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Thread: Harry Reid Caves - No New Taxes

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by 1Perry View Post
    We were told yesterday that not reaching a deal on the weekend would result in a major reaction from the markets. We didn't get an agreement and the markets have gave a collective shrug today.
    By whom? The only thing I heard is that Congressional leaders wanted to reach a deal by yesterday evening before the Asian markets opened out of concern that markets could react badly. I don't believe they actually predicted a catastrophic market reaction.

    It is notoriously difficult to predict the specific onset of a sovereign debt crisis. A quiescent scenario now--probably based on expectations that a crisis will be averted--does not mean that the actual crisis that would result from a failure to raise the debt ceiling would be insubstantial. Any disruption that is the equivalent of around 10% of GDP is bound to have a large macroeconomic impact. Any rise in yields could significantly widen the nation's long-term imbalances. Psychology can amplify the turmoil, hence a $4 trillion deficit reduction plan might be credible at present, but if a crisis were underway, such a plan might no longer be perceived as credible, especially in the face of higher interest rates and the political dysfunction that led to the self-inflicted crisis.

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    Re: Harry Reid Caves - No New Taxes

    My take was the language used. No taxes is fine, but I think some closing of loopholes is perfectly justifiable if not long overdue. But what gets me is that Reid is okay with raising the ceiling 2.7T, and offering "future" spending cuts to the tune of 2.7T ... If the good speaker thinks that's a win, he's Nutz... I trust reid like I would trust a sex offender with my daughter.. As in.. Not very much! Name the cuts, place in the bill when they will be cut, and how, and then I'll start taking these leaked reports more seriously. I repeat it is NOT a win for the tea party unless the cuts are deep, and immediate, plain and simple.

    Tim-
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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by donsutherland1 View Post
    By whom? The only thing I heard is that Congressional leaders wanted to reach a deal by yesterday evening before the Asian markets opened out of concern that markets could react badly. I don't believe they actually predicted a catastrophic market reaction.
    First off, let's make clear I said major not catastrophic. I'm not sure why you deciding to change my words but we will get past that.

    Leaders from both parties are anxious to reach a deal Sunday to head off a negative reaction in Asian markets when they open for the week, according to both Democratic and Republican aides.

    Now by negative I don't think they were alluding to a normal day. Asian markets were off somewhere around 2-3%. Something that they have done many, many times. U.S. markets are off very little. No deal has seemed to have had at best a minimal impact on the markets.

    U.S. Leaders Struggle To Reach Debt Deal As Deadline Clock Ticks - Politics News Story - WRTV Indianapolis

    If you want to argue that even 3% is negative, it's not something that would have been worth noting.

    It is notoriously difficult to predict the specific onset of a sovereign debt crisis. A quiescent scenario now--probably based on expectations that a crisis will be averted--does not mean that the actual crisis that would result from a failure to raise the debt ceiling would be insubstantial. Any disruption that is the equivalent of around 10% of GDP is bound to have a large macroeconomic impact. Any rise in yields could significantly widen the nation's long-term imbalances. Psychology can amplify the turmoil, hence a $4 trillion deficit reduction plan might be credible at present, but if a crisis were underway, such a plan might no longer be perceived as credible, especially in the face of higher interest rates and the political dysfunction that led to the self-inflicted crisis.
    I'm not going to argue that not raising the debt will have no impact. It will. I'm saying that all of these deadlines are artificial and the scare tactics are just that. I've been watching the news channels today and every one notes "default". We are not going to default.

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by 1Perry View Post
    First off, let's make clear I said major not catastrophic. I'm not sure why you deciding to change my words but we will get past that.
    The point is the same, even as I inadvertently used "catastrophic." I'm not aware of their forecasting a major impact either. They had concerns, but made no forecasts. They wanted to preempt such a situation, as the risk of a sharper downturn grows with each day an agreement is not reached.

    Certainly, the markets have reacted negatively, but not yet to a substantial degree. The predominant expectation is that default will be averted, even if credible deficit reduction is foregone. The biggest early impact has been on the long-end of the yield curve, with the 30-year Treasury Bond falling 1 1/32 today. That's the end where things will first be felt. Yields on the short-end could even fall initially. However, if numerous debt default scenarios, rising long-term yields pushed countries to shorter maturities, meaning they had to roll over their debt more and more frequently. In turn, the yield relief was temporary. In time, as creditors grew more concerned, the countries began having difficulty rolling over their debt and a debt crisis finally erupted.

    The U.S. is not in that position right now. But a permanent shift to higher long-term yields that will result in the absence of credible deficit reduction and, especially were the U.S. to experience even a short-lived default situation, would create incentives for the nation to emphasize the shorter-end of the yield curve. If so, then the U.S. would be traversing ground familiar in past default scenarios. The temptation to circumvent default via financial repression and inflation could increase at the same time.

    I'm not going to argue that not raising the debt will have no impact. It will. I'm saying that all of these deadlines are artificial and the scare tactics are just that. I've been watching the news channels today and every one notes "default". We are not going to default.
    The ratings agencies have made abundantly clear that the U.S. will be in default if it misses payments on any obligations, not just its debt obligations. That it would make payments on its debt service would be irrelevant. After all, if a company meets all of its interest payments, but fails to pay its suppliers, it is treated as a default event. That the event is not a technical debt default matters little. The government would be treated no differently by the ratings agencies. Moreover, given the political dysfunction that has been exposed by recent events, the U.S. probaby does not deserve a AAA rating on account of its elevated political risk profile.

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by donsutherland1 View Post
    The point is the same, even as I inadvertently used "catastrophic." I'm not aware of their forecasting a major impact either. They had concerns, but made no forecasts. They wanted to preempt such a situation, as the risk of a sharper downturn grows with each day an agreement is not reached.
    Disagee all you want but IMO it was simply just another false goal.

    Certainly, the markets have reacted negatively, but not yet to a substantial degree. The predominant expectation is that default will be averted, even if credible deficit reduction is foregone. The biggest early impact has been on the long-end of the yield curve, with the 30-year Treasury Bond falling 1 1/32 today. That's the end where things will first be felt. Yields on the short-end could even fall initially. However, if numerous debt default scenarios, rising long-term yields pushed countries to shorter maturities, meaning they had to roll over their debt more and more frequently. In turn, the yield relief was temporary. In time, as creditors grew more concerned, the countries began having difficulty rolling over their debt and a debt crisis finally erupted.
    The markets aren't stupid in the idea that there is any chance of the U.S. defaulting. They aren't making moves on the possibility of that happening or not as they know it's not going to happen.

    The U.S. is not in that position right now. But a permanent shift to higher long-term yields that will result in the absence of credible deficit reduction and, especially were the U.S. to experience even a short-lived default situation, would create incentives for the nation to emphasize the shorter-end of the yield curve. If so, then the U.S. would be traversing ground familiar in past default scenarios. The temptation to circumvent default via financial repression and inflation could increase at the same time.
    I think I'm clear that I outright dismiss any default talk. It's not going to happen.

    The ratings agencies have made abundantly clear that the U.S. will be in default if it misses payments on any obligations, not just its debt obligations.
    Sorry, you'll have to provide a link to this. They have said they might still downgrade even if the U.S. doesn't default, but that isn't your claim.

    That it would make payments on its debt service would be irrelevant. After all, if a company meets all of its interest payments, but fails to pay its suppliers, it is treated as a default event. That the event is not a technical debt default matters little. The government would be treated no differently by the ratings agencies. Moreover, given the political dysfunction that has been exposed by recent events, the U.S. probaby does not deserve a AAA rating on account of its elevated political risk profile.
    I won't disagree that the U.S. might not deserve it's rating and I'll state that it will keep it because it's good for the rating industry.

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    Re: Harry Reid Caves - No New Taxes

    Doesn't matter.
    The Obama refuses to compromise on the issue of taxes.

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by BDBoop View Post
    The "moral majority" are neither.

    It's GREAT to be me. --- "45% liberal/55% conservative"
    Diplomacy is the art of saying 'nice doggy" until you can find a gun.

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by PzKfW IVe View Post
    Doesn't matter.
    The Obama refuses to compromise on the issue of taxes.
    just as easily true, boner et al refuse to compromise on the issue of taxes.

    Originally Posted by johnny_rebson:

    These are the same liberals who forgot how Iraq attacked us on 9/11.


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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by BDBoop View Post
    "Closing loopholes but lowering tax rates?" Dumb ****.
    interesting. is President Obama a "Dumb ****" then, for proposing precisely such a course in his State of the Union Address? is the Presidents' Bi Partisan Simpson-Bowles Commission a bunch of "Dumb ****'s" for proposing that course? Is Bill Clinton a "Dumb ****"?


    closing loopholes while lowering rates is only "Dumb ****" if you think that increased economic growth, increased standards of living, increased wages, more jobs, and more revenue is "dumb ****" Now, if that's your position, very well. But I don't think it means what you think it means.
    Last edited by cpwill; 07-25-11 at 06:17 PM.

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    Re: Harry Reid Caves - No New Taxes

    Quote Originally Posted by liblady View Post
    just as easily true, boner et al refuse to compromise on the issue of taxes.
    on the contrary - Boehner was willing to raise effective tax rates by $800 Bn. Still is, he made clear on Sunday.

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