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Post by Disgruntled70sHab on Feb 8, 2013 11:11:11 GMT -5
I like the way Dave Ramsay puts the US federal budget, and deficit, into terms we're able to understand. We're not as bad off here in Canada, but our comparison isn't all that good either. Check it out when you have the time: ============================================================= Federal Budget vs. Household Budget: How Do They Compare?
You can't borrow your way out of debt.
from daveramsey.com on 28 Apr 2011Whenever the talking heads on TV start talking about the national economy, most of our eyes start to glaze over. The gigantic numbers that they throw out there are ridiculous; most Americans have no idea what those numbers mean in practical terms. So, I thought it’d be fun to turn those figures into something we can understand a little better—like a household budget. The federal government will take in $2.173 trillion in 2011. That’s their income, and it sounds pretty good. Until, that is, you factor in that the federal government will spend $3.818 trillion during the year. So, just like many families, the government’s outgo exceeds their income—to the tune of $1.645 trillion in overspending. That’s called the deficit. Altogether, the government has $14.2 trillion in debt. What would happen if John Q. Public and his wife called my show with these kinds of numbers? Here’s how their financial situation would stack up: If their household income was $55,000 per year, they’d actually be spending $96,500—$41,500 more than they made! That means they’re spending 175% of their annual income! So, in 2011 they’d add $41,500 of debt to their current credit card debt of $366,000! What’s the first step to get out of debt? Stop overspending! But that means a family that is used to spending $96,500 a year has to learn how to live on $55,000. That’s a tough pill to swallow. Those kinds of spending cuts seriously hurt, but it’s the only way out of debt for John Q. Public. If I ever got a call from a family that was spending $41,500 more than they made every year, you would definitely expect me to yell at them for their dumb behavior, right? Kids, no more McDonald’s four times a week. Snacks come from the grocery store now. And we’re not going to the movies for a while, so break out the board games and TV Guide. This family has a problem, so it’s time to amputate the lifestyle! It works the same way for the government. You can’t borrow your way out of debt, whether you’re a typical American family or the entire U.S. government. At some point, you’ve got to say, “Enough is enough!” and make the hard cuts necessary to win over the long haul. Link |
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Post by Cranky on Feb 8, 2013 12:22:41 GMT -5
That's nothing, more and better are yet to come.
17 trillion at 1% is a measly 170 billion in interest. Almost as much as our Federal revenues and that is with the most depressed interest rates in history. Now what happens when the economy starts to heat up and moderate inflation rears it's ugly head? Let's say it 5% they have to pay on the bonds. That's 850 billion or more then 1/3 of federal revenues.
Now what?
They are going to need trillions in unfunded entitlements that are rapidly escalating. Baby boomers aren't getting younger. Doctors and nurses aren't getting cheaper. America's economy isn't growing by 10%.
Now what?
Mehh....obama is the greatest president in the universe. Not that the previous idiot was any better.
Nothing to see here, move on.
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Post by Disgruntled70sHab on Feb 8, 2013 12:59:45 GMT -5
;D
My buddy and I just read this over and just finished chuckling. You're right in your scenario.
It would be nice to think of a solution, but I'm unsure just what that solution will be. We're looking at possibly one of the worst meltdowns in history and it's just around the corner.
I know the Tories have some safeguards in place to help lessen the impact of the US fiscal cliff, but they're quick to point out that there's no guarantees. We could be pretty much wiped out with them. That's the bottom line for me, anyway.
Though, if there is a meltdown I foresee the rich remaining rich, while the lower and middle classes will feel the direct impact.
Obama? Try to tell me he's calling the shots in Washington. He and Congress simply don't see eye to eye. He says the Republicans block whatever he wants to do, while the Republicans say there's no reasoning with the man.
Whatever!
Cheers.
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Post by blny on Feb 8, 2013 13:11:50 GMT -5
There is no 'solution'. In the real world, you'd declare bankruptcy. Then you'd set out to rebuild your credit rating over a 5 year period.
Politicians have NEVER called the shots in DC. Lobby groups do.
My understanding re NAFTA is that we're not tied to it if the US goes down. We've managed well enough during the last 5 years. Will the country take a hit if the US does tank? Yes, but I don't think we're down with the ship.
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Post by Cranky on Feb 8, 2013 13:23:29 GMT -5
I have seen it's collapse up close and personal in Greece....and it's not pretty. Ever time I bring it up, I get attacked on how Greece is not America and yadda, yadda, yadda. Mostly by Canadians. Have these people gone to the inner parts of American cities? They are already where Greek cities are getting too. What will happen when there is even MORE of the same spreading to the suburbs? Americans REAL unemployment is already at 17%. Hispanic and black youth unemployment is at 50% for 4 years. So far, no riots because there is the black guy (who they voted at 93%) is running the country....but what happens when the white guy runs it? Particularly if he is a Republican? Of course if you dare bring up this self evident reality, you must be a racist.
Another fun fact....
In Greece, they are taxing everything to hell and back, pensions, houses, farms, cars, ANYTHING they can...and raising less and less money. They are finding out that there is only so much they can raise before the taxes collapse the economy. Basically, they are taxing and redistributing an ever decreasing pie. Wow, what a surprise! NOT! They are even thinking of taxing ex-patriots if they were born Greek, aka, blood taxes. Yup, if you were born Greek, you OWE the motherland or else! Or else what? I wont be able to go back to an economic Saperlipopette hole? *middle finger*
Greece is a valuable lesson nobody wants to learn or see.
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Post by Cranky on Feb 8, 2013 13:35:25 GMT -5
There is no 'solution'. In the real world, you'd declare bankruptcy. Then you'd set out to rebuild your credit rating over a 5 year period. Politicians have NEVER called the shots in DC. Lobby groups do. My understanding re NAFTA is that we're not tied to it if the US goes down. We've managed well enough during the last 5 years. Will the country take a hit if the US does tank? Yes, but I don't think we're down with the ship. I don't care if people love or hate Harper, the reality is that as an economist and people forget that he is an economist, he is looking desperately to detach us from the US economy. We need more markets for our resources. We need that western pipeline AND one running east, all the way to NFLD. We need it NOW, not ten years from now. Not on Indian bands schedules or whims or blackmail. Not on environmentalist schedules or whims or fears. Reality is that we have THREE MILLION MILES of decades old pipelines crisscrossing Canada and US with barely an issue here and there. The future is manageable....but not trading on the decks of the Titanic. |
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Post by blny on Feb 8, 2013 14:21:37 GMT -5
I don't disagree. Spain is falling from the 'fiscal cliff' too.
I've never been a fan of the FTA, or NAFTA. I always felt they tied our hands. Mulroney owns that mess (even if NAFTA came after him).
I don't envy Obama's situation. I'm not saying he's without any fault, but no politician wins popularity contests when they're in office during a recession. The mess he's been dealing with was dumped in his lap by his predecessor and Wall Street. It's bad enough he got the mortgage crisis dumped on him, but he had to bail out GM, and to a lesser extent Chrysler. I mean it when I say "had". As tough a pill as it is to swallow, the effect on the economy from letting it die would have been far worse. How many thousands directly work for GM in the US? How many people have jobs with companies that provide services/parts to GM? How many people and TOWNS are linked to GM? To let it die would have likely put a million people or more out of work. I dare say I'm low balling.
It's one thing when a fishery dies, and out here on the East Coast I've seen the effect, but we're talking about something far bigger. You can tell that many people, 'tough luck, go back to school and re-educate yourself.'
Those two crises are absolute cripplers. I'm amazed the US has lasted this long as it is.
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Post by Disgruntled70sHab on Feb 8, 2013 14:58:51 GMT -5
There is no 'solution'. In the real world, you'd declare bankruptcy. Then you'd set out to rebuild your credit rating over a 5 year period. Politicians have NEVER called the shots in DC. Lobby groups do. My understanding re NAFTA is that we're not tied to it if the US goes down. We've managed well enough during the last 5 years. Will the country take a hit if the US does tank? Yes, but I don't think we're down with the ship. I don't care if people love or hate Harper, the reality is that as an economist and people forget that he is an economist, he is looking desperately to detach us from the US economy. Easier said that done. I mean, what's the percentage of trade we have with the USA? 85% or something like that? Harper came into office in 2006 and was in the chair for the 2008 US fiscal meltdown and our economy recovered relatively quickly, or at least quicker than I thought it would (personal opinion), at any rate. New markets? Certainly for our raw resources. Contentential Europe doesn't have a whole lot of natural resources left, but it would be more economically viable for them to look at Asia rather than us. The new retail cow on the planet looks to be China. They're flooding the world with their products and to meet that demand they're possibly going to be the world's new energy cow as well. See here.They've also cut a deal for more oil with Venezuala and Russia as well. In exchange for securing his eastern flank, Putin has agreed to open Russia's oil taps five times wider for the same rate they were giving China (link to follow once I get the hell out of here). So, while the USA is spinning out of control, China is being proactive and bolstering their economy in the process. Those markets we're talking about are really being monopolized by China. And they're probably getting natural resources from Russia as well (just a guess, I have no facts). Got to leave now. Not sure I'll get off the base with this storm. It's usually the last place in the city to be serviced. We've been getting pounded for hours now. Cheers. |
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Post by Cranky on Feb 9, 2013 15:55:44 GMT -5
Those two crises are absolute cripplers. I'm amazed the US has lasted this long as it is. Two parts to the old crisis. There were housing bubbles all over the Western world and almost all of them went poof. It wasn't "Bush did it" because every politician of every stripe in those countries thought that the cheap interest housing ride would never end. The difference was that the US had the additional derivative scam on top. If you let the banks take the brunt of it, most of the losses would be from the rich and the greedy. But he didn't do that. Worse, who paid the personal price for the scam? How many bankers or traders went to jail? ZERO. This "tax the rich" smokescreen is a 50 billion spread on a trillion plus dollar deficit. Even if you rape everything they have, French Revolution style, it's gone in two years. A GST like our, which no politician of any stripe in the US would dare suggest, would only bring in another 500 billion. And now, they need that much just to cover interest. Maybe one year, maybe two years of over spending. But this spend, spend and spend way more until you buy a better economy and people like you has all the hallmarks of systemic collapse and there is NO ONE to blame but obama. |
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Post by Disgruntled70sHab on Feb 9, 2013 17:02:51 GMT -5
But he didn't do that. Worse, who paid the personal price for the scam? How many bankers or traders went to jail? ZERO. And upon receiving their bailout monies, the top dogs took their bonuses first. I guess they might need something like a GST, I mean it would be a start. But there are many in the US who simply wouldn't be able to cope with an additional tax. Other than spending cuts, what could have Obama done (or do now) that would make an impact, in your opinion? Good post, BTW. Cheers. |
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Post by Cranky on Feb 9, 2013 17:48:53 GMT -5
Many ways to not spend stupid....and many ways to spend smart.
One.....don't spend as much. I know that during a recession, you don't want to cut spending but you don't have to blow your brains out either.
Two....don't spend on agendas. Spending billions of dollars for greenwashing and related may buy you green votes but it does and solves nothing. Even NASA budget is now stuffed with global warming "research" malarkey.
Three...target spending that actually creates jobs AND long term benefits. A trillion dollars on building nuclear plants would shut down coal and provide cheap energy for a couple of generations. A billion on a smart grid does the same. Wind turbines and solar panels from China are the stupidest way possible to spend or build for the future.
Four....let some suffering go to those who can take the suffering. Bailing out banks is not one of them.
Five....don't spend like you are the big brother and rescuer of state spending. If a state lays off teachers and cuts back jobs, let them deal with it.
Six...don't hide the news. Creating a bullsh!t "unemployment rate" number that has no basis in reality is good pr but it does nothing to create jobs or policy. Screaming the "rich did it" does not create a single job. It only creates an excuse.
Seven....cut off some or all the pork that every single senator and congressman wants for HIS constituency.
Eight....cut off some or portion of the loopholes and tax deductions.
Nine...tax EVERYBODY to some degree. If only 40% pay the vast majority of taxes, why should the other 60% vote themselves more taxes for someone else to pay? Hello obama and the utter bullsh!t of the "rich don't pay their fair share".
Ten...stop buying vote like forgiving hundreds of millions for student loans. If they want to study somethign they have a future in, then they can pay those loans. If they want a degree in ancient dildo manufacturing, let them hold the dildo in the end.
And many more.....
Dis, there is a LOT that obama could do or could of done if he and the sycophant media wasn't too busy telling us how great he is. Of course, that would be a lot more work and a lot more politically unpalatable then simply creating money with a button and spending it just as fast.
The day of reckoning will come....
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Post by Disgruntled70sHab on Feb 9, 2013 18:48:28 GMT -5
Four....let some suffering go to those who can take the suffering. Bailing out banks is not one of them. If I recall correctly, that $700 billion bailout is more than Canada's national debt (but we're getting there). Decentralization, to some degree, isn't always a bad thing. What I took from this is that the feds are meddling and undermining what strategies the state may have in place. Interesting stat. From what I understand a lot of professional players prefer to play in the states because they pay next to nothing for taxes. Conversely, players may be taxed more heavily in Canada, but from what I understand those taxes go back into local communities (I don't have a link for that, but I do remember that being discussed on TSN/CBC?) How does a system work like this? You take a loan but you don't have to pay it back. Then bail out the banks ... and other financial institutions along with them ... and let those institutions delve out the funds as they see fit ... defines a dysfunctional business. And I'm concerned how this will affect us. Cheers. |
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