Consumer Confidence Nears 10-Year Low

[Sten Sture]

Originally posted by MichaeltheGreat
Modern war really isn't. ...
I doubt the amount of stimulus to the economy from this war offsets even a couple of months of damage from the current fuel price spike.

Bingo. The fuel price spike is much worse. The trade deficit numbers bear out just how bad $35 vs $20 is for us. MtG, make sure Vicente gets a few of the pesos we are shipping down there!

The especially bad thing about the price spike is that everyone thinks it will be temperary, so rig counts are still low, and there doesn't seem to be much effort in E&P to offset Venezuela and Iraq. Why should they afterall when the price spike is going to be over by this summer. The timing of the Venezuela situation really looks like it threw a spanner in the oil market.

[PLATO]

Okay...so I am a dinosaur on economic theory. Just one question...where does the 40 to 100 billion dollars that this war is going to cost go to?

[MichaeltheGreat]

Originally posted by Sten Sture


Bingo. The fuel price spike is much worse. The trade deficit numbers bear out just how bad $35 vs $20 is for us. MtG, make sure Vicente gets a few of the pesos we are shipping down there!

Hopefully somebody will be getting something - the Mexican economy is bleeding much worse than the US economy right now, because we're so tied to US trade, tourism, and consumer spending. What benefit Pemex gets doesn't come close to offsetting losses in other areas of the economy. Since the government has such revenue shortfalls, they're proposing their typical solution - tax the hell out of everything that hasn't had the hell taxed out of it already, so the net result will be to force the economy even further underground.

Vicente has problems, since he doesn't have control of the Congress, and nobody else does either. Even the drug trade is off between the border crossing hassles (so many extra people to pay off) and the slackening demand.

[MichaeltheGreat]

Originally posted by PLATO1003
Okay...so I am a dinosaur on economic theory. Just one question...where does the 40 to 100 billion dollars that this war is going to cost go to?

A lot of it will go as charges to inventories (smart munitions, etc.), while other parts will go to civilian transport contractors, bribes to our alliance of the paid for, increased personnel pay (hazardous duty and combat pay, etc.), fuel consumption out the wazoo, and chargeoffs for broken or killed items such as trucks, planes, tank engines, etc. Eventually, it all comes out of the taxpayer, but not for several years.

The distribution of the money is pretty much the same as with peacetime military spending, with the exception of a relatively big jump in fuel procurement, and third-party transport costs.

[DanS]

The trade deficit numbers bear out just how bad $35 vs $20 is for us.

Well, shoot. It's not that bad. If you assume that the steady-state is $25, then $35 would only be $3 billion out of a $45 billion trade deficit on a monthly basis. $35 ain't gonna last long.

[DuncanK]

Maybe it would be a good idea to give an immediate bonus to all military personel involved in combat. They really deserve it and it would help the economy. Of course, it would only help immediately if they sent it home for their wifes to spend. Probably few would.

[Ned]

So, Mexico addresses a bad economy by increasing taxes. I believe this is Sava's recommendation for the US as well.

This seems to be a formula for a depression. When the economy is staggering in the desert, take its last drop of water.

Smart.

[Zkribbler]

Originally posted by Ned
So, Mexico addresses a bad economy by increasing taxes. I believe this is Sava's recommendation for the US as well.

Fiscal responsibility will do more for restoring consumer confidence than will the granting of tax-free incomes to billionaires so they can buy Rolls Royces, French wines, Italian art and Japanese vacations.

[DuncanK]

Generally I would say that raising taxes would not be good for the economy. But sometimes it is. I think the Clinton tax hikes did restore confidence, because people saw that they were needed to lower interest rates. In this case taxes might not be that bad, because people see that we are going to need that revenue when social security starts running deficits in the next decade of so. I think a lot of people might think these tax cuts wont work and they are irresponsible.

[Sava]

Originally posted by MichaeltheGreat
Don't you know it's un-American to focus on defeatist, negative talk about meaningless issues like the economy? There's a war on, you know.

BWAHHAHAHWABHAWHAHAHAHAH OMG that was funny MtG... while Bush is leading the country into the toilet, you say we it's unAmerican to talk about a meaningless issue like the economy?! Please tell me you're joking!

[Sava]

Originally posted by Ned
So, Mexico addresses a bad economy by increasing taxes. I believe this is Sava's recommendation for the US as well.

This seems to be a formula for a depression. When the economy is staggering in the desert, take its last drop of water.

Smart.

I never said raising taxes genius. Stop jumping to conclusions.

[chequita guevara]

Originally posted by Sava
Please tell me you're joking!

Wasn't it obvious?

[MichaeltheGreat]

Originally posted by DuncanK
Maybe it would be a good idea to give an immediate bonus to all military personel involved in combat. They really deserve it and it would help the economy. Of course, it would only help immediately if they sent it home for their wifes to spend. Probably few would.

Most of it stays home - the joys of direct deposit, plus it's kind of hard to find ATM's or anything to spend your money on out in the Iraqi desert.

[MichaeltheGreat]

Originally posted by Ned
So, Mexico addresses a bad economy by increasing taxes. I believe this is Sava's recommendation for the US as well.

This seems to be a formula for a depression. When the economy is staggering in the desert, take its last drop of water.

Smart.

Mexico's tax system is rather interesting. The voluntary compliance rates are near zero, underground income makes up a huge portion of off-the-books GDP, and the government rationalizes that to get more revenue, they need to come up with new ways of taxing people - encouraging more non-compliance and evasion.

This country is a classic case for supply-side overhaul of the tax system, but there are hugely powerful interests in and out of government who don't want to rock the boat, no matter how beneficial to the country and the people in the long run.

[Urban Ranger]

Originally posted by chegitz guevara
Wasn't it obvious?

Quite.