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Possible solution to the "economy problem"

Discussion in 'Politics & World News' started by dante, Jan 17, 2008.

  1. dante

    dante Unabomber

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    So the politicians are practically tripping over themselves to rush out some type of "economic stimulus package", but anything I've heard so far is pretty much complete rubbish...

    Republicans - Make the tax cuts from '01/03 permanent, even though they're not supposed to expire till 2010 so what good that'll do now is questionable... The other thing they're pushing for is general corporate tax cuts, but what that will do for the general public is still in question. Major Oil has been getting HUGE handouts from the US Gov in the form of subsidies, but nothing's really trickled down to the pump. Oil prices are up, gas prices are WAY up, and oil company stocks are WAY WAY up, but how that actually has helped me I have no clue.

    Democrats - Tax rebate for every man and woman in America, probably in the form of $250 or $300. That did absolutely NOTHING the last time, as most people said "thank you" and then put it towards their CC bill or stashed it in their savings account. The most common answer i heard to the "what are you spending your rebate on" question was "bills". Remember that this was handed out in Aug '01, to be followed by 9/11 (and the resulting huge drop in the market), and the June/August '02 massive drops as well.

    It's clear that one of the biggest problems in the market is that housing is too expensive. House prices far outshot wage increases, and you also have property taxes (tied directly to house value) and skyrocketing energy (gas/oil and electric) costs as well. So the only way to get out of this mess are a) for house prices to drop precipitously, which would be catastrophic, or b) for the cost of home ownership to go down. The only way for the government to do that is:

    Targeted rebates/income tax credits for owning a home. If your primary residence is a place that you own, you should get a sizable, permanent income tax credit ($1000? $2000?). This wouldn't apply to trailer parks since the land that the trailer is on is usually a lease... *But* this would:

    Get a LOT of money into the hands of a lot fewer people, especially richer people who will probably go out and spend it.

    Get a LOT of money into the hands of people facing foreclosure, and might forestall or prevent them from losing their house.

    Lower the actual costs of owning a home, in effect propping up the housing market. This is where the permanent part comes in. If you could afford 200k for a house, with the $1000/year from income tax reduction you could afford ~$215k. You get tax credits for having kids, buying certain cars, why not the simple act of owning a house?

    Besides, what would you guys do with a gov't check for $300, and what would you do with a check for $1000? $300 would probably get lumped into the general household slush fund, but if we were current on CC bills that $1000 would probably go towards actually purchasing something for me/us.

    Thoughts? No, I don't know how to pay for this, and no, I'd rather not run up even more debt in this country, but if this country is headed to a recession, then what?
     

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  2. jimmydean

    jimmydean The Official Meat of Ridemonkey

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    Hookers and blow.
     
  3. LordOpie

    LordOpie MOTHER HEN

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    No cuts of any kind will fix the problem.

    The biggest problem is the value of the dollar and potential unemployment. The balance needs to be made in fixing one and maintaining the other.

    If the dollar isn't fixed, more countries and more global products will switch from US$ to another currency (euro?). The long-term problems from losing the dollar as THE currency overwhelm nearly all other issues.

    Housing will fix itself eventually. Losing the dollar as a key standard would be devastating.

    Both parties are pandering, so I hope it's all rhetoric and they understand the consequences of actually doing the BS they suggest.
     
  4. Stray_cat

    Stray_cat Monkey

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    I'll not pretended to be an economist, but I can't remember the last time trickle down worked (i.e. giving the rich money). Hoover tried it during the great depression and it failed, I believe Regan may have tried it too. Personally I'd like to see some sorta weaning off our current loan-for-growth system, but that's no quick fix.
     
  5. LordOpie

    LordOpie MOTHER HEN

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    Build more Temples and Parthenons.
     
  6. Westy

    Westy the teste

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    Just give us more bread and circus, it will fix itself.
     
  7. dan-o

    dan-o Turbo Monkey

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    Why is that? A weak dollar has it's obvious issues but do we need the USD to be the #1 currency in the world?
     
  8. LordOpie

    LordOpie MOTHER HEN

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    Lots of international business is conducted in the US$. The value of any currency, like any 'product' is partly supply and demand. If countries and companies stop using the dollar as a standard, then the fall becomes cyclical since there's less use/need to support it's value.

    If the dollar spirals down, then the US will likely pass protectionism policies which would only fuel the downward spiral.

    By essentially controlling the world money supply for the last 60 some years, we've been able to float our standard of living to unreasonably higher levels. If all transactions are done in the dollar, then other countries much hold a substantial supply in reserve, keeping values high, to pay debt.

    However, the US has been able to just print more US$ to pay debt. That's a huge advantage for the US.

    By having so much control over global economics, we could leverage that power in other ways... like don't get overly pissed about us invading Iraq.

    When PotUS Nixon fvcked over the world with screwing with the dollar, there was no Euro or other currency to take over as the primary.

    Sorry for the ramble, but the bottomline is the exponential downward spiral of the dollar, massive fall in the standard of living here, as well as the fall in political influence.
     
  9. Stray_cat

    Stray_cat Monkey

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    That's top notch explination in my always biased opinion. I'm with you on the Temples and Parthenons if and only if the army adopts a 'wooden horse' strategy and we can all wear less cloths.
     
  10. dan-o

    dan-o Turbo Monkey

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    OK. Now explain how the UK has a high standard of living, a very (the strongest?) currency, and global influence without being THE currency.
     
  11. LordOpie

    LordOpie MOTHER HEN

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    I can't explain everything :) but the Pound never fell off like the Dollar might. When the UK poured a lot of resources into the two world wars, there was no global currency competition.

    When the dollar took over after WWII, the Pound was still used and respected.

    Now, there's, what, the Pound, Euro, Yen, Yuan, Dinar... all competing.

    Also, I think the US$ is very inflated compared to what the Pound was in the 1940s... much further to fall.


    If you're asking me for my layman's explanation, there ya go. If you're hinting that you have some answers/info, please share.
     
  12. dan-o

    dan-o Turbo Monkey

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    I have no answers but I don't feel the falling $ by itself is the end of the world. Euro imports are more expensive, oil is more expensive (which raises the cost of everything) but our exports are cheaper and imports from china will remain unchanged as long as they tie their currency into the $.

    The US is a huge and (currently) wealthy market. So while the $ itself may not be the strongest currency the demand to collect it via sales will continue. I hope that a weaker dollar will also bitchslap our consumer mentality back to reasonable levels, which will also reign in the value of other currencies which have grown off our personal greed.
     
  13. $tinkle

    $tinkle Expert on blowing

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    not so fast. check out the near insolvency of northern rock from last year. the subprime mess is spread throughout the western world, as is consistent with the u.s. exporting all our troubles.
     
  14. LordOpie

    LordOpie MOTHER HEN

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    Is it Pakistan that issued the notice to everyone all the way down to street vendors to not accept the US$ anymore?

    Sounds like you think I'm crying the "sky is falling"?

    I agree about our excessive and obsessive consumerism, but it's just my opinion that without a controlled deflation, the problem will be far greater than 99% of the US realizes.


    Here's a tinfoil hat thought... do you think the US is 'allowing' China to lower manufacturing standards (eg. poisoned toys) because of trade and dollar?
     
  15. $tinkle

    $tinkle Expert on blowing

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    i saw that india was doing it (clickie), but had not heard that about pakistan.

    and just how do they expect to get paid for all the poppy?
     
  16. LordOpie

    LordOpie MOTHER HEN

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    I must've been thinking about India... they're all the same.
     
  17. dan-o

    dan-o Turbo Monkey

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    I'm only asking 'you' b/c of your post, not b/c I think you're overreacting. I agree that the $s decline is not good and needs to be stopped but I'm not so sure we need to remain the #1 currency. That's all.
     
  18. LordOpie

    LordOpie MOTHER HEN

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    Agreed.
     
  19. Changleen

    Changleen Paranoid Member

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    We used to have an empire and then after a few hundred years when empires got politically inconvenient we let everyone have their countries back but we kept all the banks. :clapping:
     
  20. Changleen

    Changleen Paranoid Member

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    It's not as bad anywhere else.
     
  21. reflux

    reflux Turbo Monkey

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  22. dan-o

    dan-o Turbo Monkey

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    Well done!
     
  23. fluff

    fluff Monkey Turbo

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    You're kidding, right? The UK was broke at the end of WWII and the pound wasn't worth ****... We've been through a lot of pain in the last 30 years, and we've got a lot of debt now. Our time will come. And if you want to buy currency, buy euros, not sterling.

    And you still have a higher standard of living. We have a higher average wage, but your goods are cheaper.

    We're just smarter is all.
     
  24. Changleen

    Changleen Paranoid Member

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    Except for people from East London and Northerners.
     
  25. N8 v2.0

    N8 v2.0 Not the sharpest tool in the shed

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    meh... we've seen ressession before... back in 2000 with the dotcom bust.

    This will too pass and in 3-5 years real estate will be almost double what it is now.
     
  26. dante

    dante Unabomber

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    YHOO was over 100 in 2000, and it's trading at 20 now... AOL Time Warner was over 100 in 2000, and it's trading at 15 now. The bubble has burst, and it's going to be a long, painful recovery in real estate. I'd be surprised if in 5 years we're back where we were (price wise) in 2005.

    Don't forget, the median price of homes has increased by 6.4%/year over the last 35 years (and homes have gotten much, MUCH bigger). Why homes should suddenly be appreciating at 10, 20, 30% per year is beyond me...
     
  27. N8 v2.0

    N8 v2.0 Not the sharpest tool in the shed

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    Dont forget Apple.. lol

    well, much like politics, real estate markets are all local....

    our region of the US never had the huge boom, but then again we are not in a bust like much of the over inflated markets are...

    However, if you think Cali market has popped, then you had damn well better be picking up some properties at bargain basement prices!

    Cuz in 5 years, they will be well past where they peaked before the 'pop'...
     
  28. DaveW

    DaveW Space Monkey

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    Agreed!
    If I had any spare cash I'd be hitting the sharemarket and realestate markets!:pirate2::greedy:

    :think: BUT I'm skint so I can't. :( :banghead: