Greenspan on Economy and Downgrade

inlet13

Not a huge fan of the guy, but I respect his opinion on the economy (now that he's not FED chair) a lot more than any politician. He was on Meet the Press this morning. I thought this was interesting:

And while many warn that cutting government spending now will harm America’s fragile economy, Greenspan said hiking taxes would be worse for the economy than the spending cuts.

“First of all, there’s a general view out there that we are somehow going to solve the problem without pain,” Greenspan said. “There’s no conceivable scenario in which that is true. Cutting back on government spending will cause some contraction in economic activity, but according to the IMF, who has done a considerable number of evaluations of related issues, they’ve concluded that increases in taxes do curtail economic activity. So do expenditure cuts, but significantly less.”


Read more: http://dailycaller.com/2011/08/07/green ... z1UOQ5xbOY


http://dailycaller.com/2011/08/07/green ... -slowdown/

unsung

It still amazes me that there are people that haven't demanded an audit of the Federal Reserve.

inlet13

unsung wrote:

It still amazes me that there are people that haven't demanded an audit of the Federal Reserve.

No offense, I'm a Ron Paul fan too and I don't disagree about the FED audit, but that has nothing to do with this thread.

polaris_x

i'm not sure what he's saying in that last paragraph ...

he first says raising taxes would be bad ... then he says that solving this without some pain is not possible ... then it says that both cuts and raising taxes curtail economic activity and if i read it correctly - he said raising taxes has less an impact on economic activity than cuts ...

***************

either way ... the whole thing needs to be blown up ... this economy apparently in tatters is also producing healthy profits for many corporations ... why is that? ...

edit: also, my understanding of the downgrade was that it was the result of the partisanship that exists ... the inability of those in congress to work together ... i know obama is an easy target ... and in some ways - he's failed in his leadership capacity ... however, we all know who the real fucktards were in this process ...

inlet13

polaris_x wrote:

i'm not sure what he's saying in that last paragraph ...

he first says raising taxes would be bad ... then he says that solving this without some pain is not possible ... then it says that both cuts and raising taxes curtail economic activity and if i read it correctly - he said raising taxes has less an impact on economic activity than cuts ...

***************

Yeh, you read it right. He's saying we need to do something, which I think everyone knows. But, the important part to me was when he says spending cuts will hurt GDP less than raising taxes (or increasing government revenues). This is important because the reason we were downgraded was our debt to gdp ratio (Debt/GDP). To lower debt, we could cut government spending or increase revenues (through taxes) or both, but how we do that (spending or taxes etc) impacts the denominator, which also matters. He's saying that the IMF has proven that cuts will impact the denominator less. So, he's advocating the cut spending policy.

polaris_x wrote:

either way ... the whole thing needs to be blown up ... this economy apparently in tatters is also producing healthy profits for many corporations ... why is that? ...

Corporations are sitting on healthy profits because of a lack of confidence.

polaris_x wrote:

edit: also, my understanding of the downgrade was that it was the result of the partisanship that exists ... the inability of those in congress to work together ... i know obama is an easy target ... and in some ways - he's failed in his leadership capacity ... however, we all know who the real fucktards were in this process ...

According to what we just went through above, I suppose we agree the "fucktards" were the ones who wouldn't cut enough spending?

polaris_x

sorry ... the way i read it ... the IMF is saying raising taxes would have less an impact while greenspan says it will ... who's right?

corporations are sitting on healthy profits because the game is structured in their favour ...

a great example of how fucked up this is - is the prison system ... i won't get into details but read about ALEC and the shit they do and you realize why the gov't owes so much money ...

much of the downgrade was related to the inability for congress to work together and the fact they waited to the last possible minute to strike a deal ... to the point where they incurred significant penalties in a time when that is not needed at all ...the fucktards are the ones who held up a deal for absolutely moronic reasons ... it's the same people both democrats and republicans were railing against ...

inlet13

polaris_x wrote:

sorry ... the way i read it ... the IMF is saying raising taxes would have less an impact while greenspan says it will ... who's right?

No. Greenspan is saying the IMF has researched it and concluded that spending cuts are more favorable relative to tax increases in regards to detrimental effects on GDP.

polaris_x wrote:

corporations are sitting on healthy profits because the game is structured in their favour ...

No. They aren't. The are sitting on profits because of fear.

polaris_x wrote:

a great example of how fucked up this is - is the prison system ... i won't get into details but read about ALEC and the shit they do and you realize why the gov't owes so much money ...

much of the downgrade was related to the inability for congress to work together and the fact they waited to the last possible minute to strike a deal ... to the point where they incurred significant penalties in a time when that is not needed at all ...the fucktards are the ones who held up a deal for absolutely moronic reasons ... it's the same people both democrats and republicans were railing against ...

The debt problem was a problem before congress had to "save the day". I agree that they shouldn't have waited until the last minute. But, I don't understand why "they" (including the current Administration) didn't start worrying about this until a month or so beforehand. When all the math said this was going to be a problem six months ago. Harry Reid wanted to wait until the new Republicans were in office. In my humble opinion, in regards to the debt ceiling debate, the people who kept pushing this off were the fucktards.

To think that a Democrat or a Republican, who stands by their party's ideology, is a fucktard is silly. Personally, I wouldn't be surprised in the least if there were a group of Democrats who would not support cuts that touched entitlement programs, just as I wouldn't be surprised that a group of Republicans would not support tax increases. This is common sense. And it's why the President should have:

1) Made this an issue sooner or..
2) Told his party to allow Cut, Cap and Balance through (because we would not have been downgraded if that was the case)

But in the end, the problem was NOT the debate on how to handle the debt ceiling. We were downgraded because of our Debt/GDP ratio. The debt ceiling increase only increased that.

pjfan021

i watched MTP to and I was a little surprised to hear him say that...looked like austan goolsbee was a lil surprised too. I'm with polaris here in that he somewhat contradicts himself with what he says...now is he referring to just tax increases and no spending cuts? what kind of taxes will hurt? In a $4 trillion package and only a quarter is new revenue I don't see how that is that damaging when you said corp. are sitting on profit. Also doesn't make sense to cut away from so many programs that are needed for people who are struggling as opposed to the wealthy (corporations in particular) who aren't giving up much of anything.....and greenspan was part of the problem too so i'm not sure how much of his expertise is golden and how much is BS.

inlet13

pjfan021 wrote:

i watched MTP to and I was a little surprised to hear him say that...looked like austan goolsbee was a lil surprised too. I'm with polaris here in that he somewhat contradicts himself with what he says...now is he referring to just tax increases and no spending cuts? what kind of taxes will hurt? In a $4 trillion package and only a quarter is new revenue I don't see how that is that damaging when you said corp. are sitting on profit. Also doesn't make sense to cut away from so many programs that are needed for people who are struggling as opposed to the wealthy (corporations in particular) who aren't giving up much of anything.....and greenspan was part of the problem too so i'm not sure how much of his expertise is golden and how much is BS.

Sorry, but I don't see a contradiction at all. He's pretty straight-forward in my opinion.

You seem to be really pressing corporate taxes. Look if you raise taxes on US corporations, which already pay the highest rate in the entire world, do you really think that would make them hire more people?

Regardless, I agree that Greenspan was part of the problem. Actually, I think he is more to blame than any other person. But, his point of view there had nothing to do with Monetary Policy.

polaris_x

if so ... that article is written poorly as the wording is not very clear ...

corps have been riding strong profits for a while now ... it has nothing to do with fear ... the model has always been take as much as possible as soon as possible ...

the economic model needs to be blown up ... never is sustainability ever factored in ... it's about greed ...

inlet13

polaris_x wrote:

if so ... that article is written poorly as the wording is not very clear ...

corps have been riding strong profits for a while now ... it has nothing to do with fear ... the model has always been take as much as possible as soon as possible ...

the economic model needs to be blown up ... never is sustainability ever factored in ... it's about greed ...

That's hippy-speak for redistribute wealth. It is about fear and greed (if you mean people trying to make money) is not bad. For instance, if the economic landscape changed, and capital or human investment by corporations could knowingly make money 10 years from now... corporations would invest in long-term assets (like people). They would be "greedy" trying to make even more.... (wait for it, here comes the evil word)... profit by increasing the amount they sell. But, instead, during the recession they cut costs, and as the economy briefly turned back around, profits increased because revenues fell back-in line with pre-recession revenues, yet costs stayed low (they didn't hire). Once again, they didn't hire because they knew (correctly I might add), that this was all a BS bump up. Although the short run looked a little better, they knew the long run did not... so why hire people back and increase costs when you'll have to fire them again in a year?

This brings me back to Keynes:

"In the long run, we're all dead"

In fact, the long run is here... right now. And we're not dead, we're just getting our teeth kicked in repetitively because we've followed that stupid "make things better immediately" ideology, which just makes things worse. The irony to me is, that the guy who this economic ideology is named after "Keynes" knew this... that's why his quote is "in the long run, we're all dead". He didn't care about the long run.

polaris_x

ya ... they cut costs and payroll and froze wages and hirings ... yet executive bonuses skyrocketed ... and payouts and perks also went up ...

look at how the prison system operates ... the lobbyists pressure states to privatize ... then they lobby for ridiculous penalties to crimes to ensure occupancy ... then they bill the state for a ridiculous amount of money to house these folks ... now, they are using these guys as labour without any form of regulations ...

this is symbolic of all that is wrong ...

inlet13

polaris_x wrote:

ya ... they cut costs and payroll and froze wages and hirings ... yet executive bonuses skyrocketed ... and payouts and perks also went up ...

look at how the prison system operates ... the lobbyists pressure states to privatize ... then they lobby for ridiculous penalties to crimes to ensure occupancy ... then they bill the state for a ridiculous amount of money to house these folks ... now, they are using these guys as labour without any form of regulations ...

this is symbolic of all that is wrong ...

No one cares about CEOs making money in a normal environment. Unfortunately, this is coming a year or two after major layoffs throughout the US occurred. Those corporations had to cut back (just as the government is learning 2 years later) when the recession hit. So, they did. A year afterthey cut costs, profits increased as revenues returned to growth mode (since Profit = Revenue - Costs... profit increased). And since CEO compensation is often tied to profits, their bonuses increased.

The elementary liberal talking points from Rachel Maddow and the like are no more than elementary liberal talking points.

mikepegg44

polaris_x wrote:

if so ... that article is written poorly as the wording is not very clear ...

corps have been riding strong profits for a while now ... it has nothing to do with fear ... the model has always been take as much as possible as soon as possible ...

the economic model needs to be blown up ... never is sustainability ever factored in ... it's about greed ...

he simply says that spending cuts harm the economy far less than tax cuts...although both have an impact...but it is all in how you read it I suppose

the real job creators, small business owners, are not doing nearly as well and are affected by poor economic news and credit tightening. Start ups and small business expansion is difficult in a time of uncertainty and fear the current climate is breeding that...so you can blame corporate greed all you want, but that isn't the problem...Greed isn't always a bad thing...but we can just disagree on that.

mikepegg44

polaris_x wrote:

if so ... that article is written poorly as the wording is not very clear ...

corps have been riding strong profits for a while now ... it has nothing to do with fear ... the model has always been take as much as possible as soon as possible ...

the economic model needs to be blown up ... never is sustainability ever factored in ... it's about greed ...

he simply says that spending cuts harm the economy far less than tax cuts...although both have an impact...but it is all in how you read it I suppose

the real job creators, small business owners, are not doing nearly as well and are affected by poor economic news and credit tightening. Start ups and small business expansion is difficult in a time of uncertainty and fear the current climate is breeding that...so you can blame corporate greed all you want, but that isn't the problem...Greed isn't always a bad thing...but we can just disagree on that.

mikepegg44

polaris_x wrote:

if so ... that article is written poorly as the wording is not very clear ...

corps have been riding strong profits for a while now ... it has nothing to do with fear ... the model has always been take as much as possible as soon as possible ...

the economic model needs to be blown up ... never is sustainability ever factored in ... it's about greed ...

he simply says that spending cuts harm the economy far less than tax cuts...although both have an impact...but it is all in how you read it I suppose

the real job creators, small business owners, are not doing nearly as well and are affected by poor economic news and credit tightening. Start ups and small business expansion is difficult in a time of uncertainty and fear the current climate is breeding that...so you can blame corporate greed all you want, but that isn't the problem...Greed isn't always a bad thing...but we can just disagree on that.

polaris_x

inlet13 wrote:

No one cares about CEOs making money in a normal environment. Unfortunately, this is coming a year or two after major layoffs throughout the US occurred. Those corporations had to cut back (just as the government is learning 2 years later) when the recession hit. So, they did. A year afterthey cut costs, profits increased as revenues returned to growth mode (since Profit = Revenue - Costs... profit increased). And since CEO compensation is often tied to profits, their bonuses increased.

The elementary liberal talking points from Rachel Maddow and the like are no more than elementary liberal talking points.

yet ... you argue for cost saving measures but support increasing perks and bonuses to executives ... it's contradictory no? ...

how would you feel if congress cut major spending but gave themselves and senior staffers a huge raise?

inlet13

polaris_x wrote:

yet ... you argue for cost saving measures but support increasing perks and bonuses to executives ... it's contradictory no? ...

Not at all.

I argue for cost saving measures for an institution which I support with my own money (and could be considered a stakeholder)... the US government. Businesses can do as they like, I don't need to own stake in them if I don't like their policies.

It's hard to discuss this with someone who is really trying to equate government to corporations. They are very different.

polaris_x wrote:

how would you feel if congress cut major spending but gave themselves and senior staffers a huge raise?

I would like that they cut government spending (I pay the taxes that they spend with, remember?), but I would not like that they gave themselves a raise (I pay the taxes that they spend with, remember?).

As for corporations, if they cut costs and still gave themselves a raise, I can say... I don't think that's a wise policy, but I wouldn't care because it's not my money. Similarly, I would not care if you decided to go to your bank, take out all of your money and burn it.

polaris_x

but you said they are sitting on profits because of fear ... if that is the case - why the bonuses!? ... why aren't they subjected to the cuts and cost savings?

inlet13

polaris_x wrote:

but you said they are sitting on profits because of fear ... if that is the case - why the bonuses!? ... why aren't they subjected to the cuts and cost savings?

I already answered that. The CEO works for the board. The board must have the bonus tied to profitability. If profits go up (even if they were due to cost cutting measures, like layoffs during a recession), the bonus goes up.

I still believe the reason corporations aren't spending the record profits is fear of a double dip... and I although I've said it about six times now in one thread... they were right to have this fear.

pjfan021

there are plenty of corporations that don't pay taxes...what did GE pay last year? Everybody talks about lowering taxes and fixing the tax code to cut loopholes but I have zero faith in a Dem OR Rep. going against the grain and actually getting these loopholes closed for corporations. I don't like the fact that we have the lowest taxes since the 50's and I don't believe Regeanomics works...the past 30-40 years of cutting taxes, cutting taxes, and cutting more taxes has put us in this shithole along with unfunded wars and yes entitlement spending. Sure, Regan had the unemployment rate down to 4% but he did it by doubling our defecit....I have little to no faith in companies hiring or not hiring because of taxes and even if they do hire more with lower taxes it seems like we just tack on a couple trillion more in debt which seems very counterproductive to me.

cincybearcat

pjfan021 wrote:

there are plenty of corporations that don't pay taxes...what did GE pay last year? Everybody talks about lowering taxes and fixing the tax code to cut loopholes but I have zero faith in a Dem OR Rep. going against the grain and actually getting these loopholes closed for corporations. I don't like the fact that we have the lowest taxes since the 50's and I don't believe Regeanomics works...the past 30-40 years of cutting taxes, cutting taxes, and cutting more taxes has put us in this shithole along with unfunded wars and yes entitlement spending. Sure, Regan had the unemployment rate down to 4% but he did it by doubling our defecit....I have little to no faith in companies hiring or not hiring because of taxes and even if they do hire more with lower taxes it seems like we just tack on a couple trillion more in debt which seems very counterproductive to me.

So, other than GE, who didn't pay taxes?

inlet13

pjfan021 wrote:

there are plenty of corporations that don't pay taxes...what did GE pay last year? Everybody talks about lowering taxes and fixing the tax code to cut loopholes but I have zero faith in a Dem OR Rep. going against the grain and actually getting these loopholes closed for corporations. I don't like the fact that we have the lowest taxes since the 50's and I don't believe Regeanomics works...the past 30-40 years of cutting taxes, cutting taxes, and cutting more taxes has put us in this shithole along with unfunded wars and yes entitlement spending. Sure, Regan had the unemployment rate down to 4% but he did it by doubling our defecit....I have little to no faith in companies hiring or not hiring because of taxes and even if they do hire more with lower taxes it seems like we just tack on a couple trillion more in debt which seems very counterproductive to me.

Our corporate taxes are the highest in the industrialized world at 35%. I agree that there should be no loopholes. But, the reason the loopholes exist is because of the ridiculously high tax rate. Politicians, or at least the economists who speak through the politicians, know companies will leave if the 35% tax is properly enforced, so that's the reason for the loopholes. Lower the tax rate, close loopholes and properly enforce the new competitive tax rate.... and we'll all be better off.

RFTC

cincybearcat wrote:

pjfan021 wrote:

there are plenty of corporations that don't pay taxes...what did GE pay last year? Everybody talks about lowering taxes and fixing the tax code to cut loopholes but I have zero faith in a Dem OR Rep. going against the grain and actually getting these loopholes closed for corporations. I don't like the fact that we have the lowest taxes since the 50's and I don't believe Regeanomics works...the past 30-40 years of cutting taxes, cutting taxes, and cutting more taxes has put us in this shithole along with unfunded wars and yes entitlement spending. Sure, Regan had the unemployment rate down to 4% but he did it by doubling our defecit....I have little to no faith in companies hiring or not hiring because of taxes and even if they do hire more with lower taxes it seems like we just tack on a couple trillion more in debt which seems very counterproductive to me.

So, other than GE, who didn't pay taxes?

google it, it's been published on over n over n over again...not trying to pick, politifact probably has it posted as an fyi.

Smellyman

cincybearcat wrote:

pjfan021 wrote:

there are plenty of corporations that don't pay taxes...what did GE pay last year? Everybody talks about lowering taxes and fixing the tax code to cut loopholes but I have zero faith in a Dem OR Rep. going against the grain and actually getting these loopholes closed for corporations. I don't like the fact that we have the lowest taxes since the 50's and I don't believe Regeanomics works...the past 30-40 years of cutting taxes, cutting taxes, and cutting more taxes has put us in this shithole along with unfunded wars and yes entitlement spending. Sure, Regan had the unemployment rate down to 4% but he did it by doubling our defecit....I have little to no faith in companies hiring or not hiring because of taxes and even if they do hire more with lower taxes it seems like we just tack on a couple trillion more in debt which seems very counterproductive to me.

So, other than GE, who didn't pay taxes?

Plenty. there is a reason why every m&A and other deals are "incorporated in the cayman islands"