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<p>Alternative - Greece II, the mega version.</p>
<p>Greece…lol…</p>
<p>That didn’t show me, did it?</p>
<p>There is this idea that if you raise taxes and cut spending, we might have a recession now, but the economy will be stronger later. Yet, I don’t see too many people that want to go over the cliff and stay there. Interesting. That people don’t want to go over the cliff. </p>
<p>Because, all that austerity doesn’t work. </p>
<p>I do want to go over the cliff. I want to show what austerity can really do for an economy. ;)</p>
<p>Let’s really get that austerity going. :)</p>
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<p>Then the tax increases will have no effect on them. They will continue to pay zero.</p>
<p>Tax rates will go back to the clinton rates and people could afford them in the 90s. People today will adjust. </p>
<p>Payroll taxes should go up because that is supposed to be the funding source for social security.</p>
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<p>What part are you saying is a fallacy? If money is borrowed for 30 years to pay for the cost of operating our government today, people who are not even born today will end up paying for the cost of that government. I call it generational greed.</p>
<p>Cutting spending is not austerity. If we go back to 2007 level of spending, it is not austerity, it is security for our country.</p>
<p>"Tax rates will go back to the clinton rates and people could afford them in the 90s. People today will adjust. </p>
<p>Payroll taxes should go up because that is supposed to be the funding source for social security."</p>
<p>I actually do agree with this. Eventually the Clinton tax structure should be put in place. Maybe something slightly more progressive. But getting there over night is going to be a problem.</p>
<p>And how much to tax people depends on how much people are paid. Have you seen the wage numbers as a percentage of gdp lately?</p>
<p>Kyle Bass is suggesting that this never ending world debt is increasing the risk of wars including big ones. I think he is right. It’s the lesson of history.</p>
<p>[Kyle</a> Bass: This Ends in War | Benzinga](<a href=“Kyle Bass: This Ends in War - iShares MSCI Japan Index Fund (ARCA:EWJ) - Benzinga”>Kyle Bass: This Ends in War - iShares MSCI Japan Index Fund (ARCA:EWJ) - Benzinga)</p>
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<p>However history has shown that it works to raise a hundred bucks and spend a hundred and forty indefinitely?</p>
<p>“Cutting spending is not austerity. If we go back to 2007 level of spending, it is not austerity, it is security for our country.”</p>
<p>No. </p>
<p>Can’t go there until the private sector recovers. I am sure you have seen the numbers that show what has caused the deficit.</p>
<p>Right now, Cutting spending isn’t going to do it. </p>
<p>I was reading how housing is making a comeback. And I think it is. How many new homes are we selling now? Geez. Such a low number.</p>
<p>The private sector isn’t there…</p>
<p>“However history has shown that it works to raise a hundred bucks and spend a hundred and forty indefinitely?”</p>
<p>Indefinitely? I don’t know what that means. We aren’t going to raise a hundred bucks and spend 140 forever.</p>
<p>I don’t know if Kyle Bass is right. Maybe that inflation will make it easier to pay the interest. Depends on how the economy reacts to 2 percent inflation. What happens to the real economy with 2 percent inflation?</p>
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<p>Housing makes up something like 5 percent of GDP. If you consider housing derivative businesses that percentage go up to more than 12 percent of GDP. I’m expecting a massive increase in housing this year and it will be sufficient mostly to counter the reduction in government spending and increase in income taxes.</p>
<p>Housing will help now. </p>
<p>By the way, housing is subsidized and supported by the government.</p>
<p>Edit…If we cut government spending back to 2007 levels, housing would have to double. Not going to happen. Houaing and all the peripherals would have to increase 40 percent. Not going to happen.</p>
<p>Definitely won’t happen if federal govt spending is cut to 2007 levels. Housing would do poorly. The private sector would do poorly. We Would have a very bad recession…at best.</p>
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<p>What you call austerity (which I refer to as a minor reduction in government spending) is really not what scares me. What scares me is if the bond vigilantes come back. No government can stop them and no government has any control over them. They don’t just harm economies they destroy countries. </p>
<p>The fed is engaging in quantitative easing at a rate of $85B per month. What happens to interest rates when that slows or ends? Can the fed sit on its QE balance sheet forever? What happens to the economy when it has to unwind the position? </p>
<p>We do not have the luxury of time with this debt?</p>
<p>Razorsharp, I hope you saw my edit in my last post.</p>
<p>The bond vigilantes? Where are they? And now The deficit is actually decreasing.</p>
<p>We have time. If the economy is improving, the government can handle higher rates. If the economy is imploding, the government can’t.</p>
<p>Hopefully, the economy is going to improve and gradually the deficit is going to drop. The government can handle higher rates if the economy grows and tax revenues grow.</p>
<p>Cutting government spending to 2007 levels is an enormous cut. Unprecedented?</p>
<p>If you look at what happened after the great depression, rates rose for decades and the economy did well. Debt as a percentage of gdp dropped drastically. There was inflation. Inflation can take care of debt.</p>
<p>“Can the fed sit on its QE balance sheet forever?”</p>
<p>Why not?</p>
<p>"What happens to the economy when it has to unwind the position? "</p>
<p>Why does the position have to be unwound?</p>
<p>What would be a great way to fix our deficit problem is to get control of medical costs. Oh lets say we spend 2 or 3% of GDP more than the next highest industrialized country rather than double what they spend.</p>
<p>That fix alone would solve the budget deficit problem. I wonder how those other countries do it? What do they do to spend less as a % of GDP on health care and have longer life expectancies plus spend less years in poor health?</p>
<p>Tom1944, you are right.</p>
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<p>People have been saying this for years and no one has been able to accomplish this. It is wishful thinking at best. The Senate cliff fix raises fees to drs under medicare. Every administration talks about getting rid of waste yet no one ever does so. Every admin talks about electronic records etc. and all that can be done to reduce costs because of medical records has been done. I see no way to materially reduce medical costs unless we start paying medical providers and facilities a lot less money and nobody is willing to do this. Unless we change the reimbursement systems altogether there is no way to reduce medical costs. No one is willing to endure a major overall of our health care system.</p>
<p>Interesting article: <a href=“http://www.cnbc.com/id/1003[/url]”>http://www.cnbc.com/id/1003</a></p>
<p>This is one reason I never sell everything at once or everything for that matter.</p>
<p>this is the correct:
[What’ll</a> Get Me Back Into Market: Najarian](<a href=“http://www.cnbc.com/id/100343637]What’ll”>What’ll Get Me Back Into Market: Najarian)</p>
<p>Looks like the House is going to vote yes.</p>
<p>How boring… :)</p>
<p>Edit… Passed…</p>