Fiscal Irresponsiblity

[FewFAC]

You wanna talk Lies and Deceit? How about we talk about the federal debt and how six years of declining public debt prior to Bush have failed to decline after a bump during his presidency. So much for fiscal responsibility. Oh wait. There's more? How about $9.6 trillion in debt? (That's $9,600,000,000,000.) There's no way that's going wrong, especially in comparison to a January 2001 level of only about $5,727,776,738,304.64.

That not enough? How about ballooning budget deficits under "less regulation means more efficient economy" rule? Note that 400% peak increase in deficit combined with 600% peak increase in debt, still up almost 500%? That's more efficient, more responsible, AND more bigger, just like how we do in Texas.

We left the OTC securities markets unregulated (or regulated by the SEC in the case of the investment banks), and the result is $500B in writedowns, government bailouts, lost jobs (463,000, ytd, 1,500,000, yoy), and economic stimulus packages to create a bridge of consumer spending to nowhere.

This whole notion of limited government equals better business makes absolutely no sense, unless better business means driving the country into recession while spending inordinate amounts of money that fail to lead to growth. And we are rationally considering support for a candidate in favor of continuing this litany of failed economic policies? Why don't we just vote for Hoover?

[TBird41]

Aug 12, 2008 22:04:46 GMT -5 FewFAC said:

You wanna talk Lies and Deceit? How about we talk about the federal debt and how six years of declining public debt prior to Bush have failed to decline after a bump during his presidency. So much for fiscal responsibility. Oh wait. There's more? How about $9.6 trillion in debt? (That's $9,600,000,000,000.) There's no way that's going wrong, especially in comparison to a January 2001 level of only about $5,727,776,738,304.64.

That not enough? How about ballooning budget deficits under "less regulation means more efficient economy" rule? Note that 400% peak increase in deficit combined with 600% peak increase in debt, still up almost 500%? That's more efficient, more responsible, AND more bigger, just like how we do in Texas.

We left the OTC securities markets unregulated (or regulated by the SEC in the case of the investment banks), and the result is $500B in writedowns, government bailouts, lost jobs (463,000, ytd, 1,500,000, yoy), and economic stimulus packages to create a bridge of consumer spending to nowhere.

This whole notion of limited government equals better business makes absolutely no sense, unless better business means driving the country into recession while spending inordinate amounts of money that fail to lead to growth. And we are rationally considering support for a candidate in favor of continuing this litany of failed economic policies? Why don't we just vote for Hoover?

90% of the money for the Gravina Island bridge was going to Alaska anyway. The earmark for the Bridge to Nowhere ensured that the state of Alaska would spend its federal transportation money on the bridge and that's it. And the bridge went somewhere--it went to the island where the airport is, a vital link to the outside world for a town of 20,000 people that has no roads in or out, had no room to expand because of mountains (but would have had lots of room to grow on Gravina Island) and that was forced to rely on a ferry to get to the airport despite weather that routinely prevented the ferry from operating, but that wouldn't prevent someone from driving on a bridge.

If you're looking for a transportation project that wasted federal money, look at the Big Dig.

Back on topic--the federal debt is ridiculous. How would you propose to solve the issue? And how much of it has to do with our huge trade imbalance and weakened currency?

[Coast2CoastHoya]

Bravo, FewFAC.

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[FewFAC]

Here's the first trillion. Note the impact of Iraq across future government spending is estimated to add an additional $2 trillion to government spending. That's $3 trillion that could have been used to pay down federal debt that is instead added to federal debt, a $6 trillion swing that is more than the federal debt at the beginning of 2001. I also note how over the course of the last eight years, there has been absolutely no executive leadership addressing the next looming government budget crisis: the entitlement programs. If Wall Street was drunk, it was because Washington was blowing through money so fast, providing clear(ly poor) leadership.

One would also think the evaporating market for certain types of securities would convince market and policy makers for better thought out plans than this one which takes all of the bad characteristics of the imploding ABS marketplace and amplifies it by making trades accessible electronically (ie, faster) with just as little oversight, so that when the sophisticated investors who ostensibly know and understand the risks go belly up and come begging for a government bailout because the house(s) of cards they've constructed are about to wipeout a significant chunk of the financial services markets (let's say a 20% chunk, since we have recent guidance on the Fed stepping in to do precisely that), then the government, weighing the pros and cons will have no choice but to do so because not only will the government no have known what had been going wrong until it was too late, the government would have little recourse in determining fault also.

Some background:

Project Turquoise was apparently initially dreamed up as an alternate stock exchange that would compete with European exchanges such as the LSE, thus leading to lower trade commisions. This would have been a welcome development. However, in addition to its public exchange facilities, Project Turquoise now aims to enable private placements of large lots of stock without the need for public disclosure of those trades as would be required if they were executed on a public exchange. While firms engaging in such trades may view such disclosure requirements as "burdensome regulation", it's that disclosure that forms the basis for policing against such illegal practices as pump-and-dump and insider trading, while ensuring that for any given time, there is only one best bid and offer which is freely available to anyone who wants it.

Furthermore, it's precisely those types of private deals that contributed to the current collapse of OTC markets by hindering the normal market processes of price discovery and aggregation of liquidity.

It's like we know our history and we're running headlong like lemmings in a race to see who can be the first doomed to repeat it. I say disband the SEC. Clearly the SEC has been asleep at the wheel for far too long, has no concept of what it is tasked to do, has nowhere near the resources necessary to complete its mission (mostly because it doesn't understand its mission or its responsibilities), cannot compete in terms of attracting the requisite talent necessary to adequately address its mission, and has nowhere near the legal nor regulatory power necessary to address its mission.

I'd also recommend registering all securities. There is a lot of great work done with private placement, but the system is clearly subject to the whims of the greedy few who can wreck the entire system, generate federal liquidity injections, and run off with taxpayer money. You'd think after seeing the cycle repeat itself enough we'd understand that the people who favor such a system are precisely the people not trustworthy enough to operate within such a system, yet it perpetuates.

One thing I did notice is that federal tax receipts have been at an all time high recently, though wrecking financial systems looks to be a promising method to drive companies from profitability and thereby reduce tax receipts to a level inline with the remainder of the current economic environment. So it's not as though massive spending cuts are necessarily required. And proper regulation of currently unregulated areas of exotic financial instruments may provide for orderly, responsible arenas of growth that maintain the confidence and trust of counterparties, providing additional opportunities to grow GDP, jobs, income and tax revenue.