Strategy's Business Thread

[strategy 4]

White House: More Economic Stimulus Measures Coming

It's unclear what new measures the Obama administration is considering, though Obama mentioned previously discussed proposals such as cutting taxes, extending financing to small businesses and boosting investments in renewable energy. White House Press Secretary Robert Gibbs declined to provide details about the new measures when pressed by reporters, but said Obama plans to lay out the new moves in the coming weeks.

I think it is pretty certain at this point that the Bush tax cuts will not be allowed to expire.

[El Guapo 8]

White House: More Economic Stimulus Measures ComingI think it is pretty certain at this point that the Bush tax cuts will not be allowed to expire.

That will be amazing if that is the case.

[CaneBrain 95]

That will be amazing if that is the case.

This has been their plan for a long time. I keep telling you that in the political forum.....it's not amazing when they have been saying it since the campaign. The only difference is they may even keep the cuts for the 250k+ people now (and given the general economic situation that seems fair).

[El Guapo 8]

This has been their plan for a long time. I keep telling you that in the political forum.....it's not amazing when they have been saying it since the campaign. The only difference is they may even keep the cuts for the 250k+ people now (and given the general economic situation that seems fair).

Well then why are they taking it down to the wire if this was there plan the whole time? We have 4 months to get a bill drafted and through congress and the senate. Since this was literally THE Number One platform he ran on, don't you think it should have been at the top of the priority list?

[strategy 4]

This has been their plan for a long time. I keep telling you that in the political forum.....it's not amazing when they have been saying it since the campaign. The only difference is they may even keep the cuts for the 250k+ people now (and given the general economic situation that seems fair).

Well then why are they taking it down to the wire if this was there plan the whole time? We have 4 months to get a bill drafted and through congress and the senate. Since this was literally THE Number One platform he ran on, don't you think it should have been at the top of the priority list?

I mean, he's basically in a no-win situation in 2012. the republicans are going to hit him hard on the deficit either way, and he wanted to make sure he couldn't start to work on that now, point to it and say "we're trending toward a much lower deficit" or somesuch. the economy is sending some pretty clear signals that it still needs help, so now we're hearing these rumblings out of the white house.at least that's my theory as to why he waited until now.

[Tiltinagain 973]

I mean, he's basically in a no-win situation in 2012. the republicans are going to hit him hard on the deficit either way, and he wanted to make sure he couldn't start to work on that now, point to it and say "we're trending toward a much lower deficit" or somesuch. the economy is sending some pretty clear signals that it still needs help, so now we're hearing these rumblings out of the white house.at least that's my theory as to why he waited until now.

Or he really believed the 800 Billion Stimulus package he rammed down our throats was actually going to work. Now that it's finally obvious to him thatit did absolutely no good, he has to do something to try to buoy the economy.It would be interesting to see what happened to the stock market, and the overall economy, if the bush tax cuts were made permanent tomorrow. I believe it would have a huge positive effect.The fact is there is no confidence out there. Mortgage interest rates are the lowest they have been...maybe ever and yet the housing market is still inshambles. People do not want to make a 30 yr commitment for $200k when they're not confident they'll have jobs tomorrow. Businesses aren't willing to invest in growth and production with uncertainty about how screwed they'll be by the government for daring to make a profit.When taxes are favorable to businesses, businesses expand and create jobs. When they are not, businesses cut back. So simple it's silly. We should not be penalizing businesses, we should be rewarding them for the jobs they create. Every time tax rates have been lowered (see Reagan, Ronald) tax revenue has actually increased because more people were making more money, thus paying more in actual tax dollars as a group./rant

[SBriand 4]

. Mortgage interest rates are the lowest they have been...maybe ever and yet the housing market is still inshambles.

Because the banks won't give anyone those rates, even people with perfect credit. But I am sure I read that in some liberal rag so disregard that.

[LongLiveYorke 38]

Or he really believed the 800 Billion Stimulus package he rammed down our throats was actually going to work. Now that it's finally obvious to him thatit did absolutely no good, he has to do something to try to buoy the economy.

This is incorrect. It clearly had a positive effect in the short term. Whether it was worth it in the long term based on what it added to the defect is a different question.

Businesses aren't willing to invest in growth and production with uncertainty about how screwed they'll be by the government for daring to make a profit.

This too is incorrect. Businesses aren't investing in growth because they don't have enough income to grow. They don't have enough income because people aren't spending as much money as they once were. They aren't spending as much money because trillions of dollars of wealth were lost almost overnight when the housing market collapsed.If businesses really were itching to hire a lot of new people but were afraid of potential government overhead costs (such as taxes and healthcare), then one would expect that the hours worked by the people currently employed by those businesses would increase. Businesses would choose to work current employees more than hire new ones. But this isn't the case. Even though many jobs were lost, the hours worked by people on average is lower than before the housing crisis and isn't rising at a rate consistent with the reluctant-to-hire theory. This indicates instead that businesses simply don't have the revenue to hire new people, not that they're afraid. The jobs that were lost simply don't exist anymore.

[brvheart 1,752]

Because the banks won't give anyone those rates, even people with perfect credit. But I am sure I read that in some liberal rag so disregard that.

This isn't the case. I have inside knowledge of such things. The lowest I know of within the last week was 3.65% on a 350,000 note.

[leftygolfer 7]

This too is incorrect. Businesses aren't investing in growth because they don't have enough income to grow. They don't have enough income because people aren't spending as much money as they once were. They aren't spending as much money because trillions of dollars of wealth were lost almost overnight when the housing market collapsed.If businesses really were itching to hire a lot of new people but were afraid of potential government overhead costs (such as taxes and healthcare), then one would expect that the hours worked by the people currently employed by those businesses would increase. Businesses would choose to work current employees more than hire new ones. But this isn't the case. Even though many jobs were lost, the hours worked by people on average is lower than before the housing crisis and isn't rising at a rate consistent with the reluctant-to-hire theory. This indicates instead that businesses simply don't have the revenue to hire new people, not that they're afraid. The jobs that were lost simply don't exist anymore.

For a scientist, your sure do know your economics!I would clarify things further, however. Business are not investing in growth also because they are hindered in their ability to fund the growth. Small business generally funds their growth either through debt or capital. Banks effectively aren't lending or have such stringent requirements, that borrowing is extremely difficult. Small business owners are tapped (home equity has plummeted, their investment portfolio's are down and expenses ( school tuitions) are rising. They have no ability to re-capitalize their business.We are looking at a very very slow recovery IMO.Luckily we are growing as competitors have gone out of business and we have picked up their salespeople ( sorry Strat, only looking for experienced ones). Again as LLY correctly points out, we are managing the increased business with OT and/or temps. It all comes down to ROI when we look at hiring or adding equipment.

[SBriand 4]

This isn't the case. I have inside knowledge of such things. The lowest I know of within the last week was 3.65% on a 350,000 note.

So you are aware of one loan? Ok.

[El Guapo 8]

Or he really believed the 800 Billion Stimulus package he rammed down our throats was actually going to work. Now that it's finally obvious to him thatit did absolutely no good, he has to do something to try to buoy the economy.

I hate to agree with LLY, what it did have a positive affect in the short term, it kept us afloat. The question is the long term affects of all that borrowing.

It would be interesting to see what happened to the stock market, and the overall economy, if the bush tax cuts were made permanent tomorrow. I believe it would have a huge positive effect.The fact is there is no confidence out there. Mortgage interest rates are the lowest they have been...maybe ever and yet the housing market is still inshambles. People do not want to make a 30 yr commitment for $200k when they're not confident they'll have jobs tomorrow. Businesses aren't willing to invest in growth and production with uncertainty about how screwed they'll be by the government for daring to make a profit.

This I agree with. There is too much uncertainty. If they made tax cuts permanent and clarified the Health Care bill then businesses and people could plan for upcoming expenditures.Also, we are in a deflationary environment. People will continue to put off purchases, if they think things will continue to get cheaper.

Because the banks won't give anyone those rates, even people with perfect credit. But I am sure I read that in some liberal rag so disregard that.

Not sure where you heard this. It's hard to get loans, but they aren't giving people with great credit bad rates. If you qualify, then you get the best rates.

[Jeepster80125 0]

This too is incorrect. Businesses aren't investing in growth because they don't have enough income to grow. They don't have enough income because people aren't spending as much money as they once were. They aren't spending as much money because trillions of dollars of wealth were lost almost overnight when the housing market collapsed.If businesses really were itching to hire a lot of new people but were afraid of potential government overhead costs (such as taxes and healthcare), then one would expect that the hours worked by the people currently employed by those businesses would increase. Businesses would choose to work current employees more than hire new ones. But this isn't the case. Even though many jobs were lost, the hours worked by people on average is lower than before the housing crisis and isn't rising at a rate consistent with the reluctant-to-hire theory. This indicates instead that businesses simply don't have the revenue to hire new people, not that they're afraid. The jobs that were lost simply don't exist anymore.

Maybe you don't deal with businesses as much as I do. Our agency is one of the top 5 producers in Colorado. I'm looking over a commission sheet that reflects $455,000 written in premium for one carrier in one month, the average group is less than ten employees. I can tell you without a doubt, that the biggest reason our revenues are dropping (healthcare) is because people aren't hiring, and they're cutting costs. Not only are most of my clients not hiring or growing, they are cutting benefits because things are so bad. Unfortunately for me, one of the first things small employers do is cut benefits, much to the detriment of their employees. Do you have any sources to back up what you're saying about businesses? Maybe brv would disagree with me, but almost everything you say in this post, I totally disagree with. At least with regards to why businesses aren't hiring.Here's an example. One of the first things going into effect with obamacare is requiring coverage for children through age 18. That's not a bad thing. For several reasons, only high risk, high cost people will enroll in this type of policy. As a result of this increase in risk, insurance carriers are slowly phasing out policies that have children only. So, my clients who have sick children are now ****ed, directly as a result of obamacare.edit: The housing market is good for me. Our family does fix n flips, our last house just sold for full price to the first couple who walked through.

[mrdannyg 274]

For a scientist, your sure do know your economics!I would clarify things further, however. Business are not investing in growth also because they are hindered in their ability to fund the growth. Small business generally funds their growth either through debt or capital. Banks effectively aren't lending or have such stringent requirements, that borrowing is extremely difficult. Small business owners are tapped (home equity has plummeted, their investment portfolio's are down and expenses ( school tuitions) are rising. They have no ability to re-capitalize their business.We are looking at a very very slow recovery IMO.Luckily we are growing as competitors have gone out of business and we have picked up their salespeople ( sorry Strat, only looking for experienced ones). Again as LLY correctly points out, we are managing the increased business with OT and/or temps. It all comes down to ROI when we look at hiring or adding equipment.

I work in commercial lending, and can tell you that, while banks are lending less, to say just that is not really accurate. Banks are lending about the same as they always did, which is on a risk-adjusted basis. In this economy, businesses are generally higher risk, and therefore will receive less lending. To suggest the banks should now lower their lending standards would be to change their business model. They already needed bailouts because they're run like crap, no need to increase their costs.

Maybe you don't deal with businesses as much as I do. Our agency is one of the top 5 producers in Colorado. I'm looking over a commission sheet that reflects $455,000 written in premium for one carrier in one month, the average group is less than ten employees. I can tell you without a doubt, that the biggest reason our revenues are dropping (healthcare) is because people aren't hiring, and they're cutting costs. Not only are most of my clients not hiring or growing, they are cutting benefits because things are so bad. Unfortunately for me, one of the first things small employers do is cut benefits, much to the detriment of their employees. Do you have any sources to back up what you're saying about businesses? Maybe brv would disagree with me, but almost everything you say in this post, I totally disagree with. At least with regards to why businesses aren't hiring.Here's an example. One of the first things going into effect with obamacare is requiring coverage for children through age 18. That's not a bad thing. For several reasons, only high risk, high cost people will enroll in this type of policy. As a result of this increase in risk, insurance carriers are slowly phasing out policies that have children only. So, my clients who have sick children are now ****ed, directly as a result of obamacare.edit: The housing market is good for me. Our family does fix n flips, our last house just sold for full price to the first couple who walked through.

Though you say you disagree with LLY, nothing you say really contradicts what he says. His argument discusses why businesses aren't investing. Part of his evidence is that businesses are both hiring less and giving less hours to those that are employed.Your argument that businesses are giving less benefits is not really contradictory.It is true that businesses cutting back on benefits (your evidence) would suggest the costs are problematic, though by your own admission this type of thing is typically the first to go in smaller businesses. And for good reason - a lot easier to cut benefits than fire employees. No one here is arguing that businesses are not having difficulties.

[Jeepster80125 0]

I work in commercial lending, and can tell you that, while banks are lending less, to say just that is not really accurate. Banks are lending about the same as they always did, which is on a risk-adjusted basis. In this economy, businesses are generally higher risk, and therefore will receive less lending. To suggest the banks should now lower their lending standards would be to change their business model. They already needed bailouts because they're run like crap, no need to increase their costs.Though you say you disagree with LLY, nothing you say really contradicts what he says. His argument discusses why businesses aren't investing. Part of his evidence is that businesses are both hiring less and giving less hours to those that are employed.Your argument that businesses are giving less benefits is not really contradictory.It is true that businesses cutting back on benefits (your evidence) would suggest the costs are problematic, though by your own admission this type of thing is typically the first to go in smaller businesses. And for good reason - a lot easier to cut benefits than fire employees. No one here is arguing that businesses are not having difficulties.

I think I was thinking hiring vs. investing. Or something.

[El Guapo 8]

I work in commercial lending, and can tell you that, while banks are lending less, to say just that is not really accurate. Banks are lending about the same as they always did, which is on a risk-adjusted basis. In this economy, businesses are generally higher risk, and therefore will receive less lending. To suggest the banks should now lower their lending standards would be to change their business model. They already needed bailouts because they're run like crap, no need to increase their costs.

This is not true in the US. Not sure about Canada. Even on a risk adjusted basis, the banks are lending much less.

[leftygolfer 7]

I work in commercial lending, and can tell you that, while banks are lending less, to say just that is not really accurate. Banks are lending about the same as they always did, which is on a risk-adjusted basis. In this economy, businesses are generally higher risk, and therefore will receive less lending. To suggest the banks should now lower their lending standards would be to change their business model. They already needed bailouts because they're run like crap, no need to increase their costs.Though you say you disagree with LLY, nothing you say really contradicts what he says. His argument discusses why businesses aren't investing. Part of his evidence is that businesses are both hiring less and giving less hours to those that are employed.

I spent 18 years as a commerical lender...we can compare resume's at a later date. I am not sure what I said that is "not really accurate".Banks are not "lending about the same as they always did".I never suggested that "the banks should now lower their lending standards". I know plenty of banks that are well run.

This is not true in the US. Not sure about Canada. Even on a risk adjusted basis, the banks are lending much less.

Most likely this.

[mrdannyg 274]

This is not true in the US. Not sure about Canada. Even on a risk adjusted basis, the banks are lending much less.

I spent 18 years as a commerical lender...we can compare resume's at a later date. I am not sure what I said that is "not really accurate".Banks are not "lending about the same as they always did".I never suggested that "the banks should now lower their lending standards would be to change their business model. "I know plenty of banks that are well run. Most likely this.

I'm not challenging your perch lefty - I've barely been out of diapers for 18 years (it was an awkward adolescence). I realize that by quoting you, it seemed that I was responding directly to you, though that wasn't really my intention.Despite a lack of stats (from me too), I'll accept that US banks are lending less, using whatever assumptions. I overstated that while trying to make my point. I also understood that your criticism of banks lending less implied you thought they should be lending more. With regulations increasing and few other reasons to increase it, that implied to me you were suggesting they accept more risk in their loans.My point was really to attack what seems to be common mentality, that banks are 'evil' or curbing lending for anything other than economic reasons. Banks are an economic vehicle like anyone else. They will act exactly to their best interest, given the surrounding environment. If we want them to act differently, we simply have to provide the right stimulus (no pun intended). Increasing regulation and curbing compensation will not accomplish that.This post was boring, and completely uninformative to probably everyone that is reading this thread. If I could access a picture of a cat in a business suit through my work firewall, I would post it here.

[leftygolfer 7]

Despite a lack of stats (from me too), I'll accept that US banks are lending less, using whatever assumptions. I overstated that while trying to make my point. I also understood that your criticism of banks lending less implied you thought they should be lending more. With regulations increasing and few other reasons to increase it, that implied to me you were suggesting they accept more risk in their loans.

This was my source:

Banks post $21.6 billion profit in 2nd quarterBy MARCY GORDON (AP) – 3 hours agoWASHINGTON — A mixed picture of U.S. banks emerged Tuesday as the industry posted its highest quarterly earnings in nearly three years while the number of troubled institutions grew by more than 50.Banks overall made $21.6 billion in net income in the April-to-June quarter, the Federal Deposit Insurance Corp. said. It was the highest quarterly level since 2007 and was led by the largest institutions. The industry lost $4.4 billion in the second quarter of 2009.But the number of banks on the FDIC's confidential "problem" list increased by 54 in the quarter — growing to 829 from 775 in the first quarter. Most of the banks that have failed this year have been smaller or regional banks.The decline in bank lending stemming from the financial crisis showed signs of leveling off, the data show. Total lending declined by $107.5 billion, or 1.4 percent from the first quarter. It posted the steepest drop since World War II — 7.5 percent — in 2009 from the year before.FDIC Chairman Sheila Bair said banks' lending standards are beginning to ease for some types of credit."But lending will not pick up until businesses and consumers gain the confidence they need to hire and spend," Bair said.She said the economic recovery is starting to be reflected in banks' higher earnings and the improved quality of loans, with fewer defaults and delinquencies.For the first time since late 2006, banks overall set aside less to cover future losses on loans than they had a year earlier, the FDIC said. Total reserves declined by $11.8 billion, or 4.5 percent.The biggest banks have mounted a strong recovery with help from federal bailout money and record-low borrowing rates from the Federal Reserve. They also have been able to cut back on lending in troubled parts of the country such as Florida and Nevada.Smaller and regional banks, however, have less flexibility. They have accounted for nearly all the banks that have failed this year.The FDIC's deposit insurance fund, which fell into the red about a year ago, posted a slight improvement. Its deficit declined to $20.7 billion from $20.9 billion.The FDIC expects U.S. bank failures to cost the insurance fund around $100 billion through 2013. The agency mandated last year that banks prepay about $45 billion in premiums, for 2010 through 2012, to help replenish the fund.Last year, 140 federally insured institutions failed and were shut down by regulators. It was the highest annual number since 1992, when the savings and loan crisis hit its peak. Last year's failures extended a string of collapses that began in 2008, triggered by loan defaults in the financial crisis.The pace of bank collapses this year exceeds last year's. So far, 118 banks have failed in 2010. The pace has quickened as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.Depositors' money — insured up to $250,000 per account — isn't at risk. The FDIC is backed by the government.

[strategy 4]

I saw Sheila Bair speak at KU sometime in 2007. It was mostly "herp derp subprime?" questions from the audience in the Q&A. there's some humor in the discussion of banks not lending enough. they got tons of public scorn over their self-destructive lending pre-meltdown and now we're screaming at them to loosen their standards again in the hopes that it will jump-start the economy. to me, that attitude would suggest that we didn't learn from the experience.

[CaneBrain 95]

I saw Sheila Bair speak at KU sometime in 2007. It was mostly "herp derp subprime?" questions from the audience in the Q&A. there's some humor in the discussion of banks not lending enough. they got tons of public scorn over their self-destructive lending pre-meltdown and now we're screaming at them to loosen their standards again in the hopes that it will jump-start the economy. to me, that attitude would suggest that we didn't learn from the experience.

We never do.

[ShakeZuma 585]

I saw Sheila Bair speak at KU sometime in 2007. It was mostly "herp derp subprime?" questions from the audience in the Q&A. there's some humor in the discussion of banks not lending enough. they got tons of public scorn over their self-destructive lending pre-meltdown and now we're screaming at them to loosen their standards again in the hopes that it will jump-start the economy. to me, that attitude would suggest that we didn't learn from the experience.

yeah but I mean there's NO WAY housing prices are ever going to get lower again I mean it's a sure bet amirite?

[SBriand 4]

I know I am setting myself up here but I have a few minutes to spare and am at least...interested.My degrees are in Psychology, Culinary Arts, and Paralegal. None of which needed anything close to a finance class or even economics. So bear with me.While I agree that the lending practices helped create this mess, do they not need to lend money to stimulate the economy. Obviously don't go giving money out willy nilly to any dead beat with a 500 credit score, but they were I thought given money so that they could start lending money out to low risk people. Seems to me the problem was giving loans out to the wrong type of people.

[Balloon guy 158]

I saw Sheila Bair speak at KU sometime in 2007. It was mostly "herp derp subprime?" questions from the audience in the Q&A. there's some humor in the discussion of banks not lending enough. they got tons of public scorn over their self-destructive lending pre-meltdown and now we're screaming at them to loosen their standards again in the hopes that it will jump-start the economy. to me, that attitude would suggest that we didn't learn from the experience.

I kind of see it the opposite.It was because they were willing to make such boneheaded loans, package them and keep doing it till the market was flooded with crap, and then after making all the money on commissions, now the economy needs some infusion and they are tight as a drum, refusing to take the smallest risk without 4 different ways to be re-paid.They caused this recession, now they are making it last longer.

[SBriand 4]

I kind of see it the opposite.It was because they were willing to make such boneheaded loans, package them and keep doing it till the market was flooded with crap, and then after making all the money on commissions, now the economy needs some infusion and they are tight as a drum, refusing to take the smallest risk without 4 different ways to be re-paid.They caused this recession, now they are making it last longer.

Yeah what this dude said.