US Federal Debt Tops $13,000,000,000,000.00

[PanzerJaeger]

Federal debt tops $13 trillion mark (http://www.washingtontimes.com/news/2010/jun/2/federal-debt-tops-13-trillion-mark/)



The federal government is now $13 trillion in the red, the Treasury Department reported Wednesday, marking the first time the government has sunk that far into debt and putting a sharp point on the spending debate on Capitol Hill.

Calculated down to the exact penny, the debt totaled $13,050,826,460,886.97 as of Tuesday, leaping nearly $60 billion since Friday, the previous day for which figures were released.

At $13 trillion, that figure has risen by $2.4 trillion in about 500 days since President Obama took office, or an average of $4.9 billion a day. That's almost three times the daily average of $1.7 billion under the previous administration, and led Republicans on Wednesday to place blame squarely at the feet of Mr. Obama and his fellow Democrats.

Leaving aside the intellectual arguments surrounding Keynesian economics, what really bothers me is that I haven't felt any of this spending. With all this money being spent on my behalf, I would expect to be able to buy at least a new car with some Obama bucks. I haven't seen a penny. In fact, my taxes will most likely go up this year.

Where is all this money going? The war and interest take their toll, but that doesn't cover the threefold increase. Has anybody actually benefited from it? I see Biden on the news every once in a while at the grand opening of X $400 million Stimulus funded project that created 4 new GREEN jobs, but with this level of spending, I would expect much bigger results. How much did the interstates cost, or the railroads, or the Hoover dam? Why is China far ahead of the US in high speed rail transport?


The White House would not comment for the record, but an official speaking on the condition of anonymity said the administration is "committed to restoring fiscal responsibility."

:laugh4:

[Subotan]

The recession doesn't impact the majority of people, so it shouldn't be expected that the stimulus should do the same.

[HoreTore]

Stop all current wars and start levying war taxes until the debt is gone.

[gaelic cowboy]

Long story short your money is basically in China

[Tellos Athenaios]

Long story short: a lot of that money is essentially a solid foundation of old debts, seasoned with Afghanistan and Iraq, retardation of the tax collection schemes (witness California and property tax), and federal bailout of broken constructions and busted bubbles, and finally a nice layer of instability on the financial markets (nothing to evaporate fat reserves like a pummeling on the free & volatile financial market). Season to taste with combination of reform and refusal to collect substantively more taxes (you don't even appear to have a significant VAT, witness the you can save America debts thread.

And you are actually surprised such a world class mix of heady flavours presents mighty tasty Chinese mouthful of debt? :dizzy2:
EDIT: Let's hope for your sakes the Chinese keep their currency rating artificially low. If they don't, then the penalty of exchange rates is on you because that is how such loans work: the debtor covers the risk to the creditor. If they do start manipulating your debts, then the Dollar will make the Euro look like a role model of stable currency.

[Vladimir]

How is it that anyone in "Europe" can criticize the U.S. debt? Your currency is about to collapse and you say we need a VAT?

It doesn't matter how much tax you collect! All that matters is how much you spend.

Sheesh people.

[gaelic cowboy]

How is it that anyone in "Europe" can criticize the U.S. debt? Your currency is about to collapse and you say we need a VAT?

It doesn't matter how much tax you collect! All that matters is how much you spend.

Sheesh people.


Sheesh guy asked a question he got an answer.

[Vladimir]

Sorry. "Furry" (can't remember his full name) has me in an anti-Europe mood again. :laugh4:

[Tellos Athenaios]

@Vladimir: the difference is that in Europe you've got a few countries which are actually fairly healthy[1], and some countries which have made (either of or both) financial drama into a national sport. So we'll probably survive this some way or another[2]. Plus the *actual* debts are significantly less pressing than the US, at least if you must believe the 100% of GDP by 2015 scenario.

If we must believe Strike, you only have Texas[3]. Now, whether or not that is enough to take on 13 times its own weight (the USA debt) especially if the rest do not get their collective behinds into gear and sanitize their economy... ?

[1] Although this is relative, and largely because the structural deficits are better looking.
[2] I am not saying we'll survive this intact.
[3] Yes I know that is Texan rhetoric and not to be taken entirely seriously. And that it might rather heavily depend on how the next few years play out.

[Louis VI the Fat]

Debts have gone through the roof in all Western countries since 2008. They are therefore not the result of Obama. Nor of Labour in the UK, nor of the (rightwing) Christian-Democrats in Germany or Gaullists in France.

National allegations of irresponsible overspending by any national government is electoral rethoric. It is relevant only insofar as one disagrees with the bailouts and stimulus packages in general, as an international response. Any allegations of irresponsible overspending as a hallmark of any particular administration or political wing is pointless.



Me I blame Reagan, Thatcher, Friedman and Hayek for all of this.

[jabarto]

Me I blame Reagan, Thatcher, Friedman and Hayek for all of this.

I think you can blame pretty much anything bad that's happened in the last 30 years on one or more of those people. :creep:

[tibilicus]

At least you don't our massive deficit.

Besides, the US will always be alright, here's how it works. If the US goes into recession,the whole world goes into recession. Hence the Japanese and Chinese keep on buying up your government debt. Although of course they will be the real winners when the world economy switches east. You should feel sorry for us, if the UK goes back into recession it doesn't really affect the world so no one buys our debt.

You shouldn't be to worried about the debt, you should be worried about how you can pay it back. If the likelihood is you can pay it back, then it isn't such a big problem. Look at Japan's debt as a % of their GDP (100 and something) and yet they're not panicking, why? because they know that their deficit isn't that big. Take a worse of country, the UK for example, and here the deficit is teetering near the abyss.

Edit: LOL. Just looked at a list of countries in terms of current account balance. Turns out the USA is bottom so scratch that, it's probably ok to be a little worried. Still, you've still got your buddies in the East to buy you out.

[Crazed Rabbit]

Me I blame Reagan, Thatcher, Friedman and Hayek for all of this.

Wow.

I'll assume your joking, since it is Keynes and his ilk who recommend heavy spending and his ignorant followers who spend even more.

As for not feeling any of the spending - that's not surprising. Government spending is fundamentally less efficient and widespread than private spending; it is directed by a handful of politicians to their friends, allies and pet projects, not at what the public actually wants.

CR

[HoreTore]

How is it that anyone in "Europe" can criticize the U.S. debt? Your currency is about to collapse and you say we need a VAT?

It doesn't matter how much tax you collect! All that matters is how much you spend.

Sheesh people.

Currently my government is trying to hold back the NOK so that it does not get even stronger than it is now.

And we've got over 500 billion dollars in reserve thankyouverymuch. If that's the treshold to critizise the US; I most certainly can and will.


Wow.

I'll assume your joking, since it is Keynes and his ilk who recommend heavy spending and his ignorant followers who spend even more.

As for not feeling any of the spending - that's not surprising. Government spending is fundamentally less efficient and widespread than private spending; it is directed by a handful of politicians to their friends, allies and pet projects, not at what the public actually wants.

CR

.....And the people Louis listed thought you could cut taxes without cutting government spending. We didn't have any of that nonsense here in Norway, and lookie! We've got a full treasury and zero debt!

[Subotan]

Me I blame Reagan, Thatcher, Friedman and Hayek for all of this.
Mainly Reagan, as Thatcher was quite insistent on a balanced budget.


Wow.

I'll assume your joking, since it is Keynes and his ilk who recommend heavy spending and his ignorant followers who spend even more.
I assume by "ilk" you mean the majority of economists, worldwide.

[jabarto]

Government spending is fundamentally less efficient and widespread than private spending; it is directed by a handful of politicians to their friends, allies and pet projects, not at what the public actually wants.

If cognitive dissonance could be harnessed as a fuel source you could probably end the energy crisis with this sentence alone.

[Ironside]

The most obvious question is how much of that is because of increased goverment spending. As pointed out, there's a certain economic crisis that have eaten a considerble part of the budget in every country.

Had Obama balanced the budget to Bush levels already, you wouldn't need to declare him god-emperor because he would already be one (that would require either incredible political skill and/or dictorship, since both a large tax hike or massive cuts is politically impossible).

Now if he doesn't have this under control and massivly decreasing by 2012 he deserves scorn on failing on economic responsibillities.

[Louis VI the Fat]

it is Keynes and his ilk who recommend heavy spending and his ignorant followers who spend even moreOur response to the financial pyramid schemes is certainly Keynesian. When the music stops, the tax payers are the ones without a seat.

I blame the four horsemen of the Apocalypse neo-liberalism for turning the world upside down: the financial markets are now sovereign, unchecked by democratic control, what;s more, levying taxes on governments for all they are worth.
They are not disciplined by market forces, because all risk is covered by the bottomless coffers of the governments.

Not only has liberalisation of markets granted financial institutions complete tax exemption, but they have taken it one step beyond still: who is paying tax to whom? Financial institutions to governments, or governments to financial institutions?



And we've got over 500 billion dollars in reserve thankyouverymuch. If that's the treshold to critizise the US; I most certainly can and will.We are discussing Western economies here, Horetore. Not Kuwait, Saudi Arabia and Norway. :book:


And the people Louis listed thought you could cut taxes without cutting government spending. We didn't have any of that nonsense here in Norway, and lookie! We've got a full treasury and zero debt!
Much as the spiralling debt is not the result of wanton spendthrift by any particular Western government, so too is Norway's fiscal health not the result of any particular Norwegian discipline. It is not at all difficult to balance the books when a country of five million receives this many oil dollars.
Norways social system is not lean and mean, it is a spendthrifty social paradise, what with such luxuries as fully equipped hospitals on remote, sparsely populated islands and what not.

[Furunculus]

Sorry. "Furry" (can't remember his full name) has me in an anti-Europe mood again. :laugh4:

me....! how have i achieved that? :p

[Vladimir]

me....! how have i achieved that? :p

Sorry, I hope I wasn't being rude. Just in an anti-euro (currency) mood.

Actually, Louis has a point. While I do support most of Regan's policies, one of them was to outspend the Soviets. He made an agreement with the Democrats to essentially give them all the money they wanted as long as he got all the money he wanted. Quite the spend-fest.

[Furunculus]

Sorry, I hope I wasn't being rude. Just in an anti-euro (currency) mood.


all good, the Euro frequently sours my mood, at least when anyone suggest Britain joining! :p

[Beskar]

all good, the Euro frequently sours my mood, at least when anyone suggest Britain joining! :p

Britain should join the Euro, or the Neuro.

[Vladimir]

Or both!

[Furunculus]

Britain should join the Euro, or the Neuro.

why?

[HoreTore]

Much as the spiralling debt is not the result of wanton spendthrift by any particular Western government, so too is Norway's fiscal health not the result of any particular Norwegian discipline. It is not at all difficult to balance the books when a country of five million receives this many oil dollars.
Norways social system is not lean and mean, it is a spendthrifty social paradise, what with such luxuries as fully equipped hospitals on remote, sparsely populated islands and what not.

Alright; take Japan then. They've got money in the bank as well.

And what's really to stop us from spending all our yearly oil revenue and cut taxes? It's not like there are no parties willing to do just that....

The oil made it easier to build our reserve, yes. But it still needed to be built. And what's stopping you frenchmen to put all the tax you get from oil comapnies into a special fund, eh?

[gaelic cowboy]

@ Horetore

Population of Norway 4.8 million
Population of France 65.5 million

[Louis VI the Fat]

Do you know who Europe's largest stock owner is? It is the Norwegian oil revenue fund. We buy oil, Norway buys our countries in return. Two percent of Europe's stocks are held by the Norwegian state fund. If that doesn't sound like much, bear in mind that Norway is 1% of the population of the EU.

Every Norwegian is worth 100.000 Euros in assets held by Norwegian government oil funds.



Edit: French oil firms exploit oil. They don't own oil. There precious few natural recources in France. The French have to work for a living.

[HoreTore]

@ Horetore

Population of Norway 4.8 million
Population of France 65.5 million

Population of Japan: 127 million

What was your point again....?

[Ser Clegane]

Population of Japan: 127 million

What was your point again....?

Have you looked at the public debt of Japan recently?

[HoreTore]

Have you looked at the public debt of Japan recently?

Nope. If they've just spent the reserve they built up, I haven't heard about it.

But that's quite irrelevant really, as the point is that they made that reserve in the first place.

[gaelic cowboy]

Population of Japan: 127 million

What was your point again....?

Well my main is your talking cobblers Norway would have to basically give every person in your country a gold house to spend it's way through the money.

[gaelic cowboy]

According to last years figures Japan is second only to Zimbawe in terms of public debt.

Luckily for Japan it's public has a massive appetite for buying it's debt so the government has plenty money to spend.

[Crazed Rabbit]

.....And the people Louis listed thought you could cut taxes without cutting government spending. We didn't have any of that nonsense here in Norway, and lookie! We've got a full treasury and zero debt!

No, only one of them - Reagan - cut taxes and not spending.


Our response to the financial pyramid schemes is certainly Keynesian. When the music stops, the tax payers are the ones without a seat.

I blame the four horsemen of the Apocalypse neo-liberalism for turning the world upside down: the financial markets are now sovereign, unchecked by democratic control, what;s more, levying taxes on governments for all they are worth.
They are not disciplined by market forces, because all risk is covered by the bottomless coffers of the governments.


You acknowledge the Keynesian response, but blame his opponents, even as you blame Keynesian type policies like huge bailouts? Someday, I trust, you'll realize the architect of the response bears the blame for the results.

CR

[Subotan]

Our response to the financial pyramid schemes is certainly Keynesian. When the music stops, the tax payers are the ones without a seat.

I blame the four horsemen of the Apocalypse neo-liberalism for turning the world upside down: the financial markets are now sovereign, unchecked by democratic control, what;s more, levying taxes on governments for all they are worth.
They are not disciplined by market forces, because all risk is covered by the bottomless coffers of the governments.

Not only has liberalisation of markets granted financial institutions complete tax exemption, but they have taken it one step beyond still: who is paying tax to whom? Financial institutions to governments, or governments to financial institutions?
That has been driving me mad in the past few weeks in Britain. Every time something happens in politics, all the commentators and pundits rush to question "But how will the markets react to this?", as if the financial markets are omniscient, totally rational constructions, rather than the myopic, megalomaniac grotesques that they truly are.

[Seamus Fermanagh]

Okay, I think Norways < 5M population certainly helped. But be fair, when they came into the petrodollars they did the right thing. They upgraded the infrastructure of the whole country and piled up a powerful reserve. They then invested those monies in such a fashion as to give them political and economic leverage out of proportion to their size and geographic locale. I'd pretty much label that smart.

Mexico hasn't done it, Venezuela hasn't done it, Nigeria isn't doing it....so credit where it is due.


The USA needs to start collecting some kick-backs from people. After all, when you owe the world 13T, whose the one in trouble? I think it's those folks holding our paper. Be nice to us or we'll make it worthless, remonetize and cancel our debt. We go into a massive depression, but we've still got food, a goodly amount of fuel, of water, and a solid (albeit aging) infrastructure. The rest of the world.....

[Tellos Athenaios]

@CR: I don't know if you caught up with a post of Furunculus' in the Acropolis now thread. It linked to a Daily Telegraph article arguing that the UK isn't the financially sound, safe haven it looks in the media right now; but the real thing I think might interests you was provided by a commenter to that article. It's a link to a blog: http://gregpytel.blogspot.com/ the blog is written by someone with more than a cursory understanding of how the financial system works and it makes for a grim if interesting read.

[woad&fangs]

Wow.

I'll assume your joking, since it is Keynes and his ilk who recommend heavy spending and his ignorant followers who spend even more.

CR
Keynes recommended deficit spending during recessions and a return to fiscal responsibility during the ensuing boom. Reagan(a new deal democrat) followed the first half of the theory by cutting taxes and pouring money into beating the Commies but let Bush senior take the flak for having to inevitably raise taxes and cut spending.

[Tellos Athenaios]

The USA needs to start collecting some kick-backs from people. After all, when you owe the world 13T, whose the one in trouble? I think it's those folks holding our paper. Be nice to us or we'll make it worthless, remonetize and cancel our debt. We go into a massive depression, but we've still got food, a goodly amount of fuel, of water, and a solid (albeit aging) infrastructure. The rest of the world.....

It is possible, but risky. The backlash in terms of political, diplomatic and military goodwill will be severe. I do not imagine that the UK will continue to support your Afghanistan exploits if you do this without a very hard guarantee on the UK's stake in the debt. I do not imagine that China will find it an issue at all to equip Iran with a few nukes if you do this unless you make a very hard guarantee on the Chinese stake in the debt.

If your creditors can't get their money back, they will at least be able to have the satisfaction of wrecking the US' political and strategic interest. And there's nothing you can do about that short of another war. You want to see that happen? It is how the crisis of 1929 got `solved'.

[HoreTore]

Okay, I think Norways < 5M population certainly helped. But be fair, when they came into the petrodollars they did the right thing. They upgraded the infrastructure of the whole country and piled up a powerful reserve. They then invested those monies in such a fashion as to give them political and economic leverage out of proportion to their size and geographic locale. I'd pretty much label that smart.

The oil is the reason we're wealthy up here on our iceberg, yes.

It is not the reason why we have an oil fund. The reason for that is the simple fact that we have levied more taxes than what our government has been spending, instead of the other way around. That's not magic, and it can be done no matter how rich or poor you are. I may be a student right now, but I am still able to set aside some money every month for a potential future crisis(like something expensive breaking down). It's simply about spending less than you earn. I'm doing it. Norway is doing it. Of course the US can do it too.

[Furunculus]

That has been driving me mad in the past few weeks in Britain. Every time something happens in politics, all the commentators and pundits rush to question "But how will the markets react to this?", as if the financial markets are omniscient, totally rational constructions, rather than the myopic, megalomaniac grotesques that they truly are.

as long as we have a government that is marching towards a public debt of 400% of GDP, where 27% of tax revenue is used to service debt interest, then yes we are indeed the markets bitches.

argue from a position of strength, or at least moral standing, and tackle the markets when you aren't up to your eyeballs in borrowing from the markets, who are damned well right to be worried if we can pay it all back!

[Tellos Athenaios]

Well that would be the case if markets behaved in a rational fashion. Unfortunately they don't. The herd mentality was pretty strong for instance when Lehman's went down. And the attacks on Portugal or the UK are not rational. Opportunistic loan shark behaviour in the short term, but not rational risk assessment or responsible corporate policy.

And as explained before the market functioned rather too much like a Ponzi scheme anyway so putting your faith in the word of an investment banker might be the single most dangerous thing to your livelihood: there's a lot of money in there that doesn't exist, was never produced/earned/printed and nor will it ever be real. More than the earth's worth of GDP. Or at least, according to articles from this blog: http://gregpytel.blogspot.com/ (I found the link in a comment to a Daily Telegraph article you referred to in a different post, thanks for that btw.)

[Beskar]

why?

Because all the different currencies are the biggest scam going.

[Louis VI the Fat]

Okay, I think Norways < 5M population certainly helped. But be fair, when they came into the petrodollars they did the right thing. They upgraded the infrastructure of the whole country and piled up a powerful reserve. They then invested those monies in such a fashion as to give them political and economic leverage out of proportion to their size and geographic locale. I'd pretty much label that smart.

Mexico hasn't done it, Venezuela hasn't done it, Nigeria isn't doing it....so credit where it is due.Norway wisely invested its oil revenue indeed. But that is almost another discussion. The discussion here is prudent fiscal policy. It is simply pushing it too say that Norway's healthy coffers are the result of wise policy.


For one, look at the scale of the income of the Norwegian state. The German state has a budget revenue of 18k per capita. The UK and France of 19k. Finland of 24k and Sweden of 27k. These are the top of the world.

But Norway, Norway has a budget revenue of 49k per capita.


Norway is not a normal country. One does not have a budget per capita triple that of Germany, double that of the Nordic social paradises, by being prudent.

The first thing one notices about Norway is not prudence and restraint in governmental spending. Far from it. Even by the standards of the Nordic countries, Norway is a social paradise beyond comparison. Lavish, luxurious and enormous would sum up its welfare state. Imagine Germany, then triple it. Think an ambulance helicopter for every sparsely populated remote island. Think fully provided and paid for education, pensions and healthcare, all of the highest standard.

It has got nothing to do with being prudent and wise, it has got everything to do with being the world's third largest oil exporting country.



The point that Norway has been clever enough to invest its oil revenues, and Venezuela and Nigeria not, is both valid and besides the point. One should not compare Norway with Nigeria, but with Denmark and Finland. No more than one ought to congratulate Norway on an excellent human rights record as compared to Yemen.
Norway is a wealthy, wisely governed, social welfare state at the level of the other Nordic countries owing to hard work and prudence. Credit here where credit is due. But, Norway is a spendthrifty, luxurious paradise, has got a GDP per capita almost double that of other Nordic countries, not by wisdom, but by fortune, the fortune of being slightly more closely located to the oil fields in the North Sea than its neighbours.

[HoreTore]

Norway wisely invested its oil revenue indeed. But that is almost another discussion. The discussion here is prudent fiscal policy. It is simply pushing it too say that Norway's healthy coffers are the result of wise policy.

You're lacking history knowledge on this one. The first question you need to ask yourself, is "when did the norwegian welfare state come into being", the second is "when did the oil start pouring in?" and the third question is "when did we start dismantling the welfare state?". The answer to the first question is "50's", the second is "70's", and the third is "80's".

Norways welfare state predates our oil. And once we got the oil, we actually starting the process of dismantling it(the Willoch-government of the 80's). You're also missing the fact that while France, UK and Germany have had a very high standard of infrastructure for centuries, Norway was Europes poorest country when we became independent in 1905. Our wealth is actually not built on oil; it's built on power-hungry industry and a huge merchant fleet. The oil is what sent us over the top, it is not what built the country.

You're absolutely right that we're spending like crazy. But we've done that ever since the war, and we're also taxing ourselves to death. We're actually one of the few countries who in 2005 actually got a majority vote to raise the taxes - and not just for "the rich", but for all of us.

We could, like the Progress Party wants, have simply cut the tax and used the oil money instead of putting it in a fund. Just like you can choose to put some of your tax revenue into a fund.

[Subotan]

as long as we have a government that is marching towards a public debt of 400% of GDP, where 27% of tax revenue is used to service debt interest, then yes we are indeed the markets bitches.

argue from a position of strength, or at least moral standing, and tackle the markets when you aren't up to your eyeballs in borrowing from the markets, who are damned well right to be worried if we can pay it all back!
I actually agree with this :yes:


Because all the different currencies are the biggest scam going.
Well not necessarily, but the FOREX markets certainly are. IIRC money the total value of Italy's GDP is traded across the markets every six hours.

[Meneldil]

Population of Japan: 127 million

What was your point again....?

Japan's economy is in terrible shape and has been like that for 15 years...

[Louis VI the Fat]

You're lacking history knowledge on this one. The first question you need to ask yourself, is "when did the norwegian welfare state come into being", the second is "when did the oil start pouring in?" and the third question is "when did we start dismantling the welfare state?". The answer to the first question is "50's", the second is "70's", and the third is "80's".

Norways welfare state predates our oil. Oh, my dear HoreTore, don't mistake me for a fool. It is precisely because of my long-term historical and political perspective that I understand the difference between the effects of oil revenues in Venezuela and Norwyay.

Precisely because Norway had a strong government, an egalitarian society, with high governmental and social trust, that it was able to withstand the 'curse of oil'. Oil does not turn a country into a strong democracy, with a civil society and middle class. Oil is a detriment to progress. It destabilises weak countries, creates power struggles, damages economic diversification and growth. Oil is a debilitating curse.



The point in this thread is fiscal responsibility. And no, Norway does not owe its budget surplus to any fiscal restraint. Norway is a rich Nordic country of its own accord - through hard work and wise policy.
But Norway is nearly twice as wealthy as the other Nordic countries for one reason alone. Owing to this wealth, this enormous revenue, all the bills are paid, everything is up and running, every Norwegian receives a thousand Euros dividend from the state oil funds every year. There is nothing left to spend money on. Further fiscal restraint then is not a matter of prudent policy, but simply an absence of imbecility. The way one does not congratulate Paris Hilton for prudence should she manage to match her spending to her luxurious trust funds. Nor present her as an example of spending restraint to middle class families.

[Louis VI the Fat]

You acknowledge the Keynesian response, but blame his opponents, even as you blame Keynesian type policies like huge bailouts? Someday, I trust, you'll realize the architect of the response bears the blame for the results.

CRI acknowledge indeed that The repsonse has been 'Keynesian'.

However, I blame as the root cause of the crisis neoliberalism.

That is, the retreat of democratic control over financial institutions. These no longer pay tax, they are no longer regulated. Their brutality knows no bounds: they shift virtual money around, make huge profits, then top it off with reclaiming any loss on governments.

It is the world turned upside down. Our sovereignity has been squandered away, for fear of limiting market 'freedom'. Markets - if they deserve that name - that are nevertheless still relying on governernmentla protection and their maintaining functioning, regultaed economies. Economies that are subsequently plundered, with the motto 'private profits, socialised risks'.

[Louis VI the Fat]

as long as we have a government that is marching towards a public debt of 400% of GDP, where 27% of tax revenue is used to service debt interest, then yes we are indeed the markets bitches.

argue from a position of strength, or at least moral standing, and tackle the markets when you aren't up to your eyeballs in borrowing from the markets, who are damned well right to be worried if we can pay it all back!Moral standing? Sure, why don't we issue an apology together with our trillion euro market bailouts too. How dare we inconvenience them by not immediately offering to cover each and any possible loss any 'market' makes with renewed taxation to bail them out.

[Crazed Rabbit]

I acknowledge indeed that The repsonse has been 'Keynesian'.

However, I blame as the root cause of the crisis neoliberalism.

That is, the retreat of democratic control over financial institutions. These no longer pay tax, they are no longer regulated. Their brutality knows no bounds: they shift virtual money around, make huge profits, then top it off with reclaiming any loss on governments.

It is the world turned upside down. Our sovereignity has been squandered away, for fear of limiting market 'freedom'. Markets - if they deserve that name - that are nevertheless still relying on governernmentla protection and their maintaining functioning, regultaed economies. Economies that are subsequently plundered, with the motto 'private profits, socialised risks'.

They certainly do pay tax, and they are some of the most heavily regulated markets in America. This is not sufficient evidence to back up your assertion that neoliberalism is at fault. You can craft fine rhetoric, but I see no facts.

CR

[Louis VI the Fat]

They certainly do pay tax, and they are some of the most heavily regulated markets in America. This is not sufficient evidence to back up your assertion that neoliberalism is at fault. You can craft fine rhetoric, but I see no facts.

CR'Facts are the refuge of those who lack imagination' - Winston Churchill.


Churchill made this quote in parliament, when his wife, who was also a female MP, offered him a cup of poisoned tea, challenging him to drink it to put his money where his mouth was when he said she did not produce factual evidence that the poison would cause him to bleed, sweat and shed tears.

:book:

[Furunculus]

Moral standing? Sure, why don't we issue an apology together with our trillion euro market bailouts too. How dare we inconvenience them by not immediately offering to cover each and any possible loss any 'market' makes with renewed taxation to bail them out.

you will find no argument from me that a bank should not be too big to fail, nor too that the moral-hazard of letting banks know there is a rescue against their foolish lending.

[Louis VI the Fat]

My frustration is not so much the bailouts. Probably the least worst solution.

However, a bailout should then be followed up by an overhaul of the financial markets, by rethinking what it means if banks are too large fall, by trying to prevent repeats. It is not supposed to be followed up by dismantling the state, with the argument that we've lived beyond our means.

Yet, everywhere, this is precisely what is happening. Obama is accused of leftist spendthrift. As was Labour in the UK. Sweden, the Netherlands and Belgium will all have elections this month. As with the UK, everywhere, the right is winning. Partly, on a platform of 'we can't carry on like this, we've been living beyond our means'. The welfare states are dismantled, to use the tax revenues to pay off the bailouts.

That is what is really going on. The dismantling of the state to fund the biggest peacetime transfer of funds in history.

Typically, debt as % of GDP shot up from 60% in 2008 to 80% 18 months later. This debt is still to be paid. But rather than collecting it where its has gone to, to eventually reclaim the tax money, it is collected from the lowest incomes. It is all quite outrageous, and has shifted me from centre-right firmly to the left, against my natural instict.
We are being had.

[Tellos Athenaios]

In the Netherlands this has been a long-time coming. The reason is not the banking bailout. The reason is that the match between CDA (Christian Democrat) and PvdA (Labour) did not work out.
(Not entirely unsurprising: there is precedent for that.) This has meant that there is a sense of disappointment with the political elite within those parties anyway.

In fact we might simply return to a purple cabinet, this time with a larger blue component.

[Ironside]

Yet, everywhere, this is precisely what is happening. Obama is accused of leftist spendthrift. As was Labour in the UK. Sweden, the Netherlands and Belgium will all have elections this month. As with the UK, everywhere, the right is winning. Partly, on a platform of 'we can't carry on like this, we've been living beyond our means'. The welfare states are dismantled, to use the tax revenues to pay off the bailouts.

In the case of Sweden, the right is gaining from prudent spending (basically by doing nothing and noting that the crisis aren't caused by them and before that, taxcuts that doesn't break the budget) and that the opposition is weak, not because of living beyond our means.

I do agree that I'm sorely lacking decent alternative economic theories from the left atm, since current development says a new crisis around 2020 and the ones causing it have it mainly as a speedbumb while the rest suffers the consequences.

[Furunculus]

My frustration is not so much the bailouts. Probably the least worst solution.

However, a bailout should then be followed up by an overhaul of the financial markets, by rethinking what it means if banks are too large fall, by trying to prevent repeats. It is not supposed to be followed up by dismantling the state, with the argument that we've lived beyond our means.

Yet, everywhere, this is precisely what is happening. Obama is accused of leftist spendthrift. As was Labour in the UK. Sweden, the Netherlands and Belgium will all have elections this month. As with the UK, everywhere, the right is winning. Partly, on a platform of 'we can't carry on like this, we've been living beyond our means'. The welfare states are dismantled, to use the tax revenues to pay off the bailouts.

That is what is really going on. The dismantling of the state to fund the biggest peacetime transfer of funds in history.

Typically, debt as % of GDP shot up from 60% in 2008 to 80% 18 months later. This debt is still to be paid. But rather than collecting it where its has gone to, to eventually reclaim the tax money, it is collected from the lowest incomes. It is all quite outrageous, and has shifted me from centre-right firmly to the left, against my natural instict.
We are being had.

the british state will eventually sell-off its stake in the banks, and if the swedish example is anything to go by, will possibly even make a profit on the action.

that doeas not change the position, IMHO, that taxing more than 40% of GDP for use on public spending is frankly immoral with the term "moral" defined as being as close to 33% as can be achieved, particularly when defcicit borrowing is conducted on top of such massive taxation.

it is immoral because:
> the state is tyrannical if it believes it is right to tithe that much from society.
> it depresses growth, which counteracts inflation, and thus erodes the buying power of available money (both public & private).
> it reduces competitiveness, which erodes the balance of payments between exports and imports, making us comparitively poorer.
> government is simply not the most efficient mechanism for spending this wealth, by some measure, so its capacity to waste must be minimised.
> the very definition of waste is endless debt-interest on the structural deficit, the accumulation of which is known as the national debt.

if that means that states such as the rich west must reduce the breadth and depth of their welfare states, so be it, because what cannot be afforded should not be spent, and the attempt to do will inevitably result in an state callous of individual liberty, with poor growth and competitiveness, and massive waste via innefficiency and deficit repayments, the result of which will be a poorer nation for everyone.

i reject the notion that this is an acceptable outcome given that we will all be more equally poor, that it is the twisted logic of Britain's comphrehensive schooling system, a system that has now catastrophically failed two generations of children.

[HoreTore]

Oh, my dear HoreTore, don't mistake me for a fool. It is precisely because of my long-term historical and political perspective that I understand the difference between the effects of oil revenues in Venezuela and Norwyay.

Precisely because Norway had a strong government, an egalitarian society, with high governmental and social trust, that it was able to withstand the 'curse of oil'. Oil does not turn a country into a strong democracy, with a civil society and middle class. Oil is a detriment to progress. It destabilises weak countries, creates power struggles, damages economic diversification and growth. Oil is a debilitating curse.



The point in this thread is fiscal responsibility. And no, Norway does not owe its budget surplus to any fiscal restraint. Norway is a rich Nordic country of its own accord - through hard work and wise policy.
But Norway is nearly twice as wealthy as the other Nordic countries for one reason alone. Owing to this wealth, this enormous revenue, all the bills are paid, everything is up and running, every Norwegian receives a thousand Euros dividend from the state oil funds every year. There is nothing left to spend money on. Further fiscal restraint then is not a matter of prudent policy, but simply an absence of imbecility. The way one does not congratulate Paris Hilton for prudence should she manage to match her spending to her luxurious trust funds. Nor present her as an example of spending restraint to middle class families.

Well put, as usual. Unfortunately, this time it's all irrelevant :clown:

Or are you really arguing that a state has to be filthy rich to tax its population hard enough to cover its expenses and save a little for the future? And might I add that nations like France, Uk, Germany, etc aren't what you'd call poor nations, the standard of living honestly isn't much bigger up here than it is down there. And may I remind you that while our state may have more money, our level of taxation is nearly double what you're paying? The cost for alcohol here isn't some weird mishap - it's an integral part of how we pay for our social services.

I am able to save a rainy day fund of about two months pay with my very modest income. If I can do it, France can too. But it will require a political leadership who can explain to his voters the need to save up money before its spent; that you can't have your cake and eat it too.

Debt means paying interest. Why on eath any state(yes, including mine) wants to do that is beyond me. A state has the biggest source of cash in the world available instantly; the populations pockets. It shouldn't need to go to a bank ever, it can just turn the tax up a little more.

But this is another thing I blame on Napoleons defeat. Not just was it a huge setback for european philosophy - it was also a huge setback for european economic thinking, as it became preferable to have debt.

[rory_20_uk]

Debt would make sense when the projected rate of return is greater than the cost of the debt. Sadly, governments seem to spend without thought to the return on investments.

~:smoking:

[HoreTore]

Debt would make sense when the projected rate of return is greater than the cost of the debt. Sadly, governments seem to spend without thought to the return on investments.

~:smoking:

The only real reason for a country to take a loan, is to pay for a very expensive piece of infrastructure. Like when we first built the railroad.

Everything else can and should be paid for through taxes.

EDIT: Just like for a normal person; the only debt you should have is your mortgage. Credit card debt is something to be avoided at all costs.

[Devastatin Dave]

Unsustainable debt which will eventually break apart any form of civilization and the moral fabric of a peaceful society makes me horny.

[Centurion1]

At least something in the world is right. Dd is still dd


Indeed, a reassuring bastion of constancy in an ever-shifting multiverse.