"Marshall Plan" for the US

[GrGr]

PIMCO 2005

Today, the global economy is on the threshold of upheaval. The U.S. has borne the majority of the costs associated with the substantial structural change in the global economic architecture of the past ten years. Severe trade and financial imbalances pose grave risks to international stability. Keynesian spending policies and monetary stimulus predicated upon by Adam Smith?s free trade dogma, and the importance of global growth have produced the vulgar externalities of unsustainable indebtedness in the U.S. and Japan and excessive reliance on foreign capital in the U.S. As shown in Charts I and II below, domestic, non-financial business debt outstanding in the U.S. roughly doubled from approximately $3.8 trillion in 1994 to approximately $7.6 trillion today. Over the same period, the U.S. current account deficit soared from approximately 2 percent of U.S. GDP to nearly 6 percent, or by about $3 trillion, accounting for 75 percent of the increase in U.S. debt formation. Absent a long overdue global restructuring, status quo policies yield to these imbalances. The U.S. current account deficit is forecast to grow to 8 percent of GDP in a few years.
...

"In effect, I am calling for a new "Marshall Plan" for the global economy: A plan to be led by the U.S. It will include a broad mix of domestic policy initiatives in the U.S. designed to boost saving, cut the federal budget deficit and shift the Federal Reserve?s objective function away from promoting consumption and toward a current account readjustment. The U.S. standard of living must decline substantially if these initiatives are to be achieved."

...

 

[Genx87]

The U.S. has borne the majority of the costs associated with the substantial structural change in the global economic architecture of the past ten years.

Time to make the rest of the world pay for their own structural costs.

 

[GrGr]

Peter Schiff: Euro Pacific Capital
December 24 2004

PIMCO Peeks Through the Looking Glass
In deadly serious terms, the paper argues that America's Asian creditors
should forgive a portion of the debts owed to them by the U.S. government in
exchange for the U.S. government imposing what amounts to a broad based
austerity program

PIMCO Peeks Through the Looking Glass
This week, PIMCO, which manages the world's largest private portfolio of
U.S. government debt, published on its web site a paper by managing director
Chris Dialynas entitled "Trouble Ahead, Trouble Behind," which calls for the
modern day equivalent of a reverse "Marshall Plan." In deadly serious terms,
the paper argues that America's Asian creditors should forgive a portion of
the debts owed to them by the U.S. government in exchange for the U.S.
government imposing what amounts to a broad based austerity program,
resulting in a substantial decline in American living standards. If debt
forgiveness for what purports to be the world's richest nation sounds absurd
to you, then you haven't really been paying attention to what is actually
happening in the global economy.
The paper further proposes that America's creditors would agree to this
restructuring because in its absence, their eventual losses would be far
greater, as the U.S. government would have no choice but to default on its
sovereign debt. It is certainly self-serving that PIMCO advocates that debt
forgiveness be limited to America's foreign creditors, thereby exempting
itself and its clients from shouldering any of the burden. The paper also
maintains that a self-imposed austerity plan would benefit America, as it
would likely be preferable to the far more draconian reforms that might be
forcefully imposed from external sources.
In the absence of such a "Marshall Plan" the paper discusses several methods
by which the U.S. might default on its debts. That the largest private
manager of U.S. government bonds would even contemplate default is
significant in and of itself; but that it could actually advocate it as
policy, however, should be shocking. This raises the obvious question of
what credit rating PIMCO believes U.S. government debt actually deserves? A
triple A rating basically implies a zero probability of default. Since this
paper argues that default is all but inevitable, it would imply that not
only should U.S. sovereign debt not be AAA rated, but that it should fall
into the category of junk.
However, while some at PIMCO may be contemplating the credit worthiness of
U.S. government debt, the rating agencies themselves are asleep at the
switch. Perhaps they are fearful of the potential political and economic
ramifications that a downgrade of U.S sovereign debt might produce. It has
always seemed a bit paradoxical that Japan, the world's largest creditor,
has a lower credit rating that the USA, its largest debtor. After all, if
the U.S. government owes the Japanese government close to one trillion
dollars, wouldn't a Japanese government default imply that these bonds were
worthless, meaning that the U.S. government had defaulted first?

HoweStreet

 

[Genx87]

So you can google.

Congrats.

btw is it me or does your 2nd link criticize your first?

 

[GrGr]

Originally posted by: Genx87


btw is it me or does your 2nd link criticize your first?

Does that confuse you?

 

[sandorski]

I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

 

[Mookow]

Originally posted by: sandorski
I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

People in the USA are too spoiled to accept that. They want to have their cake and eat it too. If one politician campaigns on a promise of fiscal discipline (specifically: cutting spending, increasing taxes or at least static tax rates, and the need to pay down the deficit ASAP), and his opponent campaigns on the promise of pork spending, lower taxes, and a pie-in-the-sky promise of surpluses through unspecified means... who is going to win?* To quote Demosthenes: "A man is his own easiest dupe, for what he wishes to be true he generally believes to be true."

*Not referencing the Kerry/Bush campaign, but american politics in general. Kerry was hardly the (direct) candidate of sensible fiscal policy (though he may have resulted in being it due to partisan bickering with a heavily Republican legislature getting nothing done but the bare essentials).

 

[SuperTool]

http://www2.pimco.com/pdf/MIS0...%20Trouble%20Ahead.pdf
in pdf

 

[jpeyton]

Just twiddle your fingers until the crash comes, and know that you were around during the turning point.

 

[Mill]

Originally posted by: sandorski
I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

Why is it ludicrous to reciprocate debt forgiveness?

 

[Helenihi]

What kind of retardation is this? The US is perfectly capable of paying its debts and is not even close to defaulting on any government bonds.

 

[ReiAyanami]

The US is perfectly capable of paying its debts and is not even close to defaulting on any government bonds.

i agree, our printing presses are perfectly capable of running 24/7.

 

[sandorski]

Originally posted by: Mill

Originally posted by: sandorski
I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

Why is it ludicrous to reciprocate debt forgiveness?

The Monetary system is already a system operating as a philosophy, simply writing off Debt to one of the most Wealthy Nations in the World, which can pay their Debt if they tried, just makes a mockery of the whole system.

Perhaps we should lend Haiti a $Trillion, let them Industrialize, forgive Debt, then lend the next Third World Nation a $Trillion.....rinse repeat until everyone is rich?

Those who Borrow into Debt should be willing to Pay their Debts. Those who can Afford to Pay their Debts should be held accountable for their Debt.

 

[SuperTool]

Actually, the foreign countries buying our debt have largely been doing it to prop up the US dollar to help their exporters.

 

[Mustafa Kemal Ataturk]

I am no economist, but don't you think tha if we cut pork belly spending like funding the National Endowment for the Arts, and funding groups that say that the money will go to AIDS education seminars and instead teach gays how to pick up dudes be a good start?

 

[Mill]

Originally posted by: sandorski

Originally posted by: Mill

Originally posted by: sandorski
I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

Why is it ludicrous to reciprocate debt forgiveness?

The Monetary system is already a system operating as a philosophy, simply writing off Debt to one of the most Wealthy Nations in the World, which can pay their Debt if they tried, just makes a mockery of the whole system.

Perhaps we should lend Haiti a $Trillion, let them Industrialize, forgive Debt, then lend the next Third World Nation a $Trillion.....rinse repeat until everyone is rich?

Those who Borrow into Debt should be willing to Pay their Debts. Those who can Afford to Pay their Debts should be held accountable for their Debt.

SO those who can't afford, then they shouldn't have to pay?

 

[Steeplerot]

Originally posted by: Mustafa Kemal Ataturk
I am no economist,

We can tell. Keep your dayjob.

 

[Mustafa Kemal Ataturk]

Now tell me what was wrong in my logic.

 

[Steeplerot]

nothing rush would love it. Good luck with that worldview it's going to get you far here. for new troll

 

[sandorski]

Originally posted by: Mill

Originally posted by: sandorski

Originally posted by: Mill

Originally posted by: sandorski
I've got a better idea: Elect a Leader that Leads according to Need. Cut Spending and/or increase Revenues to Balance Budgets and begin paying down Debt. It is Political Suicide to do so, but if one truly is a Patriot, one will lay down their Political Life for the good of the Nation. Debt forgiveness for the US is ludicrous.

Why is it ludicrous to reciprocate debt forgiveness?

The Monetary system is already a system operating as a philosophy, simply writing off Debt to one of the most Wealthy Nations in the World, which can pay their Debt if they tried, just makes a mockery of the whole system.

Perhaps we should lend Haiti a $Trillion, let them Industrialize, forgive Debt, then lend the next Third World Nation a $Trillion.....rinse repeat until everyone is rich?

Those who Borrow into Debt should be willing to Pay their Debts. Those who can Afford to Pay their Debts should be held accountable for their Debt.

SO those who can't afford, then they shouldn't have to pay?

I wouldn't say that, but there can be circumstances where Forgiveness of Debt makes sense. A lot of the more recent(last 20ish years) Debt Forgiveness for the Third World was due to the First World experimenting with Lending $s to the Poor in the Hope that they would Develop. Turned out not to quite work and it also turned out that Lending Standards were compromised too much in the endeavor. It was best to recognize the mistake, forgive the Debt, and move on to other methods.

In contrast, Forgiving the Debt of the Nations in the First World will completely undermine the respect that should be given to Debt. Debt is a Fundamental part of the current Monetary system that is based on the concept that if I give You Credit, You Pay me back the amount + Interest. I give You the money, because eventually I will Profit from the transaction. If You do not pay at some time in the Future(aka, I forgive your Debt), then what would encourage me to give You Credit in the first place? I best keep My money and Buy gumballs then to Invest it under such a System.

 

[miketheidiot]

Originally posted by: Mustafa Kemal Ataturk
Now tell me what was wrong in my logic.

becuase what you just listed is extremely minor in the scope of our government. If you want to cut the deficit, there are really only 2 places to look, Tax increases, and military cuts.

EDIT: forgot Social security.

 

[Mustafa Kemal Ataturk]

I found out that this forum is a left wing ambush on right wingers like me. But hey, while I'm here I'll defend myself, and in the process hope to change your mind. By the way, tell me why you think it's wrong. Don't just say it's wrong because Rush, who I don't care for myself, says it.

 

[Mustafa Kemal Ataturk]

I'm saying that they are steps. They take millions of dollars away from needed programs. I also say get rid of Welfare, its' already been proven a failure.

 

[Engineer]

Originally posted by: miketheidiot

Originally posted by: Mustafa Kemal Ataturk
Now tell me what was wrong in my logic.

becuase what you just listed is extremely minor in the scope of our government. If you want to cut the deficit, there are really only 2 places to look, Tax increases, and military cuts.

EDIT: forgot Social security.

I disagree. I think that there can be cuts in everything, within limits. It's called cutting the pork, and in programs that are needed, it's called "continuous improvement". Business continually refines it's processes to get the best bang for the buck and the government should do the same. The government, at the federal level (other levels for that matter) has grew so large (and is increasing sadly ) and really has no scope of what it's spending, how it's spending, whether it's getting a good deal or ripped off (most likely).

While the major funding goes to entitlements and military, other cuts do add up and can be done without effecting the many programs that are worthy of funding.

This reminds me of working on machinery and trying to improve cycle time. I've had people tell me that cutting a .1 (1 tenth) of a second from a process doesn't help when they need 8 to 10 seconds cut. But if you cut .1 to .2 in each process and there are 35 steps, you get between a 3.0 and 7.0 second savings. It ALL DOES add up.

Again, as in business, everything can be reduced and still have the same product. I think that the goverment could do so, and probably much more than most business, which has already cut most of their pork and fat years ago.

 

[Steeplerot]

Goes right back to the lack of accountability of the current administration.