Obamas stimulus bill may crash the economy

[pink]

i think obama is under the impression that he has some sort of control....

[Dechristo]

you must be thinking I am someone else.

 

Comm join the party instead of muttering to yerself over there in the corner.

[Dechristo]

So much funner to make ad hominem remarks.

 

Cheeky bastard

[Dechristo]

I've got a five years supply of smoked tuna penis in my basement.

 

Is that the union tenure required to learn to smoke and tuna penis?

[Dechristo]

It sounds like people are forgetting to hunker down.

 

Sounds like some are in a journeyman program to learn how.

[billcoe]

Oh the economy - who can understand that without reading and quoting others who have degrees in it? So much funner to make ad hominem remarks.

 

It's so stimulating to hear all this concern about the future debt of the children of other people. After all, you can't pay for this bill with all the oil we'll get from invading and liberating the economy. Solar panels and bike trails? An oversized movie projector?

 

I'm not sure what you mean. Certainly the first part of the quoted part there is true. They say that the stimulus bill, when printed, was over 1000 pages and when layed down flat was 8" high and that even the senators voting on it couldn't wade through it. I didn't read it and and only got my info 3rd hand. I'm 100% positive that the media did the same. Which means that on this subject every news story we read about it was already 3rd or 4th hand info. Before some of you turn this into a Bush vs Obama thing )Or a Godzilla vs Rodan thing either) This bill was the bastard child of the last administration, and as I didnt' read the Bush proposal either: I don't have a F*ing clue what the difference was between that (Bush version) and this (final version). If anyone really did read it and personally know, speak up. If you are just going to be parroting some talking head who probably didn't read it either than whats the point of that? I suspect that both versions sucked but that the finished product sucked less because of the process. At the end of the day, someone is borrowing money to pay for this, and it's us: and our children...and their children as well I'd suspect.

 

Peter Schiff was one of those who called this whole thing on the money before it occurred. This is what he is saying right now.

[video:youtube]

 

 

I thought you were stocking up on canned food and firearms? wouldn't that be a good thing?

True dat, but I have friends, relatives and neighbors who I would not like to see suffer. Furthermore, I am still trying to figure out if the moves I have made are enough to stay out from under the bridge in the (increasingly likely) event my business collapses and I go jobless. My business partners were pissed that I was resisting their machinations and dragging my feet last August resisting a moving to a larger (and more expensive) facility. They had the location and 5 year lease all lined up and were tearing their hair out that I was resisting what they saw as a logical, critical, expansion. "WERE TOTALLY OUT OF ROOM HERE AND OUR LEASE IS UP WE HAVE TO DO SOMETHING NOW WE'RE GROWING WE HAVE TO MOVE NOW WERE BIDDING THE XYZ CONTRACT AND EVEN IF WE DON'T GET THAT WE'RE SCREWEDIFWEDON'TMOVENOW... NOWWWWWWWW!!!".

 

I replied: "Lets kick back here, toss out the extra garbage to free some room, rent a storage unit, or a container for the slow moving inventory and keep our overhead low. We'll have more, better and cheaper options in a year or 2. Our differences on this issue didn't go well at the time, especially since my viewpoint won the day.

 

The partner most invested in the move and crankiest about my resistance came up and deeply and warmly thanked me last week. If we can survive and get over the hump, we may be able to buy a place in 1-2 years for less than the lease on the last place. We are resisting laying anyone off as everyone who works for us needs their jobs badly, and there are no other jobs out there, but that's a bad business move none (except one) of our competitors have emulated, and one that we may be forced to abandon as well if this continues and we run out of money.

 

Maybe I can go live in Tvrshes basement and suck on smoked Tuna penis's? I have some Beef Stroganoff in #10 tins I can bring over.

[STP]

The idea basically is that the government will be able to service its debt if the debt remains a relatively small proportion of the GDP. If the debt becomes a larger percentage of the GDP and/or GDP decreases then there may be problems with managing the debt. In this case, a government runs the risk of going bankrupt ( Can Countries Really Go Bankrupt?). For examples of government bankruptcies, check out the history of France.

 

There are several options available when this becomes likely. One solution is simply by government decree (fiat). Another way involves decreasing the debt or its interest by reducing its nominal value by inflation. The latter method has become more common.

 

So, I’m guessing that Schiff thinks that foreign investment will no longer prop up our debt through the purchase of US Treasuries. If I understand correctly, with the loss of this underwriting then we cannot continue to finance the ballooning cost of government functions through deficit spending. Our currency is under risk too because of the massive liquidity introduced into the system thereby planting the seeds of hyperinflation. However, it is this very inflation that the government seeks to generate to avoid bankruptcy because the debt will be paid through inflated dollars (essentially, inflationary times are good for debtors, bad for creditors). Some ‘conspiracy theorists’ say this is the reason the Federal Reserve ceased publication of M3 ( Money supply).

 

Schiff’s solution to the coming crisis, however, was diverification including investment in foreign equities. Although Mish disagrees ( Peter Schiff Was Wrong ) about foreign equities, both agree that gold and silver may be the one of the better options currently (deflation or inflation) to preserve capital assuming that these are not yet overvalued. The demand was so high that in December of last year we experienced something called backwardation for a day or so in the gold market, meaning that no monetary gold was for sale at any price. Regardless, gold appears to be a safe haven ( Sprott Says U.S. Depression Will Boost Gold Price).

 

How do you judge when a flight to quality begins to have the characteristics of a speculative bubble? In any event, diverification is the best bet.

 

[AlpineK]

If I had to be in a war it would be the Barbary Pirates one. That one sounds cool.

 

The only war I'm interested in is the pig war. We should battle over pigs and potatoes till we get bored and or somebody brings some eggs then have a nice bacon and egg breakfast to settle the issue.

 

[img:center]http://upload.wikimedia.org/wikipedia/commons/1/13/PigWar-boundaries.png[/img]

[billcoe]

The Mish link is a great one STP, thanks for opening my eyes. That will provide hours and hours of study. Diversification, I would presume, would include opening a personal bank account (FDIC insured) which is denominated in Chinese Yuan?

 

Twice in as many days I have seen US officials insist or recommend that the Chinese allow their interest rate to float and increase vis a vis the dollar.

 

Mish says, in arguing against Schiff: "Given the severe stress everywhere, and given the race to zero interest rates by all, the odds favor a wide trading range rather than a collapse of the dollar. Hyperinflation is simply not in the cards, at least for the US. Ironically, China or Russia is at far greater risk."

 

?

[STP]

The Mish link is a great one STP, thanks for opening my eyes. That will provide hours and hours of study. Diversification, I would presume, would include opening a personal bank account (FDIC insured) which is denominated in Chinese Yuan?

 

Twice in as many days I have seen US officials insist or recommend that the Chinese allow their interest rate to float and increase vis a vis the dollar.

 

Mish says, in arguing against Schiff: "Given the severe stress everywhere, and given the race to zero interest rates by all, the odds favor a wide trading range rather than a collapse of the dollar. Hyperinflation is simply not in the cards, at least for the US. Ironically, China or Russia is at far greater risk."

 

?

 

I don't know anything. I'm still trying to resolve some inconsistencies to get an coherent understanding of what might be going on.

 

Well, despite the liquidity increase, there is some wealth destruction occurring associated with the deleveraging (don't ask me to explain this). Also, with the banks hoarding money etc, the velocity of money has slowed. I think it's a question of scale and the up-and-down movements relative to a particular time frame.

 

Again, it's trying to sort out the different things being spoken of: for example, stock market vs. economy, definition of inflation, currency exchange, the effect of the dollar's value on certain dollar denominated commodities, the list goes on...

 

But one thing we do have is the record of the past, which might not be an indicator of future performance but on the other hand, it may hint at a possible future. See this illustration: http://www.marketoracle.co.uk/images/1929-stock-market-crash-dow-chart-image005.png followed by this article that suggests today is analogous to 1931 ( Bad news: we're back to 1931. Good news: it's not 1933 yet ).

 

Actually, this is all rather esoteric for me and my main concern lies in hoping the company I'm employed by has the cash flow to maintain its head above water.

 

[billcoe]

I'm still trying to resolve some inconsistencies to get an coherent understanding of what might be going on.

 

Well, despite the liquidity increase, there is some wealth destruction occurring associated with the deleveraging (don't ask me to explain this). Also, with the banks hoarding money etc, the velocity of money has slowed. I think it's a question of scale and the up-and-down movements relative to a particular time frame.

 

Interesting that the US gov't quit supplying the M3 or amount of money in service information.

[Dechristo]

They're printing it too fast to count.