Author Topic: America's Debt Crisis (Read 4988 times)

edu · « **on:** July 17, 2011, 04:36:52 AM »

Obama's irresponsible spending policies are threatening the US economy with financial ruin and hurt me personally by making the dollar weak against the Israeli Shekel. I also have relatives that still live in the USA.

The question is does JTF have a position on what to do about, the upcoming debt ceiling vote, where if they don't vote to raise the debt ceiling, and the government defaults on its payments, Obama will try to make the demagogic statements that the short term financial costs (caused by a downgrading of the USA credit rating and the upping of interest costs ) and threats to popular Government Programs are the Republicans' Fault. And based on past history, the political commentators think he will be successful in the Blame Game.
But if the Republicans do vote for approving more debt and taxes, they will further sink the economy in the long run and might split the republican party into 2 in the next election which would also probably allow Obama to win.
To Sum up the question, What can be done to make Obama a loser out of this debt crisis or at least what can be done to prevent him from winning?

Zelhar · « **Reply #1 on:** July 17, 2011, 12:24:56 PM »

I don't think there would be a default on US debt because there are enough tax revenues and don't forget the government can still issue new bonds in the same amount of bonds that reach maturity. Obama might be just crazy enough to play with the idea of defaulting on the debt and anyway he wants to destroy the US economy but he still wants to get re-elected so I don't think he would actually dare not paying bonds.

If the debt ceiling isn't raised I think Obama might try to issue IOUs and use them to pay a portion of the salaries to government employees and a portion of the benefits like Medicare and Medicaid.

serbian army · « **Reply #2 on:** July 17, 2011, 12:55:46 PM »

It would not be a first time defaulting. When government borrows this increases the demand for funds and thus pushes up interest rates. So the larger the federal deficit-the higher the level of interest rates. Treasury securities have no default risk premium. Common rule, interest rates up-bond prices down.

Secularbeliever · « **Reply #3 on:** July 17, 2011, 03:10:50 PM »

I think there needs to be an increase in the debt ceiling. Otherwise the government would need to balance the budget immediately since it cannot borrow any more. While that sounds appealing the deficit is so large as a percentage of the budget it could not be eliminated in an orderly manner immediately. I like the concept that has been raised of allowing a short term increase in the debt with equal and corresponding immediate cuts in spending.

Kahane-Was-Right BT · « **Reply #4 on:** July 17, 2011, 07:09:43 PM »

I'm gonna go out on a limb here and make a prediction of what's going to happen.

The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.

The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.

Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.

Lewinsky Stinks, Dr. Brennan Rocks · « **Reply #5 on:** July 17, 2011, 07:29:05 PM »

Edu, the problem is that if Obama gets what he wants he will obviously be the winner, but if the Republicans hold their ground (fat chance), the media will demonize them to the hilt and succeed in making Obama out to be this magnanimous, bipartisan victim who was thwarted by the cruel, callous right wing.

Secularbeliever · « **Reply #6 on:** July 18, 2011, 12:34:19 AM »

Quote from: Kahane-Was-Right BT on July 17, 2011, 07:09:43 PM

I'm gonna go out on a limb here and make a prediction of what's going to happen.

The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.

The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.

If the markets were worried about default, ten year treasuries would not be trading at 2.9%

Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.

briann · « **Reply #7 on:** July 18, 2011, 12:46:23 PM »

I'm not a politician, but I am guessing that Obama won't budge. He has convinced himself early on, that the only way to 'create jobs' is to continue to spend and spend.

Remember, Obama said that the reason the New Deal didnt work, was that FDR didnt continue to spend, so he blames FDR's spending reductions in 1937 for putting us back in the depression. So he will try and double down rather than reduce spending... so any of his pseudo-deficit reduction measures will always involve increasing taxes but will only involve token decreased spending.

Also, if we end up becoming Greece in a few years, the media and institutions will blame everyone else but Obama, so he's not worried about being blamed for our country's woes; Its Bush's fault.

Dr. Dan · « **Reply #8 on:** July 18, 2011, 01:52:36 PM »

I see it this way also...

Although I don't want something bad to happen, I think something bad needs to happen to really get rid of Obama. I hope agreements do not fall through because Obama will take credit for it later on.

And yes, there would be a depression of some sort, but better now than a much worse one later.

Quote from: Kahane-Was-Right BT on July 17, 2011, 07:09:43 PM

I'm gonna go out on a limb here and make a prediction of what's going to happen.

The deadline to raise the debt ceiling is August 2. Now I don't know if it will go right up to the wire on the very last day, but perhaps it will. For sure it will extend into the next two weeks and we will all hear about how obama this and republicans that, and the world is falling apart.

The Republicans and obama will be jockeying with one another trying to arrange the best possible deal. The media will get more and more crazed as the time goes on and we get close to the deadline. The stock market will fall by a few hundred points and fear mongering will reach all-time highs. Afterall, the sky is falling. Then at the last moment, the "heroic" politicians in congress will step in and save the day by reaching an agreement, and the media will have a big celebratory orgy, and the stock market will rally like Obama just saved the world from extinction, as they just escaped having the US AAA credit rating lowered by Standard and Poor and Moody's at the very last minute. And the final deal will include a raise of the debt ceiling coupled with a cut in spending and potentially some type of tax reform but what that will be remains to be seen. But the main portion of the "deal" is legislated cuts in spending coupled to debt ceiling increase.

Take it to the bank. I highly doubt they will let us default, it would be a disaster for the economy to have our credit rating lowered. Everyone says the republicans watch out for the rich, well if that's the case, they know that the pockets of every rich person will be hit hard if the stock market falls, and it certainly will if US credit rating is lowered. Of course, due to all the "fear" and "uncertainty" it will definitely fall in the leadup to any deal.

Kahane-Was-Right BT · « **Reply #9 on:** July 18, 2011, 09:49:15 PM »

Secular believer I think the default possibility is weighing heavily on equities market even tho it won't happen. And if they merely use it as an excuse for what happens with the market rather than being an actual fear the result is the same.

Secularbeliever · « **Reply #10 on:** July 19, 2011, 03:15:24 PM »

Quote from: Kahane-Was-Right BT on July 18, 2011, 09:49:15 PM

Secular believer I think the default possibility is weighing heavily on equities market even tho it won't happen. And if they merely use it as an excuse for what happens with the market rather than being an actual fear the result is the same.

The equity markets are doing quite well for something weighing on them.

Lewinsky Stinks, Dr. Brennan Rocks · « **Reply #11 on:** July 19, 2011, 04:26:51 PM »

Quote from: briann on July 18, 2011, 12:46:23 PM

I'm not a politician, but I am guessing that Obama won't budge. He has convinced himself early on, that the only way to 'create jobs' is to continue to spend and spend.

Remember, Obama said that the reason the New Deal didnt work, was that FDR didnt continue to spend, so he blames FDR's spending reductions in 1937 for putting us back in the depression. So he will try and double down rather than reduce spending... so any of his pseudo-deficit reduction measures will always involve increasing taxes but will only involve token decreased spending.

Also, if we end up becoming Greece in a few years, the media and institutions will blame everyone else but Obama, so he's not worried about being blamed for our country's woes; Its Bush's fault.

According to every national poll Obama is probably right-on when he takes this attitude. The vast majority of Americans blame Bush, who has been out of office for nearly three years, rather than the Muslim, for America's woes.

Kahane-Was-Right BT · « **Reply #12 on:** July 19, 2011, 11:18:45 PM »

Quote from: Secularbeliever on July 19, 2011, 03:15:24 PM

The equity markets are doing quite well for something weighing on them.

lol, well they were down 2% the day after I wrote my original post, but yeah today the market was flying high. Maybe it's really being ignored afterall. Seems the great bull market continues.

Also, let's not ignore the fact that the media hyped obama's official "deficit reduction proposal" as today's reason for the market's movement.

serbian army · « **Reply #13 on:** July 20, 2011, 11:16:44 PM »

High tech stock are overvalued. Just remember internet bubble.

It was in news other day that the Facebook is wort 80 billion!! Based on what statistics? Revenues of estimated 2 billion? At least before an IPO smart people state honestly what they think stock would be worth so the underwriter has a clue on pricing. Do not fool yourselves, the Apple is worn out and overvalued stock. It was already taken advantage of.
My suggestion-look elsewhere to invest, China, India, Vietnam, Indonesia. Only problem could be the language barriers while trying to get correct information to predict, find out about management, or even accounting for some important ratios.
If we all stick here for the next two years we will probably comment on the upcoming bubble and its negative effects.

Kahane-Was-Right BT · « **Reply #14 on:** July 21, 2011, 12:50:26 AM »

Quote from: serbian army on July 20, 2011, 11:16:44 PM

High tech stock are overvalued. Just remember internet bubble.
It was in news other day that the Facebook is wort 80 billion!! Based on what statistics? Revenues of estimated 2 billion? At least before an IPO smart people state honestly what they think stock would be worth so the underwriter has a clue on pricing. Do not fool yourselves, the Apple is worn out and overvalued stock. It was already taken advantage of.
My suggestion-look elsewhere to invest, China, India, Vietnam, Indonesia. Only problem could be the language barriers while trying to get correct information to predict, find out about management, or even accounting for some important ratios.
If we all stick here for the next two years we will probably comment on the upcoming bubble and its negative effects.

Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.

I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.

briann · « **Reply #15 on:** July 21, 2011, 02:27:59 AM »

Quote from: Kahane-Was-Right BT on July 21, 2011, 12:50:26 AM

Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.

I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.

The Dow Jones should NOT be used as a metric of our economy!!!

Firstly, The dollar is incredibly low compared with many foreign currencies, so many U.S. multinational companies have seen their international revenue go way up as the dollar has declined. This is not real growth, its just changing the metric used to measure the value of revenue/profit. Its not that they are making more money, its that each time the fed prints money, it makes it appear that they are. Its sorta windowdressing. And if the Dow Jones used Euros, Pounds, Yen, there would be almost no appreciation in the last few years.

Also, the Dow Jones was at nearly 13,500 a few months before the crisis in 2008 occured. This was at a time when all indications were that the housing bust was in full force, so why was it still so high? The answer is that the market is not very good at long term Macro Economics, and hasnt been for quite some time.

Finally, people are so desperate for any return, since the Fed has relentlessly pushed interest rates to near zero, so investors are looking to large, dividend producing stocks (The kind that the Dow Jones is overrepresented with).

Kahane-Was-Right BT · « **Reply #16 on:** July 27, 2011, 08:43:26 PM »

Quote from: briann on July 21, 2011, 02:27:59 AM

The Dow Jones should NOT be used as a metric of our economy!!!

I didn't say it should be. I'm just talking about the stock market because he brought up IPOs and tech stocks.

However, when the Dow goes down significantly, so does just about every stock. Which means, so does just about everyone's pension, IRA, 401K, and private investment accounts. Less money in the accounts etc is less money to spend and bad for economy, as any simple logic dictates.

Quote

Also, the Dow Jones was at nearly 13,500 a few months before the crisis in 2008 occured. This was at a time when all indications were that the housing bust was in full force, so why was it still so high? The answer is that the market is not very good at long term Macro Economics, and hasnt been for quite some time.

This probably explains why the market didn't really pull back much until today. But now the fear is really setting in.

Kahane-Was-Right BT · « **Reply #17 on:** July 27, 2011, 08:45:37 PM »

Fear over debt fight hits Wall St.; Dow loses 198
Dow falls almost 200 points as fear about debt deadline extends to Wall Street

http://finance.yahoo.com/news/Fear-over-debt-fight-hits-apf-2048188094.html?x=0&sec=topStories&pos=main&asset=&ccode=

angryChineseKahanist · « **Reply #18 on:** July 27, 2011, 08:57:18 PM »

It seems he may actually get a second term.
As disgusting as he is.

serbian army · « **Reply #19 on:** July 27, 2011, 09:16:49 PM »

Quote from: Kahane-Was-Right BT on July 21, 2011, 12:50:26 AM

Ipos in general are being overrated right now and facebook is more like social media than high tech. I do get your point, however apple just had its greatest quarter of profits ever and the PE ratio isn't even high so its hard for me to agree that apple is overpriced even if it is very expensive and anyone who hasn't invested in it up this point seems to have missed a huge growth period. Still google sits at 600 dollars so what is going to stop apple? Everything they do is gold people simply love their products and they sell like hotcakes. They are industry leaders innovators and gamechangers. I strongly disagree. This is not some 2-bit internet company with no business model that gets h"yped just cause". Like so many internet companies were in the tech bubble.

I also strongly disagree when you say to invest overseas. I will take warren buffets advice which he gave in the heart of the market crash in 2008 - buy anerican. The greatest companies are american ones, and if you are really looking for growth get into an american company that is expanding to emerging markets like china and india and selling its wares there.

Can you name American companies in which you would invest as of today?

Kahane-Was-Right BT · « **Reply #20 on:** July 27, 2011, 09:32:56 PM »

apple google microsoft amazon, many biotech/pharmaceutical companies.
The stocks I named individually are winners for a reason.

You say as of today, I hope that's in the general sense. Any buying should be timed appropriately, for instance maybe after the debt crisis is averted aug 2nd. Technical analysis can help with that too.

If the market crashes or enters a bear market, its of course all for naught. All the ships get pulled down. But other than that, in either a bull market or volatile market going up and down, those are some of many companies I would trade. Personally I like the companies with a strong footing in the smartphone market. I also like biotech companies because I have some expertise in the science behind the products. What can I say, I do not know chinese companies (or other foreign ones), and when the market crashed in 08, the foreign markets fell too. And in the rebound, the American one has outperformed the foreign ones. Although I knew of a fraudulent company called "China Biotics" which voluntarily delisted itself after losing like 70% of its price or something when it was found that there was something fraudulent in their earnings report.

What are these amazing foreign companies that you are into?

muman613 · « **Reply #21 on:** July 27, 2011, 09:56:29 PM »

I believe that there is still strength in the Tech stocks... Judging from the employment prospect {there are many good high-tech jobs out there} I think that there is a lot of good development going on despite the poor outlook.

http://articles.latimes.com/2011/jul/23/business/la-fi-california-jobs-20110723

Quote

Silicon Valley did even better, with Santa Clara and San Benito counties adding a combined 8,300 jobs. A tech boom is lighting up the area, where venture capitalists are pouring money into start-ups, office rents are rising and more new cars are popping up in employee parking lots.

briann · « **Reply #22 on:** July 27, 2011, 11:10:20 PM »

Quote from: Kahane-Was-Right BT on July 27, 2011, 09:32:56 PM

apple google microsoft amazon, many biotech/pharmaceutical companies.
The stocks I named individually are winners for a reason.

You say as of today, I hope that's in the general sense. Any buying should be timed appropriately, for instance maybe after the debt crisis is averted aug 2nd. Technical analysis can help with that too.

Timing is pretty much luck, unless you have inside information, OR are trying to out-thinking the market's irrational psychology which can be quite tough to do.

Most of the time, it makes sense to just buy on strong fundamentals and hold; and assuming these fundamentals dont change, it makes sense to actually buy more when the stocks go down or at least, dollar cost average your investment over time.

However, this all becomes tricky, when there is a slow-motion train wreck on the horizon. The impending catastrophe WILL affect everything, and there will be almost no where to hide. Many investors know this, but they are just trying to milk any sort of return they can find, which is why large dividend stocks are quite popular now. Its also why Gold is so absurdly high.

Debbie Shafer · « **Reply #23 on:** July 28, 2011, 12:40:34 PM »

The House passed Cap, Cut, and Balance. This legislation would have started paying down the debt, cutting spending, not raising taxes, and would have started implementing responsible behavior...The ball is in Obama and the Socialist parties court. They haven't done one thing to improve the economy, jobs, or tell the truth! If we default its on their watch!

Kahane-Was-Right BT · « **Reply #24 on:** July 29, 2011, 12:39:00 AM »

Quote from: briann on July 27, 2011, 11:10:20 PM

Timing is pretty much luck,

I pretty much predicted what was going to happen, right here in this thread. So far the first part is correct. It remains to be seen if they will all play hero and save the world at the last minute by striking some kind of deal. I was pretty convinced before, but actually I'm starting to question my original assumption (guess that shows the media is really doing its job well in making us all go bonkers).

Timing in a micro sense, is a lot of luck but also can be based on technical analysis. But timing in a larger sense can be done by looking at the big picture and the major events taking place. And if you are cautious and keep your money out, but it turns out you missed out on gains, better safe than sorry. You can get an idea of the prevailing winds, and then when stocks are knocked down (but good stocks of good companies), buy them. This morning was a good day to buy some stocks , if you are prepared to take profits. But we all know it cant last in this environment, so it's important to take profits.

Many people simply buy and hold. In that case, there are two points of view. Your financial planner will tell you, stocks will soar on the day they solve the crisis and u will miss all the gains. The other point of view is look at what happened in 2008 and why would you ever think that Obama and cohorts would not sink the entire economy for their own personal gain, if he/they have something to gain from it? We've already seen it happen!