Economy

[Cerek]

Originally Posted by SpiritWarrior Well, see you hear this alot especially when the tea-party types are talking about the debt they are suddenly concerned about - not lumping you in with them whackos at all btw, just made me think of them as an example. At 11 or 12 this is a good rule of thumb for a kid to manage his pocket-money or what have you. But as we get older, we learn that finances aren't so simplistic in how they function in the world. Indeed, America is built on borrowing money to create something better. Mortgages for example. Only a very small percentage of the world has the money to purchase their house up front. The rest of us do indeed "borrow from Peter to pay Paul". Otherwise, we'd have nowhere to live. Or no cars to drive. Or credit cards. Or tabs. The list goes on. We're happy to take the risk of losing these things years down the line in exchange for the instant gratification of having them now. I understand you make a larger point and that there's a context involved in that paragraph. There are concerns that this money may not be returned which is in some ways, a valid concern. But then, we have the same concerns when committing to a house for 25 years.

However, even adults should have the intelligence to borrow responsibly and not incur payments too high or too numerous for them to afford. While I might love to have a brand new car, I understand it simply is not possible. Even if I could get the loan, I would not be able to make the payments for the full term of the loan. Unfortunately, we just went through more than a decade of banks and financial institutes basically saying "It doesn't matter if you don't have the income or credit rating to afford these things, you deserve them, so we're going to give you enough credit to buy them anyway." And then reality finally hit that they couldn't afford the payments.

I have an aunt who is a compulsive shopper. She is over 60 yrs old and has to work two jobs just to pay her bills and - especially - her credit card debt. She often complains about having to work two jobs and how high her bills are, but then she never takes any steps to control her spending. To pay off her credit cards, she will invariably get a new card and have all the balances transferred to it so she only has one payment instead of two or three or four. When she got her second job, she said "I'm gonna put THIS money in savings and not touch it". That lasted until she got her first paycheck. She moans about how much debt she has, then turns around and says "Well my bff and I are going to Biloxi this weekend to hit the casinos." HELLO! How about SAVING that money and paying on your credit card debt? But she won't do it.

Several years ago, a coworker of mine had bought a brand-new mustang, which she could not afford. The dealership eventually repossessed and said she could have it back when she got her payments up to date. Her normal payment was around $450/month. By comparison, my HOUSE payment was about the same amount. She ended up having to pay over $600 to get her car back. She filed bankruptcy to get out of the rest of her debt. As soon as the court approved her bankruptcy, did she sit down and work on a financial plan to build her savings back up? NOPE. She said "Hey, NOW I can afford to go to the beach for a week" so she started planning a vacation instead.

Congress is the same way. They don't seem to have any concept of NOT spending money they don't really have and the general American consumer has become the same way.

Borrowing money may be a part of our society, but it seems very few people or politicians understand it still has to be done responsibly and that is what has put our economy in the crapper....not lack of taxes on the super rich. The super rich got that way because, unlike most others, they DID learn how to handle their money responsibly and invest it to create more money.

[Gabrielles blades]

Cerek,
Perhaps the reason why the middle class is in this situation is because the super rich have as per the presentation NOT given the middle class a raise for quite a while. This raise that was not given is necessary inflation is causing the middle class to actually be making LESS than the previous year. With no raise, they are also of course less able to pay off the debts that they have incurred. Also, the money in a super rich persons bank is not being circulated among the population resulting in less things being bought than would otherwise be the case.

As for the Gov, bailout of the auto industry - they need to get a clue and build cars that people want to buy. The latest example of them being completely clueless is the creation of the Volt - which is a worse car than the prius in just about every single way imaginable. There is NO reason why we cant make quality affordable cars that people want to buy. A specific example is the Avion - a 100 mpg car that uses tech available from 1986. Yes thats right, we have a 100 mpg car, diesel not hybrid or electric from 1986 tech that no auto company wanted to build then or apparently now. Its just too bad that the economies of scale force them to charge 30k for a car that if built by the industry would likely be only 12-15k.

The bank bailout was mostly because of the housing bubble crash; in fact im pretty sure it was 1 house of a super rich person that caused the crash.

[Micah Foehammer]

Originally Posted by Gabrielles blades Perhaps the reason why the middle class is in this situation is because the super rich have as per the presentation NOT given the middle class a raise for quite a while.

Talk about a sense of entitlement. Sheesh

Middle class tax rates are at historical LOWS. A family of four in the exact middle of the income spectrum will pay only 4.7 percent of its income in federal income taxes this year, according to a new analysis by the Urban Institute-Brookings Institution Tax Policy Center. This is the third-lowest percentage in the past 50 years, after 2008 and 2009.

[Gabrielles blades]

So your saying its ok that the super rich are paying themselves more in order to pay the middle class less because they arent paying as much taxes as previous years?
As per the presentation they are getting 20% more of the wealth. Now lets see, the middle class is paying 6% less taxes than prior years in order to lose out on 20%. Doesnt that seem remarkably silly? I would rather pay 6% more taxes and get 20% more in my paycheck, i would still be making more.

Lots of good information here on how greedy super rich bankers and hedgefunders created the housing bubble and popped it:
http://www.whiteoutpress.com/article...omic-collapse/

[Micah Foehammer]

Originally Posted by Gabrielles blades So your saying its ok that the super rich are paying themselves more in order to pay the middle class less because they arent paying as much taxes as previous years?

That isn't what I said at all. What I simply pointed out was that the middle class currently pays taxes based on an histroically low tax rate to show the disparity between the existing tax rates.

By the way, the proposed cost for extending the Bush tax breaks for FY 2011 for the rich is estimated in various circles as somewhere between 36 billion $ and 90 billion $ with 70 billion $ being the most frequent number. But even if the upper estimate is accurate, that's less than 6% of the 1.4 TRILLION $ deficit projected for 2011. Yet according to that video, it's just the tax breaks for the rich that are responsible for the deficits and by extension ALL of our economic problems. Never mind that the cost for ALL of the tax cuts is estimated at 380 Billion $. And that total is ~25% of the total deficit. But hey it's ALL about the tax cuts for the rich. Talk about a load of BS! But it makes a great sound bite so lets just swallow that load of crap without questioning it.

And just to do the math for you, repealing the ENTIRETY of the bush tax cuts would STILL leave a deficit of over 1 TRILLION DOLLARS. Still think it's ALL about the tax cuts for the rich?

I will concede that the rich take great advantage of the capital gains tax rates. That's why I advocated doing away with those breaks completely and taxing ALL income as simple income. But that was based on leveling the playing field. That change ALONE would MORE than pay for extending the tax cuts for the rich.

There is actually a reason for allowing lower rates for Capital gains. That money typically comes from stock and bond investments which provide additional capital for business expansion. It's a direct economic stimulus. But in the interest of fairness, since most middle class folks can't take advantage of them, let's do away with them. Never mind that nobody is calling for the elimination of tax credits that benefit the middle class.

And it might surprise you that ~ 2/3 of the folks in that upper tax bracket (i.e. the folks actually benefiting from them) didn't think that extending the Bush era cuts for the rich was a good idea.

[SpiritWarrior]

Originally Posted by Micah Foehammer Good point. EXCEPT that most mortgage holders are able to make their payments without additional borrowing (except for those that overextended on sub-prime mortgages). So the principal of NOT overspending applies EVEN if you ARE servicing a large debt whether it be a car, house, appliances or even credit cards. You spend what you can afford and that applies to assuming debt as well.

Well, let's not gloss over the fact that they borrowed an unsurmountable amount to begin with, while asking someone to allow them to pay it back in fractions over many years. They ask for more money than they will ever have in their hands at one time - and they full well know it. Yet, still they do it. And this practice is so popular it's considered the American way. That's why I don't get why all the mortgage-owning teabaggers are against borrowing or debt. Maybe they are just against anyone else borrowing except themselves? Because very few of them look like renters to me.

As for overspending while servicing a debt, in these troubled times many are faced with losing their homes, and have no choice but to. They could stick to their guns, decide they cannot possibly do this, and live on the streets, taking comfort in the knowledge that they are debt-free. But what meaning does debt-free really have if you don't have a house or anything worth keeping in the first place?

Instead, many we see now are choosing to inscrease their debt, in exchange for immediate security. They ensure a bad situation does not go to worse and get to the point where their children and themselves are on the street. Reckless? If you consider doing what you need to do to protect your family and home. What choice do they have? If the bank offer you your house back on the condition you pay more in the long run, you take it and hope you and the economy, will be in a better position later. Thousands have compromised this way in the last few years. It's the reason they're not milling about on the streets.

[SpiritWarrior]

Originally Posted by Cerek However, even adults should have the intelligence to borrow responsibly and not incur payments too high or too numerous for them to afford. While I might love to have a brand new car, I understand it simply is not possible. Even if I could get the loan, I would not be able to make the payments for the full term of the loan.

Not quite sure if we're talking about the same thing. If I have a shitty car, right now I know I cannot afford a better one. I just need a car - but I don't need 2 or 3. Or the best model of one.

If I have a 2 bedroom house, and I would really like a 4 bedroom house, I still have the foresight to know the timing is incorrect and I can get by without a 4br.

If I have NO car or NO house, I need to acquire them to function so I can get to work and then go home to sleep. My house could be a dingy little hovel, but its better than having none at all. My car could be the public transport system (depending on where you live) but it works for me right now.

[SpiritWarrior]

Originally Posted by Micah Foehammer Talk about a sense of entitlement. Sheesh Middle class tax rates are at historical LOWS. A family of four in the exact middle of the income spectrum will pay only 4.7 percent of its income in federal income taxes this year, according to a new analysis by the Urban Institute-Brookings Institution Tax Policy Center. This is the third-lowest percentage in the past 50 years, after 2008 and 2009.

So under Obama, the tax rates for MC have diminished further. Would someone tell this to Fox News and the Tea Party please.

[Gabrielles blades]

True, the economy is screwed up for more reasons than those presented in the video.
Just a short list:
1) ceos decide to move jobs overseas depriving americans of jobs, this over an extended period is funneling money slowly out of the country leading to less skilled americans who are stuck in service industry jobs instead of manufacturing.
2) auto industry refuses to build high mpg cars which would make gas prices not have as huge an impact as they do.
3) education post high school is less about education and more about making a buck off students. Leading to many colleges where the cost of tuition exceeds the amount a student could expect to make on the job they are studying for by 3-5 years. Which of course means massive student loan debt. Really, 50k for a culinary school degree? ridiculous.
4) overseas wars which only seem to make other countries mad at us or create situations where we need to wage another stupid war. After all, america is who trained al queda in the first place. You may say we need to be proactive and not isolationist, but we could stand to stand down for a while - china is going to just buy america if we keep going down the toilet financially. Their defence minister is gearing up a bit more for war now since we gave them our economy over 30 years.
5) health care costs truly insane, leading of course to medical tourism since other countries can offer the same procedures for ALOT less, which of course is money going right out of the country again.

[Micah Foehammer]

Originally Posted by Gabrielles blades True, the economy is screwed up for more reasons than those presented in the video.

I agree, and yet the video would have you think it's ALL about the tax cuts for the rich.

Jobs lost to overseas? Some of that is due to labor unions simply pushing wages to the point where overseas options are simply more attractive. Is it fair? No. But the US had lost its manufacturing base in a HUGE way a long time ago.

Student loans? I had student loans that took me more than six years to pay off so it's hard for me to be sympathetic on this one. I do have to admit though that the costs have escalated a lot, but so too have salaries. Perhaps not proportionately though.

Gas Prices? USA has some of the lowest gas prices in world - about half of Europe. Detroit sells what the market buys. How about the folks that insist on buying those Hog SUVs which only get 15 mpg and then complain about fuel costs? There are plenty of options for 30+ mpg cars. I will concede that the US lost it's market by NOT paying attention. And YES, the Volt is a huge fly-covered stinking POS!

Health Care? Is it reasonable to expect EVERYONE in this country to have health insurance? If so, add another 1 trillion dollars to deficit.

Actually good points on most of those GB.

Originally Posted by SpiritWarrior Well, let's not gloss over the fact that they borrowed an unsurmountable amount to begin with, while asking someone to allow them to pay it back in fractions over many years. They ask for more money than they will ever have in their hands at one time - and they full well know it.

So? Mortgage Loans are NOT insurmountable amounts UNLESS you overextend OR something changes your financial situation. I've already paid off ONE 30 year mortgage, and I'm on my second house and a new mortgage, and I'm not unique. Millions of people do it. In fact, it normally becomes easier to handle the mortgage as time goes on because the payments are fixed (ARMs excepted of course) but your income escalates over time.

Originally Posted by SpiritWarrior As for overspending while servicing a debt, in these troubled times many are faced with losing their homes, and have no choice but to. They could stick to their guns, decide they cannot possibly do this, and live on the streets, taking comfort in the knowledge that they are debt-free. But what meaning does debt-free really have if you don't have a house or anything worth keeping in the first place? Instead, many we see now are choosing to inscrease their debt, in exchange for immediate security. They ensure a bad situation does not go to worse and get to the point where their children and themselves are on the street. Reckless? If you consider doing what you need to do to protect your family and home. What choice do they have? If the bank offer you your house back on the condition you pay more in the long run, you take it and hope you and the economy, will be in a better position later. Thousands have compromised this way in the last few years. It's the reason they're not milling about on the streets.

I wasn't advocating being debt-free. You can't buy a house without assuming debt unless you're one of the unclean super rich and trust me THEY do NOT pay cash. But there is HUGE difference between being debt-free and managing debt responsibly! You don't see something wrong with people continuing to pile on debt when they are already over-extended? Or in overextending in the first case?

When did the concept of living within your means cease to have meaning? And that same principal should apply to the government.

Look, I get that SOME of the people we are talking about have been put into horrendous situations because of lost income due to unemployment. That's truly catastrophic and I am not to downplay those situations. But face it, not everyone is in the fix they are for those reasons.

Besides, this is more about the government overspending.

Originally Posted by SpiritWarrior So under Obama, the tax rates for MC have diminished further. Would someone tell this to Fox News and the Tea Party please.

Oh geez. Look at the chart. Those nominal rates have been dropping since 1980. Obama is simply one of MANY presidents who have continued the trend. He hardly deserves a gold star for that. And they actually hit their LOWEST rate under, wait for it, BUSH in 2007!