Comments on: How we got into this fine mess http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: yonran http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28968 Tue, 26 Jul 2011 18:41:16 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28968 By the way, in Google, try using the Toolbar on the left that allows you to restrict your search to e.g. news articles 2001-2007. You may be referring to Krugman’s December 2006 column on Democrats and the Deficit: http://news.google.com/newspapers?id=Qk1 QAAAAIBAJ&sjid=yQQEAAAAIBAJ&pg=6808,2704 329

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By: vibhor http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28950 Tue, 26 Jul 2011 11:23:48 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28950 Felix its a well structured article, but it ignores the real problem: the trade deficit US has been running for decades now. Obama got this right, when he said Americans need to export more to beat the Indians and the Chinese. But herein lies the problem – its more psychological and cultural than economic. Indian and Chinese learn to work hard and save from their parents. That’s the way they live. So India and China export. Americans on the other hand, learn to consume beyond their means. That’s the way they live. So US consumes (imports). That’s the problem that needs to be addressed. Of course it’s easier said than done. Where Obama is getting it wrong, is in focusing on cutting down imports rather than stimulating exports. Look at US’ policy in WTO, it reeks of protectionism. That’s like saying, we’re going down, but we’ll drag the whole world along.

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By: beowu1f http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28943 Tue, 26 Jul 2011 03:47:54 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28943 Oh boy, its hard to imagine Treasury is that D-U-M dum. Surely the policy came from next door at the White House. Then again, they seem to think hitting the debt default wall is preferable to going around it by using th platinum coin seigniorage powers Congress gave them, so there’s no telling.

Of course, as New York Fed chairman Beardsley Ruml told the ABA in a 1945 speech, “Taxes for Revenue are Obsolete”. The purpose of (federal) taxation is to regulate aggregate demand. The optimal solution is for the Fed toy tighten or loosen our fiscal stance just as they (ineffectually) adjust monetary policy. Indeed, the Fed already has that power. 1. Since 1947 they’ve refunded their net earnings to Tsy, 2. Since 1980, Congress has authorized the Fed to levy and adjust its own transaction fees. Combine the two together: even as Tsy spends what Congress appropriates, the FRB can adjust its transaction fee schedule, mark up fees for a net drain of reserves, mark down fees for a net add. The fee revenue generated would be forwarded to the same destination as tax payments, Tsy General Account.

In 2005, UW-Madison Econ Professor Edgar Feige laid out for Bush’s tax reform panel something like this in his Automated Payment Transaction (APT) tax proposal. Of course, Feige missed the point that his plan for the Fed to collect taxes on behalf of Tsy is already authorized under current law.
http://www.scribd.com/doc/25299549/Feige -APT-Presentation-to-Tax-Reform-Panel-20 05

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By: threeRivers http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28931 Mon, 25 Jul 2011 22:25:37 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28931 Well heck yeah. I mean we’re going to be doing this same thing again and again even if we pass 20 trillion in cuts over 10 years. In fact, just how much would we have to cut, now, to actually avoid a vertical takeoff and landing when Medicare begins to have 50 million boys and girls added to it’s rolls who if not already employed, will be way too old to work at any kind of job, even if there were any?

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By: David4321 http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28928 Mon, 25 Jul 2011 21:47:20 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28928 Good analysis, but as with a lot of other commentary, it rests on the untested assumption that the bond market is rational and omniscient. Perhaps this assumption should now be known as the efficient markets fallacy.

Indeed I think it rather dangerous to speculate that, simply because yields have failed to climb, investors have by definition concluded that the probability of both imminent default and future default (rendered more likely by increased political polarization) are low.

On the contrary, I find it rather more likely that investors are every bit as asleep at the switch as they were in 2008 and have underestimated the Tea Party’s apparent willingness to escalate what would otherwise be an ordinary costume drama into a match to the death at the Colosseum. If and when they finally wake up, the results could be very unpredictable.

Exactly how the Obama administration was dumb enough to fall into this trap may very well become a topic of debate for decades. If you’re as terrible a negotiator as Obama, the last thing you ever want to do is invite the barbarians over for dinner, when it’s as clear as day that as soon as they arrive they will burn the house down.

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By: gangof4 http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28926 Mon, 25 Jul 2011 21:45:57 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28926 In the future–before the Republicans want to start another war (and John McCain would like one in Libya while Ron Paul has his eye on Iran), the GOP should specify in advance what taxes will be raised to finance the war. You cannot fund the budget on program cuts alone while exempting the DoD and providing obscene tax breaks to the wealthy. Face it, Republicans like to spend money as much as Democrats (How much does a B2 cost again?) This is why George Bush the elder called Reaganomics “Voo doo economics.”

Both sides have to give a little–that’s only reasonable. Unfortunately, the right has become unreasonable.

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By: Jlmeshell http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28925 Mon, 25 Jul 2011 21:41:36 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28925 Well done Sir. It gives me great comfort to know that only intrepid reporters create the actual word pictures. It’s up to the citizens who are active in their own local sphere of influence that anything can get done. The people have been watching the hour glass enough…wake up! Wake up! Wake Up! Go and greet and meet your representatives now. Ciao!

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By: ponder http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28923 Mon, 25 Jul 2011 21:14:34 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28923 How we got into this fine mess seems like a convenient cover for the fine mess that exists now. Don’t you remember how Congress with Clinton’s help decided that everybody needed to own their own homes via the Community Reinvestment Act? To accomplish this didn’t they set up Fannie Mae and Freddie Mac to absorb all these marginal loans from unqualified borrowers many of them with no down payment?

Nothing is mentioned about this even though the article is entitled: “How we got into this fine mess.” Perhaps short or skewed memories like this is the real reason we got into this fine mess.

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By: hsvkitty http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28921 Mon, 25 Jul 2011 20:07:23 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28921 I found lots of Krugman’s columns on the tax cuts but could not see one where Bush made Clinton look like a chump. This one was most interesting… albeit long. The last page was very prophetic. (or rather his last 4 pages)

http://www.nytimes.com/2003/09/14/magazi ne/the-tax-cut-con.html?pagewanted=19&sr c=pm

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By: frit http://blogs.reuters.com/felix-salmon/2011/07/25/how-we-got-into-this-fine-mess/comment-page-1/#comment-28917 Mon, 25 Jul 2011 17:46:13 +0000 http://blogs.reuters.com/felix-salmon/?p=9096#comment-28917 Appalling exercises in magical thinking – in face, magical arithmetic – on the part of our Tea Party Patriots. A default would be an astounding abdication of Congressional authority on the part of Congress. Who will make the decisions about who will get paid, when and how much? The executive, with no Congressional oversight. It seems that Obama would be complete within his rights to turn off the air conditioning in the House of Representatives and stop paying the Supreme Court clerks.

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