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Thread: Financial Crisis - Page 45







Post#1101 at 11-23-2004 07:01 AM by NickSmoliga [at joined Jan 2002 #posts 391]
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Contrarian View

http://www.nationalreview.com/nrof_b...0411220844.asp

November 22, 2004, 8:44 a.m. Did Tax Cuts Hurt the Dollar? Not a chance.

In its November 13 edition, the New York Times blamed the current fall of the dollar on the federal budget deficits. BuzzCharts is having a hard time figuring out how the paper can make such a claim when it doesn?t fit with the historical record.

In the late 1970s we had modest deficits and a very rapidly depreciating dollar. In the 1980s we had tax cuts, large deficits, and a very strong dollar. In the 1990s we again had a strong dollar, but ironically the lowest gold prices and some of the highest dollar valuations occurred after Bill Clinton?s capital-gains tax cut of 1997.

The New York Times also blamed the deficits on the Bush tax cuts. So, in essence, the Times is blaming the weak dollar on the Bush tax cuts.

On the contrary, tax cuts strengthen currencies, not weaken them. In America, low marginal tax rates and low capital-gains tax rates make a more inviting environment for foreign investors. These investors must first cash in their yen, euros, and yuans in order to buy dollars that they then use to purchase dollar-denominated assets. Want to create a short-term rally in the dollar? Zero out the capital-gains tax and foreigners will line up at the foreign-exchange desk to get a part of the U.S. action.

One additional point is that over the long run a strongly growing economy by definition is creating more goods and services. So the same dollars chasing more goods actually equals mild deflation.

As the chart above clearly shows, there is no correlation between federal deficits and exchange rates. The dollar problem is a real one, however, and is now the greatest threat to the Bush boom. The Federal Reserve should ignore the New York Times and realize that the Bush tax cuts are working. The Fed?s policy should reflect the fact that no country can print its way into prosperity. America needs more tax cuts and fewer dollars, not the other way around

? Jerry Bowyer is the author of The Bush Boom and an economic advisor to Blue Vase Capital







Post#1102 at 11-23-2004 09:08 AM by Marx & Lennon [at '47 cohort still lost in Falwelland joined Sep 2001 #posts 16,709]
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Re: Contrarian View

Quote Originally Posted by NickSmoliga
http://www.nationalreview.com/nrof_buzzcharts/buzzcharts200411220844.asp

November 22, 2004, 8:44 a.m. Did Tax Cuts Hurt the Dollar? Not a chance.

In its November 13 edition, the New York Times blamed the current fall of the dollar on the federal budget deficits. BuzzCharts is having a hard time figuring out how the paper can make such a claim when it doesn?t fit with the historical record.

In the late 1970s we had modest deficits and a very rapidly depreciating dollar. In the 1980s we had tax cuts, large deficits, and a very strong dollar. In the 1990s we again had a strong dollar, but ironically the lowest gold prices and some of the highest dollar valuations occurred after Bill Clinton?s capital-gains tax cut of 1997.

The New York Times also blamed the deficits on the Bush tax cuts. So, in essence, the Times is blaming the weak dollar on the Bush tax cuts.

On the contrary, tax cuts strengthen currencies, not weaken them. In America, low marginal tax rates and low capital-gains tax rates make a more inviting environment for foreign investors. These investors must first cash in their yen, euros, and yuans in order to buy dollars that they then use to purchase dollar-denominated assets. Want to create a short-term rally in the dollar? Zero out the capital-gains tax and foreigners will line up at the foreign-exchange desk to get a part of the U.S. action.

One additional point is that over the long run a strongly growing economy by definition is creating more goods and services. So the same dollars chasing more goods actually equals mild deflation.

As the chart above clearly shows, there is no correlation between federal deficits and exchange rates. The dollar problem is a real one, however, and is now the greatest threat to the Bush boom. The Federal Reserve should ignore the New York Times and realize that the Bush tax cuts are working. The Fed?s policy should reflect the fact that no country can print its way into prosperity. America needs more tax cuts and fewer dollars, not the other way around

? Jerry Bowyer is the author of The Bush Boom and an economic advisor to Blue Vase Capital
OK, now that we've been through the looking glass, can we be a little realistic? We're hemoraging dollars into the international market. If we get "investment" from abroad, it's only our own exported dollars being used to buy our capital assets. NRO seems to advocate accellerating the process.

Good plan.
Marx: Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.
Lennon: You either get tired fighting for peace, or you die.







Post#1103 at 11-24-2004 03:47 AM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Re: Contrarian View

Quote Originally Posted by NickSmoliga
http://www.nationalreview.com/nrof_buzzcharts/buzzcharts200411220844.asp

November 22, 2004, 8:44 a.m. Did Tax Cuts Hurt the Dollar? Not a chance.

In its November 13 edition, the New York Times blamed the current fall of the dollar on the federal budget deficits. BuzzCharts is having a hard time figuring out how the paper can make such a claim when it doesn?t fit with the historical record.

In the late 1970s we had modest deficits and a very rapidly depreciating dollar. In the 1980s we had tax cuts, large deficits, and a very strong dollar. In the 1990s we again had a strong dollar, but ironically the lowest gold prices and some of the highest dollar valuations occurred after Bill Clinton?s capital-gains tax cut of 1997.

The New York Times also blamed the deficits on the Bush tax cuts. So, in essence, the Times is blaming the weak dollar on the Bush tax cuts.

On the contrary, tax cuts strengthen currencies, not weaken them. In America, low marginal tax rates and low capital-gains tax rates make a more inviting environment for foreign investors. These investors must first cash in their yen, euros, and yuans in order to buy dollars that they then use to purchase dollar-denominated assets. Want to create a short-term rally in the dollar? Zero out the capital-gains tax and foreigners will line up at the foreign-exchange desk to get a part of the U.S. action.

One additional point is that over the long run a strongly growing economy by definition is creating more goods and services. So the same dollars chasing more goods actually equals mild deflation.

As the chart above clearly shows, there is no correlation between federal deficits and exchange rates. The dollar problem is a real one, however, and is now the greatest threat to the Bush boom. The Federal Reserve should ignore the New York Times and realize that the Bush tax cuts are working. The Fed?s policy should reflect the fact that no country can print its way into prosperity. America needs more tax cuts and fewer dollars, not the other way around

? Jerry Bowyer is the author of The Bush Boom and an economic advisor to Blue Vase Capital
This article is missing some things. First off, the "rise" in the value of the dollar in the "1980's" happened specifically in the early 80's. Then when our trade imbalance starting seeming severe the markets demolished the dollar and the subsequent instability lead to the Crash of '87. This time the imbalance is far worse no matter what index you use and we have a competitor currency this time 'round. Not good.

Another issue is the one where tax cuts create deflation. As a former rabid supply-sider, I must admit this can definitely be the case. The problem is that in absolute terms more of that money this time is going to the upper middle class and wealthy under rotten circumstances. The former are buying things with it (so more money chasing goods) or they and the wealthy are blowing it on speculative investments (a super-heated housing market and a stock market with still-high P&E ratios). All of this is decidely inflationary.

If we were in an economy of high-savings and undervalued equities I'd say such tax cuts would be fine, indeed even deflationarily pro-growth (aggregate supply curve moving to the left, IIRC). But the opposite is true in our case.

And tax cuts in our case would further fuel imports and a demand for speculative investing sending more dollars out and more foreign investment in -- increasing our balance of payment problems and worsening our currency's position.

I used to greatly admire the National Review. But I think they are as deluded now as the liberal mouthpieces were a generation ago.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1104 at 11-29-2004 12:08 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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Post#1105 at 11-30-2004 02:52 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Gold - 450 USD
Euro - 1.30 USD
BP - 1.90 USD
Oil - 50 USD

Interesting no?







Post#1106 at 11-30-2004 06:23 PM by Finch [at In the belly of the Beast joined Feb 2004 #posts 1,734]
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Quote Originally Posted by mgibbons19 (71)
Gold - 450 USD
Euro - 1.30 USD
BP - 1.90 USD
Oil - 50 USD

Interesting no?
No, not really -- the numbers need some context. How about a graph of the price of oil/gold relative to income quartiles (i.e. how many ounces of gold/barrels of oil could a person in the bottom 25% of income in the US buy, by year?) I think I'll put something like that together.







Post#1107 at 12-01-2004 12:05 AM by [at joined #posts ]
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Guest

First, comes this bit of devestating news...
  • Wal-Mart's China inventory to hit US$18b this year

    By Jiang Jingjing
    China Business Weekly
    Updated: 2004-11-29 15:21

    The world's largest retailer, Wal-Mart Stores Inc, says its inventory of stock produced in China is expected to hit US$18 billion this year, keeping the annual growth rate of over 20 per cent consistent over two years.

    The trend is expected to continue, company officials revealed.
... and then there's this cannon ball to fall:
  • Global poverty is in decline

    By David Brooks
    New York Times
    November 30, 2004

    I hate to be the bearer of good news, because only pessimists are regarded as intellectually serious, but we're in the 11th month of the most prosperous year in human history. Last week, the World Bank released a report showing that global growth ''accelerated sharply'' this year to a rate of about 4 percent.

    Best of all, the poorer nations are leading the way. Some rich countries, like the United States and Japan, are doing well, but the developing world is leading this economic surge. Developing countries are seeing their economies expand by 6.1 percent this year - an unprecedented rate - and, even if you take China, India and Russia out of the equation, developing world growth is still around 5 percent.

    This is having a wonderful effect on world poverty, because when regions grow, that growth is shared up and down the income ladder. In its report, the World Bank notes that economic growth is producing a ''spectacular'' decline in poverty in East and South Asia. Less dramatic declines in extreme poverty have been noted around the developing world, with the vital exception of sub-Saharan Africa. It now seems quite possible that we will meet the U.N.'s Millennium Development Goals, which were set a few years ago: the number of people living in extreme poverty will be cut in half by the year 2015.
Call 'em the Bad News Bears for the "wishing ill" paleo-communitarian crowd of Brian Rush, Sean Love and Virgil Saari et al, eh?

Interesting, no?






p.s. Oh, yes, it was "Blue skies smilin' at me. Nuthin but blue skies do I see" just before the bubble burst in 1929, right? Keep dreamin', libs, keep dreamin'! 8)







Post#1108 at 12-01-2004 02:55 AM by cbailey [at B. 1950 joined Sep 2001 #posts 1,559]
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Wouldn't you know the Devil would show up to praise Walmart.
"To announce that there must be no criticism of the president, or that we are to stand by the president right or wrong, is not only unpatriotic and servile, but is morally treasonable to the American public." -- Theodore Roosevelt







Post#1109 at 12-01-2004 12:45 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Quote Originally Posted by Rick Hirst
Quote Originally Posted by mgibbons19 (71)
Gold - 450 USD
Euro - 1.30 USD
BP - 1.90 USD
Oil - 50 USD

Interesting no?
No, not really -- the numbers need some context. How about a graph of the price of oil/gold relative to income quartiles (i.e. how many ounces of gold/barrels of oil could a person in the bottom 25% of income in the US buy, by year?) I think I'll put something like that together.
That would be helpful. I've been teaching this stuff to myself for a little while now. So I don't have as much context as would be helpful.

But, oil bottomed out during the late 90s around $11 or $15 a barrell.
Gold, as recently as this spring had a run up that only got it to 420. Otherwise it seems to have been hovering just below 400 for years.
The Euro a couple years ago started out below the dollar if I'm not mistaken, and the pound I don't remember, but 1.20 sounds more like a couple years ago.

But i'ld love to see your graphs. Thanks







Post#1110 at 12-01-2004 04:15 PM by Finch [at In the belly of the Beast joined Feb 2004 #posts 1,734]
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Here is a graph in the change in gold and oil buying power for the average US household (click for full-size image.)



In 1967 (the first year for which census data is available, and also the year of my birth), the median household income was $7078, oil was $2.92/bbl and gold was $35/oz; so an average household could buy 2423 barrels of oil or 202 ounces of gold with their gross income.

After buying power bottomed out after the oil shock in the late '70s, it peaked again around 2000, and has been declining since.

If gold (or oil) does indeed represent a store of value, then the median household's buying power has fallen by more than 50% since I was born -- more than 20% this year alone.







Post#1111 at 12-01-2004 04:36 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Good grief man. You make it sound worse than I do.

Interesting too, that you're starting with 67, since that would be just about perfect for the decline from high industrial modernism. Since then, manufacturing went overseas, men's wages stagnated, women went into the workforce (as much out of necessity I'm convinced).

Reagan tried to talk us into a new Morning, and the tech boom allowed us young uns a glimpse of high posterity. But alas.

And Off topic, isn't it interesting that in social theory Modernism represents the GIs so well, and Postmodernism represents the Xers? Hmmm.







Post#1112 at 12-01-2004 05:01 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Rick Hirst
Here is a graph in the change in gold and oil buying power for the average US household (click for full-size image.)



In 1967 (the first year for which census data is available, and also the year of my birth), the median household income was $7078, oil was $2.92/bbl and gold was $35/oz; so an average household could buy 2423 barrels of oil or 202 ounces of gold with their gross income.

After buying power bottomed out after the oil shock in the late '70s, it peaked again around 2000, and has been declining since.

If gold (or oil) does indeed represent a store of value, then the median household's buying power has fallen by more than 50% since I was born -- more than 20% this year alone.
I wonder if the GDeval. will bottom out where the line would've kept going up to now if the 70's track had continued uninterrupted? It was shortly after 1980 that the overall trend in dollar/import imbalances got started as a band-aid salve for more structural problems.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1113 at 12-01-2004 05:18 PM by Finch [at In the belly of the Beast joined Feb 2004 #posts 1,734]
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Quote Originally Posted by mgibbons19 (71)
Good grief man. You make it sound worse than I do.

Interesting too, that you're starting with 67, since that would be just about perfect for the decline from high industrial modernism. Since then, manufacturing went overseas, men's wages stagnated, women went into the workforce (as much out of necessity I'm convinced).
Indeed. Note that the figures I cite are for household income, so even with two wage-earners in the home, the Great American Family is still losing ground.







Post#1114 at 12-01-2004 05:38 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Mr Gibbons,

I must say your new name is, um, interesting.

Mr. Gibbons







Post#1115 at 12-01-2004 08:13 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by mgibbons19 (71)
Mr Gibbons,

I must say your new name is, um, interesting.

Mr. Gibbons
Thank you. I recently saw the movie Office Space for the upteenth time and find myself feeling like him at work.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1116 at 12-02-2004 12:40 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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I have never seen it. Perhaps I will look it up.







Post#1117 at 12-04-2004 04:37 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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Falling Dolar threatens housing:

http://www.msnbc.msn.com/id/6638996/

Better get the for sale sign up quick :lol:







Post#1118 at 12-06-2004 03:14 PM by Tom Mazanec [at NE Ohio 1958 joined Sep 2001 #posts 1,511]
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You might want to look at this thread on another forum (especially Peter Gribbons, in light of his post on this thread a month ago):

http://peakoil.com/fortopic3344.html







Post#1119 at 12-06-2004 04:16 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Yeah join us man. Me and tom hang out there. And the rest are a bunch of friggin wierdos.







Post#1120 at 12-07-2004 01:27 AM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Tom Mazanec
You might want to look at this thread on another forum (especially Peter Gibbons, in light of his post on this thread a month ago):

http://peakoil.com/fortopic3344.html
Interesting stuff.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1121 at 12-07-2004 01:28 AM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by mgibbons19 (71)
Yeah join us man. Me and tom hang out there. And the rest are a bunch of friggin wierdos.
I registered, but then it wouldn't let me in. I will wait for my e-mail confirmation of registration.
Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1122 at 12-07-2004 10:46 AM by Barbara [at 1931 Silent from Pleasantville joined Aug 2001 #posts 2,352]
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Quote Originally Posted by Peter Gibbons
Quote Originally Posted by mgibbons19 (71)
Yeah join us man. Me and tom hang out there. And the rest are a bunch of friggin wierdos.
I registered, but then it wouldn't let me in. I will wait for my e-mail confirmation of registration.
Ok, Sean, that avatar of Ron Livingston is manipulative. Now I am imagining that you look like him when I read your posts. :lol: Here's hoping that my new avatar accomplishes the same! :wink:
"Congress is not an ATM" - Senator Robert Byrd / "Democracy works.....against us" - Jon Stewart / "I'll reach out to everyone who shares our goals" - George W. Bush







Post#1123 at 12-07-2004 01:01 PM by Zarathustra [at Where the Northwest meets the Southwest joined Mar 2003 #posts 9,198]
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Quote Originally Posted by Barbara
Quote Originally Posted by Peter Gibbons
Quote Originally Posted by mgibbons19 (71)
Yeah join us man. Me and tom hang out there. And the rest are a bunch of friggin wierdos.
I registered, but then it wouldn't let me in. I will wait for my e-mail confirmation of registration.
Ok, Sean, that avatar of Ron Livingston is manipulative. Now I am imagining that you look like him when I read your posts. :lol: Here's hoping that my new avatar accomplishes the same! :wink:
That's nice 'n' all, . . . for a Silent. :wink:

But if you're trying to get me excited, you gotta be Phoebe . . .

Americans have had enough of glitz and roar . . Foreboding has deepened, and spiritual currents have darkened . . .
THE FOURTH TURNING IS AT HAND.
See T4T, p. 253.







Post#1124 at 12-07-2004 02:56 PM by Prisoner 81591518 [at joined Mar 2003 #posts 2,460]
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Of the two, Joan Collins would be more likely to work with me. :wink: :lol:







Post#1125 at 12-07-2004 04:09 PM by antichrist [at I'm in the Big City now, boy! joined Sep 2003 #posts 1,655]
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Mr Gibbons

I haven't seen the movie she's from either. But now I want to.

Mr. Gibbons
-----------------------------------------