federal rebates

The Core RPGC Main Forum
21

I didn’t respond to your post because I had no idea where to start. You start off by saying a nation’s psychology is culturally determined - looks like your thesis, but that’s not the point you end up making. You list government irresponsibilities that various segments of the population supported. Then you mention the media and how it affects our psychology – as though to say, “Xwing, you’re right, people’s psychology <i>can</i> be affected in meaningful ways. If only the media would maintain a more positive demeanor!” You point out the deficiencies of our scientific education. And you conclude that it’s absurd to think a tax rebate is going to reverse our decadence.

The gist of your argument seems to be, “Our own decadence over the course of many years has brought us to where we are, and no $300 rebate is going to fix that.” But nothing about that contradicts me. I never said that $300 could fix decadence. I don’t even know what “decadence” is. It’s a much “fluffier” concept than psychology. People always claim their generation is decadent, and never offer comparative analyses to show how they’re different from their more virtuous forebears.

All I said was that a rebate could incite low-level consumer spending, triggering higher-level consumer spending; and that telling consumers the rebate will do nothing will only help to ensure that it does nothing. Where does decadence – or easy biology courses or intelligent design – even enter the picture, other than in a very general, “We’re fucked no matter what we do,” sense? Isn’t your “we’re decadent -> we’re fucked” argument just a general retort to basically any discussion of American politics?

I responded by saying I’d provided a mechanism for how psychology affects consumer spending, in hopes that you’d critique <i>that</i>. I’m not prepared to deal with a “we’re decadent -> we’re fucked” argument, and I don’t think it’s immediately relevant anyway.

I could point out that you’re seizing on a three-sentence commentary on Reagan as illustrative of my post, when it’s not; and that it <i>was</i> relevant to what SK had been saying; but I’ll let SK decide whether or not I responded to him.

Bottom line is, you can’t expect a potential bump in sales to revive a struggling economy when the people themselves have no savings or economic security to begin with. Even if people do go out and spend their money, they can’t keep spending money after a short bump in economic activity because they won’t have any money to spend.

I’m not convinced at all that our savings are so disastrously low, that some long, slow period of accumulation is necessary to “fix” our economy. I don’t think we’re objectively worse off than post-WWII Americans, and they came out just fine. Regardless, your argument here doesn’t follow from your main argument, and you’ll only convince me by solid evidence distinguishing us from other generations.

22

I wasn’t trying to form a unified argument, I was putting together whatever examples that came to my head as to what did affect a nation culturally and or what that resulted in.

So I’ll clarify my main points and admit I was sloppy.

-A decadent population results in irresponsible policies that are allowed to run rampant. These policies are fiscal, as demonstrated with the the economic and housing crisis and military, as demonstrated with Iraq. Individual do not care about these things as long as their personal comfort level is not disturbed.

-Decadence also makes it so that people end up not making much of an effort to achieve anything, which actually alludes a bit to what YOU were saying. This is where I come in and start talking about education and how science education is going down the toilet and how as a result, technologically, its only a matter until the country falls behind. You don’t want to import labor on your most important and secret projects do you? The thing is, it also includes civics. When citizens don’t care about their education but only what the latest spiel is on Britney Spears, they’re a lot more malleable easier to manipulate , which leads to problems like what I mentioned in my first point.

-Now your answer to that is that they should be easily manipulated to be happy then. And the truth is that THEY WERE. For a while. Now the truth is really starting to sink in and now people are starting to be disatisfied because this is when we come down to my final point: people can’t keep spending money post-rebate if they don’t have any money left. Your argument to that is that they can because you don’t believe they don’t have any savings. The truth is that every financial analyst has been saying that people have been saving less and less of their income for the past 20 years, down to single digits. The entire problem we’re in is because people built up massive debts while hoping that it would be compensated by the rising values of their homes. Since that went down, so did their safety net, which means they have no money.

-Ultimately, I wanted to make a point that culture encompases many different things, which is a bit what you refer to as my thesis statement was about. Above are a few broad examples that you really can’t alter by throwing around a couple checks because they are very long term issues that took time to develop on top of OTHER long term issues and it will take even longer for everyone to sort things out.

-What do investors care about? A reasonable rate of return. When you want to hedge your bets, you don’t want to depend on whether or not people are “depressed”. If anything, if people are happy and these events like the market crash or the iraq war are happening, its a sign to get out because you know the populace will become unhappy. It will only be a matter of time before the shit hits the fan, which as you know, it did. If you want to make investments into technology, if your society is falling behind because your decadent lazy populace doesn’t want to put up the work or wants to believe in whatever pseudo science makes their world sound nicer, you don’t invest there. You invest where people are doing hardcore work on novel revolutionary technologies, regardless of the psychology. That was my point about the palm jumeira. What makes a society a worthwhile investment has to do with things a lot more complicated than are they depressed or not because you can predict they certainly will be when the bubble pops and all the money they thought they had, they never did, as SK mentioned. And at this point you won’t get your investment back and not because they were depressed but because they got screwed (which is why they’re depressed).

(I’m done editing my post now)

23

Exactly, and that is the point. Government spending does not occur in a vacuum. For the past two decades, American markets received a very large share of all the foreign investments in the world. This led to colossal hubris throughout American society and government. Banks and insurance companies embarked on hazardous and outright fraudulent activity in the subprime fiasco because they were confident that foreign capital would bail them out if something went wrong. The American government confidently spends billions of dollars on unnecessary, ideological interventions because it believes that, no matter what happens, the world will always continue to invest most of its free capital in American markets and use the dollar as its reserve currency, even on unfair terms, solely on the strength of American confidence and nothing else. If Americans don’t save, it’s because someone else does.

“Overspending” is more than just bad policy, it has become, along with war, the default mode of discourse and the default method of solving problems. Even those politicians who advocate “limited government” in words, really only advocate cutting a few social programs that they personally dislike – but when it comes to other massive social engineering projects, most notably wars, they fall over each other clamouring for more money. And it is fair to name Reagan as the most relevant starting point for this mentality – he made a few cosmetic cuts, while expanding the overall size and power of government, and encouraging the idea of the “image” and “psychology” of America as America’s biggest export, even as individual debt went up and individual purchasing power went down.

Whatever “success” this mentality led to, it was a one-time jackpot, not a right to receive a free lunch continuously throughout eternity. Now, foreign investors (e.g. China) are gradually beginning to decide that they will no longer participate in an unfair game where they are only allowed to buy up worthless subprime derivatives, and barred from acquiring solid companies. You can be as “confident” as you wish, but that is no longer enough to shake their belief that they simply can’t afford to trust a dollar that is being tied to increasingly more and more half-assed, unsafe projects. The recent food crisis, for instance, is due precisely to this phenomenon, the reason for the rice shortage is because foreign countries choose to exchange their dollar reserves to buy it rather than the other way around.

In this context, blaming individual Americans for a “depressive” attitude is, at best, puzzlingly off-target. Their lack of confidence was caused by a crisis which arose from overconfidence to begin with. I am sceptical of the effectiveness of tax rebates, not because I think it’s a “ploy” or because of the relative merits of progressive vs. regressive taxation, but because I think the situation was caused by systemic, overconfident spending and insufficient accumulation of wealth (savings), and now that no one else will provide that wealth, the situation can only be fixed by working more and saving more, not by spending even more indiscriminately. Far from limiting its activities to handing out money and encouraging its immediate spending, the Roosevelt administration made heavy investments in “fundamental” things like infrastructure. Another project like that could have the potential to stimulate the economy in a similar way, but no one seems to be proposing one.

24

essentially it’s just like what happened to Japan when it’s “bubble economy” burst… except it didn’t really have the disatrous borrowing policy… and it primarily lost its main investors because the World Bank saw to raise the value of Japanese currency a few hundred fold… So almost the opposite. America is losing investments because of the huge risk. Japan lost them for not being competitively priced anymore… So… maybe the opposite? Still very bad for the country’s income.

25

Yeah, uh, I was about to point out that from everything I’ve heard, one of the reasons (I’m even tempted to say main here) the American economy is starting to get so fucked here is that there hasn’t been nearly enough investment in infrastructure - it’s all been in projects that aren’t self liquidating, ie, the army and it’s various wars. When you don’t invest in your infrastructure, the inevitable result is that the future spending power of your country will decrease - which is what is happening to America right now.

26

I’d like someone to explain to me how sending people a check for a small sum of money is going to help lift the economy in the long term. It makes no sense to me.

Unfortunately, the rebate only makese sense if the economy is two seconds away from disaster. The best way to describe this is that its sort of like putting $1.00 in an almost empty gas tank in the hopes that you’ll reach a gas station before the $1.00 worth of gas gives out. The idea is that we’re so near a real collapse that helping the economy in the short-term - by preventing a collapse - will help it in the long-term. If your car runs out of gas, you’re screwed, and even a paltry amount of gas in the tank is a world better than being stranded. If there’s a collapse, there won’t be a “long-term” for a very long-time; but if we can keep things going just a little longer random chance may save us.

Now, notice I said ‘the rebate only makes sense if…’. Its possible that we’re not near collapse, that the whole thign is meaningless and political. But I find that unlikely given how quickly both Republicans and Democrats passed this thing.

27

Just a little note here: the foreign financial institutions also got involved in this “made in the USA” mess. Switzerland’s UBS has written down over 37 billion dollars of sub-prime losses in its latest financial report (and another 10 billion dollars writedown to be announced soon); Japanese financial institutions lost 5.6 billion dollars in the last three months on securities backed by troubled US mortgages; a couple of German banks have been taken over by their competitors for a fraction of their net value a la Bear Stearns fire sale to JPMorgan.

An interesting development on the stimulus package scene – there was a slight variation in Bush’s comments on what the rebates could/should accomplish.
Bush last months: “When the money reaches the American people, we expect they will use it to boost consumer spending,”
Bush last Friday: “The money is going to help Americans offset the high prices we’re seeing at the gas pump, the grocery store…”
Now, that makes more sense. In any case, my portfolios are fully loaded with energy sector picks.

28

They’ll need to pour major sums into the American infrastructure. I’ll find a couple links later and post them. It is a problem that if you give x dollars to keep a road from collapsing, you’ve spent that money to keep your current benefits, not necessarily to get any new ones. But if you don’t take care of the road, you lose its positive effects.

29

I find it funny to see Americans talk about their infrastructure and how it requires investing. You guys really need to come to Quebec. This place hasn’t had any infrastructure funding in 50 fucking years. I wish I was kidding.

30

That’s the problem with infrastructure; it’s so damn hard to convince people that it’s important.

You can’t see it.

You can’t touch it.

You can’t hear it.

And in the case of Americans, it can’t be used to kill “terrists.”

And yet, you can’t live without it. Kind of like death, or that smelly nerd that does your taxes because you spent all day playing football and not taking match classes. And when it goes, you’re fucked. Like we are now.

31

For the record, infrastructure includes stuff like roads…unfortunately, as everyone sees them as belonging to everyone, they belong to no-one so no-one does anything and everything just goes to shit.

Of course, this applies not just to self-liquidating projects like roads and such, but social infrastructure like schools or the health system. There’s also been a bit of a lack of investment there.

And yeah, I know you have to walk to even stay still with infrastructure Rig, but even staying still is better than going backwards.

32

…I’m by nature an optimist, but I don’t understand why no one seems to remember the bridge that collapsed last yearin Minnesota as a result of infrastructure not being financed. It was a major news story and you had loads of folks focusing on the infrastructure for a few months.

Then everyone just forgot about it. It’s a good thing I’m usually impervious to cynicism.

They were talking aout the stimulus package on the radio as well; it’s a pretty dumb gamble. Dana Parino says that the President won’t tell people what to do with the money, but if they don’t spend it the government’s just further in debt and didn’t get anything for it.

Retailers are making deals with those government checks; shoppers get 10% extra value for them if they put them on a gift card. Seriously. That’s the incentive I’ve heard. The best they came up with.

33

Surely, I was just saying why it doesn’t always seem so attractive. Whereas if you upgrade a company’s network (which is another kind of infrastructure) to 50% extra speed for the clients, at the end of the day you get a better network, you can brag about it and hope to get extra clients. But I don’t think voters (=politicians’ clients) would get that excited about a new road, while the current one serves them.

The health and edu system seem to be a black hole in most countries, don’t they?

34

Unfortunately both these statements are true, at least of countries with reasonable infrastructure. Not that I’m suggesting health and education are easy matters to deal with: but taking money away from them certainly doesn’t seem the best way.

35

Man am I glad trips to the doctor are free for me. I don’t even go very often, so I feel sorry for the people who pay thousands repeatedly.

36

As an interesting aside about government spending, New Jersey’s government has recently been having to deal with a huge decrease in tax revenue, with people clamoring for the state to lower property taxes (which are the highest in the country last I heard) and more and more businesses leaving NJ, not to mention the mess the economies in as a whole. So what does our Govenor do? He’s cut the budget down to about $33 billion dollars, a cut of about $5 billion I think. I almost cried when I heard this. Finally, a government is cutting back spending! And he’s considering cutting the budget even more! Of course, now everyone and their mothers are trying to convince the state that they their program is so awesome and they shouldn’t cut them so much but these other guys over there, but that’s to be expected. I’ll try to find a news article with more details, it’s fairly interesting. Of course, this isn’t to say that other states aren’t having difficulties of their own, but this is just the one I’m most familiar with, considering I live here :stuck_out_tongue:

Also Trilly’s Avatar rocks.

37

That could be an excellent way to built a healthier economic environment; or going the other way, by reducing the corporate (business) taxes or/and offering tax credits, could also be a winning strategy.
http://primebuzz.kcstar.com/?q=node/11439

The State of Indiana is the prime example of how the competitive, business-friendly tax policy could succeed.

38

As an interesting aside about government spending, New Jersey’s government has recently been having to deal with a huge decrease in tax revenue, with people clamoring for the state to lower property taxes (which are the highest in the country last I heard) and more and more businesses leaving NJ, not to mention the mess the economies in as a whole. So what does our Govenor do? He’s cut the budget down to about $33 billion dollars, a cut of about $5 billion I think. I almost cried when I heard this. Finally, a government is cutting back spending! And he’s considering cutting the budget even more! Of course, now everyone and their mothers are trying to convince the state that they their program is so awesome and they shouldn’t cut them so much but these other guys over there, but that’s to be expected. I’ll try to find a news article with more details, it’s fairly interesting. Of course, this isn’t to say that other states aren’t having difficulties of their own, but this is just the one I’m most familiar with, considering I live here :stuck_out_tongue:

My dad bitches about this all the time(I also live in NJ).

39

Just logged into my checking account and noticed the $600 deposit. I’m not complaining, it’ll cover my trip to Pittsburgh this weekend: tickets to Pens / Rangers game 5, hotel, and dinner at Ruth’s Chris.

I’m no economist, but I did a quick search and it looks like the number of homes in “some state of foreclosure” in the first quarter this year is around 650,000. First of all, I don’t feel sorry for people who agreed to take on a mortgage with a variable interest rate. Second, how many of these homes were being rented out? Third, how many were “interest only” mortgages? Fourth - if an increase in the interest rate was the straw that caused you to foreclose, you overspent on the property by a ridiculous amount and contributed to the sad increases in property values.

Property values have been increasing so rapidly that people have been taking out interest only loans. The thinking was that if you buy a 300,000 dollar house, it’ll be worth 500,000 in two years, so you just sell it then, and use the 200k profit as a down payment on a more expensive house. So why not just take out multiple interest only mortgages and become a millionaire in a few years sitting on the couch the whole time?

Where does it stop? Well, it looks like it finally has - there are 18.6 million empty homes in the US right now, 2.3 million of which are for sale. I’m glad to see this happening because I don’t own a house, but I’m looking to buy sometime in the next couple years.

And oh yeah - topic. The rebate is supposed to infuse a few billion into the economy. I’m doing my part. Along with the interest rate drops, it’ll help stimulate the economy a tad, and probably increase public opinion slightly. But, as has been said, it’s nothing more than a band-aid on a much larger and very complex problem. I don’t know that the rebate is “printing money”; if it’s coming from government tax revenue then it’s really just being given back to us.

While the $600 is nice, I’m going to forget real quick seeing as how it takes $60 to fill my tank with gas now, and it’ll probably cost $75 soon.

40

Gah, what’re prices where you’re at? O_o

As for the rebate, I’m saving my cash to help buy a laptop for school >_>