U.S. National Debt: Not so bad?

alevin said:
Thanks for the response, CB. I'm tempted to print up flyers to stick in everyone's mailboxes (maybe 400) between today and tomorrow morning. The election is this coming Tuesday.

The community is an older residential neighborhood, a mix-probably 40% renters, 60% homeowners, many retirees. The absentee landlords don't get to vote on behalf of their properties, only residents get to vote. The renters can always move away-unless they can't find something cheaper. Had 3 house fires within a block of me over the past 6 years, 1 right next door, one across the street, and 1 two houses over.

Most of my immediate neighbors vote for the increased levy, along with school district increases, but I do personally know some of the anti-taxers-retirees, heck, I even worked with one until he retired about 3 years ago-lives just up the block and around the corner from me. I do constantly think about fire danger and ways to protect my own property-problem is we live too close together if something gets started-unless there is fire protection infrastructure response quickly available. Anti-taxers here seem to lack common sense and longrange thinking re local taxes and what we get for them. Glad your area that isn't so.
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Good Luck alevin,

Hopefully the anti-taxers will wake up to the fact that any infrastructure improvement not only improves the value of their property, but also makes the entire area, more attractive to outsiders moving in and increased potential for future business development. Hopefully they'll see what a little investment now, will bring in the future.

CB
 
nnuut said:
There is always the freedom to organize a Volunteer Fire Department to serve your community if folks think the available Organization is not serving the community well or the costs are too high. Of course Volunteer Fire Departments aren't cheap but if qualified there is probably Local or state funds available for qualifying areas.
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True, true. I've also lived in areas with VFDs. My current area would probably have to develop a ballot measure and vote (plebiscite) to abolish the local fire taxation district which has been in place over 30 years. The special district property taxes don't go away, just because the contract with the city gets broken. Whether we could get enough voter engagement to disband the special property tax district would be yet another challenge and then ensuring we had enough committment from enough people to get RFD in place quickly as substitute. Logistics, logistics. It doesn't absolve us of the $35K debt we owe the city from last year either.

Jim, I like the idea of overhead sprinklers. that one hadn't occurred to me. Would they be viable in winter conditions or have to be blown out-winterized like my yard system?
 
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alevin said:
... Anti-tax people weigh in, what would you do in this instance? sell your house and move away and let someone else worry about no/insufficient fire protection for your residence?
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Hmmm. One problem is relying on the fire department to come put your fire out. If THAT is the only way to protect a structure, then you're putting a lot of trust into other folks hands....

Have you ever considered home sprinkler systems?
http://www.usfa.dhs.gov/citizens/all_citizens/home_fire_prev/sprinklers/
Not very expensive- about $1 a square foot when doing new construction, and it lowers your insurance bill considerably, as well as catches fires in a much earlier state than what happens when you are waiting for the fire department to show up.

I had a grass fire one time years back- I was out trying to battle it, and called the fire department on the cell phone, but it still took almost 15 minutes for a truck and some guys to get here. When the fire is burning, that's a LOT of time. Sprinklers look very, very inviting when you've had an experience like that.
 
Globalization more equitably distributes the benefits of industrialization. However it also increases our downside exposure. Global supply chains are kept taut as violin strings to maximise utility and minimise expensive warehousing. This means that any disturbance anywhere immediately transmits itself everywhere. Our troubles with mortgages and non-performing loans -- the result of (too) easy money -- deranged the entire global system. We coughed and the whole world caught cold, as it were.

What is needed is some slack, some give, in the system. Ordinarily this is provided by debt which enables the world system to operate even when conditions are no longer optimum. The credit system's temporary inability to bridge the gap was the result of the huge leverage set up by the (unregulated) hedge funds. When Bear Stearns went broke (33 to 1 leveraging!) a sort of atherosclerosis struck and the system went into a downward spiral of short-selling -- much of it "naked" -- on the part of the creditors looking to recoup some of their losses. These leveraged hedge funds need to be regulated but so far there is no sign of it that I have seen. The administration needs to rein in those cowboys.

(Our debt is not held overseas totally. If you own savings bonds or T-bills you're part of it. Our 1% FERS fixed annuity is a part of it, since the 1% we contribute over time will not cover costs as applied to our high-3.)
 
There is always the freedom to organize a Volunteer Fire Department to serve your community if folks think the available Organization is not serving the community well or the costs are too high. Of course Volunteer Fire Departments aren't cheap but if qualified there is probably Local or state funds available for qualifying areas. I lived in two areas that only had Volunteer Fire Departments, many of the neighbors were Volunteer Firemen, each took pride in having that RED LIGHT on top of their truck, some had sirens. :cool:
 
Thanks for the response, CB. I'm tempted to print up flyers to stick in everyone's mailboxes (maybe 400) between today and tomorrow morning. The election is this coming Tuesday.

The community is an older residential neighborhood, a mix-probably 40% renters, 60% homeowners, many retirees. The absentee landlords don't get to vote on behalf of their properties, only residents get to vote. The renters can always move away-unless they can't find something cheaper. Had 3 house fires within a block of me over the past 6 years, 1 right next door, one across the street, and 1 two houses over.

Most of my immediate neighbors vote for the increased levy, along with school district increases, but I do personally know some of the anti-taxers-retirees, heck, I even worked with one until he retired about 3 years ago-lives just up the block and around the corner from me. I do constantly think about fire danger and ways to protect my own property-problem is we live too close together if something gets started-unless there is fire protection infrastructure response quickly available. Anti-taxers here seem to lack common sense and longrange thinking re local taxes and what we get for them. Glad your area that isn't so.
 
alevin said:
Found this article from a link tied to James' most recent post re Afghanistan.


http://blog.oregonlive.com/community_writers/2009/08/history_ought_not_treat_mark_h.html

There is nothing new under the sun, is there? The people said they didn't want TARP either, but got ignored then too.

I'm struggling in my local community with similar issues at local scale-only the inverse this time, we need a plebiscite of registered voters resident in the community (subset of the town/county) to approve a small boost in property taxes to continue paying for our local rural fire district contract with the city-we already owe them $35K from last year's fire protection. The tax boost has been voted down 2 times already, due to insufficient people caring enough to vote x insufficient people willing to pay the true cost of fire protection.

At what point will the city call the fire districts bluff (they are not dependent on us to keep the fire department in business, they have a much larger client base than just our local subelement) and we will lose our fire protection AND see homeowners insurance go sky high, and renters in the fire district will see rental costs go sky high (to cover landlords increased fire insurance costs)-all to keep from paying $136/year (1%) more in property taxes for a $135K house for the next 5 years?

Anti-tax people weigh in, what would you do in this instance? sell your house and move away and let someone else worry about no/insufficient fire protection for your residence?
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Sorry alevin,

I didn't answer your question totally, to early in the morning. If the folks who don't want to vote for the increase, based on the arguement of overall betterment of your community, lower rates and other reasons stated, I don't think you'll persuade them.

I wouldn't move. I guess I'd be extra diligent in fire protection. Increase my already abundant supply of Fire extinguishers/alarms, and have garden hoses out the font and back. Clear the area around the house for a free fire zone, though back east our forest fires are nothing compared to what ya'll face. I don't now what else, you can do.

We moved into this small community some 25 some years ago, because of the type of people who lived here and luckily the community has continued to grow, though slow, in the same fashion, we're still small 3 to 5 K. Most are hard working folks that want a good education for their kids and take pride in their homes and luckily the kids stay in the area, because of this attitude and low crime rate. And luckily we have enough activist types to push hard on folks and get the word out.

Outside folks laugh at us, because we are somewhat behind the times, heck I still had dial up until 2 years ago, when satellite finally supplied our area. But we like the laid back, easy going friendly folks that are willing to help. So it's kind of a trade off and a tough call for you to make.

Good luck, cause I don't think the sentiment is going to change, at least anytime soon. I'd hate to have to move after all the work I've put in my place and from your posts you've also worked hard to do the same.

CB
 
alevin said:
Found this article from a link tied to James' most recent post re Afghanistan.


http://blog.oregonlive.com/community_writers/2009/08/history_ought_not_treat_mark_h.html

There is nothing new under the sun, is there? The people said they didn't want TARP either, but got ignored then too.

I'm struggling in my local community with similar issues at local scale-only the inverse this time, we need a plebiscite of registered voters resident in the community (subset of the town/county) to approve a small boost in property taxes to continue paying for our local rural fire district contract with the city-we already owe them $35K from last year's fire protection. The tax boost has been voted down 2 times already, due to insufficient people caring enough to vote x insufficient people willing to pay the true cost of fire protection.

At what point will the city call the fire districts bluff (they are not dependent on us to keep the fire department in business, they have a much larger client base than just our local subelement) and we will lose our fire protection AND see homeowners insurance go sky high, and renters in the fire district will see rental costs go sky high (to cover landlords increased fire insurance costs)-all to keep from paying $136/year (1%) more in property taxes for a $135K house for the next 5 years?

Anti-tax people weigh in, what would you do in this instance? sell your house and move away and let someone else worry about no/insufficient fire protection for your residence?
Click to expand...

I'm not sure what I would do in this situation. We always vote to support our local volunteer fire dept. levies and plus make donations to them 2x a year, when we change the bats in our fire detectors. Anti tax people aren't against everyone tax, that's a big broad brush to paint us fiscally conservative people with. :( We just have a different opinion on how OUR taxes should be spent.

EDIT: And believe it or not most of us vote for our local school levies also. The better our community is the more attractive it is to new folks moving into the are and for local business's to locate here. We kinda feel we know better what our community needs than those nimrods in DC, mandating that we spend our tax dollars this way. We do want what's best for our kids future.
 
The vote in 1986 was whether to refer the issue to the American people for consideration. ....to prevent the people of America from deciding if they wanted a balanced budget amendment to the Constitution. ...unwilling to allow us to decide for ourselves.
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Golly - how do these men & women get past the feeling that we, the citizens, were smart enough to elect them to Congress, then say we aren't able to handle our own affairs? Isn't this almost word-for-word that was said about us by our leaders today - I forget which guy it was, but he said we didn't know how to take care of ourselves, that we needed him to do it for us. ..this was several months ago, & obviously none up there in DC have changed their minds! ...that any monies need to go to the Big Daddies for leak/dribble down to us. Our problem was we didn't have a plan to give mega-bucks bonuses to ourselves for not being able to cipher our budget!!
 
Found this article from a link tied to James' most recent post re Afghanistan.

As Governor of Oregon and Senator from Oregon Mark Hatfield did many good things. Unfortunately, his legacy is marred by one vote that will forever taint his legacy. That seminal vote was against the Balanced Budget Amendment in 1986, and America is suffering the consequences today.
The current federal deficit is about 11.6 trillion dollars, or about $37,900 per person in America, and it is going up at the rate of about 3.92 billion dollars per day (http://www.brillig
.com/debt_clock/, accessed 7/22/2009) Our federal government cannot control spending and America is drowning in debt.

Congress came very close to passing a balanced budget amendment to the Constitution, but it failed by one vote. That vote was cast by Oregon's senator Mark Hatfield [A Republican].
Article Five of the Constitution says that a vote by 2/3rds of both houses of Congress may establish a Convention for Proposing Amendments to the Constitution. This proposed amendment must then be ratified by three-fourths of the states to become an amendment to the Constitution. The vote in 1986 was whether to refer the issue to the American people for consideration. [Republican] Senator Hatfield voted to prevent the people of America from deciding if they wanted a balanced budget amendment to the Constitution. He was unwilling to allow us to decide for ourselves. Hs vote perpetuated uncontrollable federal spending, and, in my opinion, has set the stage for the financial ruin of America.
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http://blog.oregonlive.com/community_writers/2009/08/history_ought_not_treat_mark_h.html

There is nothing new under the sun, is there? The people said they didn't want TARP either, but got ignored then too.

I'm struggling in my local community with similar issues at local scale-only the inverse this time, we need a plebiscite of registered voters resident in the community (subset of the town/county) to approve a small boost in property taxes to continue paying for our local rural fire district contract with the city-we already owe them $35K from last year's fire protection. The tax boost has been voted down 2 times already, due to insufficient people caring enough to vote x insufficient people willing to pay the true cost of fire protection.

At what point will the city call the fire districts bluff (they are not dependent on us to keep the fire department in business, they have a much larger client base than just our local subelement) and we will lose our fire protection AND see homeowners insurance go sky high, and renters in the fire district will see rental costs go sky high (to cover landlords increased fire insurance costs)-all to keep from paying $136/year (1%) more in property taxes for a $135K house for the next 5 years?

Anti-tax people weigh in, what would you do in this instance? sell your house and move away and let someone else worry about no/insufficient fire protection for your residence?
 
Re: Chinese Buying Treasuries

Another headline that has been convoluted by blogs, CNBC, false headlines, and comparison to personal credit card debt. China has a timeframe of hundreds of years, much like that of a pension or endowment fund. They aren't going to stop buying treasuries outright any time soon, nor is the dollar going to stop being a safehaven unless the US Navy is one day overpowered, which I don't plan on happening (even by China). Japan and China need a place to put all those Euro Dollars they've accumulated through the sale of big screen tv's and cheap tires to the US consumer. The Euro is toast and probably won't last the next financial shock, but the US will.

It's fun to bash administrations and a declining dollar but seriously, at the end of the day, how is a weak dollar hurt anybody on this MB personally? Everyone here seems to want to decrease debt and deficits, well, a weak dollar will do that as more money will flow in due to the anomalistically lower prices. A weak dollar could stimulate US investment. A strong dollar would kill whatever is left of US productivity.

As long as John and Jane Q public feel that they need to keep up with the Joneses by buying little johnny the latest iPhone, Mac, or Kindle, we're going to have a demand for cheap Chinese labor and the Chinese will need a place to put their Dollars. I do think that the Chinese and other countries will continue to diversify in a stealthy manner into hard equities, but the problem is, even a small percentage of investment has proven that it can move the market. The Chinese should fear a dieing American Consumer before they fear America defaulting on any debt.

I often wonder- if every currency has depreciated over the years and a dollar or loonie or krona doesn't buy what it did 40 years ago, then what difference does it really make? It's a race to the bottom and nobody wants an expensive currency. Canada and Europa are both jawboning over the US dollar being weak because it hurts them and helps us.

Re: Foreign Aid

Money we give to countries such as Mauritania, Sierra Leone, Sudan and Eritrea are just a drop in the bucket to most everything else, especially Medicare and Medicaid spending. Besides, it's better to have the assurance that we can safely mount a covert operation from a country we deem 'friendly' than to not have a safehaven for our guys overseas.
 
Kill Joy said:
Hello all,

After thinking for a bit (I admit I should do it more often), I came to a simple thought that is shared by many prominent economists and may help to alleviate some of the disappointment that clouds the minds of many Americans (more directly those who have been gracious enough to peruse my thread)… This is a vital fact that is often overshadowed by more cataclysmic proclamations, and thus are a great deal more interesting to entertain:

America is simply too large to fail – The world is vastly different than it was many years ago… While some proclaim that many once great economies, even Rome (the greatest civilization at that time) fell, thusly it is inevitable that America share the same fate eventually. This is draconian thought and excludes the key factor that many tout as a disadvantage and yet I see as the future safety of our economy… That is our debt to other nations!

It is true that China and Japan have obtained a large portion of the U.S. debt, but with that also comes the added chain of ownership; a stake in the success of that investment. If, for the sake of argument, America were to fail, then would it not be in the best interest of the other great economies to ensure our success? After all, America is 25% of the entire global consumer market! We all know the rule about he who has the gold…

The world is ever increasing in global connections, and it is almost foolish to believe that globalization will not further increase in the near future. This fact, when added to the power of comparative advantage, proves that eventually there will not be an “US vs them” mentality… This inevitable path had been paved as soon as America’s debt was not just held “to themselves”. To prove this point, just look at the long list of countries that now have a stake in our success and continued consumerism.

Any thoughts?
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Just a quick one off the top of my head (as I am currently attending the Contest for the Continents seminar centering on the 7 Years War). The last two times the world was this interconnected it ended drastically. The first time it ended in what I like to call the real first world war. That being the 7 Years War (French and Indian War), the American Revolution, The Napoleonic Wars and the War of 1812 which can all be viewed as one longterm and all encompassing world war from the Russian steps to the American Frontier. The second time this happened is what is commonly know as WWI or the Great War.

With the fall of the USSR Francis Fukuyama famously called the new paradigm the "End of History", but Samuel Huntington was much more prescient with his "Clash of Civilization." Something will come along to destroy the current world order. Something far more important then Islamic radicals. My own guess is that it will start in the Cross Strait area or the Korean Peninsula. The table is so perfectly set in Asia-Pacific for WWIII, I cannot see how it cannot happen sometime in the next 50 years.
 
I propose: In an increasingly globalized world, it is imperative to spread the risk. America has done so by creating ownership for other countries… More amply put, think of it like a company and its shareholders (but with one major difference) in that after the investor buys the stock, the company has no obligation to share any profits with the investor, though some due through dividends, with the major difference being that no matter what, the other countries get no say in how the company runs… Seems like a good deal to me! Hope that analogy illustrates my point, as I must admit that analogies are my weak point.

Of course this analogy works so long as others are willing to participate in company; however, it would seem that said company's outrageous spending would need to be reined in when the day comes that investors finally have other options. So long as we continue to devalue the dollar we are giving all of our investors worldwide every reason to diversfy their holdings and general reliance on the dollar. Not only this, but it is now openly speculated by Russia and China that the U.S. Dollar should no longer be the reserve currency of the world. Even the Council on Foreign Relations (CFR) has found this burgeoning issue important enough to address in this latest issue:
http://www.foreignaffairs.com/articles/65475/c-fred-bergsten/the-dollar-and-the-deficits



You say: Personal saving in Japan is far higher than in the U.S.

I say: What must be remember with this, however, like any equations, is that there are other variables. Most importantly, are consumption and investment. With consumption being roughly equal (when per capita comparisons are made and distribution of goods taken into account), the true difference lies in investment, and it is true that American invest more and save less (there is a difference). Over the long term, which method usually produces greater returns?

Given how many people just lost their shirt, I'd answer that saving is in the lead right now.
 
Greetings Show-me!

Alas, my inability to properly articulate my point has once again caused misinterpretation… For that I apologize and will try once more now:

How can you be so caviler to assume we are too large to fail? Isn't that how all failures begin, thinking we are invincible and not being fiscally responsible?

Please understand that I am in no way implying that we are so great that we do not need to maintain fiscal responsibility. We have all seen giants of the free market crash due to accounting and operational dishonesty (Enron, WorldCom, etc.). My point was to imply that we see ourselves as a singular entity, and not as the backbone of a global market that is so integrated, so interwoven, and so dependent on each other, that failure is simply not an option. If you see what is happening now, you will realize the truth of my statement. It started with America (damn the current banking industry and its penchant for greediness), but now every country (especially Japan) that has any dependence on America is also suffering, only to a far worse extent. Many countries do not have the size or consumer footprint to autocorrect their markets like America does… They cannot simply increase their deficit or lower taxes to “stimulate” their economy. 70% of American revenue comes from consumers! So it is quite astute when many experts mention the fact that our greatest enemy is indeed fear itself. So you see, my friend, a caviler and overconfident attitude is exactly what this nation needs… My current gauge of American success or failure is to simply compare it with the success or failure of other economies; currently, we are fairing quite well.

But they do not have to buy more. Are they not loosing money on our Treasuries due to the decline of the dollar? They can dollar cost average down but will they with the Fed. holding interest rates down artificially by borrowing money from the Treasury to buy back Treasuries.

I believe that you are looking at this the wrong way. They do not “buy” our treasuries/investments because they love American and believe it is the best investment… They invest with us because they cannot find the investment in their own country. China’s population, for example, has very little incentive to innovate or excel beyond a certain degree due to the diminishing returns that comes standard with a socialistic government, and as such do not invest in their own country… When looking for sound - Long term - investment, there is simply no beating the proverbial blue-chip that is America… Loosing money due to the declining dollar is incorrect thought; they are simply buying American treasuries and investments at a discount!

It piggybacks off of the same thought with the great advice often given here on the boards: Because of the near impossibility of the ultimate failure of the TSP funds, and thus a reduction of the greatest risk, is it not more intelligent to increase contribution when the prices are falling? I know that when others contributed less to the TSP due to the downturn, I was one who vastly increased my contribution to buy at a discount… Contrarian investing to the core and that is the similar thought process that is used by other countries. On other hand though, it is hard to understand the other countries use of their funds until one visits them and sees first hand their dismal predicament. For example, the fact that millions of Chinese people die every year due to lack of access to basic nutrition, or the fact that 80% of Japanese business have an average lifespan of only 10 years!

Yes, my friend, I am indeed caviler.
 
Kill Joy said:
Hello all,

After thinking for a bit (I admit I should do it more often), I came to a simple thought that is shared by many prominent economists and may help to alleviate some of the disappointment that clouds the minds of many Americans (more directly those who have been gracious enough to peruse my thread)… This is a vital fact that is often overshadowed by more cataclysmic proclamations, and thus are a great deal more interesting to entertain:

America is simply too large to fail – The world is vastly different than it was many years ago… While some proclaim that many once great economies, even Rome (the greatest civilization at that time) fell, thusly it is inevitable that America share the same fate eventually. This is draconian thought and excludes the key factor that many tout as a disadvantage and yet I see as the future safety of our economy… That is our debt to other nations!

How can you be so caviler to assume we are too large to fail? Isn't that how all failures begin, thinking we are invincible and not being fiscally responsible?

It is true that China and Japan have obtained a large portion of the U.S. debt, but with that also comes the added chain of ownership; a stake in the success of that investment. If, for the sake of argument, America were to fail, then would it not be in the best interest of the other great economies to ensure our success? After all, America is 25% of the entire global consumer market! We all know the rule about he who has the gold…

But they do not have to buy more. Are they not loosing money on our Treasuries due to the decline of the dollar? They can dollar cost average down but will they with the Fed. holding interest rates down artificially by borrowing money from the Treasury to buy back Treasuries.

The world is ever increasing in global connections, and it is almost foolish to believe that globalization will not further increase in the near future. This fact, when added to the power of comparative advantage, proves that eventually there will not be an “US vs them” mentality… This inevitable path had been paved as soon as America’s debt was not just held “to themselves”. To prove this point, just look at the long list of countries that now have a stake in our success and continued consumerism.

Any thoughts?
Click to expand...

So how is Japan doing? They have not recovered from their recession. They used to be a huge manufacture of trinkets after the war. They evolved so to speak to electronics, stereos, TV's. The next phase was autos and motorcycles. Now they are in the machinery phase. As labor cost in other Nations competed with them they lost their simple manufacturing.
 
Hello all,

After thinking for a bit (I admit I should do it more often), I came to a simple thought that is shared by many prominent economists and may help to alleviate some of the disappointment that clouds the minds of many Americans (more directly those who have been gracious enough to peruse my thread)… This is a vital fact that is often overshadowed by more cataclysmic proclamations, and thus are a great deal more interesting to entertain:

America is simply too large to fail – The world is vastly different than it was many years ago… While some proclaim that many once great economies, even Rome (the greatest civilization at that time) fell, thusly it is inevitable that America share the same fate eventually. This is draconian thought and excludes the key factor that many tout as a disadvantage and yet I see as the future safety of our economy… That is our debt to other nations!

It is true that China and Japan have obtained a large portion of the U.S. debt, but with that also comes the added chain of ownership; a stake in the success of that investment. If, for the sake of argument, America were to fail, then would it not be in the best interest of the other great economies to ensure our success? After all, America is 25% of the entire global consumer market! We all know the rule about he who has the gold…

The world is ever increasing in global connections, and it is almost foolish to believe that globalization will not further increase in the near future. This fact, when added to the power of comparative advantage, proves that eventually there will not be an “US vs them” mentality… This inevitable path had been paved as soon as America’s debt was not just held “to themselves”. To prove this point, just look at the long list of countries that now have a stake in our success and continued consumerism.

Any thoughts?
 
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