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How would you fix the economy and budget issues?

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Old 06-21-2011, 02:06 AM   #46
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Re: How would you fix the economy and budget issues?

Schneed, there are many symptoms and causes to this fragile economy. It's like a sickly patient who comes into your office sneezing like crazy. The first thing the doctor wants to know if they're allergic to anything. If the answer is yes, he/she will keep diagnosing beyond the obvious before they prescribe medication. My basic premise is that the weakness of the housing market is the most glaring undermining confidence and recovery, not the only thing.

I wholeheartedly agree that the the rate of unemployment is linked to housing prices. I've mentioned this in at least one other thread around here. However, my point of contention with the Obama administration, as it relates to the foreclosure crisis, is that they've nursed the banks back to health, the auto industry is back on it's feet, yet they've left the middle class to endure the most brutal housing recession to hit this nation, perhaps ever.

You seem to lay much of the blame at the feet of the American consumer. Government can't solve all the problems, people need to save more, homes are expensive, etc. While all of your statements are true, it's also true that real wages have stagnated over the past 20 years while the cost of living continues to go up. The average American is working longer, retiring later, and the exorbitant cost of health care have driven many into bankruptcy, all while being barraged with ads selling the American dream and easy credit.

It's not that government can -- or should be expected to solve everything, but they should at least uphold their end of the bargain.
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Old 06-21-2011, 08:51 AM   #47
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Re: How would you fix the economy and budget issues?

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You seem to lay much of the blame at the feet of the American consumer. Government can't solve all the problems, people need to save more, homes are expensive, etc. While all of your statements are true, it's also true that real wages have stagnated over the past 20 years while the cost of living continues to go up. The average American is working longer, retiring later, and the exorbitant cost of health care have driven many into bankruptcy, all while being barraged with ads selling the American dream and easy credit.
But WHY have real wages stagnated? It's not enough to just say they have, you have to understand why they've stagnated if you expect anyone to do anything about it. You can't prescribe medicine for the disease if you don't understand how it's attacking the body.

Globalization. That's the cause.

Real wages have stagnated because the American dream as we used to know it has evaporated. It used to be enough to graduate from high school and get a job at a factory. That could support the American family just fine. But companies have found ways to make many products for cheaper overseas largely because of lower wage rates in foreign countries. Companies shut down factories here and moved them to China. And now as India has become stronger from an education perspective, companies are finding they can eliminate American call centers and do it cheaper in India.

So when you have so many jobs headed overseas, and a growing population here in the states, you get a greater supply of workers. Natural market forces will of course prevent wages from growing.

Understanding that, what praytell do you ask of Obama or congress or anybody? What the hell can you do about it? China and India have cheaper labor, are you going to tell your American companies they can't ship jobs overseas to those countries? If you do, those American companies won't last long against competition that is allowed to tap into the cheaper labor pool.

Obama hasn't done anything about it because there is no answer. It's up to the people. You want to live the American dream, be better than your Chinese or Indian counterpart, because if you don't then they'll live the American dream. Work and deserve it, earn it to own it.
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Old 06-21-2011, 08:57 AM   #48
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Re: How would you fix the economy and budget issues?

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What do you guys think about repealing ethanol subsidies? That could be another $6 bil?

A study from CATO, a conservative think tank done in 1995. I'm curious what our free market conservatives think about ethonal subsidies.

http://www.cato.org/pubs/pas/pa-241.html

Hell yes get rid of this shit..lol
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Old 06-21-2011, 09:08 AM   #49
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Re: How would you fix the economy and budget issues?

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Hell yes get rid of this shit..lol
But isn't there a return on investment case to be made on this?

You can mix ethanol at up to 10% levels into gasoline and cars will still run fine. I haven't done the math, but the financial analyst in me says:

- You have a cash outlay of $6 Billion
- You have savings on gasoline of 10% x Gallons of Gas Sold at Pump x (Price of Gasoline per Gallon - Price of Ethanol per Gallon)

So the question becomes, without the Ethanol subsidy could we still realize the savings on the 10% of gasoline that's displaced by Ethanol?

I'm sure this is overly simplified, but somebody somewhere needs to do an ROI on this before recommending cutting the subsidy.
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Old 06-21-2011, 09:49 AM   #50
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Re: How would you fix the economy and budget issues?

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But isn't there a return on investment case to be made on this?

You can mix ethanol at up to 10% levels into gasoline and cars will still run fine. I haven't done the math, but the financial analyst in me says:

- You have a cash outlay of $6 Billion
- You have savings on gasoline of 10% x Gallons of Gas Sold at Pump x (Price of Gasoline per Gallon - Price of Ethanol per Gallon)

So the question becomes, without the Ethanol subsidy could we still realize the savings on the 10% of gasoline that's displaced by Ethanol?

I'm sure this is overly simplified, but somebody somewhere needs to do an ROI on this before recommending cutting the subsidy.


Not sure how.


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In 1986 the U.S. Department of Agriculture estimated the average cost of producing ethanol at $l.60 a gallon, more than double the then wholesale gasoline price of 60 cents a gallon (the current wholesale price is roughly 55 cents).


Ethanol has done poorly on its own largely because it is a relatively lousy fuel. An Agriculture Department report observed,

Each gallon of ethanol contains about two-thirds as much energy as does gasoline, resulting in reduced fuel economy. One would expect vehicles using gasohol to show about a 3.3 percent reduction in miles per gallon since ethanol constitutes 10 percent of the ethanol-gasoline blend. In a recent report on the performance of alcohol-gasoine blends, the DOE concluded that gasohol-fueled vehicles averaged 4.7 percent fewer miles per gallon than gasoline-fueled vehicles in automobile fleets.(35)

The comparatively feeble fuel value of ethanol is a large part of the reason why the fuel is so discounted from its cost of production. The USDA report further noted,

Fuel ethanol sold for about $0.90 per gallon in July 1986. This price does not reflect its free market value because gasoline blenders qualify for Federal and State ethanol subsidies. After deducting the value of the subsidies ($0.60 per gallon for the Federal subsidy and some $0.30- $0.40 average for State subsidies) the net cost of ethanol to blenders is about zero. This indicates that ethanol producers could not survive without the subsidies, and suggests that most will need even larger subsidies to stay in business unless petroleum prices increase sharply. Net of applicable subsidies, ethanol is selling for about $0.30 per gallon less than the wholesale price of gasoline.(36)

Yet, while ethanol was selling (net of subsidies) for half the price of gasoline, it cost more than twice as much to produce as gasoline. Obviously, government intervention is necessary.
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Old 06-21-2011, 11:46 AM   #51
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Re: How would you fix the economy and budget issues?

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Not sure how.
Compelling case. As you can tell, I did not read it!
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Old 06-24-2011, 08:36 AM   #52
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Re: How would you fix the economy and budget issues?

I don't know the details of the latest due to lots of work/family stuff going on but.......one thing I know I wouldn't do to try to fix the economy/budget is walk out of negotiations to work on the budget/defecit/debt ceiling. Maybe I'm just naive, but no one said this was going to be easy, and you can't get anything done if you're not talking.
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Old 06-24-2011, 02:39 PM   #53
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Re: How would you fix the economy and budget issues?

Here's a study on the effect ethanol production has on food prices, particularly the price of corn.

Opponents argue that it's disrupting to the food supply, which is true, and there's a direct link to the higher food prices. Proponents argue the opposite.
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Old 07-01-2011, 01:09 PM   #54
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Re: How would you fix the economy and budget issues?

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Funny now the Dems are trying to say the Rep are sabotaging the economy for political gain. Thats funny because it was the right that said that 1 trillion Obama spent would not help and it looks like we were right. So I guess the only thing the Dems can try to do is blame the Rep.
Greenspan concurs.

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Old 07-04-2011, 11:58 AM   #55
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Re: How would you fix the economy and budget issues?

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The stimulas was around 870 billion and we have around 300 million us citizens if I'm correct. That works out to be around 2500 per person. Seems like given families the money directly would have really been a true stimulas. That would mean a family of 3 like myself would have received around 7,500. Wow imagine how much spending would have occured.
The numbers in the 7th Quarterly Report (7 quarters since the "stimulus" was passed) released on Friday certainly don't help Big O. His own handpicked trio of economists put the report together, and it paints a pretty grim picture of just how ineffective this stimulus has been thus far. $278K spent for each job gained? Eeeesh.

Obama’s Economists: ‘Stimulus’ Has Cost $278,000 per Job | The Weekly Standard
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Old 07-04-2011, 01:13 PM   #56
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Re: How would you fix the economy and budget issues?

You guys are totally confusing the facts here. This article is referring to the stimulus passed by the Fed Reserve under Ben Bernanke, not President Obama. Under the direction of Ben Bernanke the Fed purchased $600 Billion in Treasury Bonds, also known as QE2. This has absolutely nothing to do with the "stimulus" Congress passed shortly after President Obama took office. In fact, the president of the United States doesn't control monetary policy, the Federal Reserve is the monetary authority. Alan Greenspan's critique was directed at Ben Bernanke's actions, not President Obama.

But since we're now talking about Obama's stimulus, anyone know what portion represented tax cuts? Firstdown, how come I don't hear you crowing about that?
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Old 07-04-2011, 01:22 PM   #57
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Re: How would you fix the economy and budget issues?

No one --not a single economist-- thought the recovery would take this long. The Administration's biggest mistake was floating that 8% unemployment number from the jump, not trying to stimulate the economy.

Historically speaking it takes time for an economy this large to recovery from a recession, such as the one we're coming out of, and even longer to replace all the lost jobs. They caved to the intense political environment and the urgency to grease the wheels and get things going so they threw out 8%. It was stupid and they know it, but they saved and created a lot of damn jobs in the process.
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Old 07-04-2011, 01:35 PM   #58
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Re: How would you fix the economy and budget issues?

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No one --not a single economist-- thought the recovery would take this long. The Administration's biggest mistake was floating that 8% unemployment number from the jump, not trying to stimulate the economy.

Historically speaking it takes time for an economy this large to recovery from a recession, such as the one we're coming out of, and even longer to replace all the lost jobs. They caved to the intense political environment and the urgency to grease the wheels and get things going so they threw out 8%. It was stupid and they know it, but they saved and created a lot of damn jobs in the process.
A good portion of the stimulus spending amounted to spitting into the wind. You're right in saying they caved to the political environment, and consequently they lost sight of the long term good.

First time homebuyer credit was one of the stupidest things I've ever seen. We had a bunch of people who were underwater on bad mortgages, which this administration blamed on predatory lending practices, yet they turn around and give first time homebuyer credits to people who had never bought a house before. Wha?? So we're going to help the people who got screwed buying a house by helping the people who've never bought one?

Once first time homebuyer credits dried up the market went where the market should have gone, back to Earth. Houses are for people who can afford them without government help and without sketchy loans. The market was headed south whether Obama liked it or not, he just drove us into further debt by spitting into the wind.
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Old 07-04-2011, 02:47 PM   #59
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Re: How would you fix the economy and budget issues?

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You guys are totally confusing the facts here. This article is referring to the stimulus passed by the Fed Reserve under Ben Bernanke, not President Obama. Under the direction of Ben Bernanke the Fed purchased $600 Billion in Treasury Bonds, also known as QE2. This has absolutely nothing to do with the "stimulus" Congress passed shortly after President Obama took office. In fact, the president of the United States doesn't control monetary policy, the Federal Reserve is the monetary authority. Alan Greenspan's critique was directed at Ben Bernanke's actions, not President Obama.

But since we're now talking about Obama's stimulus, anyone know what portion represented tax cuts? Firstdown, how come I don't hear you crowing about that?
I'm not confusing anything. All I said was these numbers don't help Obama. He may not have been directly responsible for the QE2 pump, but it happened on his watch. Wrong or right, he'll ultimately be held largely responsible.
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Old 07-04-2011, 02:51 PM   #60
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Re: How would you fix the economy and budget issues?

You know, I'm going to apologize. I shouldn't have posted anything political today. The 4th is all about celebrating what's great about this country. So that's my bad.

Happy 4th of July, Warpath. Ive got a BBQ to attend... Softshell crab sandwiches here I come! Cheers y'all.
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