Next great debate. Effect of US's economy on us...

[Greatwhite]

I'm opening this discussion because I am curious what people here think about the current economic problems that the US is seeing and what will happen to us as a result.  Being a government city, I'm sure there are some very good opinions on this one...  And I want to learn more on the subject!

I just watched Obama right now on Fox, talking about the debt ceiling deadline in 8 days.  If they can't get a bill passed to raise the ceiling (again), to allow them to borrow more money, they won't be able to pay the bills.  They'll lose their AAA credit rating, and make investors think twice about investing in the country.  This sounds like a situation that most of us have found ourselves in at some point in our lives, no??  Now imagine that for an entire country.

So, since they don't make enough money - they borrow.  And, they continue to borrow, and borrow, and borrow.  The laws are in place to prevent them from borrowing too much.

To lower the national debt, there are proposals to cut government spending, raise taxes on the rich and remove tax cuts that they get.  Other proposals want more cuts, but not raise taxes on the rich.  I have a feeling that the guys who are making the decision to raise the debt ceiling fall into the "rich" category.  They say that they will ONLY raise the ceiling if they don't get their taxes raised.  THEY want cuts to programs like Medicare and social assistance....  I have a feeling that most of us would be for tax hikes on the rich guys to help with their debt repayment.

Hmmmm...

Historically, war has been profitable for the country.  But, historically, weapons didn't cost $1 billion to build.  Soldiers were just sent over to the war, where they outnumbered the enemies until the war was over.  Just look at the cost of weapons these days!
http://www.strategypage.com/militaryforums/478-1045.aspx

I'm all for spending on technology to keep soldiers safe(r), but where is the profit in attacking Iraq?  It certainly didn't lower oil costs.  SOME people profit by destroying cities, and then charging to rebuild them...

IF the ceiling isn't raised, and they default on some payments due, the economy will start suffering.  Interest rates will skyrocket on everything from credit cards to mortgages.

Unfortunately, OUR economy is very tied to theirs.  Our economy is affected by the economy of European countries that were on the verge of bankruptcy - like Greece, Portugal and Ireland.  They were saved by the EU extending their loan periods and taking control of some parts of their banking systems. (conspiracy theorists, stop saying "I told you that would happen!!")

At the risk of looking like a crackpot, I'll point out now that bankruptcy in the US was predicted 500 years ago by Nostradamus (or at least that's how some people interpret his predictions)...  Like I've said before, I look at many points of view on world issues to come up with my own conclusion.  That includes insane, drug induced predictions from 500 years ago - and looking at past events in history because history repeats itself.

So what affect will this have on us?  Any?  Or has our government got enough in place to  protect us?

[NanoSF]

I have no idea how this will effect us, but it was amazing to me that Fox news was even pointing out all the hypocrisy of the Republican party. They called them out on the impossible situation the Tea Party are trying to create, they called them out on the fact that they are only trying to not fix this so it looks bad on Obama for the next election. They called them out on their claims that there was a bipartisan vote previously when it was in fact only 5 Democratic votes. Meanwhile the tea party support seems to not even be in support of the current Republican proposal.

To me the best thing that can happen in the US is the Tea Party becoming an actual party. That way the Republicans don't have to cater to the radical fringes any more. They can just be the party of lower taxes and smaller government. Plus it will split the votes the Republicans get and benefit the Democrats which I am personally in favor of.

BTW Greatwhite....You just had to do it did you? I know you said you enjoy this kind of debate, but OMG did we have to poke the bear so soon after our last debate. 

P.S. Did Obama say that Regan raised the debt celling 17 times!!!!! That is too funny that the Republicans are arguing against government spending all the time and that's what he did.

[Greatwhite]

 

Debates are the best way to learn about issues, in my opinion.  AND - I'm always trying to learn more!!!

Yeah, Regan raised 17 times.  Back then, money grew on trees.  These days, everyone is looking at WHERE money is going.

I really did like how he was VERY clear that this situation was in motion "when he took office" and later on, about removing tax cuts that millionaires and HE got, but didn't ask for and don't need.  HE is all for raising taxes on those guys so that the lower classes are not affected.  He's definitely spinning things to win another election... OH - he also PERSONALLY got Osama.

My wife is an accountant of sorts.. Currently on leave from CRA...  I asked her for her opinion, and she laughed at me thinking I was mocking her because she's been telling me for years that if US's interest rates go up, ours will not be far behind.

[Darth]

being an american I found what obama said somewhat refreshing these big companies and billionares get tax breaks and limits on how much tax they can pay is BS the middle class are penalized for being middle class. Changing the tax cuts and what not are not going to hurt these companies at all they wont even feel it, I dont get why when you are that rich can you not take a hit like this, you have more money than you can spend, and yes the country is in trouble and havng an aunt and a brother who live off social security not getting paid is not an option, he said by removing the tax cuts and breaks from the big companies and billionares they can cut the defecit  by4 trillion dollars I all. for that, we dont need hard cuts cut back on milatary spending pull our troops out.
Now the real side is the president went national with it saying put politics aside, yet he turned into a political debate, I like what he said and was totally on board if it is true and this is what would happen, but we all know its a do as I say not as I do world so I will believe it when I see it

[JetJumper]

I can see both sides of the coin for the reasoning behind the tax cuts for corporations.  Had they not implemented the cuts in taxes the big companies would simply move their location to another country that was either A) Tax free or B) lower taxes then what they currently had available in the USA.  Think about it, no one really likes paying taxes and if you had the ability to avoid them you probably would yourself?  So the government said okay, we want you to stay in our country to at least pay some taxes to us instead of taking away all those jobs and not collecting taxes at all.

If you think about it that way it makes perfect sense why the breaks for these corporations are in place.  

Rich people are rich because they find ways to keep their money and they like to pay the least amount of the money they have out to others.  Plain and simple.

[magnosis]

Historically, war has been profitable for the country.  But, historically, weapons didn't cost $1 billion to build.

Weapons were still costing money back then.  Relative to what the GDP was, it wasn't exactly cheap.

War were profitable because the weapon, mining and manufacturing industries weren't as developed as they are today.  The requirements for arsenal & supplies gave a tremendous boost to these sectors and provided work for nearly everyone.  The citizens were forced into labor (by conscription) but doing so they also made a bit of $, which they re-invested in the economy.  And those factories didn't shut down overnight either they kept going for the most part.

I think this is where the profit came from out of war.  

We won't see that happening any time soon.

In the US:
Cost of war in Iraq: ~700 b $
10 year budget on nuke weapons: ~213 b $
Annual cost on nuke weapons maintenance: ~20 b $
Annual cost on missile defense: ~10 b $

Elsewhere in the world:
89 countries have a GDP less than the US budget for maintaining their nuclear weapons.


All the rich and poor could keep their tax money if, for just one bit, they stopped focusing so much on war and mind their own business a little more ...

[Greatwhite]

All the rich and poor could keep their tax money if, for just one bit, they stopped focusing so much on war and mind their own business a little more ...

That'd be a nice start.  They got all the bad guys, now they need to sit back and let the smaller countries who are at war with each other sort their own crap out.

Taking the tax breaks away from corporations and "the rich" will affect them...  They will be paying more tax to the government, so less money will be in their pockets.  I think that it was said that it wouldn't affect them as much as a tax hike on lower & middle class because they simply have more money.

The thing is, Americans are VERY patriotic.  Obama is appealing to the patriotism in the rich to "volunteer" to pay a little more to save the country.  However, there's a risk in that... IF the rich don't volunteer, and they end up defaulting and the economy starts crashing - there's going to be further separation between the rich & poor, and the result may be civil unrest.  "You could have prevented this by paying a little more tax!! *BLAM!*" (that's my gun sound..)

The 98% of Americans who make less than $250k would certainly support the 2% paying their fair share... I know I would!

I talked about this with NanoSF a bit, but if  you haven't seen it already - head to youtube and watch the Zeitgeist movies.  The 2nd one (Zeitgeist Addendum) talks about the economy, and explains very well what is going on in the US right now.  Obama isn't necessarily looking to raise the debt ceiling to BORROW money from another country to pay the bills.  They actually CREATE money.  The important section to watch here starts at about the 4 minute mark.

Adding to the debt ceiling will de-value their dollar to cover the new money in the system.  The result... Inflation.  No one would try to sell inflation as a result of borrowing money to the public - because inflation costs EVERYONE.

I'm watching the value of the US dollar closely these days.  The wife & I are planning a shopping spree in Syracuse in August.  Lower valued US dollar means more savings for us.

[brotherluv]

As soon as you start talking War you'll always have different opinions.  War itself is horrible.  Thinking about the casualties of war is as tragic as thinking about a Tsunami or Earthquake that devastates a 3rd world country.  However the cost of this so called war in Iraq is essential.  This is not about oil. First, the radical Islamist groups hate and I can't stress it enough HATE the Western world.  Terrorism is very real and just because most of us have been lucky enough to not experience the results first hand doesn't mean it's not there.  They will not rest or stop their terrorist plots until they have completely destroyed our countries economy resources and our spirit  as Canadians or as Americans.  Groups like Al Qaeda are protecting the poppy farmers in Afghanistan right now and Heroin in the rest of the world has never been cheaper.  There was a story about 40 little girls on their way to school one morning and they organized some heartless monsters to throw acid in their faces because they don't feel women should have the right to an education.  Don't these little girls deserve the same opportunities as their male counterparts?  These are a couple of examples of why we are fighting these terrorists.   Love or hate George W. after 9/11 there hasn't been one terrorist attack on American soil. It seems like a forgotten dream this 9/11.  If you think 700 billion is too much to spend on fighting these terrorists think about the 500 - 700 billion the Americans will be paying to to subsidize Obamacare in the next 10- 12 years.  Not to mention the overwhelming cost to actually implement it.  Over 70% of Americans had proper health insurance before he instituted this policy.  It actually costs more money out of our pockets here to have "free health care"  than it would for us to buy our own insurance.  Perhaps the infamous 2 tier system isn't such a bad idea.  The biggest problem I find is some of the decisions Obama made early in his Presidential term has directly affected the amount of debt their country now has. As far as reform to reduce the American deficit I think it should have been the first thing Obama addressed instead of waiting until the end of his term as President.  Over half of their debt is to China.  A communist country owning half of the US debt fightens me beyond no measure.  No matter what he does he is fighting a losing battle  as most of the American population is losing all confidence in his ability to run their beautiful country.  The best way to reduce it is to eliminate tax shelters and to cut government spending. The best way for the American people to help, vote against the Obama administration in the next election.

[Darth]

I can see both sides of the coin for the reasoning behind the tax cuts for corporations.  Had they not implemented the cuts in taxes the big companies would simply move their location to another country that was either A) Tax free or B) lower taxes then what they currently had available in the USA.  Think about it, no one really likes paying taxes and if you had the ability to avoid them you probably would yourself?  So the government said okay, we want you to stay in our country to at least pay some taxes to us instead of taking away all those jobs and not collecting taxes at all.

If you think about it that way it makes perfect sense why the breaks for these corporations are in place.  

Rich people are rich because they find ways to keep their money and they like to pay the least amount of the money they have out to others.  Plain and simple.

I will say you put it very well I hadnt thought about the companies moving to another country at the same time it sickens me to see these big wigs who won't feel the effect of the losing the tax breaks when you have that much money you wont feel it. Your 500 grand a year bonuses are still gonna come in, as a human knowing you can make a difference to help the middle class from being raped again and you choose to say no I want to still get breaks on money I can never spend SMH

[Hookup]

This will be an interesting turn of events, but I think they will get the debt-ceiling raised.  There are no other options that I see at this time.

you cannot tax the rich or they'll leave, so net is a greater loss.
you cannot tax the poor or you won't get re-elected.
you cannot take away social programs, or you won't get re-elected.

increase debt limit - make it someone elses problem for later..


Are we at the point where obmama is going to be the guy left holding the bag?  I don't think so.

[az]

whatever it is things are not looking bright at all.

[Greatwhite]

As soon as you start talking War you'll always have different opinions.  
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The discussion is not about war, and the necessity of it.  That's a whole other discussion.

This discussion should be more about the direction the US economy is going, and its effect on us...

Here's why I have such an interest in this...  I run a small software company, dealing ONLY with US customers.  I used to bill in USD when I started, and laughed all the way to the bank.  I was LOVING the 20% exchange rate in 2005 I was getting because it was in my favor.  Then, in March 2007, the exchange started changing and the Canadian dollar caught up with US in September.  I took a small loss until October, and renegotiated my contract to bill in CDN at a "fair" exchange rate.

Then in Sept 2008, the US government bailed out the banks, and that caused the US $ to regain some value and the exchange went back to 20%, but I stayed CDN - just in case.  Well, today - $1 CDN = $1.06 USD.

Next week, regardless of what happens - the economy will change.  If the debt ceiling is raised again, the value of the dollar will drop.  If they default on the loans and miss a payment - the dollar will drop because of a lack of confidence in the US dollar.  Expect a cheaper US $ than we have ever seen in history, starting in a couple weeks.

Retail in Canada may suffer, because of people going across the border to shop at the outlet malls instead of shopping locally.  Cross border online shopping will increase, taking business from our own retail outlets.

I know that our plans to head to Syracuse for some shopping couldn't have come at a better time financially.

[Hookup]

Canada will have to look at putting NAFTA back on the table. It is a pretty solid road-block to our own economy that will continue to worsen.  The challenge will be getting something better. 

It is very likely that following (or parallel to) that we will likely see softening of immigration policies.

Canada's got the space, the social systems, and the reputation to attract a lot of people... Get our population growing exponentially with immigrants and we'll start to matter again...

More people = more consumers = more economic demand = better influence on the supply.

As the US dollar decreases, the cross-border shopping increases (with 80% of canada population living within 60min of the US border it's going to happen), supply for goods in canada decreases such that we can no-longer influence the supply.

Alternately, governments can step in with the stick, and lay-down law's, leveys and taxes to discourage the behavior, but that only re-sets and delays the cycle...   

More population = more power...

China scares the hell out of me...

[Greatwhite]

Alternately, governments can step in with the stick, and lay-down law's, leveys and taxes to discourage the behavior, but that only re-sets and delays the cycle...   

Government controlling the public will cause more problems than they'd be trying to solve.  Pretty soon, it'd be George Orwell's vision of the future with Big Brother watching our every move. (and to be honest, we're really not too far off of that already)

[dan2x38]

Yes debate is fine - it encourages the growth of ideas. It is hard with debate to remain on just one topic as it breeds new ideas so do the topics or sidebars increase. So how can you not discuss war especially when discussing national or international economy.

Remember when Obama took over he inherited a lot of issues and not of his own doing. The decline of the American economy was well on his slide way before he was empowered. The defaulting of loans by the big car makers, banks, retail outlets,real estate, etc. was a disaster. This created a staggering government debit over night. They were left with little choice. Millions of people lost jobs, homes, defaulted on their creditors, etc. The cost of medical treatment went up as more public clinics and hospitals were forced to take on patients without insurance since they were out of work. So medicare as we know like or not was basically forced upon the government there. In other words more and more cost. Then through on top of that several nature disasters like Katrina, Oil Spill in the Gulf and Joplin, Missouri.

The other incurred cost/debit was the war/s. Obama was not so short sighted as to pull out all the soldiers over night releasing everything would have been lost. Were these wars necessary? OH yes they were. America if for no other reason had to weed out the rats and show they are not to be pushed around - ever. Plus who else was going to do it? These cowards are not just enemies of the U.S. but of the entire World look at what they've done else where and most recently in India!

So Obama inherited not only these burdens but there costs. So people forget that and blame them for out hand national over spending. The real acid test is if (when) he re-elected if he is able to bring down the debit? With Afghanistan offensive winding down and pull outs soon to follow in Iraq those costs will drop. With higher domestic auto sales, retail sales increase by outsiders, etc. it will inject more economy. Also the disaster areas like New Orleans for one is recovering and producing to the economy instead of drawing from it and it looks like the Gulf is recovering too.

As for use we will have a stronger exportation which will increase our GNP. Our importation will suffer a little but as the U.S. claws it's way back we will as always ride on their coat tails. I am certain they will recover and sooner than later. And if they do not claw their way back then we will all likely see another great depression the likes of never before. How else could we not?

OH on the terrorist note... This a new phenomena up until the late 60's there was no real terrorism. We needed then and likely today to do as the Israels did. They told all citizens we will not bargain for your return. In a very short time all terrorists stayed away because they were killed period. If they hi-jacked a plane it was of no valve. If they saved the civilians it was if they were back from the dead and a bonus. They should have no rights and capital punishment enforced on the spot - just like Osama Bin-Laden. They did the right thing.

[Greatwhite]

Yes debate is fine - it encourages the growth of ideas. It is hard with debate to remain on just one topic as it breeds new ideas so do the topics or sidebars increase. So how can you not discuss war especially when discussing national or international economy.

I'm not saying that war is off topic.  Discussing whether it is necessary or not just results in arguing about war, or the cause of 9/11.  Kinda like a thunderstorm turning into a global warming debate.   I just didn't want to derail the topic just yet.

However, discussing war's effect on the economy is acceptable.

Yeah, Obama basically jumped aboard a sinking ship when he came into power...  I'm actually amazed how many of my American friends don't like him, for whatever reason.  It seems to me that he's been doing the right things to help the economy - bringing troops home in phases and injecting money into the economy ONLY when it's absolutely needed.

Unfortunately, USA is operating at a deficit, and it will take time to turn around to a surplus - and drastic changes.  Most Americans I have seen in documentaries are not willing to change their way of life, but of course, that's WHY they were in the documentaries that I watched.

[dan2x38]

If Obama plays it right not pointing fingers or the blame game and stays straight forward he has a good chance or re-election. He deserves it! I mean to have a more normal Presidency. It would be to bad the first Afro-American President and to be remembered for an economic collapse - not really his fault. I would like to see him have a 2nd term to show what he can really do without all the disasters and distractions. He has many great ideas and I am sure they include us or at least will aid us.

[Greatwhite]

George Junior started the collapse of the economy, and left a real big mess for Obama to clean up.  Honestly, I think he's done well so far with it, making the right moves at the right time.  (I realize that HE is not the only one involved, being a democracy and all)....

He is a great salesman.  Most politicians remind me of used car salesmen, actually.. But he's one that I'd buy a car from.

[Greatwhite]

So my prediction as to where the US dollar was going to go by the end of this week was wrong... $1 CAD = $1.02 USD now... Down 3 cents since monday.  I hope this trend doesn't continue!! My end-o-summer shopping spree in Syracuse would prefer a crappy US dollar!