Bailout, the $700 billion dilemma and world markets

[williamc]

mis-characterization, maybe, but ponder this. When the limit was extended to 99 weeks and the employee worked less than that to begin with, yet they are making 3/4 or more of what they made on the job, you seem to think that amount was paid in. That is generally never the case. Then take into consideration that many of those unemployed who do not qualify for actual unemployment go on welfare, and you have a worse problem. So yes, I still refer to it as 'free money'. Take it away and a lot of peoples 'need to work' ideas change fast.

[williamc]

There is a very strong correlation, then, between a state voting for Republicans and receiving more in federal spending than its residents pay to the federal government in taxes (the rust belt and Texas being notable exceptions). In essence, those in blue states are subsidizing those in red states. Both red and blue states appear to be acting politically in opposition to their economic interests. Blue states are voting for candidates who are likely to continue the policies of red state subsidization while red states are voting for candidates who profess a desire to reduce federal spending (and presumably red state subsidization).

My method removes all the blurred lines. Take away all the free money, except for people who actually can NOT work, and make people be productive members of society and watch the change in attitudes and work habits. Also watch the unemployment numbers drop instantly.

[deepsand]

And, then, watch as the inescapable multiplier effect works it's way inexorably throughout all, and the entire economy crashes, making the Great Depression look like a 98 lb. weakling.

[williamc]

Maybe you are not a fan of history? When most civilizations crashed and fell, was when they tried taking care of everyone. Civilizations such as the spartans that made everyone work stayed great until defeated in wars.

[SteveGerencser]

State, Federal 940, or both?
What type entity is business?
Damned cold, if you ask me.

Both state and federal.. I also get to pay in to the state re-education program, uh, training program for people that lose their jobs, but can't draw from that either.. But that will be changing in a few months.. Relocating to a more tax friendly state..

As for people paying in, yes, they do, but I have never seen a case where anyone paid in more than they received in benefits, assuming they can actually receive them.. And with the 13 month extension you can pretty much guarantee that will remain the case.. I'm personally tired of all the freeloading, woe is me, mentality all around this country.. I have worked since I was 14 years old.. And even through the worst economic times I've been able to find work and feed my family.. We have FAR too many people that think government is the solution rather than the problem..

[kgun]

An interesting new report from IMF

http://www.imf.org/external/np/pp/eng/2011/010711.pdf

For further information:

Over the past few years, there have been many rumors about a coming global currency, but at times it has been difficult to pin down evidence that plans for such a currency are actually in the works but not anymore. A shocking new report by the IMF is proposing just that – a global currency beyond national control!

Source: http://www.munknee.com/2010/11/imf-p...al-currencies/

Why do they call it shocking? At least not for me that know IMF's Special Drawing Rights (SDR) very well, it is not shocking news.

NEW YORK (CNNMoney) -- The International Monetary Fund issued a report Thursday on a possible replacement for the dollar as the world's reserve currency.

The IMF said Special Drawing Rights, or SDRs, could help stabilize the global financial system.

SDRs represent potential claims on the currencies of IMF members. They were created by the IMF in 1969 and can be converted into whatever currency a borrower requires at exchange rates based on a weighted basket of international currencies. The IMF typically lends countries funds denominated in SDRs

Source: http://money.cnn.com/2011/02/10/mark...llar/index.htm

[kgun]

While Japan grew 3.9% last year – its first annual growth in three years – this was not enough to hold off China's booming economy. Japan's nominal GDP was $5.4742tn (£3.4tn) in 2010, less than China's total of $5.8786tn, according to official data released by Japan.

Source: http://www.guardian.co.uk/business/2...argest-economy

See also:

At its current rate of growth, analysts say China will replace the US as the world's top economy in about a decade.

http://www.bbc.co.uk/worldservice/af...nomy_foa.shtml

[cw1865]

It'll be sooner than that...

https://www.cia.gov/library/publicat...k/geos/ch.html

$9.872 trillion (2010 est.) - Purchasing Power Parity.

They already export more than the United States.

[kgun]

They already export more than the United States.

Yes, and that may be the problem of China's export led growth based on an undervalued currency.

1. How long can that last?
2. How long can other nations absorb the constantly increased Chinese production?

Exponential growth paths (waves) have a tendency to crash with a force proportional to the energy in the wave.

Now you have other problems. The comments on your last budget is not very optimistic. Economists state that you are on a path similar to Southern Europe. The only difference is that it will take longer for the USA to recognize the problem (5 years from now is indicated by some).

Obama has hard times both with his own party and the Republicans.

Personally I think it may take longer for China to pass the USA as the worlds largest economy. Fifteen years are indicated by some economists here. If the correction I indicate above takes place, it may take much longer.

Based on todays population, China should be the worlds larges economy.

Based on todays technology, USA should be the worlds larges economy.

Based on area, Russia should be the worlds larges economy.

My bet is on USA for the next 20 years.

[cw1865]

Yes, and that may be the problem of China's export led growth based on an undervalued currency.

Well, that is true, but in a side note that is why China is actually much closer to the US in PPP terms than in nominal terms. China is one revaluation away from being at 70-80% of US GDP.

[*]How long can that last?[*]How long can other nations absorb the constantly increased Chinese production?

Well, right now we'll see, there are inflationary pressures in China and as the article that you noted with the IMF, there is clearly a global imbalance, but if you look at the Chinese trade numbers you'll see exports at roughly $1.5 trillion and imports at $1 trillion (+/-). The question to me is really at what point China can start to rely on internal demand.

Exponential growth paths (waves) have a tendency to crash with a force proportional to the energy in the wave.

ala Japan, I suppose, but from WWII until 1990, Japan underwent massive, transformative growth and while Japan has definitely hit a 'ceiling' and has definitely been hurt by the recession (I think they had a -10% GDP growth in one quarter); its still a 'developed economy'

Now you have other problems. The comments on your last budget is not very optimistic. Economists state that you are on a path similar to Southern Europe. The only difference is that it will take longer for the USA to recognize the problem (5 years from now is indicated by some).

Follow the yields on the 30 year treasury. The clock is ticking, that much is for sure, you're starting to see articles right now about 'weak demand' for treasury auctions.

Obama has hard times both with his own party and the Republicans.

Well, at the end of the day, the President is important, no doubt, but the constitution gives the power of the purse to the Congress.

Personally I think it may take longer for China to pass the USA as the worlds largest economy. Fifteen years are indicated by some economists here. If the correction I indicate above takes place, it may take much longer.

I respect that opinion and inasmuch as its a future forecast, really who is to tell. But in PPP terms? The day is coming in years, not decades. China right now is sitting at a per capita GDP of $7-$8K - Personally I don't see it as very difficult for them to get to say the Mexican per capita GDP level and at that point their GDP (again in PPP terms) will actually surpass the US.

Based on todays population, China should be the worlds larges economy.

Well, that is the truism behind it, you'd think 1.3 billion people would be able to nominally outproduce 300 million people.

Based on todays technology, USA should be the worlds larges economy.

Unlike 1900, where say, a certain technological edge did actually exist between countries. Technology today is a little bit different. The United States does produce a lot of ideas (as does Europe), but the old adage applies - what is the work of the goldsmith quickly becomes the work of the tinsmith. The Chinese aren't just sitting over there sewing T-Shirts, you'd be surprised what's coming out of that country (HDTV's, ipads)

Check out the chart for 'high technology' exports:

http://data.worldbank.org/indicator/TX.VAL.TECH.CD

2008 (US) = $231bn
2008 (China) = $381bn
2008 (Germany) = $162bn

Last I checked Germany is 1/3 our size in population, so I'd say that we probably AREN'T the world's leader in technology.

Based on area, Russia should be the worlds larges economy.

The US is a large country and most of it is somewhat habitable. But even here, look at southern California. Place has fantastic weather. LOTS of people there, lots of economic activity. Take I-15 out to Barstow and you're in the middle of the desert, there's nobody out there. Russia's area has a tundra problem. The Russians built the trans-Siberian railroad and cities did spring up along that railroad; Russia's expansion eastward simply isn't as attractive as America's expansion westward. No matter how you slice it, Siberia is still Siberia.

My bet is on USA for the next 20 years.

Guaranteed, kgun, the United States is going to go bankrupt.

http://www.foxnews.com/politics/2011...r-budget-cuts/

"Sources told Fox News that fiscally conscious conservatives, particularly freshmen, pressed the party leadership Wednesday to make bolder budget cuts in response to a proposal released by the House Appropriations Committee. That plan, outlined by panel Chairman Hal Rogers, R-Ky., claimed $58 billion in non-defense cuts as compared with President Obama's proposals. Compared with last year's budget, the net savings amounted to about $35 billion."

That will save us from insolvency for about, oh, I'd say, 21 days or so....of course they still have to float trillions in bonds and then next year the budget will be systemically worse and they'll find out that the 'savings' will have been eaten up by the increased interest they have to pay.

The entire system is rotten to the core. You see the Federal government because you're in Norway and you tend to look at the United States, but the states themselves are bleeding and beyond them, the local municipalities are bleeding as well.

http://www.huffingtonpost.com/2010/1..._n_800652.html

That is just one town of course....but here too....

http://news.yahoo.com/s/ap/20110118/...camden_layoffs

Camden, NJ (half the police in a city struggling with crime)

And now of course the relatively larger states themselves

http://www.thefiscaltimes.com/Articl...enue-Jump.aspx

"The report comes at a time of heightened problems at the state level, as many governors try to close gaping budget deficits. The Center on Budget and Policy Priorities, a Washington-based think tank, estimates that for fiscal year 2012, 44 states and the District of Columbia cumulatively face a $125 billion budget gap."

Frankly, the economic fundamentals just aren't there anymore.