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Thread: Putin US is a parasite on world economy

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by donsutherland1 View Post
    I probably wasn't sufficiently clear. Russia likely had a choice as to whether it defaulted (it chose default). Russia had no choice when it came to the onset of its crisis. In contrast, if U.S. policy makers choose wisely, the U.S. still has enormous latitude to avoid the kind of crisis that unfolded in Russia. But will the U.S. choose wisely remains to be seen. Risks of a less than prudent course likely have increased on account of the recent political dysfunctionality exhibited during the debt ceiling debate. That a modest deficit reduction agreement was sealed to avoid a self-inflicted crisis does not mean that U.S. political risk has diminished.

    Also, I fully agree about PM Putin's motives. He is extremely focused on Russia's interests how he perceives them and those interests alone. The less exaggerated point about the opportunity costs associated with large capital inflows is a reasonable one. PM Putin's exaggerated claim goes well beyond that narrower issue.
    In regards to the last paragraph, the United States could do with focusing on ourselves by ending all foreign aid and military involvement.

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by Chris.Yoder View Post
    In regards to the last paragraph, the United States could do with focusing on ourselves by ending all foreign aid and military involvement.
    I agree that the US should probably end a great deal of foreign aid. We can start by withdrawing from Afghanistan, Iraq, and the Libyan cluster----. We can also stay out of the Syria debacle. However, I'm not sure the US should frame the change of foreign policy as "focusing on ourselves" even though I agree that's what should be done. Then there would be enough money in the US to help old folks and the needy, making liberals as well as conservatives happy.
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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by donsutherland1 View Post
    I probably wasn't sufficiently clear. Russia likely had a choice as to whether it defaulted (it chose default). Russia had no choice when it came to the onset of its crisis. In contrast, if U.S. policy makers choose wisely, the U.S. still has enormous latitude to avoid the kind of crisis that unfolded in Russia.
    In your opinion, what can the US do to avoid this sort of crisis? With such a large deficit and unimaginably huge unfunded liabilities in the future such as medicare, medicaid, social security, etc., how can the US ever have a balanced budget? People say cut entitlements, but they fail to see just how much money the fed has "loaned" to both domestic and foreign corporations and banks. Even if it cut all of the entitlement programs (which would be a disaster) that still wouldn't cover it all. Not even close. And then there is the unemployment rate, and the lack of growth. It comes down to basic accounting: either the US needs more growth or less spending, preferably both. However, even if all of these things happened, the dollar is still losing ground and many foreign governments are dumping the dollar for more secure currency. To me, this looks like impending doom. But to most people, they seem to find hope- but hope in what, exactly?
    “In politics, stupidity is not a handicap.” -Napoleon

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by Chris.Yoder View Post
    In regards to the last paragraph, the United States could do with focusing on ourselves by ending all foreign aid and military involvement.
    The U.S. will be gradually winding down military operations in Iraq and Afghanistan. Also, foreign aid is a tiny fraction of the federal budget. Of course, foreign aid should be focused based on American interests.

    Completely eliminating foreign aid would not be helpful. First, even if foreign aid were completely eliminated, that outcome would have almost no impact on the nation's fiscal trajectory. Second, abdication undermine overseas U.S. interests leading to greater risk of future military interventions. Such operations are far more costly than foreign aid. Hence, a neo-isolationist policy would, at best, contribute very little to the nation's finances, and could well increase the nation's security, economic, and financial risk exposure.

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by donsutherland1 View Post
    The U.S. will be gradually winding down military operations in Iraq and Afghanistan. Also, foreign aid is a tiny fraction of the federal budget. Of course, foreign aid should be focused based on American interests.

    Completely eliminating foreign aid would not be helpful. First, even if foreign aid were completely eliminated, that outcome would have almost no impact on the nation's fiscal trajectory. Second, abdication undermine overseas U.S. interests leading to greater risk of future military interventions. Such operations are far more costly than foreign aid. Hence, a neo-isolationist policy would, at best, contribute very little to the nation's finances, and could well increase the nation's security, economic, and financial risk exposure.

    I see, so we keep making the 'vig' on the nations blackmail payoffs....Jefferson was weary of becoming involved in foreign entanglements, how is it any different when we use our money, or our troops?

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    Re: Putin US is a parasite on world economy

    As most everyone else, he judges by perception, as we judge him.
    Looking at his countries history, his own dealings, what is happening around him, I'd say he should clean up his own act before commenting on everyone else.
    Unless he in need of attention. So many world leader seem the thrive on such these days, and the more full of themselves they are, the more they crave attention.

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by evanescence View Post
    In your opinion, what can the US do to avoid this sort of crisis? With such a large deficit and unimaginably huge unfunded liabilities in the future such as medicare, medicaid, social security, etc., how can the US ever have a balanced budget? People say cut entitlements, but they fail to see just how much money the fed has "loaned" to both domestic and foreign corporations and banks. Even if it cut all of the entitlement programs (which would be a disaster) that still wouldn't cover it all. Not even close. And then there is the unemployment rate, and the lack of growth. It comes down to basic accounting: either the US needs more growth or less spending, preferably both. However, even if all of these things happened, the dollar is still losing ground and many foreign governments are dumping the dollar for more secure currency. To me, this looks like impending doom. But to most people, they seem to find hope- but hope in what, exactly?
    Evanescence,

    There is no silver bullet. The process will take a lot of time. The first step would be to slow the increase in the rate at which the nation's debt has been growing. The second step would be to stabilize that debt. The last step would constitute debt reduction. In doing so, there will always be a level of social welfare, investment, national security, among other functions, that the federal government needs to undertake. The federal government cannot be "run like a business" because the interests in governance are far broader than those of a business (social, economic, financial, safety, etc., vs. financial/economic for businesses). The government can apply some lessons i.e., become far more focused and efficient.

    IMO, a credible fiscal consolidation strategy will have to involve:

    1) Social security reform: A fairly simple actuarial problem. Current retirees would largely be held harmless. The eligibility age would be raised for future retirees and then pegged to changes in life expectancy. The payroll tax cap would be raised to the original level (share of income) and pegged that share of income. Benefit increases (for future retirees) would be tied to the cost of living, not wages.

    2) Medicare/Medicaid: Very complex. Savings would depend on fundamental health care reform. Unless the health system's excessive cost growth problem is addressed, Medicare/Medicaid reform won't be viable. One could convert the programs to vouchers, but then the problem would be that the recipients' vouchers would provide increasingly less coverage (underinsurance/uninsurance) on account of rapidly rising health costs. One could impose strict budgeting, but that would lead to rationing based on expenditures (effectively simulating underinsurance/uninsurance). As a result, neither vouchers nor strict budgeting would fix the programs in the absence of fundamental health reform, except at unacceptable costs of effective underinsurance/uninsurance.

    Policy reforms would include permitting Medicare to negotiate drug prices, etc. In business, firms use their purchasing power to leverage better deals. It is remarkable that Medicare is not permitted to do so. Reimportation of drugs should also be permitted. Prohibitions are anti-competitive and they essentially protect price disparities from arbitrage. In the securities markets, if a share of a company's stock is trading at a higher price in London than in New York, one would witness buying in New York/selling in London (profitable) until the price disparity disappears. Such a practice is barred when it comes to preventing reimportation of drugs.

    Fundamantal health reform would be more complex. Both the demand and supply side would need to be addressed. That means addressing incentives that currently exist for overutilization (copayment structures could be made flexible). It means dramatic changes in technology procurement. It also means reducing competitive barriers i.e., making it far easier for foreign medical providers/hospitals and physicians to practice in the U.S. Other reforms would include tort/medical malpractice reform, licensing reform, etc.

    3) Tax reform: The tax base should be broadened (elimination of various deductions) so as to generate additional revenue. Even popular deductions should be on the table. In general, if all businesses cannot receive the same deduction, such a deduction is preferential. It distorts economic activity.

    My guess is that a credible fiscal consolidation program could stabilize federal debt relative to GDP within 5-10 years. Afterward, a gradual reduction relative to GDP, and later absolute terms, could commence. However, a lot will depend on economic growth and interest rates. Historic experience with fiscal consolidation has shown that consolidation that is largely (but not wholly) spending-driven (2/3 or more of the savings come from spending changes) creates the least economic drag in the short-term. Policy makers should be careful to distinguish between expenditures that are mainly consumption and those that are investments (create future value). Indiscriminate treatment could also tend to cap the nation's long-term growth potential. More robust economic growth leads to faster revenue growth. At the same time, the program has to be credible in terms of substance and perceived as credible by the public. When credibility is lacking or perceived to be lacking, interest rates would wind up higher than they would otherwise be. Higher interest rates would slow economic growth (higher cost of capital) and increase debt service costs. A measure of revenue increases can add credibility, as it could take away concern that a country might not be able to carry through with a magnitude of spending reductions that could be viewed as unrealistic.

    Finally, the recent debt ceiling debate revealed enormous problems in the nation's political process. The extent of dysfunction has elevated risks going forward. The other big issue is structural problems in the nation's economy. Unless those issues are addressed by both the public and private sectors, the nation's long-term growth rate will be lower than it would otherwise have been. A 2.5% sustainable long-term growth rate vs. the 3% figure widely assumed in many fiscal projections, would essentially wipe out a significant share of the savings in the recently enacted debt ceiling legislation (revenues would underperform and stabilizers such as unemployment costs would be higher than expected).

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by Chris.Yoder View Post
    By drastically decreasing the size and scope of the government and letting the earning power of capitalism fill the coffers
    I think you are confused. We suffer Corporatism and it is not the same as Capitalism. Corporations are legal persons now, thanks to the Supreme Court. Of course, Corporations don't live and breathe so don't tend to want the same things living, breathing species need and they don't die and are simply about money so the viewpoints they espouse are not related to the needs of humans. Could that bode ill for our future? Spell Corporatism with a capital "R" for Republicans. Keep your hand over your ass, and don't bend over.

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by j-mac View Post
    I see, so we keep making the 'vig' on the nations blackmail payoffs....Jefferson was weary of becoming involved in foreign entanglements, how is it any different when we use our money, or our troops?

    j-mac
    Just to be clear, I am not arguing for unlimited foreign involvement. I am suggesting that foreign policy be focused more narrowly on critical interests/allies. By that test, the U.S. would not be involved in Libya. It would not consider involvement in Syria. For the most part, military operations aimed mainly at "humanitarian problems" would be avoided. However, it would not abandon its key allies e.g., it would remain committed to helping defend South Korea. Deterrence would become a more important ingredient when it comes to addressing the risks posed by potentially hostile powers. Deterrence, if undertaken effectively, can reduce the actual risk of military conflict.

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    Re: Putin US is a parasite on world economy

    Quote Originally Posted by DaveFagan View Post
    I think you are confused. We suffer Corporatism and it is not the same as Capitalism. Corporations are legal persons now, thanks to the Supreme Court. Of course, Corporations don't live and breathe so don't tend to want the same things living, breathing species need and they don't die and are simply about money so the viewpoints they espouse are not related to the needs of humans. Could that bode ill for our future? Spell Corporatism with a capital "R" for Republicans. Keep your hand over your ass, and don't bend over.

    One could wonder Dave, if you feel like you are getting ****ed so hard here in America, why you would choose to reside here? Aren't there plenty of Socialist playgrounds around the world that would be more than happy to have you? And then you could be just content living in Utopia?

    j-mac
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