Economic Death Spiral?

[OJsDad]

The whole concept of free trade should be reevaluated.. It was one thing when we exported to the rest of the world.. Now our trade deficit with China is so unbalanced - place a 5% across the board tariff and use the revenue to pay down the national debt.

I have no problem with free trade, but China does not practice it.  If an American company opens a factory in China, then they have to export 100% of the product from it for x number of years.  They keep the value on their currency artificially low for to help their exports.  They out right steal intellectual property.  No to mention they are at least 60 years behind on enviromental abuses.  India isn't much better either.

[Keunert]

i have to show the competitive list Action Jack. it will make him break down and admit his sins

[Gusington]

^Never happen.

[Silent Disapproval Robot]

You could easily get him to cut and paste it and accept it as gospel if you posted it as an article on some whack job Libertarian site.

[airboy]

The Federal Government borrows about $41 for every $100 spent.  This cannot continue long term when annual deficits are > $1 Trillion annually.

Under Obama, Federal spending has gone up to about 25% of Gross Domestic Product compared to the average of 18-20% over the last 20 years.

But the Dems are correct that the total Federal Tax burden is lower than it has been since the 1950s.  But....  the reason for this is primarily how many people have been removed from the tax rolls.  Currently less than 50% of US households pay any federal taxes outside of taxes on booze, smokes & gasoline.

It is a fantasy that either cutting military spending or only taxing the "rich" can close the budget deficit.  The savings are not big enough and the revenues are not great enough.

Part of this is demographic.  Social Security, Medicare and other transfer payments to the old were set up to work when there were many, many working people and relatively few retired or old people.  Just look at increasing life spans and the failure to adjust when benefits kick in (or the amount paid to support them).

The Federal Reserve is printing amazing amounts of money.  The amount of worthless assets they have on their balance sheet is equally alarming.

All of this can be fixed - but it requires real pain.  Increased taxes for everyone.  Spending cuts for everyone.  Stop accumulating even more debt.  Don't print outrageous amounts of money.  But all of this requires actual painful decisions by politicians.  Or they can keep kicking the can down the road until or creditors cut us off - think Greece, Spain, Imperial Spain, Imperial Russia, Weimer Republic.....

People can point fingers - but nobody can run this level of fiscal deficits long term.

[OJsDad]

People can point fingers - but nobody can run this level of fiscal deficits long term.

[OJsDad]

Ok, here is a better one;

[LongBlade]

Ok, here is a better one;

Doesn't help.

[DoctorQuest]

The Federal Government borrows about $41 for every $100 spent.  This cannot continue long term when annual deficits are > $1 Trillion annually.

Under Obama, Federal spending has gone up to about 25% of Gross Domestic Product compared to the average of 18-20% over the last 20 years.

But the Dems are correct that the total Federal Tax burden is lower than it has been since the 1950s.  But....  the reason for this is primarily how many people have been removed from the tax rolls.  Currently less than 50% of US households pay any federal taxes outside of taxes on booze, smokes & gasoline.

It is a fantasy that either cutting military spending or only taxing the "rich" can close the budget deficit.  The savings are not big enough and the revenues are not great enough.

Part of this is demographic.  Social Security, Medicare and other transfer payments to the old were set up to work when there were many, many working people and relatively few retired or old people.  Just look at increasing life spans and the failure to adjust when benefits kick in (or the amount paid to support them).

The Federal Reserve is printing amazing amounts of money.  The amount of worthless assets they have on their balance sheet is equally alarming.

All of this can be fixed - but it requires real pain.  Increased taxes for everyone.  Spending cuts for everyone.  Stop accumulating even more debt.  Don't print outrageous amounts of money.  But all of this requires actual painful decisions by politicians.  Or they can keep kicking the can down the road until or creditors cut us off - think Greece, Spain, Imperial Spain, Imperial Russia, Weimer Republic.....

People can point fingers - but nobody can run this level of fiscal deficits long term.

How much has revenue been hurt by unemployment? Sorry if it's a dumb question but there have got to be a fair number of folks who have dropped off the rolls due to being unemployed.

[OJsDad]

How much has revenue been hurt by unemployment? Sorry if it's a dumb question but there have got to be a fair number of folks who have dropped off the rolls due to being unemployed.

Look at the top right hand side.  The first is from 2004, second from 2008, last is current.  Revenues today are higher than 2008

[Staggerwing]

Is the middle one the current one?

[OJsDad]

Is the middle one the current one?

It was, I just fixed it.

[OJsDad]

More great news today.  The 2nd quarter GDP numbers have been revised down to 1.3% from 1.7%.  The 1st qtr GDP grew at 2%.    Durable goods orders dropped by 13.2% from July to August.  New jobless claims dropped by 26,000.  However, as has been happening over a year and a half, the previous weeks were reviced up. 

[airboy]

More great news today.  The 2nd quarter GDP numbers have been revised down to 1.3% from 1.7%.  The 1st qtr GDP grew at 2%.    Durable goods orders dropped by 13.2% from July to August.  New jobless claims dropped by 26,000.  However, as has been happening over a year and a half, the previous weeks were reviced up.

Let me add a bit to this. 
The US housing market is finally starting to clear.  House prices were up 6% in the recent period.  The foreclosure overhang is finally starting to end due to conversions to rental units and (unfortunately) destruction of non-maintained housing stock.  It has a way to go, and this took way longer than it should have due to some inept meddling in the foreclosure market by the Obama Administration - but the overall US housing market signs are much better.

On the down side, Europe is tanking, India is tanking, and China's growth rate is rapidly slowing.  The general signs are that the world-wide recession is going to get worse again for the next 12 months or longer.  This is in addition to the slowing of the US economy noted by OJsDad.

[OJsDad]

House prices were up 6% in the recent period.  The foreclosure overhang is finally starting to end due to conversions to rental units and (unfortunately) destruction of non-maintained housing stock.  It has a way to go, and this took way longer than it should have due to some inept meddling in the foreclosure market by the Obama Administration - but the overall US housing market signs are much better.

I kind of understand your point about the destruction of non-maintained housing stock, but cities like Detroit cannot afford to leave them anymore.  They no longer have the population to support them.  They are being used to hide crime.  It is not unusual to hear about half a dozen or more building being burned in a single night.  Or for bodies to be found that have been there for weeks, months or longer.  These force the city to respond, at a time when the city needs to down size its police and fire departments.  You also have the streets, water, sewage, and stormdrains that need to maintained to some level. 

Detroit is on track to demolise over 4500 buildings in the last two years.  These are all owned by the city, that have been guttered by looters, and are deteriorating from neglect.

On the plus side, I think developers will be more interested in these vacant lands in the future.