2008 PRESIDENTIAL ELECTION: Obama (D-IL) vs. McCain (R-AZ)

[TheNiche]

Inexpensive debt? When upwards of one-third the price of oil is attributed to the weak dollar, a weakness due to our massive debt, it is hard to call that debt inexpensive. More so than oil, America is addicted to debt. And debtors have little clout. The bankers do. While SOME debt is not bad, and is even advisable in certain situations, the US fiscal policy mirrors US consumers, which is borrow til you're bankrupt.

And that policy is pushed by Republicans, not Democrats.

Treasury bonds are the means by which government issues debt. The lower the interest rate, the lower is the cost of debt to our government. The government has basically three ways to raise cash: 1) tax, 2) issue debt, 3) print money. Printing money is generally recognized as a bad idea. It seriously hurts all public and private debt-holders and induces price inflation. Lets think of it as a last resort and put it aside for the moment.

At this point the question is whether the economy could take the resources that otherwise would've been taxed from it and put them to a use that generates sufficiently high real rates of return as to exceed the real cost of debt. Since our government is the largest, most collateralized, most stable, most trusted debt issuer in the history of the world, we have really inexpensive debt. And it really isn't much of a stretch to say that if our government can get such cheap money, it ought to take full advantage of the situation.

And contrary to some of the concerns you've mentioned, Red, it just keeps getting less expensive. If ever there was a time in our history to issue lots and lots of long-term debt, this really is it. Just look at how cheap government debt has gotten.

But there's another advantage. The more foreign debtors we have, the more leverage we exert in diplomatic negotiations. If China were to become militaristic and start threatening its neighbors, for instance, we could just impose sanctions and refuse to pay their debt service. If they declared war on us or an ally, we could nationalize their debt. And if we were really facing some kind of nationwide catastrophe, we could just print more money and screw all the foreign debt-holders...it'd eliminate our debtor-of-first-resort status that we enjoy today, but its a nice option to have.

[RedScare]

Wow! You're right. I just got off the phone with Wells Fargo. I threatened to stop paying my mortgage and they cratered. It's amazing the leverage I have over my lender!

Dumb leverage suggestions aside, the interest on the national debt is NOT getting cheaper. From the Treasury Dept.....

2007 $429,977,998,108.20

2006 $405,872,109,315.83

2005 $352,350,252,507.90

2004 $321,566,323,971.29

2003 $318,148,529,151.51

2008 interest is at $377 Billion with 3 months to go in the fiscal year.

Interest on the national debt is up 35% in only 4 years!

Interest due by every single American in 2007 was $1420. Just interest.

The 2008 and 2009 fiscal budgets are projected to add $900 BILLION to the national debt, pushing interest payments to nearly HALF a TRILLION DOLLARS PER YEAR.

That's just government paid interest. You completely ignored what this does to the dollar, and what that weak dollar is doing to oil and gasoline prices. Those indirect costs are causing all sorts of problems. But, like Cheney, you simply ignore it.

[TheNiche]

Wow! You're right. I just got off the phone with Wells Fargo. I threatened to stop paying my mortgage and they cratered. It's amazing the leverage I have over my lender!

You've made a fallacy of composition and do not apparently understand the concept of national sovereignty.

Dumb leverage suggestions aside, the interest on the national debt is NOT getting cheaper. From the Treasury Dept.....

2007 $429,977,998,108.20

2006 $405,872,109,315.83

2005 $352,350,252,507.90

2004 $321,566,323,971.29

2003 $318,148,529,151.51

2008 interest is at $377 Billion with 3 months to go in the fiscal year.

Not the valid measure for an analytical approach. What is necessary is to look at the real weighted average cost of capital at present.

Our long-term treasury debt was largely issued back when interest rates were higher. That is a sunk cost. Our policy must be forward-looking.

Interest on the national debt is up 35% in only 4 years!

Good.

The 2008 and 2009 fiscal budgets are projected to add $900 BILLION to the national debt, pushing interest payments to nearly HALF a TRILLION DOLLARS PER YEAR.

More!

You completely ignored what this does to the dollar, and what that weak dollar is doing to oil and gasoline prices. Those indirect costs are causing all sorts of problems. But, like Cheney, you simply ignore it.

The analytical approaches I've suggested rely upon inflation-adjusted measures, not nominal.

That the dollar weakened even as treasury yields dropped only further proves my point that we enjoy a tremendous advantage as a debtor-of-first-resort. After all, holding all other economic factors constant, why would someone with a stable currency want to invest in an asset denominated in a devaluing currency without interest rates sufficiently high as to compensate them for it? And yet they do! And their foreign direct investment in us is to our tremendous and overwhelming benefit.

[RedScare]

So your saying that the dems are fiscally responsible?

Read the above posts and see for yourself.

[Trae]

http://www.gallup.com/poll/109105/Gallup-D...ope-Effect.aspx

July 25, 2008

Gallup Daily:

Obama by 6, Is There a Europe Effect? Obama moves back to significant lead over McCain

[sarahiki]

He's right (although I'm not sure that's what he actually meant). The democratic presidents have been more fiscally responsible than republican presidents since Reagan. The contrast between Clinton, who balanced the budget (actually, a surplus), and G. W. Bush, who quickly turned that surplus into a deficit, only cements this new reality. Tax and spend Republicans.

1950-2007 National Debt Graph: http://zfacts.com/p/318.html

Thank you for pointing that out. I am still baffled as to how some people still think of the Republicans as the fiscally responsible party. Our debt has weakened the dollar, which has, just to name one example, severely exacerbated the rising cost of oil.

[Trae]

Israeli paper publishes Obama's wall note

http://www.politico.com/blogs/bensmith/070...te.html?showall

The Israeli paper Maariv obtains the note Obama left at the Western Wall in Jerusalem, and puts a photograph of it on its front page.

The handwriting, beneath the letterhead of the King David Hotel, does appear to be Obama's. Visitors traditional stick notes of prayer into the wall.

The note says:

Lord,

Protect my family and me. Forgive me my sins and help me guard against pride and despair.

Give me the wisdom to do what is right and just.

And make me an instrument of your will.

The paper reports that the note was taken by a yeshiva student who was at the wall at the time -- a mark of how virtually nothing remains private.

The rabbi of the Western Wall, also known as the Wailing Wall, condemned its publication.

How sad. Nothing is private these days.

[BryanS]

http://www.gallup.com/poll/109105/Gallup-D...ope-Effect.aspx

July 25, 2008

Gallup Daily:

Obama by 6, Is There a Europe Effect? Obama moves back to significant lead over McCain

How tragic. Don't you think it is concerning that he's not above 50%? I bet you there are a lot of old mid-westerners that aren't counted... but they'll show up on election day!

[Trae]

How tragic. Don't you think it is concerning that he's not above 50%? I bet you there are a lot of old mid-westerners that aren't counted... but they'll show up on election day!

Um.....wut?

[BryanS]

And their foreign direct investment in us is to our tremendous and overwhelming benefit.

The idea that we even let the Communist Chinese, "Oil Exporters", and other undesirables, invest in our country is disgusting to me.

Who really owns our B-2 bombers? Us? Nope. We took out a loan... and the Chinese own it. The Saudis own it. Anyone ever travel to Saudi Arabia - for leisure? Guess what? You're banned from that country (except for work reasons.)

http://www.ustreas.gov/tic/mfh.txt

Top 5:

Japan

China

UK

Oil Exporters*

Brazil

...read the fine print: Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.

Look at that list. I would say 80% of the countries on this list want us DEAD. But we depend on them, to buy our treasuries, to keep us going. Now how screwed up is that?

So instead of issuing MORE DEBT, that has to be bought up by these undesirables, why not REDUCE DEBT, so that we can reduce our financial dependency on hostile nations, many that want us dead.

So I guess we could just default on the debt. That'll show'em. But that's also when the nukes start heading this direction...

[TheNiche]

So today it is a 6-point lead. That's about the same as occured on the 5th, 10th, and 20th of this month. Yet in between those dates, the margin has narrowed to two points or less for six days. I didn't spot any error of margin measurements on the Gallup site, but given the pattern, I'd say that neither candidate has a statistically significant lead.

As I said earlier, Obama's Europe trip really isn't a game-changer. He got a bump, but our ADD electorate will quickly forget, as always. If he wants to decisively win this thing, he needs to consistently come across as a more honest and straightforward guy and less of a politician.

[BryanS]

Um.....wut?

Exactly what John Kerry said, the day after Election Day, in 2004. All the polls, the election map, etc, really mean nothing right now. It may look good now (although I would think Obama would have more support, above 50%)... but that can change over night. Election Day is what matters.

[Trae]

Exactly what John Kerry said, the day after Election Day, in 2004. All the polls, the election map, etc, really mean nothing right now. It may look good now (although I would think Obama would have more support, above 50%)... but that can change over night. Election Day is what matters.

roffles.

If anything, McCain's campaign right now is reminiscent of John Kerry's campaign back in 2004.

[TheNiche]

The idea that we even let the Communist Chinese, "Oil Exporters", and other undesirables, invest in our country is disgusting to me.

Who really owns our B-2 bombers? Us? Nope. We took out a loan... and the Chinese own it. The Saudis own it. Anyone ever travel to Saudi Arabia - for leisure? Guess what? You're banned from that country (except for work reasons.)

http://www.ustreas.gov/tic/mfh.txt

Top 5:

Japan

China

UK

Oil Exporters*

Brazil

...read the fine print: Oil exporters include Ecuador, Venezuela, Indonesia, Bahrain, Iran, Iraq, Kuwait, Oman, Qatar, Saudi Arabia, the United Arab Emirates, Algeria, Gabon, Libya, and Nigeria.

Look at that list. I would say 80% of the countries on this list want us DEAD. But we depend on them, to buy our treasuries, to keep us going. Now how screwed up is that?

So instead of issuing MORE DEBT, that has to be bought up by these undesirables, what not REDUCE DEBT, so that we can reduce our financial dependency on hostile nations, many that want us dead.

So I guess we could just default on the debt. That'll show'em. But that's also when the nukes start heading this direction...

You do realize that they not only have been financing our gluttonous consumerism but have really gotten the shaft as our dollar depreciated, right? I mean, if they really are our enemies, then we're winning a financial war that we haven't even bothered to fight. Yay America!

As for defaults, there is no such thing as an international repo guy. Nor are there international courts for this kind of thing. A country that defaults on its debt (or other assurance, no matter what they are) just has to pay more to entice foreigners to invest there. And being that country really does suck. Look to Sub-Saharan Africa for examples of how it sucks.

[livincinco]

You do realize that they not only have been financing our gluttonous consumerism but have really gotten the shaft as our dollar depreciated, right? I mean, if they really are our enemies, then we're winning a financial war that we haven't even bothered to fight. Yay America!

As for defaults, there is no such thing as an international repo guy. Nor are there international courts for this kind of thing. A country that defaults on its debt (or other assurance, no matter what they are) just has to pay more to entice foreigners to invest there. And being that country really does suck. Look to Sub-Saharan Africa for examples of how it sucks.

The fact that our financial status has fallen to the point that we're having a discussion that compares the US with the totally dysfunctional governments in Sub-Saharan Africa is very disturbing.

[HtownWxBoy]

I watched Obama speak from Paris today on CNN... I was very impressed... he definitely seemed Presidential. I know that doesn't really mean anything, I just thought he seemed that way.

On a side note, it's just remarkable how different Obama sounds when he speaks when compared to Bush... Obama actually sounds educated. It's a nice change.

[BryanS]

You do realize that they not only have been financing our gluttonous consumerism but have really gotten the shaft as our dollar depreciated, right? I mean, if they really are our enemies, then we're winning a financial war that we haven't even bothered to fight. Yay America!

As for defaults, there is no such thing as an international repo guy. Nor are there international courts for this kind of thing. A country that defaults on its debt (or other assurance, no matter what they are) just has to pay more to entice foreigners to invest there. And being that country really does suck. Look to Sub-Saharan Africa for examples of how it sucks.

Not if the countries we end up screwing send this over first. Direct to your front porch:

No repo guy needed. No courts. Just a couple of Chinese megatons.

There won't be any more foreign investment. Because America, will be gone.

[Deut28Thirteen]

It is very refreshing and he does not sound like a ten year old. I remeber when Bush said he will rid the world of evil doers. I know it was a very serious statement just days after 9/11, but I could not stop laughing. I was like in 6th grade when he said that speech and I remember saying that sound like something out of the Justin Leauge. Bush well he is so

[crunchtastic]

You do realize that they not only have been financing our gluttonous consumerism but have really gotten the shaft as our dollar depreciated, right? I mean, if they really are our enemies, then we're winning a financial war that we haven't even bothered to fight. Yay America!

As for defaults, there is no such thing as an international repo guy. Nor are there international courts for this kind of thing. A country that defaults on its debt (or other assurance, no matter what they are) just has to pay more to entice foreigners to invest there. And being that country really does suck. Look to Sub-Saharan Africa for examples of how it sucks.

Now this is the Niche that I love: Succinct, more or less right, and fun!

[TheNiche]

The fact that our financial status has fallen to the point that we're having a discussion that compares the US with the totally dysfunctional governments in Sub-Saharan Africa is very disturbing.

I can compare the U.S. to Macedonia and Saudi Arabia to Mongolia just as easily as I can compare an orange to an apple or even a grain of sand to the universe. All things can be compared.

But that's besides my point; if you read more closely you might note that I'm ranking the U.S. at the top in terms of debtor quality. And I use Sub-Saharan African countries as examples of what happens in the unlikely event that we started getting financially reckless or xenophobic.

Obama actually sounds educated. It's a nice change.

Yeah, but so did Woodrow Wilson...who not only talked the educated talk but walked the educated walk. Didn't work out well for us.

Not if the countries we end up screwing send this over first. Direct to your front porch:

No repo guy needed. No courts. Just a couple of Chinese megatons.

There won't be any more foreign investment. Because America, will be gone.

You've got to be kidding, right?

Globalization is the best military defense of all time. Nobody will ever nuke a major trading partner. The very thought is absurd.

Now this is the Niche that I love: Succinct, more or less right, and fun!

Bashing xenophobes really is fun!

[HtownWxBoy]

Yeah, but so did Woodrow Wilson...who not only talked the educated talk but walked the educated walk. Didn't work out well for us.

I'll take my chance w/ Obama.

[RedScare]

Not if the countries we end up screwing send this over first. Direct to your front porch:

No repo guy needed. No courts. Just a couple of Chinese megatons.

There won't be any more foreign investment. Because America, will be gone.

In general, countries do not nuke bankrupt nations. It is a waste of perfectly good plutonium. The more common practice is to raise their interest rate.

in the unlikely event that we started getting financially reckless or xenophobic.

Now, THAT is a description of the GOP if I've ever heard one.

[memebag]

Not if the countries we end up screwing send this over first. Direct to your front porch:

No way. The US (with all our consumerism and debt) is fueling China's growth. If we go down, where will they sell all those tube socks? They would never nuke Wal-Mart headquarters.

[TheNiche]

Now, THAT is a description of the GOP if I've ever heard one.

No, we ain't seen nothing yet. When I'm talking about being financially reckless, I'm talking about big fundamental changes. Not just a few instances of bad policy that cost us mere hundreds of billions of dollars or cause a minor recession. I'm talking about a second great depression followed by the second coming of an even clumsier New Deal. And its something that would probably be far enough out in the future that we couldn't tell right now whether particular parties still stood for the same things that they do today or whether they even exist at all.

And when I'm talking about xenophobia, generally, I have Lou Dobbs' (D) populism in mind as my nemesis...although I concur that economic illiteracy and xenophobia among voters and their elected officials is certainly not confined to particular geographies or to either of the major political parties.

[RedScare]

Well, if we had a second great depression, I would not think reckless fiscal policies designed to get us out of the depression would be the biggest of problems. The bigger problems would be the ones that caused the depression in the first place.

And, Lou Dobbs? Well, what can I say? He's Lou Dobbs. (Note to big mouthed internet xenophobes. If you ever wonder what your rants sound like, turn on CNN and watch Lou. Yeah, you sound like that.)

[barracuda]

No, we ain't seen nothing yet. When I'm talking about being financially reckless, I'm talking about big fundamental changes.

I would say that blowing $12B per month supporting Iraq without some kind of exit plan (or goal whatsoever) is financially reckless and fundamental.

Also, $4+ per gallon gas is a fundamental change for the country; just look at how the domestic car companies are struggling and consumers are abandoning gas-guzzling large trucks and SUVs. And of course, Republicans are blocking Democrat efforts to clamp down on speculators that are driving up the cost of fuel. I wonder who's side they are on.

http://www.chron.com/disp/story.mpl/business/5908523.html

[Mark F. Barnes]

Given my deep passion for Lebanese women, does that make me an anti-xenophobe? Y'all have throw this xenophobes term around a lot lately. Hope it's not contagious...............

[TheNiche]

Well, if we had a second great depression, I would not think reckless fiscal policies designed to get us out of the depression would be the biggest of problems. The bigger problems would be the ones that caused the depression in the first place.

The idea was that some set of really bad policies caused disaster, which was aided by something that caused the disaster to worsen. It'd have to be at least as bad as the Great Depression to cause even the possibility of default on government debt. I'm talking about a circumstance that for all intents and purposes is the least likely default of any conceivable financial instrument in the history of mankind. A couple of simultaneous major foreign wars, a double-dip recession, high rates of inflation, unemployment into the double digits...wouldn't do it.

If you want an idea of what could do it, you and barracuda going to have to get creative and think well beyond partisan talking-points.

[barracuda]

The idea was that some set of really bad policies caused disaster, which was aided by something that caused the disaster to worsen. It'd have to be at least as bad as the Great Depression to cause even the possibility of default on government debt. I'm talking about a circumstance that for all intents and purposes is the least likely default of any conceivable financial instrument in the history of mankind. A couple of simultaneous major foreign wars, a double-dip recession, high rates of inflation, unemployment into the double digits...wouldn't do it.

If you want an idea of what could do it, you and barracuda going to have to get creative and think well beyond partisan talking-points.

Okay. It's hard to talk about bad policies and disasters without citing some examples. Fortunately, I don't think we have to worry about a depression quite yet. But I think another four to eight years of bad policies could push us in that direction.

[RedScare]

If you want an idea of what could do it, you and barracuda going to have to get creative and think well beyond partisan talking-points.

Can't speak for the 'cuda, but my points are not partisan. At least I do not perceive them to be. I think both parties are reckless about the seduction of easy money. The foundation for the subprime crisis was not laid during Bush's term, but rather during Clinton's. Bush merely let it continue to its ugly conclusion.

It doesn't take much creativity to see that the speed with which information and money can travel in the age of the internet can cause small ripples to become tidal waves. In just the last 10 years, we've seen the tech bubble, the housing bubble, aided by the hedge fund bubble, and the oil "bubble", for lack of a better term. All of these otherwise minor issues were exacerbated by the ability of large sums of money to be pumped into them in a relatively short period of time. The pendulum effect will normally cause an equal reaction to these actions. If the reaction is big enough, government either cannot or will not rescue the risk takers from their folly, and the fallout could cause calamity. There is already growing opposition to bailing out the hedge funds and banks, and we are only on our 3rd failed bank. The predictions are 150 more.

The problem was mentioned before. The 'free market' is one of privatized profits, but socialized losses. Since we appear unwilling to allow entire institutions to fail, as it may induce severe recession or depression, the only equitable solution is to limit the risk taking. And we all know what the free marketers think of that.