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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jim McMannis who wrote (50342)	1/19/2006 11:09:26 PM
From: bond_bubble	Respond to of 110194

By current deflation, I meant recession that is going to happen in near future. In 2000-2003, there was no credit bursting deflation (AG and Bush reduced rate and tax) and the malinvestment was increased. Going forward with credit bubble burst, you should expect deflation, tax and rate increase... Of course this is my opinion.

To: Jim McMannis who wrote (50342)	1/20/2006 1:48:59 AM
From: John Vosilla	Respond to of 110194

Your post makes a ton of sense. Perhaps when wealth inequality gets reduced to where it was in the 1950's we'll be ready to start a new cycle?

To: Jim McMannis who wrote (50342)	1/20/2006 4:38:50 AM
From: shades	Read Replies (2) \| Respond to of 110194

He thought raising tax rates would increase revenue and balance the buget isop.ucla.edu The most universal example of counterproductive government policy was the effort to keep a balanced budget. Doing so proved impossible because the depression caused tax revenues to decline at the same time that the government was being forced to spend more in relief for the needy. With prices falling, unemployment high and economic activity stagnating, deliberate deficit spending would have provided stimulation to the economy, however the contrary was done, expenditures were reduced to a minimum and additional taxes were imposed. During the period between 1931 and 1932, Herbert Hoover made no fewer than 21 public statements stressing the need for a balanced federal budget. After loosing the election in 1932, he even pleaded Franklin D. Roosevelt to maintain fiscal discipline "even if further taxation is necessary". These measures were fully backed by the big corporations and the very wealthy individuals to whom the tightness of Hoover’s policies made perfect sense. Regardless of the crisis, many conglomerates such as U.S.Steel, DuPont, Shell Oil, Gulf Oil and General Motors managed to expand. After the crash they were able to buy businesses and properties at basement bargain prices (13). However the policies described above made no sense for the ordinary citizen because by the early thirties the United States’ economy was in obvious depression. (doesn't that sound like today McMannis - with bush and big business?) Two months after the crash several million people had lost their jobs, many businesses had closed, sellers had been fired and factories had cut their production and decided not to grow further. Office buildings, homes, apartments and hotels everywhere had few tenants and the construction industry came to a complete halt. Banks curtailed their loans and the industry ceased to receive funding. The automotive industry exploded like an inflated balloon, the Ford Motor Company which had 128,000 workers in March of 1929 lowered the payroll to 37,000 eighteen months later. The Metropolitan Life Insurance Company estimated that in the large cities unemployment had reached 24% of the economically active population . Prices of many goods began to fall as companies sacrificed their margins or even operated with losses. That prompted further layoffs and lower wages which in turn meant less consumption and an aggravation of the slump. Deflation followed the depression and both started feeding each other, creating a vicious circle Millions had no shoes, yet footwear factories were operating at marginal capacity. Hundreds of thousands had no food, yet gallons of milk and silos of grain were dumped and burned. Meanwhile, concentration of wealth increased. Those who had money invested in government bonds which always honored their obligations even while sacrificing infrastructure, education, social security and public safety projects. One freaky thing is that the gulf of wealth distribution between the rich and poor was huge back in the '20's which is where we've been heading in the last 5 years with regard to tax favored asset appreciation in real estate. dailytimes.com.pk\01\06\story_6-1-2006_pg5_26 By contrast, skeptics hold that the US economy already contains the seeds of its own socio-economic decline. They point to worsening income inequality, as images beamed worldwide from post-hurricane New Orleans illustrated all too clearly. Poor children do not have reasonable access to health care. Nor are the non-poor faring particularly well, as wage growth has remained virtually flat for a very long time, even as corporate profits are booming. Indeed, this disconnect may explain why polls do not give President Bush the credit for economic management that his strong record would seem to merit. Nor does it help Americans’ mood that they spend far more of their lives working than do citizens in Europe or, these days, even Japan. All of these factors place deep stresses on the social fabric which, so the skeptics argue, will ultimately play out in the political arena.

To: Jim McMannis who wrote (50342)	1/20/2006 2:08:38 PM
From: bond_bubble	Read Replies (2) \| Respond to of 110194

Did you know the Hoover Dam was built by Hoover? And this dam was built as part of public works - and was not built by private enterprise? The point is, Hoover started the public works, FDR, during election campaign, vouched for "hands off" capitalism - but then turned to Hoover's policy of "intervention". The key thing is that - lot of information about 1929 is fudged today. You will find all sorts of contradictory information in literature. Even the article quoted by Shades is so contradictory within itself!! It says, big business benefitted - and also says those big businesses had to lay off etc. Murray Rothbard is a good one to read...

To: Jim McMannis who wrote (50342)	1/23/2006 7:16:42 PM
From: shades	Respond to of 110194

What was that about hoover and balanced budgets? J ECOFIN: Fin Mins Say Countries Are Reducing Budget Gaps BRUSSELS (Dow Jones)--European finance ministers agreed Monday that euro-zone countries are making progress in shrinking their budget deficits. Luxembourg leader Jean-Claude Juncker said "budgetary outcomes were better-than-expected" and "commitments" made by countries breaking the rules would be honored. In particular, he said the figures coming out of Germany were particularly impressive.

To: Jim McMannis who wrote (50342)	1/23/2006 8:35:03 PM
From: shades	Respond to of 110194

What was that about Hoover and balanced budgets? DJ Australian Treasurer Says Budget Won't Pressure Inflation . CANBERRA (Dow Jones)--Australian Treasurer Peter Costello Tuesday said his next budget, due to be handed down on May 9, won't put pressure on inflation. "The most responsible thing to do if you want to keep inflation low and not put pressure on interest rates is to balance the budget and to add to savings through a budget surplus," Costello told ABC Radio. A government update last month said Treasurer Peter Costello will have an underlying budget surplus of A$11.5 billion in 2005-06 and a surplus of A$9.7 billion in the following year ending June 30, 2007. Costello has previously hinted his next budget may include some form of tax relief for families, and over the weekend Finance Minister Nick Minchin suggested cutting the tax on contributions to superannuation, or pension, funds, was one way of returning surpluses without putting pressure on interest rates. Costello declined to say whether he was considering Minchin's plan. "He was saying that one way of ensuring that you don't overheat the economy is encouraging savings," Costello said. "The way in which we are building savings in this country at the moment is by having the government save and if the government gets out of the business of saving at a time when individuals are borrowing and businesses are borrowing, then you won't have any of the components of saving going on in our economy and that will not be good for national saving." Handing down a budget that caused interest rates to rise would cancel any tax cuts or increased spending on services, Costello said. "The one thing this budget will do is it will ensure that Australia continues to grow and it will be poised so as not to put pressure on inflation," he said. -By Barbara Adam, Dow Jones Newswires; 61-2-6208-0901; barbara.adam@dowjones.com