View Full Version : "60 Minutes" Finally Catches Up ( impending bankruptcies in CA, IL, NY etc.)
Melonie
02-25-2011, 04:06 AM
As obvious as this is, some conservatives will still deny that decreasing our oil consumption will lower the price of gasoline, as Melonie has stated in a previous post.
And I'll still deny any truth in this point ... based on a global view i.e. facts such as GM selling more cars in China last year than in the USA ! The obvious point is that any decrease in total US oil consumption would have to exceed other increases in oil consumption by China, India, and other 'developing' countries around the world, before the longer term oil supply vs demand equation was significantly affected. This is actually the SAME global observation that liberals have used when they attempt to assert that increased US oil production from new gulf / coastal / anwr oil well development would NOT significantly lower oil or US gasoline prices !
Circling back on topic, the ( illegal ) de-facto ban on offshore oil drilling in the gulf, and federal denial of drilling in US coastal waters, also contributes significantly to the growing budget deficits of certain states !
Eric Stoner
02-25-2011, 09:02 AM
Sigh. Most corporations, for their day to day operations, depend on commercial paper. The commercial paper market lost over $150 billion in funds in the weeks before Oct. 1 2008.
From:
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3152487/Financial-crisis-US-takes-radical-action-to-revive-commercial-paper-market.html
--snip--
Officials have been under pressure to act fast. The US commercial paper market lost a record $94.9bn in funds in the weeks to October 1, according to figures from the Fed. That followed a previous high of $61bn recorded a week earlier.
The majority off outflows have so far been linked to funding for financial institutions – which can access the Fed direct as an alternative to raise funds - but experts fear that inaction on the part of the government could lead to companies in other sectors feeling the squeeze.
Without access to central bank funds those companies could rapidly collapse as they are starved of liquidity.
--snip--
Again, there wasn't enough credit available. See the article I linked to above.
We're not discussing whether or not a 94% tax rate is pro growth. We're discussing what actually happened. You claimed raising taxes made the Depression worse. If that was the case, the economy would have gotten even worse when the tax rate was increased to 94%. It didn't. The economy greatly improved as a result of the dramatic increase in government spending.
This is the problem with conservatives. They seem to think that the state of the economy is based solely on how closely their ideology is followed. They think as long as their ideology of low taxes, low government spending, and a strong currency, is followed, the economy will be strong, and unemployment will remain low. When their ideology is not followed, they believe it will weaken the economy. The real world doesn't work that way. There is no one right answer that works for everything.
That is what was in demand because we were at war. If we were at peace and the government spent the same amount of money to subsidize the production of consumer products, such as cars and refrigerators, the results would have been the same.
The United States was, and is, the biggest user of oil in the world. Decreasing our oil consumption by close to 1/3 definitely was a major factor in the falling of oil prices in the 1980's. As obvious as this is, some conservatives will still deny that decreasing our oil consumption will lower the price of gasoline, as Melonie has stated in a previous post.
You're right but it flies in the face of YOUR argument that banks were lending to corporations. I confined myself to corporate borrowing directly from banks to show that it is mostly SHORT-TERM. Commercial paper i.e. corporate bills and notes is short term. Long term bonds are how corporations do long term financing. Remember the strange dichotomy not to long ago over IBM stock vs. IBM bonds. The stock was going down with a higher return than the bonds !
Yes, we all know that the credit markets froze up after Lehman collapsed. All you have to do is look at the LIBOR rates during that period. All it means was that the banks stopped lending. Not that ALL of them were on the verge of collapse.
Here's the real problem : Moral hazard is alive and well and the banks could easily create another financial crisis. Goldman Sucks and Morgan Stanley are now bank holding companies entitling them to belly up to the discount window at the Fed. Try, just try getting a car loan from either. Or finding an ATM ar getting a credit card from either.
Fannie and Freddie have both just asked the Federal government for MORE money. After hundreds of billions already with no end in sight.
Raising taxes did make the Depression worse. Remember the Recession of 1938-1939 ? Arguably, the economy improved from 1940 to 1945. Is that what you're prescribing now ? Deficits as high as 50% of GDP ? National debt HIGHER than annual GDP ? That's what we had during W.W. II. How many start- ups did we have during W.W. II ? The unemployed not drafted into the military were hired by major defense contractors. And when the war ended ? What did we have ? Unemployment and inflation.
Surely you are not advocating that the Federal government buy over 50% of industrial production plus at least 50% of agricultural production plus substantial percentages of oil and other natural resource production ? That's what happened during W.W. II. Why do you insist on averting your gaze from what has been PROVEN to work - restrained spending and TAX CUTS ? They worked for Coolidge, JFK, Reagan and Clinton .
Yes, I advocate going back to spending at 2008 levels, not raising taxes, cutting corporate taxes and strengthening the dollar. Are you seriously advocating MORE spending , increased taxes and a weaker dollar ? Do you seriously want to recreate the Nixon-Ford- Carter economy ?
Coolidge cut taxes and restrained spending and we had SURPLUSES. Eisenhower ran small deficits, didn't cut taxes and we had three recessions. JFK cut taxes and the economy boomed under LBJ. Reagan cut taxes and revenues almost doubled. He did not restrain spending and yet deficits declined from a high of $221 billion in F.Y. '86 to $152 billion in F.Y. '89. Bush the Smarter RAISED taxes and the deficit went from $221 billion to $290 billion. Clinton raised taxes and the deficit went down because he did it retrocatively and grabbed a lot of dollars generated during the recovery which STARTED in 1992 well before Slick Willy took office. He cut Capital Gains taxes and other business taxes while working with Gingrich to restrain spending and what happened ? We had HUGE surpluses. Surpluses that Bush the Dumber squandered by not controlling spending. Bottom line : I'll stack MY ideology against yours any time. Mine WORKS every time it's tried.
The price of oil is affected by WORLD supply and WORLD demand. Our demand is stable but Middle East instability is causing worries about supply and the price is doing what ? Going UP !
eagle2
03-02-2011, 11:30 PM
Raising taxes did make the Depression worse. Remember the Recession of 1938-1939 ? Arguably, the economy improved from 1940 to 1945. Is that what you're prescribing now ? Deficits as high as 50% of GDP ? National debt HIGHER than annual GDP ? That's what we had during W.W. II. How many start- ups did we have during W.W. II ? The unemployed not drafted into the military were hired by major defense contractors. And when the war ended ? What did we have ? Unemployment and inflation.
If raising taxes did make the Depression worse, why didn't it get even worse when taxes were raised again in the 1940's?
I'm not advocating raising spending as much today as we raised it in World War 2 because the economy still isn't as bad as it was during the Great Depression.
Surely you are not advocating that the Federal government buy over 50% of industrial production plus at least 50% of agricultural production plus substantial percentages of oil and other natural resource production ? That's what happened during W.W. II. Why do you insist on averting your gaze from what has been PROVEN to work - restrained spending and TAX CUTS ? They worked for Coolidge, JFK, Reagan and Clinton .
No. I'm only stating that if we didn't go to war in the 1940's, but government spent the same money they spent on the war on products other than weapons, the results would have been similar.
No, what you are advocating has not been proven to work. Less than two years after Coolidge left office, we were in the Great Depression. JFK/Lyndon Johnson did not restrain spending. JFK launched the project to put a man on the moon before the end of the decade he became President. Lyndon Johnson increased spending dramatically on the Vietnam War and the Great Society programs.
Reagan's policies did not work. He tripled the debt when he left office. We are still suffering today from Reagan's policies of tax cuts for the rich and spending cuts on social programs. Before Reagan was President, homelessness was rare, and our national debt had been continuously shrinking relative to GDP. Reagan is the one who made large deficits a standard policy, rather than something that only occurred during a severe economic downturn or major war. Without the debt run up as a result of Reagan and Bush's tax cuts, we would not be nearly in as bad a shape as we are currently in.
President Clinton raised taxes, and we were already having strong economic growth before he reduced the capital gains tax.
Yes, I advocate going back to spending at 2008 levels, not raising taxes, cutting corporate taxes and strengthening the dollar. Are you seriously advocating MORE spending , increased taxes and a weaker dollar ? Do you seriously want to recreate the Nixon-Ford- Carter economy ?
We should have spent more on the stimulus, probably at a level similar to what China did (relative to GDP). China's economy was back to pre-recession growth within a few months. We still haven't fully recovered.
How would strengthening the dollar and reducing spending decrease unemployment? How would reducing corporate taxes reduce unemployment when corporations are already flush in cash from their record profits?
The weakened dollar has already worked. Retail sales have increased while imports have decreased. That means Americans are buying more American products, which is what was intended. How is making American products more expensive, relative to imports going to help the economy?
I don't remember Nixon, Ford, or Jimmy Carter raising taxes, and we didn't have 10 percent unemployment.
Coolidge cut taxes and restrained spending and we had SURPLUSES. Eisenhower ran small deficits, didn't cut taxes and we had three recessions. JFK cut taxes and the economy boomed under LBJ. Reagan cut taxes and revenues almost doubled. He did not restrain spending and yet deficits declined from a high of $221 billion in F.Y. '86 to $152 billion in F.Y. '89. Bush the Smarter RAISED taxes and the deficit went from $221 billion to $290 billion. Clinton raised taxes and the deficit went down because he did it retrocatively and grabbed a lot of dollars generated during the recovery which STARTED in 1992 well before Slick Willy took office. He cut Capital Gains taxes and other business taxes while working with Gingrich to restrain spending and what happened ? We had HUGE surpluses. Surpluses that Bush the Dumber squandered by not controlling spending. Bottom line : I'll stack MY ideology against yours any time. Mine WORKS every time it's tried.
Deficits were much bigger after Reagan became President than they were before. In addition, Reagan raised taxes multiple times after first cutting taxes.
The economy boomed under LBJ as a result of dramatic increases in spending on the war in Vietnam, the space program, and the Great Society.
We continued to experience strong economic growth after Clinton's tax cuts were passed.
The price of oil is affected by WORLD supply and WORLD demand. Our demand is stable but Middle East instability is causing worries about supply and the price is doing what ? Going UP !
Yes, if the supply of oil decreases and the demand does not, the price of oil will increase. If the demand for oil decreases, and there is no corresponding decrease in the supply, the price of oil will decrease.
Melonie
03-03-2011, 03:38 AM
^^^ while it's of little relevance to this thread about state budget deficits, the 1940's provided a number of 'unique' opportunities for the US gov't to raise US tax rates, raise US wage rates, and lower US unemployment ...
- the first is that the US was able to enter into a massive manufacturing for export economy. Thus the higher wage rates could be passed on to the foreign buyers in the form of price increases without objection ( if Britain and Russia need tanks and planes, and if the US is loaning them the money to purchase them, the cost of said tanks and planes was irrelevant ). This is clearly NOT the case today (i.e. the US is no longer a net exporter nor a net creditor, and no longer can exercise 'pricing power' in international markets ).
- the de-facto US unemployment rate in the early 40's was zero. This was the direct result of shipping millions of GI's to foreign countries thus removing them from the US work force. Ultimately, hundreds of thousands were 'permanently' removed from the US work force. Again there is no equivalent situation today ... with the opposite arguably being true ( i.e. an ongoing stream of illegal immigrant workers effectively adding themselves to the US work force, and also exporting a large percentage of their earnings instead of saving or spending it within the US economy )
- the resulting US 'command' economy of the early 40's effectively eliminated the production of all non-essential consumer goods and rationed / fixed prices for essential goods ... which left US consumers with no choice but to save a major portion of the money they earned. As such, extraction of higher tax rates had no impact on 'immediate' US standard of living during this period since the higher tax rates merely reduced the amount of 'forced' savings ( which is certainly not the case today where price levels for essential goods are rising rapidly and where most US consumers have no surplus earnings to save ).
if the supply of oil decreases and the demand does not, the price of oil will increase. If the demand for oil decreases, and there is no corresponding decrease in the supply, the price of oil will decrease.
Undeniably true ... but with the proviso that supply does have regional considerations ( i.e. the price of UK brent crude is significantly above the world market price of oil due to demand from european and US east coast refineries ), in light of ongoing decline in global oil production at a given price ( as low production cost wells peter out ) providing upward price pressure on oil independent of demand ( shale oil costs far more to pruduce than Libyan light crude ), and in light of increased demand for oil from developing countries adding to aggregate global oil demand overshadowing reductions in US and european oil demand ).
Eric Stoner
03-03-2011, 08:32 AM
If raising taxes did make the Depression worse, why didn't it get even worse when taxes were raised again in the 1940's?
I'm not advocating raising spending as much today as we raised it in World War 2 because the economy still isn't as bad as it was during the Great Depression.
No. I'm only stating that if we didn't go to war in the 1940's, but government spent the same money they spent on the war on products other than weapons, the results would have been similar.
No, what you are advocating has not been proven to work. Less than two years after Coolidge left office, we were in the Great Depression. JFK/Lyndon Johnson did not restrain spending. JFK launched the project to put a man on the moon before the end of the decade he became President. Lyndon Johnson increased spending dramatically on the Vietnam War and the Great Society programs.
Reagan's policies did not work. He tripled the debt when he left office. We are still suffering today from Reagan's policies of tax cuts for the rich and spending cuts on social programs. Before Reagan was President, homelessness was rare, and our national debt had been continuously shrinking relative to GDP. Reagan is the one who made large deficits a standard policy, rather than something that only occurred during a severe economic downturn or major war. Without the debt run up as a result of Reagan and Bush's tax cuts, we would not be nearly in as bad a shape as we are currently in.
President Clinton raised taxes, and we were already having strong economic growth before he reduced the capital gains tax.
We should have spent more on the stimulus, probably at a level similar to what China did (relative to GDP). China's economy was back to pre-recession growth within a few months. We still haven't fully recovered.
How would strengthening the dollar and reducing spending decrease unemployment? How would reducing corporate taxes reduce unemployment when corporations are already flush in cash from their record profits?
The weakened dollar has already worked. Retail sales have increased while imports have decreased. That means Americans are buying more American products, which is what was intended. How is making American products more expensive, relative to imports going to help the economy?
I don't remember Nixon, Ford, or Jimmy Carter raising taxes, and we didn't have 10 percent unemployment.
Deficits were much bigger after Reagan became President than they were before. In addition, Reagan raised taxes multiple times after first cutting taxes.
The economy boomed under LBJ as a result of dramatic increases in spending on the war in Vietnam, the space program, and the Great Society.
We continued to experience strong economic growth after Clinton's tax cuts were passed.
Yes, if the supply of oil decreases and the demand does not, the price of oil will increase. If the demand for oil decreases, and there is no corresponding decrease in the supply, the price of oil will decrease.
You can't look at tax policy in a vacuum. FDR raised taxes to hold up a fig leaf of fiscal responsibility during W.W. II coupled with a bias against anyone making money. He literally tried to tax every nickel above $25,000 per year. Is that what you advocate ? During W.W. II we had massive Federal spending on defense paid for with BORROWED money. Is that the kind of stimulus you'd like to see ?
China spent more BUT they didn't worry about keeping up civil service salaries and benefits. They spent on INFRASTRUCTURE . How may times do I have to post that such spending is far preferable and demonstrably more beneficial than transfer payments ? We did NOT do that .The Chinese have a command economy. We do not.
I have repeatedly documented how a strong dollar, spending restraint and corporate tax cuts COUPLED with the elimination of corporate welfare and crony capitalism will improve the economy. You're damn right the weak dollar is "working". It's helping to make everybody poor or haven't you bought gas lately ? A strong dollar does NOT increase the price of American goods sold in the U.S. or of our imports. What model are you using for THAT kind of analysis ? A strong dollar means the exact opposite because it means lower inflation and cheaper imports.
Not only didn't Coolidge have anything to do with the Great Depression but Hoover refused to listen to Cal as he turned a recession into a depression. Coolidge strongly opposed Smoot-Hawley and Hoover's tax increases.
The 7O's are generally regarded as a "lost decade" for the U.S. economically. While the three dummies did not raise taxes per se, there was plenty of inflation thanks to several oil shocks plus the village idiot, Arthur Burns at the helm of the Fed. Bernanke is doing a fine imitation and inflation is not just coming around the bend. It is already Here , NOW ! The last two months have seen increases in the CPI of 0 4 % equalling an annualized rate of 5.1%. CPI calculated the "old way" with food and energy included is running at 9 %.
In looking at the LBJ and Reagan years you insist on using what I like to call the "Krugman Method" of economic analysis. You literally focus on the positives of LBJ's spending ( ignoring HIS deficits ) and bash Reagan for his. LBJ's enjoyed a booming economy thanks to JFK's tax cuts which took effect while LBJ was in the Oval Office. Under Reagan revenues INCREASED. ( I must have posted that little datum at least a dozen times in this forum ! ) We had deficits because of the SPENDING ! Reagan was irresponsible about controlling spending and yet in hsi second term deficits were declining both in real terms and as a percentage of GDP. Reagan's tax increases were not increases in tax RATES . Remember the Bradley tax reform of 1986 ? The top rate was what ? ; 28 % ?
Even though Reagan ran large deficits, as a % of GDP they are minute compared to what Bush the Dumber did and what Obama is doing now.As I have pointed out, Reagans' deficits were declining by the time he left office. We also had almost full employment, a strong dollar, lower interest rates, tens of millions of new jobs created and near record economic growth. We also had the Space Shuttle and defeated Communism.
Reagan had nothing to do with the homeless problem. That resulted primarily from urban gentrification coupled with massive deinstitutionalization of the mentally ill on a STATE and LOCAL level. Crazy Eddie Koch , Society Carey and Mario Cuomo were primarily responsible for N.Y.C.'s homeless problem by : A. permitting elimination of SRO's and B. clearing out the state asylums without proper housing or after care. What was Reagan supposed to do about it ? How was he responsible for what Koch, Carey and Cuomo did ?
Clinton REDUCED taxes especially the Capital Gains tax and revenues did what ?
They went UP ! Look it up if you don't believe me because I am getting tired of filling in the blanks for you.
Nixon, Ford and Carter were stuck cleaning up after LBJ and the deficits set in motion by his policies. None of them were up to the job. In fact Nixon was forced to bail out of Bretton Woods because $35 an ounce for gold was ridiculous and everyone knew it. Nixon closed the gold window and also instituted wage and price controls.
Eric Stoner
03-03-2011, 08:44 AM
^^^ while it's of little relevance to this thread about state budget deficits, the 1940's provided a number of 'unique' opportunities for the US gov't to raise US tax rates, raise US wage rates, and lower US unemployment ...
- the first is that the US was able to enter into a massive manufacturing for export economy. Thus the higher wage rates could be passed on to the foreign buyers in the form of price increases without objection ( if Britain and Russia need tanks and planes, and if the US is loaning them the money to purchase them, the cost of said tanks and planes was irrelevant ). This is clearly NOT the case today (i.e. the US is no longer a net exporter nor a net creditor, and no longer can exercise 'pricing power' in international markets ).
- the de-facto US unemployment rate in the early 40's was zero. This was the direct result of shipping millions of GI's to foreign countries thus removing them from the US work force. Ultimately, hundreds of thousands were 'permanently' removed from the US work force. Again there is no equivalent situation today ... with the opposite arguably being true ( i.e. an ongoing stream of illegal immigrant workers effectively adding themselves to the US work force, and also exporting a large percentage of their earnings instead of saving or spending it within the US economy )
- the resulting US 'command' economy of the early 40's effectively eliminated the production of all non-essential consumer goods and rationed / fixed prices for essential goods ... which left US consumers with no choice but to save a major portion of the money they earned. As such, extraction of higher tax rates had no impact on 'immediate' US standard of living during this period since the higher tax rates merely reduced the amount of 'forced' savings ( which is certainly not the case today where price levels for essential goods are rising rapidly and where most US consumers have no surplus earnings to save ).
Undeniably true ... but with the proviso that supply does have regional considerations ( i.e. the price of UK brent crude is significantly above the world market price of oil due to demand from european and US east coast refineries ), in light of ongoing decline in global oil production at a given price ( as low production cost wells peter out ) providing upward price pressure on oil independent of demand ( shale oil costs far more to pruduce than Libyan light crude ), and in light of increased demand for oil from developing countries adding to aggregate global oil demand overshadowing reductions in US and european oil demand ).
You highlight one of the many problems with Eagle's Krugmanic analysis: the attempt to compare economic apples and oranges. One example, the suppressed consumer demand coupled with wage and price controls during W.W. II. Nixon tried something similar in the '70's and it was a disaster.
One historical quibble : Neither the Soviets, Chinese nor Britain bought much of the weaponry and supplies we gave them. Before December 7, 1941, under Lend- Lease FDR got around the Neutrality Act which banned "sales" of weapons to combatants on anything other than a "cash and carry" basis ( Britain was SUPPOSED to buy them with GOLD and pick them up here in U.S. ports and transport it all back to Britain in its own ships ). He did it with the Lend- lease Act whereby we "lent" Britain and the U.S.S.R. tanks, planes etc. which they were supposed to "return" after the war. Lol. Just like when someone asks to "borrow" a cigarette. In return Britain leased us bases in Bermuda and the Caribbean. It was the only thing to do because Britain was bankrupt; she had exhausted her gold reserves. The U.S.S.R. didn't have anything we really wanted or needed except the ability to kill lots of Nazis and keep millions of Japanese tied down in Manchuria.
There was nothing that said FDR couldn't "lend" weapons and supplies. In a famous "'fireside chat" he likened it to lending a neighbor a garden hose to put out a fire in his house and then getting it back when the fire was put out. He never mentioned the part about it possibly being destroyed in the fire as many planes and tanks got blown up by the Germans.
eagle2
03-03-2011, 11:54 PM
You can't look at tax policy in a vacuum. FDR raised taxes to hold up a fig leaf of fiscal responsibility during W.W. II coupled with a bias against anyone making money. He literally tried to tax every nickel above $25,000 per year. Is that what you advocate ? During W.W. II we had massive Federal spending on defense paid for with BORROWED money. Is that the kind of stimulus you'd like to see ?
China spent more BUT they didn't worry about keeping up civil service salaries and benefits. They spent on INFRASTRUCTURE . How may times do I have to post that such spending is far preferable and demonstrably more beneficial than transfer payments ? We did NOT do that .The Chinese have a command economy. We do not.
I have repeatedly documented how a strong dollar, spending restraint and corporate tax cuts COUPLED with the elimination of corporate welfare and crony capitalism will improve the economy. You're damn right the weak dollar is "working". It's helping to make everybody poor or haven't you bought gas lately ? A strong dollar does NOT increase the price of American goods sold in the U.S. or of our imports. What model are you using for THAT kind of analysis ? A strong dollar means the exact opposite because it means lower inflation and cheaper imports.
A strong dollar makes American products more expensive relative to foreign produced products. A strong dollar makes cars produced in South Korea, Japan, and Germany cheaper relative to cars produced in the US. The same with steel and any other product produced here. Please explain how making foreign-produced products cheaper, relative to US products, is going to help the economy.
In looking at the LBJ and Reagan years you insist on using what I like to call the "Krugman Method" of economic analysis. You literally focus on the positives of LBJ's spending ( ignoring HIS deficits ) and bash Reagan for his. LBJ's enjoyed a booming economy thanks to JFK's tax cuts which took effect while LBJ was in the Oval Office. Under Reagan revenues INCREASED. ( I must have posted that little datum at least a dozen times in this forum ! ) We had deficits because of the SPENDING ! Reagan was irresponsible about controlling spending and yet in hsi second term deficits were declining both in real terms and as a percentage of GDP. Reagan's tax increases were not increases in tax RATES . Remember the Bradley tax reform of 1986 ? The top rate was what ? ; 28 % ?
When LBJ was President, our national debt dramatically decreased relative to GDP. When Reagan was President, our national debt dramatically increased relative to GDP. See chart below:
http://news.mortgagecalculator.org/images/National-Debt-GDP.gif
Notice that since World War 2 our national debt has been decreasing relative to GDP for every President except Reagan and the two Bushes.
Our country would be so much better off today without those dramatic increases in national debt.
Melonie
03-04-2011, 04:28 AM
A strong dollar makes cars produced in South Korea, Japan, and Germany cheaper relative to cars produced in the US. The same with steel and any other product produced here
world market prices for steel, oil based plastic, copper, aluminum, platinum, neodymium, and every other raw material for auto manufacture also makes the 'relative' costs of these commodities a function of local currency strength. A strong US dollar makes these commodities 'appear' to be less expensive in US dollar terms versus Won or Yen or Euros. Thus a strong US dollar actually lowers the 'relative' non-labor related cost of US auto manufacture.
By the same token, a strong US dollar similarly lowers the 'relative' price of other world market commodities purchased by consumers i.e. food, gasoline, etc. This leaves more family budget dollars available for the purchase of a new auto !!!
Of course, the reality of the situation probably is that Korean, Japanese, German and American automakers are all now outsourcing a significant percentage of their vehicle's sub-assemblies from China ... thus as long as China maintains a soft currency peg to the US dollar there isn't a whole lot of impact on the 'relative' cost of these sub-assemblies ( i.e. they're all much less expensive than domestically produced sub-assemblies ) !
Eric Stoner
03-04-2011, 08:49 AM
A strong dollar makes American products more expensive relative to foreign produced products. A strong dollar makes cars produced in South Korea, Japan, and Germany cheaper relative to cars produced in the US. The same with steel and any other product produced here. Please explain how making foreign-produced products cheaper, relative to US products, is going to help the economy.
When LBJ was President, our national debt dramatically decreased relative to GDP. When Reagan was President, our national debt dramatically increased relative to GDP. See chart below:
http://news.mortgagecalculator.org/images/National-Debt-GDP.gif
Notice that since World War 2 our national debt has been decreasing relative to GDP for every President except Reagan and the two Bushes.
Our country would be so much better off today without those dramatic increases in national debt.
Where are the revenue and spending figures for those periods. National debt is composed of accumulated deficits. Agreed ? Those deficits are covered by borrowing to make up the difference between revenue and SPENDING !
If your prescription really worked then why didn't all the Reagan and Bush the Smarter tax increases have any effect on the deficit. After Bush's tax increases the deficit went UP ! Clinton's tax cuts would have resulted in higher deficits , not record surpluses. The difference is not the revenue side. It is the SPENDING !
Something you have repeatedly posted that Obama has not done enough of. Please stop trying to have it both ways. Just look at spending as a % of GDP under Reagan and Clinton and compare it to what it is under Obama.
LBJ gave us Vietnam, The Great Society, The NEA , NEH, Head Start, Medicare, Medicaid and didn't add to the debt ? Revenues went up that much thanks to JFK's tax cuts ?
Your chart also neatly ducks OUT YEAR spending. Programs put in place by LBJ had to be paid for by the 3 Dummies. Really 4 because it was Arthur Burns who came up with the stupid idea of monetizing the debt which gave us stagflation under Ford and Carter.
Eric Stoner
04-27-2012, 08:33 AM
I TOLD YOU SO , I TOLD YOU SO !
Illinois Governor Quinn has acknowledged that Illinois is virtually bankrupt. Up to a point.
Illinois was already more heavily taxed than its five neighboring and contiguous states ( Indiana, Wisconsin, Missouri, Iowa and Kentucky ) when Quinn and the Dems raised corporate taxes 30 % ; from 7.3 to 9.5%. Illinois now has one of the highest state corporate taxes in the country and the fourth highest combination of state and Federal corporate taxes in the WORLD ! They also raised personal income taxes 67% from 3% to 5%. That added over $1000 per year to the tax bill of a family of four making about $60,000 per year. The result ? Illinois ' unemployment rate increased faster than any other state's in 2011. It still has the nation's most underfunded state pension system. Despite selling bonds to finance pension contributions !
Now, NOW , Quinn has supposedly seen the light and proposes to raise the retirement age to 67 and cap COLA's on pensions. I said "up to a point " because the trustees of Illinois' pension systems are still using an anticipated rate of return on investments of 8.5%. This in a state where its bond debt has exploded from $9.4 to $30 billion in less than ten years. Vendors waiting to get paid are still owed $5.6 billion.
The afrementioned pensions are underfunded by $83 billion. Now it is reported that that the state health care programs are also underfunded by another $54 billion ! Just these two liabilities are growing twice as fast as revenues.
In another "surprise", the number of Illinois taxpayers has declined and the number of people receiving government assistance has gone up. What happened to the taxpayers ? They moved out. Where did the recipients come from ? They moved in.
The sole disciplining device left seems to be the bond markets. The spread between interest paid on California debt went from .24 to 2.71 % in just three ( 3 ) months. Illinois has seen similar increases.
The last hope for Illinois, California and the other spendthrifts is a Federal bail-out. That Will NOT Happen. Even a native son of Illinois like Obama has said an emphatic "NO" every time he has been approached on the subject. To his credit afaic. Even "Bailout Ben " Bernancke has said that the Fed will NOT buy state debt. To HIS credit.
The bottom line is that I repeat my recommendation , made numerous times in this forum, which is to look with a wary eye toward investing in state bonds and to prefer "revenue" over General Obligation Bonds. There are many reasons but here is a new one : It used to be that in a bankruptcy , the bondholders got paid off first. Not anymore. Not after the GM and Chrysler bankruptcies. Technically there is no mechanism for states to go "bankrupt" as there is for municipalities. The ONLY help which Congress is remotely inclined to offer bankrupt states is a mechanism for orderly restructuring i.e. bankruptcy in all but name. Btw, N.Y. State had to go through something similar in the Mid-70's when N.Y.C. defaulted on its debt. The state was technically bankrupt too.
Revenue bonds are backed by a specific revenue source like bridge and tunnel tolls or sometimes a specific tax like a sales tax. There is less chance ( although anything is possible ) of futzing around with the priority of creditors with revenue bonds that with the GO variety.
jimboe7373
04-27-2012, 08:33 AM
I TOLD YOU SO , I TOLD YOU SO ! I haven't really been following this too much, but wasn't this kind of a thing widely predicted by a lot of people?. Were there people who were saying the states "wouldn't" go bankrupt?- it seems like kind of a no-brainer to me once the Feds put the States into austerity mode.
mikef
04-27-2012, 02:32 PM
the trustees of Illinois' pension systems are still using an anticipated rate of return on investments of 8.5%.
There is an awful lot of this going on..... Easy to make promises.... Harder to deliver.
Very few public pension funds are getting 8% return..... But I never see them lower that number. /:O
Eric Stoner
04-28-2012, 10:08 AM
I haven't really been following this too much, but wasn't this kind of a thing widely predicted by a lot of people?. Were there people who were saying the states "wouldn't" go bankrupt?- it seems like kind of a no-brainer to me once the Feds put the States into austerity mode.
Oh no. Not when you've got guys like Paul Krugman advocating that we "borrow, spend and tax until it hurts". He doesn't think anybody should be cutting their budget and has been saying that states like Illinois should be spending MORE.
The fact remains that taxpayers have been moving OUT of states like Illinois and recipients have been moving IN.
jimboe7373
04-28-2012, 11:54 AM
Oh no. Not when you've got guys like Paul Krugman advocating that we "borrow, spend and tax until it hurts". He doesn't think anybody should be cutting their budget and has been saying that states like Illinois should be spending MORE.
The fact remains that taxpayers have been moving OUT of states like Illinois and recipients have been moving IN.That wasn't my question- I was curious why you seemed to be bragging so much about being correct, when to the best of my knowledge the vast majority of people (Krugman included) were pretty much predicting defaults at the state level since the Federal government cut way back on the money they receive and they don't have the ability to print their own money.
eagle2
04-28-2012, 11:45 PM
I TOLD YOU SO , I TOLD YOU SO !
Illinois Governor Quinn has acknowledged that Illinois is virtually bankrupt. Up to a point.
Illinois was already more heavily taxed than its five neighboring and contiguous states ( Indiana, Wisconsin, Missouri, Iowa and Kentucky ) when Quinn and the Dems raised corporate taxes 30 % ; from 7.3 to 9.5%. Illinois now has one of the highest state corporate taxes in the country and the fourth highest combination of state and Federal corporate taxes in the WORLD ! They also raised personal income taxes 67% from 3% to 5%. That added over $1000 per year to the tax bill of a family of four making about $60,000 per year. The result ? Illinois ' unemployment rate increased faster than any other state's in 2011.
No, Illinois' unemployment rate has fallen dramatically since August 2011.
http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=state:ST170000&fdim_y=seasonality:S&dl=en&hl=en&q=illinois+unemployment+rate
Illinois unemployment rate was about the same in Jan. 2012 as it was in Jan. 2011, and has fallen since then. Since January 2010, Illinois has added 130,700 private sector jobs.
http://www.ides.illinois.gov/page.aspx?item=2985
In October 2011, 30,000 jobs were created in Illinois. Meanwhile in neighboring Wisconsin, which has been following Republican Governor Scott Walker's conservative policies of cutting taxes for corporations and the rich, close to 10,000 jobs were lost.
http://www.onewisconsinnow.org/blog/2011/11/walker-lost-10000-wisconsin-jobs-illinois-created-30000-jobs.html
Now, NOW , Quinn has supposedly seen the light and proposes to raise the retirement age to 67 and cap COLA's on pensions. I said "up to a point " because the trustees of Illinois' pension systems are still using an anticipated rate of return on investments of 8.5%. This in a state where its bond debt has exploded from $9.4 to $30 billion in less than ten years. Vendors waiting to get paid are still owed $5.6 billion.
The afrementioned pensions are underfunded by $83 billion. Now it is reported that that the state health care programs are also underfunded by another $54 billion ! Just these two liabilities are growing twice as fast as revenues.
In another "surprise", the number of Illinois taxpayers has declined and the number of people receiving government assistance has gone up. What happened to the taxpayers ? They moved out. Where did the recipients come from ? They moved in.
I'm not sure what the numbers are, of who has moved in and who has moved out, but since Illinois has added over 130,000 private sector jobs since January 2010, I would think that the number of taxpayers has increased.
What makes you think Illinois' financial situation would be any better without the tax increase?
eagle2
04-29-2012, 12:26 AM
According to this article, October job losses in Wisconsin were revised from 9,700 to 2,400.
http://host.madison.com/ct/business/biz_beat/biz-beat-wisconsin-loses-jobs-for-fifth-straight-month/article_c7367550-2764-11e1-b665-0019bb2963f4.html
That's still much worse than the 30,000 created in Illinois.
Melonie
05-01-2012, 02:48 AM
meanwhile, this new tidbit ... from
(snip)"Illinois borrowing costs are poised to rise about 22.5%. The nominal increase is about .34 percentage points as reported by Bloomberg.
Illinois plans to sell $1.8 billion of general-obligation debt tomorrow as its relative borrowing costs may increase by almost a quarter.
The tax-exempt deal for the state, rated lowest by Moody’s Investors Service, includes a 10-year segment that underwriter Jefferies & Co. plans to offer to investors at 1.85 percentage points above benchmark AAA securities, according to a person familiar with the sale.
Illinois’s last general-obligation sale was on March 13 for $575 million, with 10-year securities priced to yield 1.51 percentage points above benchmark tax-exempts, according to data compiled by Bloomberg. That’s 0.34 percentage points below tomorrow’s tentative pricing plan, or a difference of 22.5 percent.
The state has the lowest-funded pension in the U.S., with assets equal to 45.5 percent of projected obligations, Bloomberg data show. Its backlog of unpaid bills to vendors and Medicaid obligations is more than $9 billion.
Investors should get more yield than 1.85 percentage points given those fiscal challenges, John Mousseau, a portfolio manager at Vineland, New Jersey-based Cumberland Advisors, which has $1.2 billion of municipal debt. It doesn’t own Illinois general-obligation bonds.
“The state’s debt should be trading even cheaper,” Mousseau wrote in a report released today. “At some point it is a buy. Not yet.”
Or put another way, gov't statistics can 'lie' to the people, but financial analysts dig until they discover the REAL numbers !!! And the economic reality for Illinois is that the financial world is officially recognizing that the state's position of future gov't obligations plus present gov't spending requirements minus current tax revenues represents an increasing risk !!! That increasing risk is now translating into higher interest rates for Illinois taxpayers if the state gov't wishes to borrow yet more money to spend on present obligations, with an increasing percentage of those obligations now being interest payments on money previously borrowed / already spent !!!
Apparently, those 130,000 new Illinois jobs reported by gov't statistics hasn't resulted in a significant increase in Illinois tax revenues ( despite the major Illinois state income tax rate increase ) ! Perhaps part of the reason for this is as follows ...
(snip)"About 1,800 new jobs will be coming to the Chrysler plant in Northwest suburban Belvidere, Gov. Pat Quinn announced Thursday with Chrysler's CEO.
Chrysler Group LLC invested $700 million to expand the plant and open a 638,000-square-foot body shop to support production of the new Dodge Dart beginning in the second quarter of 2012, Quinn said.
It's part of a business investment package Quinn announced in 2010 to support the creation of the 1,800 jobs. The plant currently produces the Jeep Compass and Jeep Patriot.
“The auto industry is essential to growing our economy," Quinn said. "Illinois automakers and their suppliers are thriving today because we have helped meet their needs."
The investment package includes EDGE tax credits, job-training funds and Large Business Development Program funds for capital improvements, he said."(snip)
Source:
I wonder how much money it actually 'cost' Illinois taxpayers to 'buy' those 1800 Chrysler jobs ???
Kellydancer
05-01-2012, 11:19 PM
I TOLD YOU SO , I TOLD YOU SO !
Illinois Governor Quinn has acknowledged that Illinois is virtually bankrupt. Up to a point.
Illinois was already more heavily taxed than its five neighboring and contiguous states ( Indiana, Wisconsin, Missouri, Iowa and Kentucky ) when Quinn and the Dems raised corporate taxes 30 % ; from 7.3 to 9.5%. Illinois now has one of the highest state corporate taxes in the country and the fourth highest combination of state and Federal corporate taxes in the WORLD ! They also raised personal income taxes 67% from 3% to 5%. That added over $1000 per year to the tax bill of a family of four making about $60,000 per year. The result ? Illinois ' unemployment rate increased faster than any other state's in 2011. It still has the nation's most underfunded state pension system. Despite selling bonds to finance pension contributions !
Now, NOW , Quinn has supposedly seen the light and proposes to raise the retirement age to 67 and cap COLA's on pensions. I said "up to a point " because the trustees of Illinois' pension systems are still using an anticipated rate of return on investments of 8.5%. This in a state where its bond debt has exploded from $9.4 to $30 billion in less than ten years. Vendors waiting to get paid are still owed $5.6 billion.
The afrementioned pensions are underfunded by $83 billion. Now it is reported that that the state health care programs are also underfunded by another $54 billion ! Just these two liabilities are growing twice as fast as revenues.
In another "surprise", the number of Illinois taxpayers has declined and the number of people receiving government assistance has gone up. What happened to the taxpayers ? They moved out. Where did the recipients come from ? They moved in.
The sole disciplining device left seems to be the bond markets. The spread between interest paid on California debt went from .24 to 2.71 % in just three ( 3 ) months. Illinois has seen similar increases.
The last hope for Illinois, California and the other spendthrifts is a Federal bail-out. That Will NOT Happen. Even a native son of Illinois like Obama has said an emphatic "NO" every time he has been approached on the subject. To his credit afaic. Even "Bailout Ben " Bernancke has said that the Fed will NOT buy state debt. To HIS credit.
The bottom line is that I repeat my recommendation , made numerous times in this forum, which is to look with a wary eye toward investing in state bonds and to prefer "revenue" over General Obligation Bonds. There are many reasons but here is a new one : It used to be that in a bankruptcy , the bondholders got paid off first. Not anymore. Not after the GM and Chrysler bankruptcies. Technically there is no mechanism for states to go "bankrupt" as there is for municipalities. The ONLY help which Congress is remotely inclined to offer bankrupt states is a mechanism for orderly restructuring i.e. bankruptcy in all but name. Btw, N.Y. State had to go through something similar in the Mid-70's when N.Y.C. defaulted on its debt. The state was technically bankrupt too.
Revenue bonds are backed by a specific revenue source like bridge and tunnel tolls or sometimes a specific tax like a sales tax. There is less chance ( although anything is possible ) of futzing around with the priority of creditors with revenue bonds that with the GO variety.
I live in Illinois and I saw this coming years ago. I told people this and they didn't listen and voted for Quinn and Blagojevich. What is happening to Illinois (and I'm going to try to make this as non political as possible)is we are getting taxed more and more to pay for people who have never paid (and in fact aren't even citizens in many cases). Not to mention all our government agencies are corrupt. I worked for a government run railroad and the taxpayer waste is notorious.
There are so many things I would fix but that would end up in political issues but I will say that the times of generous public employee pensions paid by taxpayers has got to stop.
Kellydancer
05-01-2012, 11:24 PM
I also wanted to mention that Governor Quinn is planning to raise cigarette taxes to pay for Medicaid. I wish I could elaborate on that one, but political bans prevent me from doing as such except to say look at the majority of who gets medicaid now in Illinois (hint: it's not disabled or the elderly). Quinn also plans to cut assistance for the elderly and disabled to pay for more assistance for other groups.
Melonie
05-02-2012, 12:14 AM
speaking of gov't run railroads and corrupt gov't agencies, here's an update from California ... from
(snip)“The Great Train Robbery,” California Version
The hoped-for April spike in personal income tax revenues for the State of California fell once again below the overoptimistic assumptions used to get the budget to “balance.” Instead of the $9.4 billion that the government had counted on collecting in April, it only collected $7.4 billion, according to the nonpartisan Legislative Analyst's Office. A 21% shortfall! In addition, corporate taxes were $450 million below forecast. After months of “disappointing” tax revenues, the total shortfall in income taxes now amounts to $3.5 billion for fiscal 2012 ending June 30.
The budget, supposedly balanced when it was passed last summer, had been spewing red ink from day one. Tax revenues were one problem. Expenditures were the other. The most recent re-revisions pegged the deficit at $9.2 billion. That was a few weeks ago. Now it’s going to be re-re-revised to nearly $12 billion. And the dance of shuffling funds between accounts, slowing payments to municipalities, begging Wall Street for loans, and selling crappy bonds will start all over again. But there’s a savior on the horizon: the Facebook IPO that will solve the budget problems forever. Ha, read.... Give us the Facebook Manna Now. ( )
Yet permanently broke California, instead of fixing its fiscal problems, is getting ever more entangled in a mega-project of JELL-O-esque nature: high-speed rail between San Francisco and Los Angeles. In 2008, voters authorized $9.95 billion in general obligation bonds to fund the first stage of the $35.7 billion project; the federal government would pick up a chunk, and it would be profitable! By November 2011, costs ballooned to a range between $98.5 billion and $117.6 billion—though construction hadn’t started yet. And all heck broke lose.
The California High-Speed Rail Authority (CHSRA) then dared to request $2.7 billion, the first tranche of the bond money, to be matched with $3.5 billion in federal money, for 130 miles of track in the Central Valley from just north of Fresno down to Bakersfield. Lacking electrification, it could only be used by regular diesel trains. In January, the High-Speed Rail Peer Review Group recommended that the project be put on hold: if future funding didn’t materialize, that initial section in the Central Valley would become an icon of high-cost rail from nowhere to nowhere.
Resistance to the project became insurmountable. So, Governor Jerry Brown installed some new folks at the CHSRA—which suddenly chopped the price tag by 30% to a range between $68 billion and $80 billion. OK, on the Peninsula south of San Francisco and in the LA Basin, the system would be more like commuter rail. And it would also include more "medium-speed" links. Travel times would creep up. High-speed service, where available, might be ready by 2028.
“The great train robbery,” is what retired Judge Quentin Kopp called the new plan—and he, as state senator, co-authored the bill that created the first high-speed rail study.
But it gets even worse: turns out, operating costs are based on fantasy assumptions. The CHSRA plan assumes that it would cost 10 cents per passenger mile (the average cost of carrying one passenger one mile at a given load factor) when international high-speed rail systems averaged 43 cents per mile, according to a report that just surfaced. The low-cost leader was Italy with 34 cents per mile; at the upper end were Germany and Japan with 50 cents per mile; Amtrak’s Acela Express, though not truly high speed, was in the middle with 44 cents per mile. And in California, it’s going to be 10 cents per mile?
The CHSRA correctly assumes that train tickets compete with air fares and the cost of driving, which, despite our incessant complaints, are lower in California than overseas. Thus, the US market requires cheaper tickets. And to make the project appear profitable, and thus more digestible for the taxpayer, the CHSRA lowered its projected operating costs to less than a quarter of the international average.
But if actual operating costs are 43 cents per mile and not 10 cents per mile, annual subsidies of $2 billion to $3 billion would be required just to keep the trains running, according to the report. Yet, AB3034, the California High-Speed Train Bond Act, makes these subsidies illegal. A conundrum that the Legislature, the Administration, and the CHSRA have so far successfully ignored.
Thus, our dream of having a profitable high-speed rail system has gone up in subsidies, so to speak, at least in the current scenario, though scenarios change with the seasons, in the hope that money will start flowing soon(snip)
How shocking ... actual California individual income tax revenues fell 21% / 2 billion short of gov't projections ! With California state corporate income taxes falling another 1/2 billion short of gov't projections ! How dare those taxpayers move out of the state, seek 'legal' tax exempt investments etc.
How surprising ... the shortfall in this year's California tax revenues just about equals the amount of annual subsidies that will actually be necessary to operate California's High Speed Rail project !!! Oops make that 'medium' speed rail project. But that of course assumes that California can actually come up with the $80+ billion dollars necessary to fund the state's portion of this original $36 billion project ( with a like amount coming from taxpayers in other US states ) !
eagle2
05-02-2012, 10:54 PM
Apparently, those 130,000 new Illinois jobs reported by gov't statistics hasn't resulted in a significant increase in Illinois tax revenues ( despite the major Illinois state income tax rate increase ) !
According to this report from the Illinois Dept. of Revenue, tax revenue is up significantly from 2011.
http://www.revenue.state.il.us/AboutIdor/TaxResearch/MarchFY2012RevenueReport.pdf
Individual income tax revenue has increased from $7.8 billion in FY 2011 (July 2010 - June 2011 I think) to $11.7 billion in FY 2012.
Eric Stoner
05-03-2012, 08:07 AM
According to this report from the Illinois Dept. of Revenue, tax revenue is up significantly from 2011.
http://www.revenue.state.il.us/AboutIdor/TaxResearch/MarchFY2012RevenueReport.pdf
Individual income tax revenue has increased from $7.8 billion in FY 2011 (July 2010 - June 2011 I think) to $11.7 billion in FY 2012.
Even if true it is not terribly relevant when you look at the SPENDING and BORROWING numbers plus the OUT-YEAR projections for things like pensions and health care costs.
I'm sure not even you thinks Illinois will be getting returns of 8.5% on it's pension and health care trust funds. Yet that is what the trustees of same have listed as a projected rate lof return to help cook their books.
Melonie
05-13-2012, 09:07 AM
California is even worse off than predicted ... from
(snip)"California’s budget deficit has swelled to $16 billion after tax collections trailed projections amid the tepid economic recovery, Governor Jerry Brown said in a comment on his Twitter post.
The shortfall has widened from the $9.2 billion Brown estimated in January, after lawmakers resisted the Democrat’s call for cost cuts, the federal government blocked other reductions and April income-tax revenue missed budget forecasts by $2 billion. On May 14, he’s set to unveil a revised spending plan and to say how he would erase the gap.
Brown, 74, set out an initial budget in January with $92.6 billion in spending for fiscal 2013, which begins in July. That plan stripped more than $4 billion from health and welfare programs while relying on higher income and sales taxes. The levy increases will go before voters in November. If rejected, schools will lose $4.8 billion midway through the year.
“We are still recovering from the worst recession since the 1930s,” Brown said in a YouTube video cited on his Twitter post. “Tax receipts are coming lower than expected and the federal government and the courts have blocked us from making billions of necessary budget reductions. The result is that we are now facing a $16 billion deficit.”
Brown this week submitted more than 1.5 million signatures to place the tax measure on the ballot. It would temporarily raise the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. It would also boost rates on income starting at $250,000. The 10.3 percent levy on those making $1 million or more would rise to 13.3 percent, the most of any state."(snip)
Eric Stoner
08-09-2012, 07:35 AM
Fresno, Compton and at least a dozen other cities in California including Oakland are either waiting to file for Chapter 9 or have declared states of fiscal emergency and are trying to raise taxes. A big part of the problem is that the state stole , excuse me "borrowed", development funds to balance its own books in Sacramento. Most analysts agree that L.A. is on the brink but the current mayor, among others, refuses to recognize reality and cut the city budget. The total municipal budget shortfall is at least $ 68 billion and the state can't help even if it wanted to.
The root of the problem of course is the overpromising done in past years that cannot be paid for now thanks to lower than expected revenues.
Stockton was just permitted by its Bankruptcy Judge to cut medical benefits for retirees.
Much more to come.
Zofia
08-09-2012, 06:41 PM
Not so fast. California's economy is a basket case. But, all is not doom and gloom. According to the Kauffman Index of Entrepreneurial Activity, http://www.kauffman.org/research-and-policy/kiea-interactive-2011.aspx California has the highest entrepreneurial activity of any of the states. Might this be the way forward?
HTH
Z
Melonie
08-10-2012, 03:02 PM
again, by 'sheer coincidence, a timely article on the topic of high speed rail ... from
(snip)"China has blacked out the first anniversary of the worst train crash in its history, with no memorial service for the 40 people who died and the media banned from mentioning the disaster.
The collision between two bullet trains outside the southern city of Wenzhou last year remains highly sensitive; a moment when confidence in the Communist party crumbled as officials first played down the news and then attempted to bury the wreckage before a thorough search for survivors had been completed.
On Monday, there was no memorial at the scene of the accident, where a further 192 people were injured. Small groups of mourners congregated to pay their respects, but one survivor was taken in by police at Hangzhou South rail station on his way to visit.
Two popular bloggers, Li Chengpeng and Wang Xiaoshan, did manage to make it to the site early in the morning, and post a photograph calling for people to remember the anniversary, but were followed by teams of men dressed in black, they said.
Journalists at a local newspaper in Wenzhou told Japanese reporters from the Asahi Shimbun that they "wanted to cover the issue" but that "there is nothing we can do because the local government and the Railways ministry do not want the accident to be revisited".
"The accident is something we want to forget," said a senior municipal government official to the newspaper. "If a local government were to plan a ceremony, that would bring shame on the Ministry of Railways. You surely understand that, don't you?" "(snip)
While I can't prove this due to official 'censorship', a gentleman businessman acquaintance of mine who has spent a lot of time in China during the past year tells me that the true cause of this high speed train accident was actually quickly identified. It was due to 'settling ' of the earth supporting the rails ... settling caused by continued pumping of fresh water from underground aquifers to supply water needs for rapidly growing cities which has lowered the water table thus allowing the earth above the aquifer to 'settle'.
Ironically, this same ground water pumping / water table dropping problem with America's underground aquifers is particularly 'serious' in California, Nevada, and other western / southwestern states. However, unlike China's high speed rail, US efforts won't actually travel at anything near 'high speeds' ... which makes them less susceptible to the effects of tracks settling out of alignment.
Melonie
08-10-2012, 03:13 PM
But, all is not doom and gloom. According to the Kauffman Index of Entrepreneurial Activity, California has the highest entrepreneurial activity of any of the states. Might this be the way forward?
not meaning to be the purveyor of doom and gloom, but if you check the 'fine print' you'll find that those 2011 figures are actually 10 year averages. Thus in Califonia's case the entrepreneurial index number ( which was lower than Arizona and equal to Texas by the way ) does NOT fully reflect the very recent effects of California's 'business nexus' taxation of out-of-state business earnings, does not reflect California's most recent increases in minimum wage and entrepreneurial business tax rates ( = individuals earning > $200k per year ), etc. What it actually reflects is 6-7 'good' years in the early 00's averaged down by 3-4 'bad' recent years ... meaning that it might reflect the 'wrong' way forward !