CBO: Stimulus hurts economy in the long run

j-mac said:

But, in simple terms, what happens to small business, and even larger business when their bottom line profit shrinks?

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Profit tends to shrink primarily from two reasons. Either company sales (demand) are slumping, or their input costs (supply) are growing faster than their sales. Considering our actual situation, what do you think is the largest risk to shrink profits for small businesses?

Goldenboy219 said:

Profit tends to shrink primarily from two reasons. Either company sales (demand) are slumping, or their input costs (supply) are growing faster than their sales. Considering our actual situation, what do you think is the largest risk to shrink profits for small businesses?

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Well, if you work in plastic, both. Until very recently, oil prices have been high, raising the input costs. The economy has been depressed and people are putting off projects, reducing demand. So supply cost is up and demand is down.

Goldenboy219 said:

Profit tends to shrink primarily from two reasons. Either company sales (demand) are slumping, or their input costs (supply) are growing faster than their sales.

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Are you saying that taxation costs are not part of the bottom line considerations to running a business? Things like Training, Health Care, Pension (if offered), Worker compensation Ins.? All these things are considerations separate from Sales, or Supply are they not?

Considering our actual situation, what do you think is the largest risk to shrink profits for small businesses?

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I drive a semi for a medium to large carrier that hauls for Kroger, and am pretty good friends with the terminal manager, as well as a few of the VP's of my company, and have talked with them at times with what their concerns are when it comes to taking on added employment, and the strength and stability of business today as it relates to the economy. The answers I get most often since we carry groceries that in any economy is a fairly stable good to be transporting, the climate to hire is actually more risky today than other times, largely because the current administration is not offering anything certain for business to plan out with. Using a strategy of slapping down, and demonizing business one day as greedy, and "protected", then the next portraying that the administration is buddy, buddy with them and backs them is schizophrenic to say the least, and lends to business holding fast to see what is going to happen rather than investing.

This idea that business has some moral responsibility to help this administration by hiring in such a divisive, uncertain economy merely for the reason to make this administration look like it is succeeding, when it is clear that it want's nothing more than to control, and limit the amount that any particular business can make and take the overage of that number for the purpose of redistribution, coupled with crony capitalism that they have displayed clearly is a major hindrance to this economy recovering, and will continue to be such, if not more destructive should Obama somehow beat the odds and retain the Presidency.


j-mac

Blue_State said:

Well, if you work in plastic, both. Until very recently, oil prices have been high, raising the input costs. The economy has been depressed and people are putting off projects, reducing demand. So supply cost is up and demand is down.

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Our current economic downturn is not a result of short term commodity volatility.

j-mac said:

Are you saying that taxation costs are not part of the bottom line considerations to running a business? Things like Training, Health Care, Pension (if offered), Worker compensation Ins.? All these things are considerations separate from Sales, or Supply are they not?

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Of course they are. But can you show me that these various costs are increasing to the point where input costs (overall) are outpacing sales? If not, then you are essentially blowing hot air.

Goldenboy219 said:

Of course they are. But can you show me that these various costs are increasing to the point where input costs (overall) are outpacing sales? If not, then you are essentially blowing hot air.

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The one issue that far too many do not understand is that for every dollar of expense the profits of the company drop by a dollar and every dollar of revenue increase affects the bottomline by the GP margin on that item sold normally in the range of 30% but varying by business. Tax increases affect the bottomline by a dollar and hurts business more than sales growth.

Conservative said:

The one issue that far too many do not understand is that for every dollar of expense the profits of the company drop by a dollar and every dollar of revenue increase affects the bottomline by the GP margin on that item sold normally in the range of 30% but varying by business. Tax increases affect the bottomline by a dollar and hurts business more than sales growth.

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Wake up!

Also, i was unaware that sales growth hurts a business.

Goldenboy219 said:

Wake up!

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Price to earnings ratio? Never ran a business did you? My statement is accurate and based upon actual P&L's. Ever look at one? Expenses a dollar hit to profit and revenue is a percentage less than 100% to profit. That is the way it works, sorry.

finebead said:

It was a global phenomenon, in the US and around the world. If you don't know this, or refuse to acknowledge the obvious, they will be little for us to discuss. I provide my documentation just below, from a neutral site in Europe, one that offers investment advice, not one that is politicized. So, where is your support for your position?

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Yes, what was done was a huge positive for those who provide investment advice.

Translation = I have no plan, I will ask someone else to fix this. Actually FDR got numerous programs enacted to spend money to public works programs, to get people back to work, to put money in their pockets, so they could consume and get the rest of the economy pumping, programs like the WPA and the CCC. He also enacted financial reform with the SEC and Glass-Steagal.

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I'm going to guess you've never read what he did.

Understanding FDR’s Bank Holiday Move in 1933 « Mostly Economics

Now just because one can pick something they agreed with someone one does not mean they agree with everything they did. Yes, in FDR's case it was a little different. It was depositors causing the problem. Depositors had no reason to this time as the vast majority were protected by FDIC insurance. It was the markets that were the problem. I would have done the same thing. Would it be more complicated than in 1933? Sure, but despite claims of being "surprised" those running things had to know that things were about to collapse and had plenty of time to come up with a plan that didn't involve taking from those who had nothing to do with the problem.

Greenspan the lifelong republican, appointed by repub president Bush in 2002. The legacy of republican failures from 2001-2006 when they controlled the house, senate, white house and federal reserve is why I DON'T want to vote for those fools today.

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You only show that you are as I noted before, a partisan hack with statements like this.

What about Chris Cox role at SEC in 2004, where he allowed the biggest banks to radically increase their leverage by relaxing the Net Capital Rule, which is what allowed them to buy all the junk mortgages up in 2004-2006, which directly lead to the crisis?

What about Bill Frist (R-Tenn), senate majority leader who would not bring S-190 by Chuck Hagel to the senate floor in 2005 for a vote, a bill to reign in Fannie and Freddie? The house of rep. had already passed the companion bill, H-1464 if memory serves, by a wide majority from both parties, the vote was 330 to 90 in favor IIRC.

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I can find all sorts of individual cases to show blame from BOTH parties. There are all sorts of video's out there with folks like Barney Frank claiming that F&F were in fine financial shape and that no further actions needed taken just before they collapsed. Bernanke was appointed by Bush and I have no problem blaming BOTH of them but even after we knew that Bernanke failed miserably in his job Obama re-appointed him.

There is little to gain in discussing something like this who only wants to blame one party.

It is just semantics at best, or plain wrong at worst. See below:

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You can call it spending all day and it matters none. They only redistribute money.

Translation = I have no plan.

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I told you were I would have started. The second thing I would have done is enforce Sarbanes/Oxley.

Goldenboy219 said:

Of course they are. But can you show me that these various costs are increasing to the point where input costs (overall) are outpacing sales? If not, then you are essentially blowing hot air.

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Let's not be so quick to dismiss if I don't agree with everything you are proposing here. Like I said, I am no economist, so I look to what is being said, as well as informed opinions on what is taking place, as well as common sense.

I offer an opinion from:

Gary Stanley Becker (born December 2, 1930) is an American economist. He is a professor of economics, sociology at the University of Chicago and a professor at the Booth School of Business. He was awarded the Nobel Memorial Prize in Economic Sciences in 1992, and received the United States' Presidential Medal of Freedom in 2007.[1

Gary Becker - Wikipedia, the free encyclopedia

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and:

Richard Allen Posner (born January 11, 1939) is an American jurist, legal theorist, and economist who is currently a judge on the United States Court of Appeals for the Seventh Circuit in Chicago and a Senior Lecturer at the University of Chicago Law School. He is an influential figure in the law and economics school of thought.

Richard Posner - Wikipedia, the free encyclopedia

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In addition to repeated attacks on American business, especially banks (some of the attacks on banks were well deserved), Congress passed an expensive stimulus package that did not stimulate much. The health care bill Congress passed seems likely to increase the cost to small and large businesses of providing health insurance for employees. Congressional leaders proposed high taxes on carbon emissions, large increases in taxes on higher income individuals, corporate profits, and capital gains as part of vocal attacks on “billionaires”. Many in Congress wanted to cap, or at least control, compensation of executives. Proposals were advanced to make anti-trust laws less pro-consumer, and more protective of competitors from aggressive and innovative companies. Congress passed and the president signed a financial reform bill that is a complicated and a politically driven mixture of sensible reforms, and senseless changes that have little to do with stabilizing the financial architecture, or correcting what was defective in prior regulations.

It is no surprise that this rhetoric and the proposed and actual policies discouraged business investment and slowed down the recovery. Yet, I had expected the recovery to speed up after radical approaches to the American economy were repudiated in the 2010 Congressional elections, when many of the more liberal members of Congress lost their seats. For a while the economy did began to pick up, as unemployment declined quite rapidly from hovering around 10% to about 9% at end of 2010, and GDP started growing faster. But then the economy stalled. The challenge is to explain the drift in the unemployment rate during the past several months, and the rather tepid growth in GDP that have raised fears of a “double-dip”.

http://www.becker-posner-blog.com/2011/06/the-slow-economic-recovery-becker.html

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All of these things have a negative effect on our economy, and are solely the province of Obama, and administration tampering in business that have made this economy what it is today.

j-mac

Goldenboy219 said:

Our current economic downturn is not a result of short term commodity volatility.

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No, but it is not helping. It is adding to it.

Goldenboy219 said:

Profit tends to shrink primarily from two reasons. Either company sales (demand) are slumping, or their input costs (supply) are growing faster than their sales. Considering our actual situation, what do you think is the largest risk to shrink profits for small businesses?

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Blue states notes plastics. I can speak about that. Our supply costs did increase dramatically. We had to make cuts. The problems with increasing sales is many fold. Global competitors that do not have to play by the same rules first. We aren't a small business but all the same the volitility in the commodities markets have caused many problems and jobs.

1Perry said:

No, but it is not helping. It is adding to it.

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No doubt! But the volatility of asset prices is far to complex to be controlled by the interests of D.C.

j-mac said:

Excuse me if I believe that a strong business sector means not only employment for the middle class, but economic health for the country.

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Strength is having to be protected by others?

In the army, they maintained, rightly so I think, that an army was only as strong as it's privates. This is the idea that a chain holds or breaks based on it's weakest link and not it's strongest link. Business is not stronger or weaker based on whether we appease them or not. Business needs people with money to spend. Without them, there is no business.

There you go again. "likely" means you don't know for a fact, but then follow that with definitive, absolute statements show your complete fundamental misunderstanding of how business works. You want to dissect a true "protected class"? Check out public sector unionized employees like teachers.

j-mac

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Yes, I use the word likely as there are often many variables, and many different companies and many different possibilities, but without being absolute, what you believe isn't likely in any cases, let alone all of them. It is much more likley in most if not all cases that The rate change would not amount to enough to really justify passing it on. And the likely don't. But it helps in making an excuse to exclude them for any responsibility to pay for the benefits they use. A protected class if you will.

Goldenboy219 said:

Our current economic downturn is not a result of short term commodity volatility.

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I work in plastic. Trust me, it hurts, hurts all around. Just because you are focused on it being demand is down...there are some severe impacts on the supply side due to oil costs.

Goldenboy219 said:

No doubt! But the volatility of asset prices is far to complex to be controlled by the interests of D.C.

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Unfortunately, our country’s energy policy plays a huge part on the cost of oil.

Boo Radley said:

Strength is having to be protected by others?

In the army, they maintained, rightly so I think, that an army was only as strong as it's privates. This is the idea that a chain holds or breaks based on it's weakest link and not it's strongest link. Business is not stronger or weaker based on whether we appease them or not. Business needs people with money to spend. Without them, there is no business.

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Using the armed forces as analogy to private business is a poor example unless you are saying that you think that business should be controlled by government as far as their budgets are concerned. Other than that, please tell us what profits the military contributes to our GDP.

Yes, I use the word likely as there are often many variables, and many different companies and many different possibilities, but without being absolute, what you believe isn't likely in any cases, let alone all of them. It is much more likley in most if not all cases that The rate change would not amount to enough to really justify passing it on. And the likely don't. But it helps in making an excuse to exclude them for any responsibility to pay for the benefits they use. A protected class if you will.

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That is one long run on sentence to simply say that this is your opinion.

j-mac

j-mac said:

Let's not be so quick to dismiss if I don't agree with everything you are proposing here. Like I said, I am no economist, so I look to what is being said, as well as informed opinions on what is taking place, as well as common sense.

I offer an opinion from:



and:





All of these things have a negative effect on our economy, and are solely the province of Obama, and administration tampering in business that have made this economy what it is today.

j-mac

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Do you see the problem with making claims on an unquantified basis? If you can provide a valid description to how the actions of the Obama administration have increased short term input costs for business, then please go right ahead. You will have been the first to do so.

Goldenboy219 said:

No doubt! But the volatility of asset prices is far to complex to be controlled by the interests of D.C.

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I would not disagree that they can fully control this. They are adding to it though.

Blue_State said:

I work in plastic. Trust me, it hurts, hurts all around. Just because you are focused on it being demand is down...there are some severe impacts on the supply side due to oil costs.

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So? That is the point in allowing the market to dictate the price of commodities, and why successful firms implement input cost hedging strategies. Unless there is a valid substitute for plastic, i am pretty sure people will still buy it if the price increases.

1Perry said:

I would not disagree that they can fully control this. They are adding to it though.

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Markets dictate the price of commodities; even those whose production is primarily state owned (see OPEC).

Blue_State said:

Unfortunately, our country’s energy policy plays a huge part on the cost of oil.

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Not really, no. The single greatest price determinant for oil is emerging market demand.

j-mac said:

Using the armed forces as analogy to private business is a poor example unless you are saying that you think that business should be controlled by government as far as their budgets are concerned. Other than that, please tell us what profits the military contributes to our GDP.

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You're misisng the point copletely. It has nothing to do with control. A business with poor workers is a poor business. Sloppy, work equals a poor product. I'm sure you understand that. So, the worker is at elast of equal, if not greater importance to the health of the business as the owner.

Also, if workers make wages that are too low, fewer will have money to spend. While this may give the company temporary profits, in the long run, if such is wide spread, the company will lose as there won't be any buyers. For companies here, the best profit making may be to pay peanuts overseas, and hope someone else pays you here. No way you can appease them enough to counter act that.

But, the point is, a healthy business needs good, satified, hard working emplyees. And they need people making money in order to buy things to be successfull. I suggest this means we shoudl be concerned about the worker, and business is short sighted not to.

That is one long run on sentence to simply say that this is your opinion.

j-mac

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Run on doesn't mean long. I think there are four sentences there. However, dealing with absolutes is susally a bad thing. Still, I ahve given reasoning and rationale, which puts me a step ahead in this discussion.

Goldenboy219 said:

Do you see the problem with making claims on an unquantified basis? If you can provide a valid description to how the actions of the Obama administration have increased short term input costs for business, then please go right ahead. You will have been the first to do so.

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Wait a minute....You asked me this...

"Of course they are. But can you show me that these various costs are increasing to the point where input costs (overall) are outpacing sales? If not, then you are essentially blowing hot air."

I answered with the informed opinion of not one but two people that should be able to offer an informed opinion, that you in turn totally ignore, and tell me then to rattle off a litany of stats, and numbers that I have made clear I am over my head in that arena.

I asked you to address what these two individuals said in relation to your request, and you ignore it. Why not show me where Mr. Becker, and Mr. Posner have it wrong?

If you can.


j-mac

Boo Radley said:

You're misisng the point copletely. It has nothing to do with control. A business with poor workers is a poor business. Sloppy, work equals a poor product. I'm sure you understand that. So, the worker is at elast of equal, if not greater importance to the health of the business as the owner.

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So now you are going to delve into the chicken or the egg theory eh? Good workers are essential to the health of a successful business, yes. But, without a place for these workers to put their skills to use, and earn a paycheck, then you have nothing.

Also, if workers make wages that are too low, fewer will have money to spend. While this may give the company temporary profits, in the long run, if such is wide spread, the company will lose as there won't be any buyers. For companies here, the best profit making may be to pay peanuts overseas, and hope someone else pays you here. No way you can appease them enough to counter act that.

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You forget that employment is a mutual agreement to trade work skill for pay. If that pay is too low, you don't have to work there.

But, the point is, a healthy business needs good, satified, hard working emplyees. And they need people making money in order to buy things to be successfull. I suggest this means we shoudl be concerned about the worker, and business is short sighted not to.

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You are falsely making the worker the reason for employment, rather than the market need. We don't live in that type of society.

Run on doesn't mean long. I think there are four sentences there. However, dealing with absolutes is susally a bad thing. Still, I ahve given reasoning and rationale, which puts me a step ahead in this discussion.

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Glad you think so.


j-mac