Riddle me this you financially gifted types

[Typical_08]

Here's my question, where does all this leave me?

Me being a college student. Myself and my peers, either right now or in a few years will be looking for jobs and trying to get ourselves started. Tons of people are losing their jobs so how are the new generations going to find jobs? "Mom and Dad" can't support us forever, heck a lot of people's parents can't financially support their college either.

The free market, if left to their own devises, is self correcting, as is our economy. If the government allows failing or bad businesses to fail, others pop up and replace them. In the case of the big three. If they are allowed to fail one of two things will happen. One they will restructure and get out of their bad labor contracts, and dump their bad CEOs. As they are able to get out of their labor contracts, they will be able to become productive again, and also, they will be able to hire and fire again, meaning they will be able to dump the leaches that were not earning their pay. Productivity shoots up. Quality shoots up. And prices drop. As productivity shoots up, and as prices drop, these companies can start to hire more people, and in turn, economy gets a small boost.

Now, if they are allowed to fail, and the parts companies decide not to extend them credit, then they will vanish (not likely that the parts companies will tell them no, they still need to make parts and make money). When and if they do vanish, car production will go down, causing a drop in supply, while demand stays high. So the price of a car will go up. In an attempt to pick up the slack, and produce more cars, other productive companies like Honda and Toyota, and will have to hire more workers, build new facilities, and buy more equipment. Supply will rise again, and will meet with demand, dropping the price back down. as there are only so many qualified people out there, these productive companies will hire them up quick. In the end, no jobs are lost, but new ones are created because of the need to create facilities and what not for the productive companies. But if bad companies are not allowed to fail, then the market will stay as is until acted on by a positive (business wise) force. Think about what happened during WWII.

That is the simple version, and is ignoring factors external of the U.S. that are also affecting us. But their impact is minimal compared to the problems we have caused on our own.

Now, something that the government can do to help, and it is proven to help, is lower what they take in taxes, but increase spending. This is bad for the budget, but good for the economy.

If left to its own devises. The economy will show marked improvement by the second quarter FY 10.

I still don't understand why the HECK people are still "paying" for 40k+/year private schools, by "paying" I mean taking out student loans up the yin-yang. Sorry if this is offensive to anyone but I just don't understand it. How is the having the "big name" on your diploma really worth being saddled with years and years of debt?

Because to make money, you have to spend money.

[DrLew]

[QUOTE=lenastorms;938921]IF we took that 700 billion and divided it up among every citizen in the USA, all 300 million of them, each person would receive 23 million dollars.

Do you suppose a few of us could pay all our debts with that?


We'd have some left over to get some nice BP's !

[elevatethis]

Now, something that the government can do to help, and it is proven to help, is lower what they take in taxes, but increase spending. This is bad for the budget, but good for the economy.

Say what? How is this sustainable long-term? I understand the government's need for taking on short-term debt to provide the infrastructure necessary for economic growth, but the government, like any business, entity, or individual, cannot spend more than it takes in. Period.

Want to clarify?

I do agree with you on leaving the auto industry to its own devices, though. Let them fail. They've had years to adjust to the changing world while asian auto companies have been wrecking shop for the last 20 years. Most of the Japanese auto manufacturers have manufacturing operations domestically anyway - employing American workers, buying supplies from American companies, etc etc. It will suck for the overpaid, over-pensioned workers from Detroit, but there are winners and losers in life. In the long term it will be better for everyone.

[Typical_08]

Say what? How is this sustainable long-term? I understand the government's need for taking on short-term debt to provide the infrastructure necessary for economic growth, but the government, like any business, entity, or individual, cannot spend more than it takes in. Period.

Want to clarify?

Look at what Regan did during his time in office, he lowered taxes on income, but increased spending and deregulated the free market. This spending ended up creating jobs, and brought foreign dollars into our economy. Additionally. As the people have more money to spend (see my post on the other page about a tax holiday), federal revenue actually increases because of the tax taken from sales and the additional dollars coming in from foreign buyers. So in the end, they are not spending more than they make.


FFWD some years.
Clinton then came in and set the goal to ballance the budget, and re regulate everything, He rode out two terms banking on the success from the Regan era (as did the other Bush), and by the taxes, and regulations, you saw the down turn in the Bush years.

One thing that the fed has forgotten is income tax revenue does not a good economy make.

[elevatethis]

As the people have more money to spend (see my post on the other page about a tax holiday), federal revenue actually increases because of the tax taken from sales and the additional dollars coming in from foreign buyers. So in the end, they are not spending more than they make.

Exactly what I said, spending more than you make is not sustainable. By your logic, as the economy got better and the government kept accumulating debt, wouldn't they just continue to spend more and more? There needs to be an end somewhere.

[icygirl]

The free market, if left to their own devises, is self correcting, as is our economy. If the government allows failing or bad businesses to fail, others pop up and replace them. In the case of the big three. If they are allowed to fail one of two things will happen. One they will restructure and get out of their bad labor contracts, and dump their bad CEOs. As they are able to get out of their labor contracts, they will be able to become productive again, and also, they will be able to hire and fire again, meaning they will be able to dump the leaches that were not earning their pay. Productivity shoots up. Quality shoots up. And prices drop. As productivity shoots up, and as prices drop, these companies can start to hire more people, and in turn, economy gets a small boost.

Now, if they are allowed to fail, and the parts companies decide not to extend them credit, then they will vanish (not likely that the parts companies will tell them no, they still need to make parts and make money). When and if they do vanish, car production will go down, causing a drop in supply, while demand stays high. So the price of a car will go up. In an attempt to pick up the slack, and produce more cars, other productive companies like Honda and Toyota, and will have to hire more workers, build new facilities, and buy more equipment. Supply will rise again, and will meet with demand, dropping the price back down. as there are only so many qualified people out there, these productive companies will hire them up quick. In the end, no jobs are lost, but new ones are created because of the need to create facilities and what not for the productive companies. But if bad companies are not allowed to fail, then the market will stay as is until acted on by a positive (business wise) force. Think about what happened during WWII.

That is the simple version, and is ignoring factors external of the U.S. that are also affecting us. But their impact is minimal compared to the problems we have caused on our own.

Now, something that the government can do to help, and it is proven to help, is lower what they take in taxes, but increase spending. This is bad for the budget, but good for the economy.

If left to its own devises. The economy will show marked improvement by the second quarter FY 10.

Edit - never mind, I read it over again, and I see what you are saying now. I agree to an extent but it worries me that if the big 3 are allowed to fail, they will create an even bigger hole in the country that we can't dig ourselves out of.

Because to make money, you have to spend money.

Yes, but you also can be smart about it!!

If you have $200, you can set up a basic snake rack yourself that works, and you can tailor it so that it does what you want it to do. Or, you can take out a loan and buy a really fancy snake rack online and end up paying back the money for a while afterwards. Either way you get a healthy snake. See where I'm going with this?

(I know you wouldn't normally take a loan out for a snake rack but I am trying to make an example.)

[Typical_08]

Exactly what I said, spending more than you make is not sustainable. By your logic, as the economy got better and the government kept accumulating debt, wouldn't they just continue to spend more and more? There needs to be an end somewhere.

They were accumulating debt at the time. However, once the economy starts to thrive, the government should cut their spending, and keep taxes where they were, while leaving the free market to do its thing.

This did not happen. If it did, then the monies that the government spent, would have come back to them two fold as the economy continues to grow under less regulation, and if they would have cut their spending, it would have paid their debt. These increased monies from foreign buyers, and increased spending that people can contribute because of the still low taxes pay the debt in sales tax revenue.


Same principal with the student loan thing. You are in debt while going through school, and after, but as you grow your own little economy (career), you cut your spending, and use your increased profits from your higher education to pay your debt, and after a time your debt is paid, you are better off than when you started and you have money to spend.

But this did not happen. Taxes were raised, and regulation was forced back onto the free market. Hence where we are today.


Case in point. In the sixty's we were something like 60% energy independent. The fed instituted some serious regulations on drilling and production here. Now we are something like 90% energy dependent on foreign oil. Now, instead of us putting our monies into our oil, we are sending it overseas, so the money that could come from that and put money back into our budget, is going elsewhere.

Yes, but you also can be smart about it!!

If you have $200, you can set up a basic snake rack yourself that works, and you can tailor it so that it does what you want it to do. Or, you can take out a loan and buy a really fancy snake rack online and end up paying back the money for a while afterwards. Either way you get a healthy snake. See where I'm going with this?

(I know you wouldn't normally take a loan out for a snake rack but I am trying to make an example.)

I hear what you are saying, and yes that is the safe way to do things. But if you use the loan wisely, and build it fast, then you can make the money back faster, and pay your debt faster than you could have if you just saved and did a little at a time. But many people do not do this. They, like the gov, get their higher paying job, and instead of paying off their debt fast while living on what they need, instead of what they want, they accumulate more debt.

It is all about proper planning.

[nixer]

Case in point. In the sixty's we were something like 60% energy independent. The fed instituted some serious regulations on drilling and production here. Now we are something like 90% energy dependent on foreign oil. Now, instead of us putting our monies into our oil, we are sending it overseas, so the money that could come from that and put money back into our budget, is going elsewhere.

actually our oil isnt as good as the oil we get from the middle east ours is much dirtyer than theirs so it would cost more to refine ours

[Typical_08]

actually our oil isnt as good as the oil we get from the middle east ours is much dirtyer than theirs so it would cost more to refine ours

Not so much. It isn't that our oil is dirtier, unless you are talking about oil shale, which is not actually crude, it is kerogen. Not the same thing.

It is that our oil is more difficult to get to. So the economic limits for a number of the rigs in the US are lower than those in the ME. But we are only talking about the small portion in the areas where we are able to drill right now.

[PythonWallace]

Since there are already posts wih conspiracy informaion here, this does a good job of illustrating how our money works.
Zeitgeist: Addendum

At least the financial parts of this movie are mostly accurate.