugman has no understanding of economic theory. Okay.How is our level of debt unsustainable? And how is that one of our biggest problems? It seems that we could easily sustain the level of debt that we have right now.Our biggest short term problem is obviously unemployment, and by a LONG shot. Our biggest long term problems are medical costs and energy sustainability. Debt is nothing to us. We're not Greece or Spain.

Do you have any ideas on how to deal with 'medical costs' long term? Our costs are out of control now, and we're expecting to grant access to guarantee issue coverage to another 30-45million people by 2014. 1/6th of our economy. Do you have any sort of idea or plan or solution here? It seems that you're just taking the typical liberal 'let's pass it to see what's in it' position here. I guess I'm wondering how you can say it's a huge long term problem while also championing the healthcare reform bill. sorry if i'm hijacking the thread.

[mk 11]

Look at what is happening now with the financial sectors.

I look all day, every day, and what I see is that: banks are still solvent, which is a good thing, unless you're an anarchist and are looking for society as we know it to collapse.

[dabetka 0]

I look all day, every day, and what I see is that: banks are still solvent, which is a good thing, unless you're an anarchist and are looking for society as we know it to collapse.

What do you do for a living, not trying to be a smart-as.s, just wondering? I am in the financial sales area. All i know for sure is that spending all this money that we don't have CANNOT be a good thing in the long run. From what I understand, there were plenty of banks that were forced to take money that did not want it. That seems rediculous as well. Maybe some would have failed, but not the vast majority. Again, on that I'm not saying I'm a genius on this matter, just from what I understand. I have some good relationships with bank presidents, not huge banks by any means, just banks in Nebraska.

[akoff 0]

What do you do for a living, not trying to be a smart-as.s, just wondering? I am in the financial sales area. All i know for sure is that spending all this money that we don't have CANNOT be a good thing in the long run. From what I understand, there were plenty of banks that were forced to take money that did not want it. That seems rediculous as well. Maybe some would have failed, but not the vast majority. Again, on that I'm not saying I'm a genius on this matter, just from what I understand. I have some good relationships with bank presidents, not huge banks by any means, just banks in Nebraska.

Spending more then you earn (tax in this case) is not the solution to anything.Local banks for 99 percent of common needs are far superior to the big boys...I just left one of the mega banks for our local, i had been with them for years but got lead away by pretty pictures and promises. It was a mistake and has been corrected.

[Jeepster80125 0]

What do you do for a living, not trying to be a smart-as.s, just wondering? I am in the financial sales area. All i know for sure is that spending all this money that we don't have CANNOT be a good thing in the long run. From what I understand, there were plenty of banks that were forced to take money that did not want it. That seems rediculous as well. Maybe some would have failed, but not the vast majority. Again, on that I'm not saying I'm a genius on this matter, just from what I understand. I have some good relationships with bank presidents, not huge banks by any means, just banks in Nebraska.

Whatever he does, he seems to have a better grasp of it than you. Why are you questioning that? Are you really inferring that he doesn't know his shit on this? Also, I'm not trying to be an ass, I'm just wondering.

[mk 11]

What do you do for a living, not trying to be a smart-as.s, just wondering?

i trade bonds for a hedge fund in chicago.

[Balloon guy 158]

Is there a level of debt that we can't reach?Do the people creating more debt understand this?Can't we just kidnap the Fed chair's kids and make him keep interest rates low and then print a brazillion dollars and let everyone buy a new set of tires?Isn't this all a case of America is too big to fail, so the rest of the world can't react towards our debt like they can to Greece etc.

[Balloon guy 158]

i trade bonds for a hedge fund in chicago.

Ever read Bombardiers by Po Bronson?Funny book.

[LongLiveYorke 38]

Do you have any ideas on how to deal with 'medical costs' long term?

Sure. Find a way to make people not pay 90% of the medical costs they will pay in their entire lives to extend their lives for 2 months. If we can do that, we've solved the problem.

[Jeepster80125 0]

Sure. Find a way to make people not pay 90% of the medical costs they will pay in their entire lives to extend their lives for 2 months. If we can do that, we've solved the problem.

I would agree if your position is that end of life care is atrociously expensive, but I don't really see what you're saying. On the other hand, wouldn't you want to keep your father or grandmother alive for a few months at any cost? People don't often make rational decisions when they are upset (end of life scenario), so of course 99.9% of people will keep the relative alive or comfortable or whatever, even though everyone knows the inevitable is coming.Again, you aren't proposing a solution, just highlighting another problem. I'll ask again, what's your solution?You seem to be in favor of socialized medicine, but you have to agree that sustaining these end of life costs can't be absorbed by taxpayers. Is your solution to simply not pay/not allow/let the person die if the medication or treatment is too expensive? Aren't those death panels? Would you be okay with someone else making your major life decisions on when your father dies?I am really, really eager to hear your thoughts.edit: If you don't mind, I'd like your thoughts on this article, which discusses some of the problems with programs like these and how they are paid for. I know it's reason so you might not find it credible, so feel free to debunk it.http://reason.com/archives/2010/06/30/temp...funding-forever

[strategy 4]

you sure found an expedient way to undo your mk goodwill there, jeep

[dabetka 0]

Whatever he does, he seems to have a better grasp of it than you. Why are you questioning that? Are you really inferring that he doesn't know his shit on this? Also, I'm not trying to be an ass, I'm just wondering.

Because I was genuinely interested obv. I never denied that he might have a better grasp than me. I admitted I wasn't a genius on topic. So, dont' know why you were obv. being an as.s.

[dabetka 0]

i trade bonds for a hedge fund in chicago.

I see, I'm sure you do have a better grasp on this than me. I guess Jeep really didn't believe my inquiry about your job was genuine but w/e. What is your take on my previous point:"From what I understand, there were plenty of banks that were forced to take money that did not want it. That seems rediculous as well. Maybe some would have failed, but not the vast majority."

[Jeepster80125 0]

I wasn't trying to be mean or critical. I guess tone is hard to convey over these series of tubes.

[strategy 4]

I see, I'm sure you do have a better grasp on this than me. I guess Jeep really didn't believe my inquiry about your job was genuine but w/e. What is your take on my previous point:"From what I understand, there were plenty of banks that were forced to take money that did not want it. That seems rediculous as well. Maybe some would have failed, but not the vast majority."

pretty sure we would have witnessed a catastrophic domino effect without the stimulus money, e.g. AIG fails --> Citi --> Bofa --> etc.sure, there may be people on the healthier end of the scale who could have weathered AIG's failure, but there's so much shared exposure across the board... it would have been awful for everyone, even those who claim they had a massive war chest all saved up. think: S&P bottoms at 100 and stays there for a long period of time.supposedly the rules regarding short-term loan repayment--not needing to wait until bankruptcy--also made it much easier for the above to be possible. http://en.wikipedia.org/wiki/Bankruptcy_Ab..._Crisis_of_2008

[CaneBrain 95]

pretty sure we would have witnessed a catastrophic domino effect without the stimulus money, e.g. AIG fails --> Citi --> Bofa --> etc.sure, there may be people on the healthier end of the scale who could have weathered AIG's failure, but there's so much shared exposure across the board... it would have been awful for everyone, even those who claim they had a massive war chest all saved up. think: S&P bottoms at 100 and stays there for a long period of time.supposedly the rules regarding short-term loan repayment--not needing to wait until bankruptcy--also made it much easier for the above to be possible. http://en.wikipedia.org/wiki/Bankruptcy_Ab..._Crisis_of_2008

The same people who complain about the bailouts now would have been lined up outside the White House with torches and pitchforks if the government had just let everything fail.

[hblask 1]

It's going to be hard to take the rest of your post seriously after this introduction. Yeah, Paul Krugman has no understanding of economic theory. Okay.

Again, look at the Checky thread, I point out a large number of glaring historical factual errors in Krugman's writing. He is consistently wrong. And not just a little wrong, but a LOT wrong.

How is our level of debt unsustainable? And how is that one of our biggest problems? It seems that we could easily sustain the level of debt that we have right now.Our biggest short term problem is obviously unemployment, and by a LONG shot. Our biggest long term problems are medical costs and energy sustainability. Debt is nothing to us. We're not Greece or Spain.

Many economists think we are just a step behind Greece and Spain, and within a decade we will reach debt levels that is beyond those countries unless we make radical cuts. Obama has made no serious attempt to address this issue. The problem is that our debts are not incurred yearly, they are incurred way, way ahead, such as in Social Security.Energy and health care are not problems for the country if the government stays out of them. With the passage of Obamacare, we are making both problems -- debt and health care -- worse.

[hblask 1]

I mean, in a word: no. If future expectations of our debt levels were seen as unsustainable by the universe, our interest rates would be much higher. As I sit in front of the screens here this morning, our 10y sits at 2.92%. Temporary measures in 2009 and early 2010 certainly made for ugly auction amounts, but H2 issuance is much lower, and 2011 lower still. There's been a headlong rush into USTs right around the same time that Treasury supply started to recede from record levels. Meanwhile, other high grade fixed income supply has been falling also, with negative net issuance in MBS and Agencies and a sharp decline in IG corporate issuance since Greece became more known for its debts rather than its olive oil. The flight higher in Treasury prices has been somewhat unabated since early April given this highly bullish mix of rising demand meeting shrinking supply. Our debt picture is really not so bleak going forward. Now if only we could stop sending hundreds of billions to Afghanistan and Iraq we'd really be getting somewhere.

The reason US treasuries are not dying is because we are the world's reserve currency, and most of the other major countries are in huge trouble.Anyway, as I mention above, our problem is that the problems are coming and need to be anticipated now or we will have a crisis in a decade. The short term bond investors don't care about that right now.

[hblask 1]

I look all day, every day, and what I see is that: banks are still solvent, which is a good thing, unless you're an anarchist and are looking for society as we know it to collapse.

No problem with banks, nope, none at all.

[dabetka 0]

pretty sure we would have witnessed a catastrophic domino effect without the stimulus money, e.g. AIG fails --> Citi --> Bofa --> etc.sure, there may be people on the healthier end of the scale who could have weathered AIG's failure, but there's so much shared exposure across the board... it would have been awful for everyone, even those who claim they had a massive war chest all saved up. think: S&P bottoms at 100 and stays there for a long period of time.supposedly the rules regarding short-term loan repayment--not needing to wait until bankruptcy--also made it much easier for the above to be possible. http://en.wikipedia.org/wiki/Bankruptcy_Ab..._Crisis_of_2008

Late last yr, Omaha NAIFA (Nat. Assoc. of Ins. and Financial Advisors) brought in a guy from the FED to talk to us. He did a Q & A session. He seemed to agree that something needed to be done, but was defnintely NOT in favor of passing the bailout before the majority of stimulus funds were spent. I think @ the time something like only 30% of stimulus funds were allocated.

[strategy 4]

Anyway, as I mention above, our problem is that the problems are coming and need to be anticipated now or we will have a crisis in a decade. The short term bond investors don't care about that right now.

30y yielded 3.88% today (source). I guess that's short-term if you're a geologist or something...