Tuesday, August 26, 2003

tax insanityThis article pretty much supports most of what I have been trying to saying regarding tax cuts.  It does not however go into the fact that the short term impact of the tax cuts were probably a much needed stimulus for the economy (as a strict monetarist i personally believe that either monetary or fiscal policy should be used to attempt to regulate and economy however the one exception to that is when an economy stalls..........its not actually clear if this economy actually stalled but after seeing what happened in Japan its probably safer to edge on the side of caution and attempt to stimulate the economy using fiscal policy..........i believe that most monetarist already believe that some monetary intervention by the Federal Reserve is always a good thing to regulate money supply).

I dont think the politicians ...either Reps or Dems have the spine to deal with this at the moment.  We certainly dont have any leadership from either side.  Both are playing self-interest politics and neither have the interest of the nation as top priority.   The turning point will, i predict, be when Wall Street turns it attenion to these numbers.  At the moment the Street is has its eye on the so called recovery but sooner or later that tide will turn and when it does the politicians will be brought to there knees.  Unfortunately for all of us the longer we wait to address the long term budget problem the more painful that capitulation will be for all of us.

"WASHINGTON (Aug. 26) - The federal government is heading toward a record $480 billion deficit in 2004 and will rack up red ink of almost $1.4 trillion over the next decade, according to the latest analysis by the Congressional Budget Office.

The nonpartisan budget office on Tuesday also confirmed earlier estimates that the federal deficit for the fiscal year ending Sept. 30 will be $401 billion, well above the previous record of $290.4 billion set in 1992.

The 2004-2013 deficit estimate of $1.397 trillion reverses previous predictions that the federal government, battered by economic recession and rising defense and security costs, would still take in more than it spends over the coming decade.

The CBO put the deficit in 2005 at $341 billion, and predicted that the budget will finally return to a surplus in 2012 and 2013. But it also hedged those predictions, saying they were based on the assumption that Congress will allow several tax cuts enacted in recent years to expire in 2010. That is unlikely to happen.

It also does not predict the cost of the war and reconstruction in Iraq or take into account new spending programs, such as a $400 billion Medicare prescription drug plan Congress is now working on.

Besides defense costs, Democrats were quick to cite the Bush administration's tax cuts for the government's financial problems. The CBO, while saying there were other factors, said tax cuts enacted this year were responsible for much of the anticipated decline in revenue over the next few years.

The Bush administration has succeeded in enacting tax cuts the past three years, including a measure this year reducing taxes by $330 billion through 2013.

In its last budget estimates in March, the CBO predicted that the deficit would be $246 billion this year, but would move gradually back toward the black and result in an accumulated surplus of $891 billion in the 2004-2013 period.

``It is clear that these estimates will provide yet more evidence of the nation's fiscal deterioration under the irresponsible tax cut and spending policies of the Bush administration,'' said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee.

House Budget Committee Democrats said their analysis shows that the deficit will hit $495 billion in 2004, and will never go below $300 billion in the 2004-2013 period, reaching a total over the decade of $3.7 trillion.

If money from the Social Security surpluses now being used to pay for other federal programs is not factored in, the decade-long deficit will be $6.3 trillion, they said.

Sean Spicer, spokesman for House Budget Committee Chairman Jim Nussle, R-Iowa, disputed the Democratic conclusions, saying Republicans do have a blueprint for getting the budget back in balance. He said the keys were promoting a strong economic recovery and controlling federal spending and ``we're trying to do both.''

The Bush administration has blamed the swift reversal from budget surpluses to perennial deficits to the faltering economy, the Sept. 11 attacks and the sharp rise in defense and homeland security costs. The White House says the fiscal situation will improve as the economy, bolstered by the Bush tax cuts, becomes more robust.

But Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee, contended that budget projections already assume strong growth of more than 3 percent a year over the next few years. ``Even with growth we still have deep deficits getting even deeper,'' he said.

The CBO numbers, he said, do not take into account the $1.2 trillion that will be lost if tax cuts scheduled to expire over the next decade are made permanent, and another $878 billion in new tax cuts over the decade being sought by the White House.

This fiscal year's deficit has already exceeded the old record of $290.4 billion set in 1992 when President Bush's father was president. Republicans argue that the economy is much larger today than it was then, so the budget shortfall has less of an impact and is not a record when measured as a percentage of Gross Domestic Product. Many economists look more at the percentage of GDP than raw dollars in assessing the impact of federal budget deficits on the economy.

08/26/03 11:49 EDT
Copyright 2003 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press.  All active hyperlinks have been inserted by AOL."

Saturday, August 23, 2003

Afghanisan and Iraq - legal dodoA couple of interesting points: the "legal rational" for the war with Afghanistan was the Bush doctrine. This allowed us to remove the Taliban and try to eliminate Al Queda. However since we never occupied the country what rights and responsibilities to we have under the Geneva convention? I am not sure at this point if we have the right to tell the Afghans how to run their country even if we were able to.

I have heard it said that we have a certain bundle of "legal responsibilities" in Iraq under the rules of the Geneva convention since we are the occupying power (in the guise of a liberating force). However, if there were no WMD, then was the war legal in the first place and even if it was, what is our legal grounds for going after Saddam and his government if they did not have WMD. You can even ask if the killing of his sons after the end of the war was a political assassination since our grounds for being there in the first place may not exits. Now you can argue that Saddam was a murdering butcher as he undoubted was but the rules of national sovereignty allow that and that alone would not be grounds for invoking the Bush doctrine. We had better find something soon or we are gonna be in deep legal dodo.

Tuesday, August 05, 2003

terrorismterrorists strike jakarta hotel:


Thursday, July 10, 2003

deflationThe rise in mortgage rates nine-week high may signal and end to the low interest rate environment. If this is true then talk of deflation may soon switch to fears of inflation if monetary and fiscal policy has resulted in an over stimulated economy.
trading rangeThe market is now in a trading range from Nasdaq 1500 -1750. I expect a lot of resistance at 1750-1800 before the market finally move higher.

Saturday, July 05, 2003

hackingHacking contest to begin today!!!!!
open govHave u always wondered what our policians get up to. Check out the open gov project .....its a really great idea. Another good source is opensecrets.org .

Friday, July 04, 2003

be sure to check out all the best links on modelmotion.com

SADDAMsaddam is talking on al jazeera........that is never a good thing for the markets.
BushToday President Bush used the term "outlaw regime". What is an outlawry regime? Apparently Iraq and Afghanistan qualified. The question is...........in the future to what degree with nations respect each others sovereignty?
CHINAIs there any benefit or risks to the US economy if China lets the yeun trade freely?

...well if the yeun get stronger against the dollar then chinese products become less competitive against the equivalent us product..........but i am not sure there is a lot of overlap between what i made in china and what is made in the usa.................on the other hand it would force up the price of chinese products and that would increase inflation.

it will be hard for anyone to compete against china in labor intensive industries

chinese internet stock are soaring at the moment.....check out iiji, sina, china and sohu.
KANAKANA, a leading provider of enterprise customer support and communications applications, will join the Russell 3000
CHINATARGET="zx">china is hot!!!!!!!
iraqanother us soldier killed today......

...the usa is facing a situation similar to what the brits faced in n. ireland
unemployment just rose to 6.4%

...this is typical of what happens rite at the END of a slow down..........so start looking for ur condo.........interest rates may be heading up....so prices may drop..............

....however if it does rise about 6.5 we are headed for more trouble ahead

.....i think the 2nd half of the year will be good..........but that does not rule out a slow down in 2004.........that is the wild card at the moment.

.....all the pieces are now in place for growth in the economy but with growth comes increasing interest rates and that could quickly kill the growth that created it.......its a fine balance and only time will tell.

..be sure to look for great financial news links at modelmotion.com!!!