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Life Alert: Sitting on The Fiscal Cliff
#1
I'm not sure where this belongs: here or in the Economics Section. But regardless, it is time now to begin the dreaded Death Watch for the US economy. So, I'll begin this thread with the recent remarks of my first choice for president: Ron Paul. He has been right all along, and I see no reason for him to be wrong on this either.

Quote:Ron Paul: Election shows U.S. 'far gone'

Rep. Ron Paul, whose maverick presidential bids shook the GOP, said in the wake of this week's elections that the country has already veered over the fiscal cliff and he sees no chance of righting ship in a country where too many people are dependent on government.

"We're so far gone. We're over the cliff," the Texas Republican told Bloomberg Television's "In the Loop" program. "We cannot get enough people in Congress in the next 5-10 years who will do wise things." The video can be seen at http://www.bloomberg.com/video/ron-paul-...Tvxkw.html.

Mr. Paul, who is retiring after 12 terms in the House, said voters on Tuesday rejected Mitt Romney because he had opposed the government bailout of General Motors and Chrysler.

"The people in the Midwest voted against him: 'Oh, we have to be taken care of!' So that vote was sort of like what we are laughing at in Greece," Mr. Paul said.

"People do not want anything cut," he said. "They want all the bailouts to come. They want the Fed to keep printing the money. And they don't believe that we've gone off the cliff or are close to going off the cliff. They think we can patch it over, that we can somehow come up with some magic solution. But you can't have a budgetary solution if you don't change what the role of government should be. As long as you think we have to police the world and run this welfare state, all we are going to argue about is who will get the loot."

I am positive that history will show both parties as being guilty of contributing to the collapse. Bush Junior led the way, with the GOP congress, and Obama simply added the final nails to the coffin.

And note that with all this rhetoric by The Boner about compromise, like that of Ronmey's concession speech, is exactly the opposite of what is needed morally. If one side lacks the moral courage to do the unpleasant, yet correct thing, we are all dooming ourselves. Churchill would never have given in, as with Reagan or Thatcher.

Ron Paul: We're Broke and Already Over Fiscal Cliff
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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#2
Here is the one thing that politicians, including the GOP, need to seriously think about with the coming collapse. Because when this is all over and we need to start picking ourselves up again, the ones who didn't yield to expediency are the ones who are going to be leading.

And I believe we will be seeing a constitutional amendment that requires a balanced budget, and return to the gold standard. Because if not, this will never get fixed.

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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#3
I don't think that Romney or Obama would have made a difference as te fiscal Cliff is concerned.

I'm not defending Obama here, I'm also saying that he won't do the right thing neither.

Politicians are unable to cut spending, or it must come with huge, almost unbearable psychological burden and humiliation.

We see that in Greece. When forced to cut spendings by the material lack of money, they all get sick, and the governements are falling one after the other.

And even worse is that the left and, ironicaly Wall Street protest in anger when the governement spendings are not increased as much as in the previous years. Any whisper of spending cut in real dollars, immediately causes riots and teargas.
(it's not clear whether teargas are to tame the riots or part of it)

GOP and Dems will never discuss about reducing expenses. They will only debate about the conditions to raise the debt limit. Tax cuts for the richs against Obamacare.

Indeed the US goernement doesn't need to borrow, to seek money, to find fundings. All they need is to raise the debt ceiling and the money get flowing naturaly, unsolicitedly.
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#4
Fred,

I agree on your view. Politicians really cannot cut spending. I doubt even Greece spends less next year than this year. We have it easy over here due to the dollar being the reserve currency, so we get to spend more and create debt faster w/o paying for it as soon.
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#5
Here's how Politicians think it can be done gracefully. Watch closely and see how the Bamster is going to lead by example.

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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#6
(11-08-2012, 07:10 PM)Fredledingue Wrote: GOP and Dems will never discuss about reducing expenses. They will only debate about the conditions to raise the debt limit. Tax cuts for the richs against Obamacare.

They're discussing it right now Fred. Of course not the expense part, but the keeping the goodies flowing part? That (as our VP likes to say) is a BIG F*CHING DEAL!! Boehner will cave ... the rich will get taxed at a higher rate ... along with pretty much anyone that has a job or does any sort of financial transaction. Most of the defense spending will be restored ... but not all of it ... and there will be virtually no changes to social programs. Reid will complement Boehner on his bitchin' tan, and everyone will declare victory.

(11-08-2012, 07:10 PM)Fredledingue Wrote: Indeed the US goernement doesn't need to borrow, to seek money, to find fundings. All they need is to raise the debt ceiling and the money get flowing naturaly, unsolicitedly.

What the f*ck are you talking about? What exactly do you think the "debt ceiling" actually is Fred? I'll agree with you that a government that conjures it's own currency out of thin air doesn't 'technically' need to 'borrow' ... but without the Kabuki theater of T-bonds, auctions, exchange accounts, Federal reserve buy backs, etc ... the thin chiffon would be revealed for the sh*t that it is. The 'borrowing' is absolutely necessary to the 'debt' exercise Fred. It would be like Catholicism without the Pope or praying in the opposite direction from Mecca. Some things are simply NOT done!
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#7
Yak Wrote:What the f*ck are you talking about? What exactly do you think the "debt ceiling" actually is Fred? ....
The 'borrowing' is absolutely necessary to the 'debt' exercise Fred.
You didn't understand what I mean:
As they rise the debt ceiling lender money gets flowing in like a torrent, unsolicitedly. At the moment poeple are buying T-bonds for every spare dime they can find. There is a huge rush on treasuries. The yield is 1.62% as I type, yet another 1% than yesterday. Incredible!

As soon as the debt ceiling is lifted, poeple pour money in instantly. The gouvernement doesn't even need to ask for it.
But of course, technicaly it's borrowing.

In practice it's giving indifinetly.

Palladin Wrote:I doubt even Greece spends less next year than this year.
Greece is spending less than past year already and will spend even less next year, believe me. But Greece is also an exception, they are kind of an extreme case.

Greece is very interresting to observe now because it's an example of what would happen if other governements would cut spending as much as Greece does.
IMO every governement with debts like that of the US, Spain, UK, France and so on should cut spending like Greece yesterday. But at the same time it's good to see what can happen if we do so.

Greece doesn't have riots every 3 days: It goes through a terrible political crisis, an unprecedented loss of power by the governement, a one way street economic policy,... the greek parliament is in emergency mode permanently.
And this because it's a terrible shock for politicians to cut spending!

But Greece is also not on the verge of a civil war, not taken over by the nazy (albeit the extreme right is rising), not experiencing famine, hospitals and schools are still working in low budget mode, ...
One guy here who came back from Greece even said that he didn't see any crisis (as he expected to see the whole place in rubbles). So everything is relative.

We also see that about half of the population or say 40% is against the budget cuts. Strongly against. While the rest of the country accept it with resignation or with indifference because not every greeks are losing that bad on it.
I mean by that that the population is also unable to accet budget cuts.

Like Ron Paul said

Ron Paul Wrote:People do not want anything cut. They want all the bailouts to come. They want the Fed to keep printing the money. And they don't believe that we've gone off the cliff or are close to going off the cliff.
Why wasn't RonPaul nominated instead of Romeny? Because he would have done what nobody want to be done.

IMO the Fiscal Cliff is what the US needs. Thought I wonder how and who will implement automatic cuts....
The US needs cuts in their spending even if it causes traumas like in Greece (more psychological trauma than real poverty).
We need to live in a new reality where the governement is not donnor in chief for eveybody and forever.
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#8
Fred, there is one thing you can count on in the near future. And that is the breakdown of societal order, because there is nobody to act as the glue holding things together. Like it or not, the US has filled that role, and Euro-LaLa land has benefited because it has had Uncle Sugar to protect them. Not any longer.

We're broke, and while not on the rocks at the bottom of the cliff, we are rushing toward it, with no real chance of landing softly. Only deceleration trauma ahead.

I'm not sure if the next big war is going to be with Islam, or PRC, but nature abhors a vacuum. Anyway, our days of playing world policeman are about to come to a screeching halt, just as Ron Paul has predicted all along. You guys over there in Euro-LaLa Land had better get yourself ready for the Big Dance that is headed your way. Could be a resurgent Russia, or it could be Islamo-Kooks. Or it could be the rise of the next tyrant, such as Uncle Adolf. No predictions, but you'd better get prepared anyway.

I'm still worried about the Far East situation ahead too.
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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#9
Fred,

Ron Paul or any "libertarian" here receives right at 1-2% of our vote. The people here want Medicare, medicaid, social security and a massive defense effort including using that defense effort w/o impediments.

That alone guarantees future excess spending. Especially as our population is getting older, lesser revenues, higher outlays for some of this.
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#10
(11-09-2012, 06:19 PM)Palladin Wrote: Fred,

Ron Paul or any "libertarian" here receives right at 1-2% of our vote. The people here want Medicare, medicaid, social security and a massive defense effort including using that defense effort w/o impediments.

That alone guarantees future excess spending. Especially as our population is getting older, lesser revenues, higher outlays for some of this.

Patrick, you are missing something key here. There are very few Libertarians, who are members of the LP. Seriously. The LP is under the leadership of the L.H.Rockwell crowd.

The total number of Libertarians, or Classic Progressives to be more specific, are growing every day. Most of them are Independents, and a whole lot of them are Libertarian Republicans. And as time goes by, I predict that there will be more within the GOP. I just don't know is they will be able to wrest control of the party from the Big Government Dumbasses.

That's why I think the GOP should be totally abandoned and start all over again. The GOP, in my opinion, is beyond redemption. And the longer this gets drawn out, the longer it is going to straighten things out again.

The GOP is ruin't as they say in East Tennessee. S5
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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#11
(11-09-2012, 09:15 PM)John L Wrote: The GOP is ruin't as they say in East Tennessee. S5

The GOP needs to make the choice now.

I was hoping they will go back to the roots and become a small government party on all levels... this is one option. The other is to become more like Democrats and compete on the left. It seems that this is what they are about to do now... and if they do, I think they are indeed ruin't.

And funny enough, the fate of GOP now may be in hands of one man....boneless bongo....

Now, it is unlikely I'd vote for a libertarian. However, I have no problem voting for a Cain's 3rd party.
Sodomia delenda est

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#12
Obviously here is one 'so called' economic expert, who is thinking positive over how things turned out: Following Tuesday’s Election, Former Reagan Econ. Advisor Says he Couldn’t be More ‘Optimistic’: Here’s Why.
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"INSIDE EVERY PROGRESSIVE IS A TOTALITARIAN SCREAMING TO GET OUT" - David Horowitz

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#13
He is echoing my pre-election feelings... so Yes, but two caveats: Paul Ryan is damaged goods now. Someone else.
Secondly, if GOP goes into a full retreat (accommodation) mode now, this is all for nothing.
Sodomia delenda est

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#14
(11-09-2012, 05:33 PM)Fredledingue Wrote: In practice it's giving indifinetly.

We aren't Japan Fred ... and "in practice" it's not going to make it to 'indefinitely' for them either.

I don't buy your social breakdown theory ... mostly nausea, malaise and depression. Half the country took a major, traumatic ideological hit this week ... but have you seen us take to the street? burning cars? clashing with police in riot gear? On January 15, people are gonna shit their pants when they see their paychecks shrink ... but they'll do it in a quiet, dignified (pissed as hell on the inside) American way ... at some point they will pick a whipping child ... but they'll do it at some later date ... at the next ballot box.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#15
(11-09-2012, 09:39 PM)John L Wrote: Obviously here is one 'so called' economic expert, who is thinking positive over how things turned out: Following Tuesday’s Election, Former Reagan Econ. Advisor Says he Couldn’t be More ‘Optimistic’: Here’s Why.
It's certainly the worse time to be POTUS since Nixxon.
It's indeed a position you can wish for you worse enemy.

JL Wrote:You guys over there in Euro-LaLa Land had better get yourself ready for the Big Dance that is headed your way. Could be a resurgent Russia, or it could be Islamo-Kooks. Or it could be the rise of the next tyrant, such as Uncle Adolf. No predictions, but you'd better get prepared anyway.
Not yet. The US is very close to bombing Iran.
I'm not saying that they will do it, just that the US will not hesitate to attack Iran if a panic treshold is crossed.
And if they do, there will be nobody left in this region to be a serious threat to the West.

Remains Russia and China. China is too far away from Europe. Russia is still potentialy a threat, but only after Putin is deposed. And that's not going to happen soon.

I don't believe that a reduction of 10 or 20% of defense spending would change much in the global equation. An attack on Iran would need a special fund, but with treasury yields at 1.62% it won't be hard to find.

IMO so-called experts and everyone else are over-estimating the budget cuts impact. The economy doesn't depend on budget being uncut.
There was no budget cut when the recession hit full blow the US. Spain, Italy and Ireland and Greece were already in recession before they cut (modestly) spendings.
Economic slowdown in Spain and Greece are due almost entirely to lack of trust into these countries and their governement.
Wall Street is selling off as if it was oct. 1929 as soon as the phrase spending cuts is heard.
Labor unions unfold their communist banners before they have yet to lose one cent.
(IMO the US will react apparently quietlier to this because you don't have such socialist tradition but more street violence and unorganised riots could happen as it happened in the past)
Mr Y Wrote:and "in practice" it's not going to make it to 'indefinitely' for them either.
As a pool, T-bond investors are giving their money to the US Treasury forever. Of course on an individual basis there are some poeple getting out, other getting in. And nobody ever thinks that they couldn't resell their bond at any microsecond on the exchange place.

The US debt is revolving so fast that it's like it's indefinetly.
And since the US is unable to repay its debt, even not 10% of its debt principal, they are forced to leave their money there.
T-bonds are like collectibles: They keep value as long as poeple believe and accept the value they put in it while materialy it has none.
Huge creditors like China or Russia cannot dream of getting out of their position in US treasuries because that would crash their value instantly. They can reduce their position little by little, but it will take decades until they get rid of it.
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#16
(11-10-2012, 03:47 PM)Fredledingue Wrote:
Mr Y Wrote:and "in practice" it's not going to make it to 'indefinitely' for them either.
As a pool, T-bond investors are giving their money to the US Treasury forever. Of course on an individual basis there are some poeple getting out, other getting in. And nobody ever thinks that they couldn't resell their bond at any microsecond on the exchange place.

The US debt is revolving so fast that it's like it's indefinetly.
And since the US is unable to repay its debt, even not 10% of its debt principal, they are forced to leave their money there.
T-bonds are like collectibles: They keep value as long as poeple believe and accept the value they put in it while materialy it has none.
Huge creditors like China or Russia cannot dream of getting out of their position in US treasuries because that would crash their value instantly. They can reduce their position little by little, but it will take decades until they get rid of it.

Decades is not an indefinite period. And some decades tend to go by faster than others ... And even if they didn't, are you going to tell me that you've never had to cut your losses? ... I have ... I've ridden crappy investments right into the ground ... matter of fact, I've had instances where there was nothing left to cut and I lamented the fact that I didn't take a 50 or 75% hit (it would have been painful as hell, but not as painful as the nothing that I ended up with). "Faith and Trust" can linger for a very, very long time ... but when it crumbles, it crumbles pretty damn fast. Again, we are NOT Japan Fred, we don't have the patience ... and we don't cater to authority ... this last election has pretty well driven home the idea that the plurality expect authority to cater to us. You can't really expect this country to passively tolerate decades of boring stagnation. We prefer exciting extremes ... we'd rather prosper or starve ... than simply 'exist' in a dull long term fantasy driven stasis.
"Democracy is the theory that the common people know what they want and deserve to get it good and hard."
-- Henry Mencken
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#17
Decades in term of Presidential mandates, it's eternity.
There is nobody who thinks 30, 40 or 50 ahead. And this debt can be revoled over very long period of time, until the currency is worth only a tiny fraction of what it was worth when the creditors first lent money.
T-bond owners are losing on the currency getting worthless slowly but surely over time. This time it may not be as slowly thought.

If you keep cash or T-bonds you lose about half your initial investment after 25 years. And this is in normal time. Now it's abnormal times and it may be a 75 or 90% loss over 25 years.
$16T debt. Not a peace of cake.

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