Bronco has won a can of worms

[Gerald McGrew]

I'm sure that's right. But the options are, meet it by taxes, or cuts, or a combination of both, or agree to throw the borrowing rules out of the window.

Another option is to enact mostly meaningless measures that kick the can down the road.

Both taxes and cuts will directly take money out of the economy. Which will depress confidence, as well as remove cash. And more borrowing might well spook the market.

I agree on the effect of removing cash from the economy, but not on the rest.

That's what I meant by a can of worms. There isn't a painless way out.
Having said that, is a bit of recession actually all that bad? It's not comfortable, but maybe it forces people to face facts.
Living on a growing bubble might feel better at the time, but it's shit when it bursts.

It's important to understand how our monetary system works and why having deficits and a debt is not necessarily a bad thing. We do need to reduce our current debt, but it won't be by "paying it off" like you do with a credit card bill. Our debt is mostly in the form of gov't bonds, treasury bills and notes. So even if the gov't were running surpluses right now, it wouldn't be paying those things off. They're investments that pay off at a pre-determined time. Running a surplus (or balancing the budget) would just mean we wouldn't be issuing/accruing new debt. Over time the debt would go down as previous bonds and notes are paid, assuming the gov't isn't issuing new bonds or bills for new debt. Overall, it's best for the federal gov't to reduce its debt and deficits, but not necessarily eliminate them.

It's like the ridiculous meme that the federal gov't can "run out of money" or that China can "call in our debt". Neither are at all true.

The US housing market is going to be toxic for years, just like it is in the UK.
Houses will be over-valued, with sellers who can't afford to sell, and buyers who can't afford to buy.
Which forces up rents.

Here in the US, I think the housing market already bottomed out. It's on the rise again, so we just have to make sure we don't create another ridiculous bubble.

[mistermack]

You can't backpedal out of looking like a turkey, they're physically incapable of walking backward.

I think you're better off talking about turkeys. Or to them. But don't feel too superior. You might beat one at walking backwards, but that doesn't mean you could outthink one.

[Gawdzilla Sama]

Live with it.

[DaveD]

I think you're better off talking about turkeys. Or to them. But don't feel too superior. You might beat one at walking backwards, but that doesn't mean you could outthink one.

He doesn't need to, he just has to out-think you.

[Gawdzilla Sama]

I think you're better off talking about turkeys. Or to them. But don't feel too superior. You might beat one at walking backwards, but that doesn't mean you could outthink one.

He doesn't need to, he just has to out-think you.

[mistermack]

Here in the US, I think the housing market already bottomed out. It's on the rise again, so we just have to make sure we don't create another ridiculous bubble.

It's easy to get the wrong impression though. In the UK, the market is still dropping, but only very slightly, and very slowly. But it's a false market level.

The supply of houses on the market is artificially kept low, because people can't afford to sell.
If they are in negative equity, they just have to sit there and keep paying the mortgage.

So basically, there is very little selling. Normally, that would prompt agents to reduce the valuation of the houses on their books. But they can't do that, the sellers can't afford to sell for less.

They could, if there were other houses available at similar values. But everybody is in the same boat, so there aren't.

I don't know if it's the same in the US, but it's been that way here for years now. Houses take years to sell, if at all. But the banks are very reluctant to reposess these days. The government has leaned on them to go to the very limit, before reposessing. That might not be the case in America.

[mistermack]

I think you're better off talking about turkeys. Or to them. But don't feel too superior. You might beat one at walking backwards, but that doesn't mean you could outthink one.

He doesn't need to, he just has to out-think you.

Perhaps he could start with you, then move up to a turkey, before he tried me?

It could give him his best chance.

[Tero]

massive tax increase amounts to 1500-4000 per household
http://finance.yahoo.com/news/bush-tax- ... 20449.html

[mistermack]

massive tax increase amounts to 1500-4000 per household
http://finance.yahoo.com/news/bush-tax- ... 20449.html

That's what I meant by a can of worms.

If I was Obama, I would have mixed feelings about winning this election.
George Bush has taken all of the good years, and squandered them.
He must be laughing his head off now, because he's got away with it, not many are actually blaming him.

[laklak]

That's more like a can of man-eating killer eels than a can of worms.

Notice to citizens: Due to our profligate, drunk sailor on shore leave spending and our inability to act like adults we're going to need a bit more money from you next year. Well, more than a bit, actually. Oh, and BTW, there's going to be another recession and you'll probably lose your job, car and house. Sincerely, The Congress of the United States. PS Please don't forget those contributions, folks, this is no time to change horses.

[Gerald McGrew]

It's easy to get the wrong impression though. In the UK, the market is still dropping, but only very slightly, and very slowly. But it's a false market level.

The supply of houses on the market is artificially kept low, because people can't afford to sell.
If they are in negative equity, they just have to sit there and keep paying the mortgage.

So basically, there is very little selling. Normally, that would prompt agents to reduce the valuation of the houses on their books. But they can't do that, the sellers can't afford to sell for less.

They could, if there were other houses available at similar values. But everybody is in the same boat, so there aren't.

I don't know if it's the same in the US, but it's been that way here for years now. Houses take years to sell, if at all. But the banks are very reluctant to reposess these days. The government has leaned on them to go to the very limit, before reposessing. That might not be the case in America.

Most signs in the US point to a housing market that's on its way back up. Hopefully not to bubble levels where Wall St. firms are playing every angle (selling people on the idea of buying houses as get-rich-quick investments, pressuring small banks to hand out loans like candy, bundling the bad loans with the good and rating them AAA investments, selling them to investors, and then betting against them). If it happens again any time soon, I suspect there'll be a big push to crack down on them hard.

[mistermack]

Most signs in the US point to a housing market that's on its way back up. Hopefully not to bubble levels where Wall St. firms are playing every angle (selling people on the idea of buying houses as get-rich-quick investments, pressuring small banks to hand out loans like candy, bundling the bad loans with the good and rating them AAA investments, selling them to investors, and then betting against them). If it happens again any time soon, I suspect there'll be a big push to crack down on them hard.

I hope it stabilizes. But movement up is only significant, if there is sales volume.
Agents can value your house at $300,000 dollars, but can they sell it for that? Or can they sell it at all?

On the subject of banks, I think it would be much harder right now to get them to hand out loans like candy. NOBODY is going to buy sub-prime investment packages from American banks any time soon. They would have a job selling prime ones. So they just wouldn't find the money for that kind of lending.

[Coito ergo sum]

Further to the OP, I thought that raising taxes helps the economy and causes businesses to hire more. That's what folks around here have been saying for years.

[laklak]

CES, you're not keeping up with current economic theory. Raising taxes would have helped business THEN. This is NOW. It's different.

[Coito ergo sum]

The repeal of the Bush tax cuts would cause the following:

The existing 10 percent bracket will go away and the lowest “new” bracket will be 15 percent.
The existing 25 percent bracket will be replaced by the new 28 percent bracket.
The existing 28 percent bracket will be replaced by the new 31 percent bracket.
The existing 33 percent bracket will be replaced by the 36 percent bracket.
The existing 35 percent bracket will be replaced by the 39.6 percent bracket.
The existing 15% rate on capital gains would go up to 20% for long term capital gains and 39.6% on dividends.
The zero percent rate that currently applies to long-term gains and dividends collected by people in lowest two rate brackets of 10 percent and 15 percent would increase to 10 percent on gains and 15 percent and 28 percent on dividends.

Married couples filing jointly will get hit. Right now, the bottom two tax brackets for married joint-filing couples are exactly twice as wide as for singles. Starting next year, the joint-filer tax brackets will contract, causing higher tax bills for many married couples. Currently, the standard deduction for married joint-filing couples is double the amount for singles. Starting next year, the joint-filer standard deduction will fall back to about 167 percent of the amount for singles.

REgardless of the Bush tax cuts expiring -- the Alternative Minimum Tax will be back and 20 million households will pay the higher "alternative minimum tax." The estate tax will hit more than 10 times the estates than in 2011. Higher payroll and social security taxes are kicking in for 2013 too. Be prepared for your first paycheck in 2013 to take hit. Automatic withholding schedules go up too, for paychecks in 2013.

About 88% of households would see taxes go up, and the average would be about $3,500 each household. Middle-income households will see an average increase of about $2,000. Low-income households will see an average increase of $412, and upper-income people will pay an additional $14,173 on average.

In other words, shits gonna get real.