The 'stimulus' isn't going to work, and why.

[Ishmael]

OK, I'm going on the record here with another prognostication. Time will tell whether I'm right or wrong.

The stimulus isn't going to work. As a matter of fact the tack taken by Obama is going to lead to things getting even worse. The only question that remains is how much worse can things get? That answser is easy, the financial bankruptcy of the US is how much worse things can get.

There will be a market run up this summer followed by a retreat in the fall. The run up will be pointed to by the Obamanistas as proof that all is well. I have no idea who they're going to blame the subsequent retreat on. Maybe they'll try to blame that on Bush too. What everyone should be on the look out for is the size of the summer run up. If it's a decent run, then the depths that we will later fall to will not be as deep as would be the case if the summer run up is just a little bump. Because if it's only a little bump, foriegn investors are going to flee our markets and the dollar and if that happens things are going to get seriously ugly.

Before I go into the reasons for this let me be quite clear. It wouldn't have made much difference if McCain had been elected, or Ron Paul or any of the other candidates. The only thing any president could do with regard to what's about to happen would be to implement policy that would only allow things to get 'real bad' as opposed to 'horrible' or 'catastrophic.'

In a nut shell, the baby boomers are picking up their marbles and going home. They trust neither the government nor the markets anymore. The fact of the matter is most of the nations wealth is concentrated in the hands of the baby boomers and they aren't going to play the game anymore. The kids are out of college, their house is paid for, they no longer have to commute so not much driving around and they already have more toys than they want or need. They are moving their money to safe havens now and it's not going to come back. And this is especially true if, as Obama has promised, they're going to be punished for getting back in the game.

It's going to take 10 or more years for the next generation to generate the capital, if they even can or are allowed to, to start the wheels of the economy really moving again.

I wouldn't be looking to the Chinese, or any of the other emerging economies, to pick up the slack. Their economies were based on US consumerism and we aren't going to be doing a lot of consummin' for the foreseeable future.

Obamas rosy budgets are based on a seriously flawed assumption, that being that the capital is going to flow back into the markets and productivity on the high end is going to return to pre Jul. 2008 levels. I got news for you, it isn't. The 55+ crowd is no longer going to put their money at risk and nothing short of wholesale confiscation on the part of the government is going to get that money back into the economy. They aren't going to be paying any taxes to speak of either, all of that burden is going to fall on backs of those that don't have the money to begin with. (That means you in the 25-45 age brackets.) Fiscal realities are going to force that to happen. On top of not paying the taxes anymore, the boomers are going to start feeding off the very systems the government has put in place thereby accelerating the rise in the national debt.

Obama, never having lived in the real world, seems to be quite oblivious to all that is about to happen and is putting in place spending programs and policies that are going to make matters considerably worse. There is no ammount of spending on the part of the government that can change the economy. Primarily because ALL government dollars come out of the economy to begin with. Government spending actually shrinks the economy. There is no law that can be passed or tax levied that is going to prevent humans from reacting in the interests of self-preservation and that includes the wholesale flight of capital and producers from this nation to places a little more friendly.

So there it is folks. I'm calling it 10 years of a shit economy even with the government enacting sound fiscal policy. If the government doesn't, then it's going to be even worse than a shit economy.

Ishmael

 

[Cap’n AMatrixca]

The model which Obama worships comes from across the pond where years ago they began by hating the wealthy and getting even for the good of the poor (it's hysterically funny, btw, to see Obama calling for Carbon Taxes now to go to the poor, I thought we were supposed to be planting trees...), but as the dull, stupid, boring, hated and WRONG, "Atlas Shrugged" points out, eventually you run out of rich people, and when you do, everyone is fair game, thank you "Progressive Taxation."

The Taxpayers' Alliance, which campaigns for lower taxes, said one pound in every five paid in council tax goes towards local authority pensions.

Council pensions, excluding those for firemen and teachers, cost 4.5 billion pounds in 2007-08, a seven percent rise on the year before, according to the group's research.

"Gold-plated public sector pensions place a stranglehold on council budgets," said Maria Fort, an analyst at the Alliance. "They are unjust, unsustainable and unfair."

Councils should spend less and reform their pensions to ease the burden on taxpayers, the group added.

The Local Government Association, which represents 466 councils in England and Wales, said council pensions have recently been reformed and offer good value for money.

http://uk.news.yahoo.com/22/20090227/tpl-uk-britain-councils-39349ed.html

Once we start down the path of who's worth what for what they do (Liily Ledbetter), the only logical outcome is a system where everyone gets paid the same, even when they don't work...



On a more personal note....

Your post echos the "nonsense" this *lol* idiot boomer has been spouting for months now about how people weren't going to just sit still and wait for the Obamanation (the ex's lawyers) come and take half their stuff as they try to "Divorce" us from THEIR America, the land WE destroyed...

Unlike Bronzeage (nothing personal, just the best example I have of one of the smart people here who decided McCain was Bush III, and man did we hate the Bush Economy and Foreign Policy!), some of us listened to then Senator Obama and took him at his word while others passed it off as the usual Democrat Rhetoric that would go away because people will rise to the level of the house WE PUT THEM IN!

...

PS - Why is the man of Peace going to shoot down a Korean rocket; isn't it better to just watch them destroy themselves, not to mention, CHEAPER??? Okay, I'm done, unless we also want talk about the new attacks (celebrated by Waxman) on big Pharm and biotech drug profits as well as the new assault on "Assault Weapons."

 

[Ishmael]

Bronze, and the rest of the collectivists can sit around and pontificate on high ideals and how things should be all they want. But when the rubber meets the road they're just like anyone else and will act in their own self interests. No matter how hard they try they just can't seperate themselves from the rest of the human race.

Ishmael

 

[KingOrfeo]

In a nut shell, the baby boomers are picking up their marbles and going home. They trust neither the government nor the markets anymore. The fact of the matter is most of the nations wealth is concentrated in the hands of the baby boomers and they aren't going to play the game anymore. The kids are out of college, their house is paid for, they no longer have to commute so not much driving around and they already have more toys than they want or need. They are moving their money to safe havens now and it's not going to come back.

IOW, they're becoming retirees. What of that? Retirees do not live on air. Retirees are not producers but they still play an economic-stimulus role as consumers. They draw their pensions and they spend them on the ordinary daily needs of life, plus others peculiar to retirees, such as lots and lots of medical care. They create jobs. Younger, working people pay into Social Security and private pension funds, retirees draw the money and give it back to young people, 'round and 'round -- and retirees' demands are recession-proof. And when they pass away, whatever they have left goes to their heirs.

Politicians in Florida do not much mind having lots and lots of retirees around. When they come here, they bring no social problems with them. They don't need jobs, they don't commit crimes, they don't have school-age children needing education. They just spend and live.

 

[Ishmael]

IOW, they're becoming retirees. What of that? Retirees do not live on air. Retirees are not producers but they still play an economic-stimulus role as consumers. They draw their pensions and they spend them on the ordinary daily needs of life, plus others peculiar to retirees, such as lots and lots of medical care. They create jobs. Younger, working people pay into Social Security and private pension funds, retirees draw the money and give it back to young people, 'round and 'round -- and retirees' demands are recession-proof. And when they pass away, whatever they have left goes to their heirs.

Politicians in Florida do not much mind having lots and lots of retirees around. When they come here, they bring no social problems with them. They don't need jobs, they don't commit crimes, they don't have school-age children needing education. They just spend and live.

Go to anyone of the big retirement towns and come back and give us a report on their thriving economies.

Ishmael

 

[KingOrfeo]

The model which Obama worships comes from across the pond where years ago they began by hating the wealthy and getting even for the good of the poor (it's hysterically funny, btw, to see Obama calling for Carbon Taxes now to go to the poor, I thought we were supposed to be planting trees...), but as the dull, stupid, boring, hated and WRONG, "Atlas Shrugged" points out, eventually you run out of rich people, and when you do, everyone is fair game, thank you "Progressive Taxation."



http://uk.news.yahoo.com/22/20090227/tpl-uk-britain-councils-39349ed.html

Once we start down the path of who's worth what for what they do (Liily Ledbetter), the only logical outcome is a system where everyone gets paid the same, even when they don't work...

What you're describing is Soviet Communism. The model "across the pond" now relevant is European social democracy, which works, and better than what we've got here. Obama does not, in fact, worship social democracy. IF ONLY!

 

[Sharon_]

The model which Obama worships comes from across the pond where years ago they began by hating the wealthy and getting even for the good of the poor (it's hysterically funny, btw, to see Obama calling for Carbon Taxes now to go to the poor, I thought we were supposed to be planting trees...)

Well, this 'po person is gonna plant some more trees to ensure I don't run out of firewood cuz I can only imagine what this cap and trade tax is gonna do to my propane bill (on top of the school taxes attached to every single utility and insurance policy I have, and the $9/week tobacco tax).

I can plainly see the outcome is tax me right out of the 'po house and into the street.

 

[Cap’n AMatrixca]

What a conflict! act in your own self-interest, but vote someone else's self-interest first; again, tantamount to putting a gun to your head, stealing your own wallet, and buying a home for the homeless...



... and in return, getting a home mortgage deduction on your taxes (i.e., a tax credit*) for engaging in worthy behavior.





* because YOU don't really pay an income tax anymore, that's only the "rich" people...

Of course, ol' A_J says, eventually, the homeowner WILL be the rich...

"In Germany, they first came for the communists and I didn't speak up because I wasn't a communist," said the Rev. Martin Niemöller. "Then they came for the Jews and I didn't speak up because I wasn't a Jew. Then they came for the Catholics. I didn't speak up because I was a Protestant. Then they came for me and there was no one left to speak up."

The Rev. Niemöller spent time in one of the concentration camps.

In America, they first came for the very rich and I didn't speak up because I wasn't rich," said the Rev. ImaDem Doinggood. "Then they came for the Bourgeoisie and I didn't speak up because I wasn't Bourgeois. Then they came for the Upper Middle Class blue-collar workers. I didn't speak up because I was a Government clerk. Then they came for me and there was no one left to speak up.

 

[Cap’n AMatrixca]

Well, this 'po person is gonna plant some more trees to ensure I don't run out of firewood cuz I can only imagine what this cap and trade tax is gonna do to my propane bill (on top of the school taxes attached to every single utility and insurance policy I have, and the $9/week tobacco tax).

I can plainly see the outcome is tax me right out of the 'po house and into the street.

Thank Allah I live in a forest on not on the prairie anymore...

All the chips are cashed in, so-to-speak.

 

[tactful]

Look who gave it, and, look who's getting it, enough said, actually, too much said.

 

[Cap’n AMatrixca]

What you're describing is Soviet Communism. The model "across the pond" now relevant is European social democracy, which works, and better than what we've got here. Obama does not, in fact, worship social democracy*. IF ONLY!

DOES it work?




Can it stand alone when the last bastion of capitalism takes a plunge?

Judging by the headlines, I think not. Ayn Rand saw its full force and effect as a young girl and gave us a glimpse into our future in "We, the Living."

A "Social Democracy" is just the jumping off point, all Democracies devolve into tyranny, a VERY well-intentioned tyranny.



* You haven't read much on Obama, now HAVE YOU?

 

[Cap’n AMatrixca]

Retirees clip coupons, count pennies, and actually keep the heat at 62F while living under a pile of blankets clapping the telly on and off as they doze in and out...





That's why commercials aim at the 30-something crowd in the evenings.

 

[Sharon_]

Thank Allah I live in a forest on not on the prairie anymore...

All the chips are cashed in, so-to-speak.

He isn't raising my income tax. Whoop-de-doo.

They're raising all my other taxes (440% on the tobacco).

 

[PannieMonster]

one term in office, 30 years of damage.

 

[emap]

Ishy I thought you died or went elsewhere, glad neither is true.

Anyway, retiree communities do not have a booming economy because as shown with Sun City, they go outside of said community for their shopping and prescriptions. I would assume cheaper outside. There are a ton of restaurants in Sun City though.

Course I gotta admit i've not seen that much of it, but apparently it is mostly houses golf courses and restaurants. Hard to have a booming economy with that. Not to mention, most of the residents get around on golf carts, souped up golf carts but golf carts. Weirdest place to drive I swear, doesn't help speed limit is only 35 to give the golf carts a legal drive.

I remember one time sitting at a light and two old guys pull up alongside us in one, both whistled at me.

 

[Cap’n AMatrixca]

Obama IS going to lower OUR taxes. Whether or not it offsets the inflation (two kinds: freshly printed money and the rich passing on their taxes imbedded in the goods and services they provide) is another question...

 

[miles]

Not one word of support from Obama voters explaining why the package will work.

 

[Ishmael]

Ishy I thought you died or went elsewhere, glad neither is true.

Anyway, retiree communities do not have a booming economy because as shown with Sun City, they go outside of said community for their shopping and prescriptions. I would assume cheaper outside. There are a ton of restaurants in Sun City though.

Course I gotta admit i've not seen that much of it, but apparently it is mostly houses golf courses and restaurants. Hard to have a booming economy with that. Not to mention, most of the residents get around on golf carts, souped up golf carts but golf carts. Weirdest place to drive I swear, doesn't help speed limit is only 35 to give the golf carts a legal drive.

I remember one time sitting at a light and two old guys pull up alongside us in one, both whistled at me.

To amplify on your observation, and what orfeo said. It's like comparing subsitence agriculture to agri-business. Those communities are stable and self-sustaining. But they do not build wealth. They do not contribute to the growth of the economy. In earlier days the more wealthy of the retirement generation would contribute to the economy in the form of moderate risk investments, real estate investments in particular. No one in the boomer generation, in their right mind that is, is going to invest in real estate, or any other investment medium with even moderate risk. You can't grow an economy without putting capital at risk. That is even more true when you inact legislation that punishes those that take those risks.

Ishmael

 

[Oliver Clozoff]

There is no ammount of spending on the part of the government that can change the economy. Primarily because ALL government dollars come out of the economy to begin with. Government spending actually shrinks the economy. There is no law that can be passed or tax levied that is going to prevent humans from reacting in the interests of self-preservation and that includes the wholesale flight of capital and producers from this nation to places a little more friendly.

So there it is folks. I'm calling it 10 years of a shit economy even with the government enacting sound fiscal policy. If the government doesn't, then it's going to be even worse than a shit economy.

Ishmael

A lot of liberal economists agree with you, on this part at least.

 

[jhuson]

In a nut shell, the baby boomers are picking up their marbles and going home. They trust neither the government nor the markets anymore. The fact of the matter is most of the nations wealth is concentrated in the hands of the baby boomers and they aren't going to play the game anymore. The kids are out of college, their house is paid for, they no longer have to commute so not much driving around and they already have more toys than they want or need. They are moving their money to safe havens now and it's not going to come back. And this is especially true if, as Obama has promised, they're going to be punished for getting back in the game.

Ishmael

So you assume to know the finance habits and investment strategies of an entire generation? Interesting.

Purely on the anecdotal side, my in-laws fall into the group of boomers to which you refer.

With a 40% loss in their market holdings, they aren't "taking their marbles" and going home. They're planning on retiring later than anticipated and they are looking for bargain investment opportunties. But they're probably the only ones.

 

[Oliver Clozoff]

So you assume to know the finance habits and investment strategies of an entire generation? Interesting.

Purely on the anecdotal side, my in-laws fall into the group of boomers to which you refer.

With a 40% loss in their market holdings, they aren't "taking their marbles" and going home. They're planning on retiring later than anticipated and they are looking for bargain investment opportunties. But they're probably the only ones.

My parents certainly have become much more conservative as they aged, moving money to treasuries. With lower yields, like your in-laws, they're pushing back their retirements...

 

[PannieMonster]

The Obama Revolution
Paid for by the people.


In the closing weeks of last year's election campaign, we wrote that Democrats had in mind the most sweeping expansion of government in decades. Liberals clucked, but it turns out even we've been outbid. With yesterday's fiscal 2010 budget proposal, President Obama is attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back.

The first point to understand is the sheer magnitude of federal spending built into this proposal. As the nearby chart shows, federal outlays will soar in fiscal 2009 to $4 trillion, or 27.7% of GDP, from $3 trillion or 21% of GDP in 2008, and 20% in 2007. This is higher as a share of the economy than any year since 1945, when the country was still mobilized for World War II. It is more spending by far than during the Vietnam War, or during the recessions of 1974-75 or 1981-82.

But let's assume, for the sake of argument, that Mr. Obama is right that this spending is needed now to "jump-start" an economic recovery. Though the budget predicts that the economy will recover in 2010, spending will still be 24.1% of GDP that year, and the budget proposes that spending will remain higher than 22% for the entire next decade even as the defense budget steadily declines. All Presidential budgets predict spending will decline in the "out years," if only to give the illusion of spending restraint. Mr. Obama tries the same trick, but he is proposing so many new and expanded nondefense programs that his budgeteers can't get anywhere close even to Jimmy Carter spending levels.

These columns focus on spending, rather than deficits, because Milton Friedman taught us that spending represents the real future burden on taxpayers. Nonetheless, the 2009 budget deficit is estimated to be an eye-popping 12.7% of GDP, which once again dwarfs anything we've seen in the postwar era. The White House blueprint predicts that this will fall back down to 3.5% as soon as 2012, but this is based on assumptions about Washington that aren't going to happen.

For example, Mr. Obama's budget assumes that nearly all of the new stimulus spending will be temporary -- a fantasy. He also proposes to eliminate farm subsidies for those with annual sales of more than $500,000. This is a great idea, and long overdue. But has the President checked with Senators Kent Conrad (North Dakota) or Chuck Grassley (Iowa)? We hope we're wrong, but a White House that showed no interest in restraining Congress during the recent stimulus bacchanal isn't likely to stand athwart history to stop the agribusiness lobby.

The falling deficit also assumes the largest tax increase in U.S. history, starting in 2011 with the repeal of the Bush tax rates on incomes higher than $200,000 for individuals and $250,000 for couples. The White House says this will yield upwards of $1 trillion, if you choose to believe that tax rates don't affect taxpayer behavior.

In the real world, two of every three tax filers who fall into this income category are small business owners or investors, who are certainly capable of finding ways to invest that allow them to declare less taxable income. The real impact of this looming tax increase will be to cast further uncertainty over economic decisions and either slow or postpone the recovery. Ditto for the estimated $646 billion from a new cap-and-trade tax, which no one wants to call a tax but would give the political class vast new leverage over the private economy.

Then there is Mr. Obama's plan for national health care. The White House has put a $634 billion place holder in the budget to pay for covering tens of millions of uninsured Americans with government subsidized coverage. But even advocates of this government plan say the cost will be closer to $1 trillion over 10 years, and probably much more. Meanwhile, the President is promising to reform entitlements, but his budget proposes a net increase of about $1 trillion in Medicare, Medicaid and other entitlements.

The biggest illusion in this budget may be its optimistic economic forecast. The White House assumes that the economy will decline by only 1.2% this year, before growing by 3.2% next year. This assumes the recovery will begin later this year and gather steam quickly to return to normal levels of growth. By 2010 to 2013, the budget adds, the economy will be cooking by an average of 4% a year -- which is also how it conjures up magical deficit reduction.

This growth is a lovely thought, but how? The only impetus for growth in this budget comes from the government spending more money that it is taking out of the job-producing private economy. With $1 trillion of new entitlements, $1.4 trillion in new taxes, and $5 trillion in new debt, America's entrepreneurs aren't getting any help soon from Washington.

Democrats will want to rush all of this into law this year while Mr. Obama retains his honeymoon aura and they can blame the recession on George W. Bush. But Americans are only beginning to understand the magnitude of Mr. Obama's ambitions, and how much of their own income will be required to fulfill them. Republicans have an obligation to insist on a long and considerable debate on all of this, lest Americans discover in a year or two that they live in a very different country.

http://online.wsj.com/article/SB123569611695588763.html

Oh the joys of living in Obamanation!

 

[Cap’n AMatrixca]

So you assume to know the finance habits and investment strategies of an entire generation? Interesting.

Purely on the anecdotal side, my in-laws fall into the group of boomers to which you refer.

With a 40% loss in their market holdings, they aren't "taking their marbles" and going home. They're planning on retiring later than anticipated and they are looking for bargain investment opportunties. But they're probably the only ones.

Talkin bout my g-g-g-generation...



When do they think they'll be able to retire now? What happened to their g-g-g-golden years?

Obama told us what he was going to do, and as he explained to Cavuto, it's a matter of "fairness" and now, he attacks yet another industry and retards at the same time, a lot of future research...

WASHINGTON – President Barack Obama's budget aims to foster generic competition for costly biotech drugs used to treat cancer and other intractable ailments.

With Americans now spending more than $40 billion a year on such medications, the budget calls on Congress to set up a framework for regulators to approve generic versions, cutting costs for government programs, employers and patients.

Biologic drugs are produced from living organisms — not from chemicals. They are often the first-line treatments for diseases that involve the immune system, such as cancer, rheumatoid arthritis and multiple sclerosis. But the medications are among the costliest, with many easily exceeding $1,000 a month.

When the patent expires on a drug made from chemicals, generic manufacturers can enter the market by showing the Food and Drug Administration that their version contains the same active ingredients, and is identical in strength, dosage and other characteristics to the brand medication.

The generic company does not have to replicate all the tests that went into developing the original medication. That regulatory shortcut dramatically lowers the cost of developing a generic drug, allowing patients to save an estimated $8 billion to $10 billion a year at pharmacies.

http://news.yahoo.com/s/ap/20090227/ap_on_go_pr_wh/obama_budget_generics_1

Sounds good, no? Note though, the article never mentions how much the R&D costs, or what percentage of R&D pays off; once the Obamanation sees a pool of money, all they see is "unfairness..."

Where then, is the incentive to continue this avenue of research if your equity is simply going to be doled out to Indian and Chinese drug companies while you "eat" your losses?

 

[Cap’n AMatrixca]

My parents certainly have become much more conservative as they aged, moving money to treasuries. With lower yields, like your in-laws, they're pushing back their retirements...

... and if they lose their jobs?

 

[jhuson]

Talkin bout my g-g-g-generation...



When do they think they'll be able to retire now? What happened to their g-g-g-golden years?

Obama told us what he was going to do, and as he explained to Cavuto, it's a matter of "fairness" and now, he attacks yet another industry and retards at the same time, a lot of future research...



http://news.yahoo.com/s/ap/20090227/ap_on_go_pr_wh/obama_budget_generics_1

Sounds good, no? Note though, the article never mentions how much the R&D costs, or what percentage of R&D pays off; once the Obamanation sees a pool of money, all they see is "unfairness..."

Where then, is the incentive to continue this avenue of research if your equity is simply going to be doled out to Indian and Chinese drug companies while you "eat" your losses?

They're in their 50s now and were planning on hanging it up in a year or two. However, they are now pushing that back a little.

The thing is, my brother in law is very conservative and they are actually still in very good shape financially. It's just not about being able to survive for them, it's the quality of their retirement that they are targeting.