Housing prices down; Stock Market down; Economy slowing; & the benefits

[laurence]

The U.S. is the wealthiest nation in the history of civilization, and you are laughing at the concept that we would have collateral to back up our obligations I don't even know how to answer that.

I am completely open to correction on this, just tell me what we would give our debtors if we could not make the payments on time. The government doesn't own businesses, if by wealth you mean GDP, 3/4 of that is consumer spending. In simple terms I'm missing the collateral. Now tax rates could always go up, just like you can increase your income to cover your increased credit card payments. But due to the aging boomer population, cuts in Social Security and Medicare are (politically) completely off the table, and while we may slow the growth in defense spending, I don't see it getting cut, either. The discretionary piece of the pie is going to disapear soon, and we'll be more vulnerable to "market shocks" than we were in the past.

(putting my moderator hat on) : People, please, Please, PLEASE try to keep the conversation civil! Not interested in who started what, let's just end it. Hey, we could even get back to the OP subject!

 

[haha]

People, please, Please, PLEASE try to keep the conversation civil! Not interested in who started what, let's just end it. Hey, we could even get back to the OP subject!

Oh come on Laurence, let them follow up a bit on this leather theme.

 

[samclem]

The government doesn't own businesses, if by wealth you mean GDP, 3/4 of that is consumer spending. In simple terms I'm missing the collateral. Now tax rates could always go up, just like you can increase your income to cover your increased credit card payments.

I think the primary "collateral" of the US government is it's authority to tax the national wealth of the US. Our debtors look at this the way a bank would look at a person's job/income before lending him more money. Tax rates can only be rasised to a certain level before the burden on the economy becomes so great that activity fals and actual tax income plumets. This is more true today than 30 years ago, as American businesses can more easily outsource their production/services overseas (it was harder to do with steel plants ad car production). And it doesn't make any difference if we're talking about personal income taxes or corporate taxes--both raise the cost of production and will induce businesses to do their business elsewhere. As soon as those who lend the US money (i.e. those who buy govt securities) see that the US has reached the practical limit to service the debt, then rates they'll demand will go up.

 

[laurence]

MODERATOR POST: Oh great, I tried to split out the Iraq conversation from this thread and I seem to have lost those posts somehow. This was not on purpose. I apologize, I'm not out to delete other people's posts, I feel like a jerk now. Sorry!!!

 

[lswswein]

Bravo - great job laurence

-h

 

[samclem]

MODERATOR POST: Oh great, I tried to split out the Iraq conversation from this thread and I seem to have lost those posts somehow. This was not on purpose. I apologize, I'm not out to delete other people's posts, I feel like a jerk now. Sorry!!!

No problem--good riddance!

 

[unclemick]

Soooo - Lawence gets an honarary Golden Kayak award - or what?

heh heh heh heh - I bad - just couldn't resist. , , , 8).

 

[HFWR]

Oh come on Laurence, let them follow up a bit on this leather theme.

Please leave Karl Rove and Kathy Bates out, though...