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Just the Facts: S&P's $2 Trillion Mistake

treasury.gov

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Re: Just the Facts: S&P's $2 Trillion Mistake

#161

Post by pyoung »

_delirium wrote: post #155
alnayyir wrote: post #117

Earlier quoted context omitted.

Our tax burdens are not the lowest by any means. My total tax rate partially due to living in California (although it is mostly Federal) is ~40%. There are plenty of countries in Europe that would be happy to tax me less. My buddy in Singapore pays about 8% all told and he's in the same income range. The temptation to become an expat gets stronger as I earn more money. My sin is not being a fat cat living off capital…

How do you manage to get an effective 40% tax rate in California? I could see that as a marginal rate on the last few dollars, but you'd have to make in the millions to get there for your overall tax rate. For example, if you make $100k and take only the standard deduction, you'll pay $19k in federal taxes (19%) and $6k in California taxes (6%), for 25% total. If you include payroll taxes, that's another ~7.5%, so 32…

He is probably forgetting to subtract what he contributes to 401k and medical and dental plans. If I simply look at what gets deposited in my bank, and what my salary is, it comes out close to the 40% number.

Re: Just the Facts: S&P's $2 Trillion Mistake

#162

Post by pessimizer »

cop359 wrote: post #58
fauigerzigerk wrote: post #50

S&P's mistake is certainly incredibly embarrassing but apart from that I'm asking myself a much more fundamental question: Why is the ability to pay considered at all when it comes to the US? A country that is indebted in its own currency can theoretically never default on its nominal obligations. Not due to inability to pay at least. I don't think that credit rating agencies even try to pass judgement on the likelyh…

No one was seriously suggesting that we never pay our debts ever again, There really was two things proposed: One was too not raise the debt ceiling and use SS and Medicare funds to pay off the debt; The other was to default but just for a short while so as to provide more pressure on the Democrats. If we defaulted for say a month; it would hurt a minuscule fraction of the debt holders. If it actually would hurt debt…

SS is self-funding, and is one of the creditors owed as a part of the debt, because it holds treasuries. To suggest that we use SS funds to avoid default is to suggest that we default to avoid default.

Re: Just the Facts: S&P's $2 Trillion Mistake

#163

Post by jamesaguilar »

mynegation wrote: post #157
katovatzschyn wrote: post #126

From Naomi Klein's The Shock Doctrine: In February 1993, Canada was in the midst of financial catastrophe, or so one would have concluded by reading the newspapers and watching TV. “Debt Crisis Looms,” screamed a banner front-page headline in the national newspaper, the Globe and Mail. A major national television special reported that “economists are predicting that sometime in the next year, maybe two years, the dep…

Please have my upvote (like you need one). I will definitely include "the shock doctrine" into my "To read" list. I wonder if there's an opportunity for "open source" credit ratings. Numbers like GDP, trade deficit or proficit, exchange rates, national debt etc are available and someone could creates a method that software or website could use to calculate all that into credit rating.

Bear in mind that there is a fair amount of criticism from many economists on the book's analysis. It may be worthwhile to include those on your reading list as well. Here are just a few: http://en.wikipedia.org/wiki/The_Shock_Doctrine#Criticism

Re: Just the Facts: S&P's $2 Trillion Mistake

#164

Post by [deleted] »

katovatzschyn wrote: post #126

From Naomi Klein's The Shock Doctrine: In February 1993, Canada was in the midst of financial catastrophe, or so one would have concluded by reading the newspapers and watching TV. “Debt Crisis Looms,” screamed a banner front-page headline in the national newspaper, the Globe and Mail. A major national television special reported that “economists are predicting that sometime in the next year, maybe two years, the dep…

[deleted]

Re: Just the Facts: S&P's $2 Trillion Mistake

#165

Post by Bo102010 »

katovatzschyn wrote: post #126

From Naomi Klein's The Shock Doctrine: In February 1993, Canada was in the midst of financial catastrophe, or so one would have concluded by reading the newspapers and watching TV. “Debt Crisis Looms,” screamed a banner front-page headline in the national newspaper, the Globe and Mail. A major national television special reported that “economists are predicting that sometime in the next year, maybe two years, the dep…

Yikes. I refer you to Tyler Cowen's review of Klein: http://www.nysun.com/arts/shock-jock/63867/

Some highlights: "Ms. Klein's rhetoric is ridiculous. For instance, she attaches import to the fact that the word 'tank' appears in the label 'think tank.'"

"What the reader will find is a series of fabricated claims, such as the suggestion that Margaret Thatcher created the Falkland Islands crisis to crush the unions."

"If nothing else, Ms. Klein's book provides an interesting litmus test as to who is willing to condemn its shoddy reasoning."

Re: Just the Facts: S&P's $2 Trillion Mistake

#166

Post by pyoung »

Estragon wrote: post #128
mrb wrote: post #123

Earlier quoted context omitted.

To me, it raises this other fundamental question: if, in a case so high-profile such as rating the US debt, S&P and their best experts make a $2T mistake, then how much trust can we put in the financial rating industry at a whole ?

The erosion of faith goes deeper than that, as James Galbraith discusses in this talk from earlier in the year. http://www.nakedcapitalism.com/2011/08/james-galbraith-on-fr... This is the diagnosis of an irreversible disease. The corruption and collapse of the rule of law, in the financial sphere, is basically irreparable. It’s not just that restoring trust takes a long time. It’s that under the new technological ord…

Thanks for the link. James is the son of famous economist and author, John Galbraith. A quote I pulled from his Wikipedia page:

"The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

Re: Just the Facts: S&P's $2 Trillion Mistake

#167

Post by Estragon »

pyoung wrote: post #166
Estragon wrote: post #128

Earlier quoted context omitted.

The erosion of faith goes deeper than that, as James Galbraith discusses in this talk from earlier in the year. http://www.nakedcapitalism.com/2011/08/james-galbraith-on-fr... This is the diagnosis of an irreversible disease. The corruption and collapse of the rule of law, in the financial sphere, is basically irreparable. It’s not just that restoring trust takes a long time. It’s that under the new technological ord…

Thanks for the link. James is the son of famous economist and author, John Galbraith. A quote I pulled from his Wikipedia page: "The modern conservative is engaged in one of man's oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness."

I like "Faced with the choice of changing one's mind and proving there's no need to do so, almost everyone gets busy on the proof."

Re: Just the Facts: S&P's $2 Trillion Mistake

#168

Post by ams6110 »

jandevos wrote: post #143
jerf wrote: post #104

Earlier quoted context omitted.

It isn't our current debts that have people concerned. It's the combination of current debts and unsustainable future obligations, which are so large that they in fact can't be paid down by just raising taxes. Barring an adjustment in what they are, they grow to the point that they eventually consume 100% of the economy in something like 40 years in conjunction with interest payments, but of course they become comple…

Well, there is, technically, which is that some amazing breakthrough in technology suddenly makes us all a lot wealthier very quickly, which is such a long shot it's hardly worth talking about. Wealth? Is there really a lack of wealth in the US? I though the problem was not a lack of wealth, but more a lack of those in the US that possess it in abundance to share it with those who don't (e.g., by paying taxes). Even…

The US does not tax wealth, really, except when it's inherited. We tax income, and the most of the income taxes are paid by the top income-earners.

Re: Just the Facts: S&P's $2 Trillion Mistake

#169

Post by CamperBob »

rayiner wrote: post #149
Zumzoa wrote: post #116

Earlier quoted context omitted.

This article http://www.economist.com/node/21524889 covers some of it. "Health spending will rise by 5.8% each year from 2010 to the end of 2020, according to actuaries at the Centres for Medicare and Medicaid Services (CMS). In 2020 health care will account for one-fifth of America’s economy." The article goes on to point out that surveys suggest that the Federal government will be liable for a huge amount of medica…

Staggeringly poor article. Projecting out a trend line by effectively assuming sustained exponential growth is completely retarded. It's really the same as the projections predicting that the sustained 1990s bubble would continue and the US debt would be paid off by 2009.

Considering the demographics involved -- the population as a whole is getting older and health care for old people is expensive as all hell -- it seems the burden of proof is on you to demonstrate why sustained exponential growth in health-care costs will not take place.

Re: Just the Facts: S&P's $2 Trillion Mistake

#170

Post by ams6110 »

_delirium wrote: post #155
alnayyir wrote: post #117

Earlier quoted context omitted.

Our tax burdens are not the lowest by any means. My total tax rate partially due to living in California (although it is mostly Federal) is ~40%. There are plenty of countries in Europe that would be happy to tax me less. My buddy in Singapore pays about 8% all told and he's in the same income range. The temptation to become an expat gets stronger as I earn more money. My sin is not being a fat cat living off capital…

How do you manage to get an effective 40% tax rate in California? I could see that as a marginal rate on the last few dollars, but you'd have to make in the millions to get there for your overall tax rate. For example, if you make $100k and take only the standard deduction, you'll pay $19k in federal taxes (19%) and $6k in California taxes (6%), for 25% total. If you include payroll taxes, that's another ~7.5%, so 32…

If you count income taxes, sales taxes, property taxes, other "sin" taxes and various and sundry fees, it's a lot more.
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