Stimulus package and the economy

[tcsmpsi]

I really don't know what folks expect.

Just using some reasonable numbers/percentages, just take a logical look at the 'economy'.

Let's say 35-40 yrs ago, the job that paid $2.50 an hr, today pays $7.50 an hour (there are some jobs I'm aware of then/now in which those numbers are true).  That is an increase of 300%.  Using one of our most indicative expenditures, gasoline, 35-40 yrs ago let's give it .50 per gal.   Today, between gasoline and diesel (many more vehicles using it in this country today), we can easily and reasonably say that it costs $3.00 a gal.  That is an expenditure increase of 600%.   I believe that, overall, we can easily and reasonably that our 'average person' tax increase is at least 200% more than it was 35-40 yrs ago (more things taxable/government fees/registrations/etc., etc).

I know what I paid for utilities, etc. 35-40 yrs ago, and it falls pretty much in line with fuel increases.

So, in a society, over a 35-40 yr period, the average person's income has risen 300%, while their major expenditures have risen around twice that amount.  So, for all practical purpose, the average person's wages are basically half of what they were in 1970.  The 'mystery' of folks going to credit to have things (things are offered, this is America, the average, hard-working person should be able to have them, right?).  In many cases, just basic necessary things.  

Though wage difference may have a significant bearing on some businesses moving and/or closing, the tremendous tax burden on a business here is no insignificant factor.   Taxes, fees, permits, matching social security, benefits, workmans comp, etc.

35-40 yrs ago, more taxes levied and collected were actually utilized in this country than they are today.  We're spread out all over the world attempting to take care of other people's business, while ours is being sorely forgotten.

Though the 'government' may boast some sort of 'tax-cut', it will never be.  Government has become a bankrupt business.  Whatever littlle dollop might be 'rebated' or 'cut', will be made up for in some manner.  

In strictly a business sense, a merger or hostile takeover is inevitable.

More and more folks are maxing out their credit abilities, while the credit furninishing entities are, instead of being reasonable stewards, cutting their throats while raping them.

So, how can consumer spending possibly increase?  
 

I suppose I always just took too simple a view of 'economics'.   I always figured that with those in government having their own agendas, and the Public always wailing and wanting government to provide and control every little aspect of their lives, that one day the cost of that would be more than was possible to squeeze from the taxpayer.  Just a matter of time.  I believe history is full of similar instances.

The closer that moment comes, the more it will effect every aspect of the Public's availability to spend, for there won't be much to spend.

Though I have not sit down and figured just exactly how much I pay in some sort of government tax/regulation every day, just a quick overview is indicative of that very thing.  

[badpenny]

   I hope that a "rebate check" never does appear in my mailbox or bank account. I don't need it. nor do I want it.  I'm guessing here, but that $ will probably be taken off any fed income tax refund next year. It has been my experience that "the government" only gives a person something that has already been taken away.
    I don't have a solution yet, but most financial problems of the magnitude this country has at the moment have been historically solved by recession/depression or war.  IMHO, we should bring all our overseas troops home, and all our overseas spending should stop. But this also may lead to recession/depression world wide, and possibly war as well.  The ultimate solution to America's financial problem is going to hurt someone/everyone somewhere in some way or another. And it's not going to be pretty or instant.

[DanG]

I think the theory behind the tax cuts or rebates is that the money will come back to the Gov't anyway.  The money isn't really being spent, as in "used up", but is just being circulated.  Every time a dollar is circulated, somebody pays a tax on it.  If you could trace a single dollar as it circulates, you would find that the Gov't, at some level, recover's an entire dollar in an amazingly short time.  Money given back to the people is not only good for business, it is good business for the Gov't.

[thedeeredude]

The government is just out of hand, just like our highway departments here, 5 man crew, 1 working, 4 watching. To many chiefs not enough indians.

Where I work is union and I'm not allowed to work outside of my job class.  I can't drive a truck with a snowplow to clear the roads, but I can drive that truck to haul wood debris even if the plow is still attached as long as I'm not clearing the road.  The highway departments are probably under AFSCME like I am.  One group of workers can do one thing but not another but another group can do both things.  Ain't it great.  We could get a lot more done if people would quit bickering about who can get what done or who's allowed to do this or that.  But if you try to do more than you're supposed to you're made fun of and scorned.

[Larry]

All this gloom and doom is depressing me.  Anybody know bright spots?

I’ll throw out a few that I’ve noticed.

Thirty year fixed rate mortgages are flirting with near record lows along with the points.  A great opportunity for first time buyers or somebody looking to refinance...and the banks are loaning...to those who can keep there finances in order.  I can remember payments associated with double digit mortgage rates in the 80's and it kept a lot of family's out of the housing market.

A glut of houses on the market at reasonable prices...again a golden opportunity for the first time buyer.

Just over 3 months ago the DJIA hit a record high.  Every sign from the economy was screaming SELL.  Now were in a market that might be a bargain hunters dream...just figure out exactly when to buy.

Kathy's new Honda CRV gets better than twice the mileage of her new at the time 1982 S-10 Blazer.  Far less maintenance expense...and it leaves fewer parts strewn along the roadside.

And Walmart had a 32" TV for less than $300 the other day...wonder how much one of those suckers would have cost me 30 years ago?

[Fla._Deadheader]

 If anybody gets pithed, sorry about that. If you WORK for any Govt. and CARE about doing what you get paid for, then, good for you.

  I'm talking about those that hide in the bathroom, visit others , get way too many breaks at the cooler, or coffee pot. You all know the ones I'm describing.

  Let me give you one example. My Dad worked for the town, as a mechanic and parttime dozer operator. He KNEW what he was doing. He kept around 39 pickups, dump trucks and Garbage trucks on the road or standing by, nearly by himself. Kept salt spreaders and plows from seizing up and ready to go when needed. ALL this, nearly solo. Just before he retired, they gave him a helper. He was a greaseball-moron. I knew him personally.

  An example, one day, a driver came in and told my Dad that the horn in his dump truck blew, everytime he made a left turn. Some of youns recollect the wire going down the steering column   That's what this was.

  My dad told greasy to go fix it. He wasn't gone 5 minutes and crawled back up on the bench, to BS with the guys. Dad asked him, did you fix it   YUP !!!  How   CUT THE WIRE 

  These vehicles ALL had to be licensed AND inspected.

  M Dad never had "Lifts" in the garage. All "trucks" have plenty of room under them to work on. Greasy whined forever about getting lifts in. Dad didn't want them, to stumble over and clean around. Just a problem. HAD Trans jacks, and several Floor jacks.

  He wasn't retired 3 months when lifts went in, ALL 3 STALLS.   First job was fix a garbage truck. Greasy drives one in, raises it up on the lift, and pushes the roof up on the garage. 

  Another time, Dad takes off to go Deer Hunting. Greasy is FUMING. HE wants off.  dad told him a dump truck needed brakes. They DID NOT work. Bring it in and strip it down, so first thing Monday he could go for parts. Greasy laid around until 11:30 and then remembered, gotta strip the truck. He runs out comes tearing into the garage and YUP, no brakes. Drove it into the block wall, knocking it out, right on top of another workers convertible GTO    Happened to sammich the Forney 240V welder in between the truck and block wall.    Dad brought that home after they bought a new one, and we worked for 2 nights carefully prying it back into shape. Only one "socket" did not work. 

  THESE are the kinds of people we don't need working for the Goobermint.  They's MILLIONS of 'em.    DON'T get me started on WELFARE SUCKERS 

[johnjbc]

This thread sounds like Ron Paul’s Platform

[thedeeredude]

Oh yeah, we're not allowed to work through break either.  We could in an event but get paid time and a half for that 15 minutes, but the union would get on us if it wasn't an emergency like snow removal.  We're not allowed to work more than two hours without a break, must take a lunch break, half hour, after working 5 hours.

[Rocky_Ranger]

Ya’ll remember last time we got a “rebate” on our taxes?  Seems like it was 2001 or so, I remember it ‘cause the next time taxes were due you had a premium to repay that sucker.  I remember how hard it was trying to come up with $ that were long since spent.  My beautiful, blushing bride didn’t want to cash the check.  Didn’t matter, it was coming out of your hide anyway.  I am a G’ubment employee now, but also hope I contribute more than I’m paid.  I do also know when you are having $ trouble you don’t just print more and hope for the best, you also cut spending.  I’d like to see some cut.  We are facing a significant shortfall in some of our $ in the USFS this year.  It will affect how much timber we can get sold, as well as other programs.  We’ve been lulled to sleep trying to put too many resources toward fire suppression and it now takes close to 50% of our budget to keep doing what we are doing on fires.  Ten years ago it was near 10%.  That 50% comes from the other programs, except for some emergency funding held at the National level.

Now, back to cutting some spending; pork barrel projects and most of what we pay overseas to buy friends to keep them from attacking us.  I don’t know where it goes, but I do know what it’s like to live on a budget.  I don’t make that much money, and doubt anybody else here does either………… 

Good call on the stock market, I don't have a whole lot of sympathy for the yahoos that got caught up in the sub-prime lending mess.  I guess me and you will help bail those folks out too.......

[thedeeredude]

   What is sub prime?

[jesse]

Sub Prime
This is a term used by lenders to describe the sector of Mortgage Problems. A sub prime mortgage is the same as a Non Status Mortgage, a Non Standard Mortgage, an Adverse Credit Mortgage, a Poor Credit Mortgage or a Bad Credit Mortgage. Put simply, it is a Mortgage for People with Credit Problems.

www.ukremortgagequote.co.uk/html/mortgage_jargon_letter_s.html

[Ron Wenrich]

Think creative financing.  Sub primes are ways of giving mortgages to people who really don't qualify.  There were reports of people who actually bought a house for $1 down.  I can't vouch if that's true.  But, a lot of banks and lending institutions got caught up in the easy loans with ballooning interest payments.  On paper, it looks good.

But, when the housing bubble popped, there was insufficient equity in the homes to support the mortgages.  That meant people who couldn't really make the payments to begin with would have to come up with more money to meet equity standards.  Then there were the increasing payments due to higher interest rates kicking in.  People started to default on payments, foreclosures went up, and the banks went into the red.

The losses didn't only come from our banks, but European banks have been caught up in the mess.   I heard Morgan Stanley and Citie Group have lost about $24 billion in just the last quarter.  

From the banks perspective, they had to feel confident that if their faulty lending practices got them in to a mess, they had nothing to worry about.  Afterall, the government bailed out the savings and loans fiasco back in the '90s.  But, this time the loss is massive.  Its all due to really poor lending practices.

And, its about to get worse.  People are now starting to default on both car loans and credit cards.  I have no sympathy for any of them.  Credit cards charge interest rates that organized crime would envy.  All allowed thanks to really good lobbying efforts.

Cutting back government workers or stop sending foreign aid or pork barrel spending are not the root of the financial problems.  We have a credit problem, and it comes from poor management.  Credit markets have been unregulated and have run rampant.  I know that's a bitter pill to swallow for those who like free markets.  We shall see if the markets will correct itself, or if the government will bail it out.  If the market makes the correction, then companies pay.  If the government makes the correction, then we pay.  

[jackpine]

Ron    In the end does it really matter? when everything is said and done only people pay as companies pass along their expenses to whomever is next down the line. If they cannot make a profit they will no longer be in business. As the old line goes, companies do not pay taxes, only people pay taxes

Bill

[Ron Wenrich]

I just read a few specifics of the tax rebate plan.  The Republicans want it so that people who actually pay the tax gets the rebate.  That means that families making under $24K/year will not get anything.  In order to get the full amount, you will have to earn over $40K/yr.  Low income and social security recipients are on the outside of this plan.

Of course, the Democrats don't want to exclude the lower income group (election year).  They're talking enhanced unemployment and food stamps to help the poor.  I wouldn't be holding my breath for that check.   

[Rocky_Ranger]

Great job on explaining Ron, it’s more than sub-prime, and does hinge on credit gone wild.  I use credit to my advantage but realize sooner or later all those bills will come due.  Some folks have no clue.  Just as the ones “buying” a house for $1.00 down, the faults lie with both the lender and the consumer.  What irks me is their mess still affect me, our lender (Countrywide) was sold to somebody else the other day.  I have no clue what that will mean long term, if anything.  But, their mistakes and the mistakes of many others have pulled the economy down the proverbial tube.  Housing got us into this mess and it will take housing to get us out……

[DanG]

Personally, I don't care if we have a recession, or even a depression.  What would it mean for the people of this Country?  It would mean that more of them would have to live like I do.  It just might help restore the work ethic of the Nation, and people would start to produce something instead of just pushing someone else's money from one place to another.  The Great Depression of the early 1930s was apparently a great character builder, as those who grew up in that time are now known as "The Greatest Generation."  I'm not so sure we would have prevailed in WWII if the hard times hadn't taught them how to work hard for the cause.

It is time to realize that wealth is not an "entitlement."  There are only 3 paths to wealth: 1. Have a rich Uncle that likes you an awful lot.   2. Live within your means and save your money.  3. Sit down at "The Big Poker Table."   If you choose that last one, as so many have, you better realize that the losers will always outnumber the winners.  The big mortgage companies are just now finding out about that, and are about to walk away with empty pockets.  So what?  It doesn't bother me if they have to move out of their condo, into a mobile home.

[LOGDOG]

Actually "housing" did not get us in this mess. "Poor decision making" on the part of consumers got us in this mess. A house is a basic need - has been for thousands of years. Add to that, there's actually no danger in buying a house with $1 down IF your agreed purchase price is fair or below market value and the terms are fixed and something that you are capable of dealing with long-term. The interest only lending and sub-prime mortage platforms would simply be empty lending platforms if we as consumers didn't buy into them. I mean let's call a spade a spade shall we?

The out of control spending that we see is a "behavioral problem". Not every American is plagued "buy" it. However, it's fair to say that the majority of Americans are.

As to government, I assume you all are voters? Remember that government officials are elected by a "majority". That said, the government we currently have is a reflection of what the majority of Americans voted for. If you feel that things need to be different I'd ask 'what are you doing to create awareness in your own circle of influence to get friends and family thinking about the direction things are moving'?

America is what Americans make it. That includes you and me. On that note where are you spending your money? Have you been to Wal-Mart lately? Supporting China again with your American dollars? Do you drive a foreign made vehicle or vehicle made in America but owned by a foreign company? Where was your TV made? How about your sawmill? America? (Sorry but it counts.) How about your home? Have any Canadian SPF studs in there that were sold to Home Depot for less than you can buy a log per board foot here in the States? ( I know we have Canadian friends here and a large part of my family is from Canada - but it's relevant.) How about your vegetables? Any chance that they were picked by illegals and sold to the big chain grocery stores? Illegals paid in cash - who go straight to Wal-Marts service center and wire the money back to Mexico and Panama with not one dime being taxed here in the States - yet they drain the medical system and other systems we have.

I could go on and on. The fact is, all of us in this discussion have contributed to the way things are. Some of us may have faired better than others - but it always come down to the decisions we individually make in our own households on a day to day basis.

As to the Stimulus rebate ... I have yet to see one person in this discussion mention investing in it anything ( from watermelon seeds to grow and sell to stocks etc.) in an effort to grow it for your benefit. Give it some thought. How many times could you double that $1,600.00 in a year? Even if you have to give the $1,600.00 back next year you've had use of it.

LOGDOG

[scgargoyle]

$1600- what's that in chainsaws? Ours will go in the bank, to be spent a couple years from now on our homestead. I know it's un-American, but we put less and less money into the economy every year. We have no car payments, no credit card balances, 10 y/o TV, and heck, overalls last for years, and never go out of style! We're in big do-do anyways, unless we do something like isolationism, which all the rich folk would never allow. Most of the world already hates us, and they're buying us up left and right. Soon, we won't know how to make anything, much less have the factories and equipment to do it. It's not a matter of if, only when and how. I don't see a tax rebate as anything more than a small band-aid on an amputated limb- the money's gotta come from somewhere. You don't burn your cabin to keep warm. I just hope I'm safely under the ground before someone else takes over.

[DanG]

Good points, Logdog.  I can only speak for myself, so I'll try to answer a couple of your rhetorical questions from that perspective.

I try to enhance my own singular vote by talking common sense to other voters.  I pay attention to what candidates say and do, and try to keep abreast of current affairs.  I read history and try to factor that in, so I can have an idea what effect those learned lessons will have on the future.

I try to use my money wisely, so I can have a comfortable life right now, while still building for the future.  If I spend money, it is toward those ends.  My idea of a luxury expenditure is a tool purchase, or something else that will help me be productive.  I did splurge the other day and buy a bundle of onion plants, because they were out of seeds.

I do shop at Walmart a bit, mainly because that's the only local option I have.  I run the risk of sending a few of my pennies to China to keep from sending it ALL to the Middle East.  Actually, I got curious a couple of weeks ago while I was in Walmart, and did a little survey of my own.  I picked up a few random items and examined them, and found  a surprising number of them were made in the good ol' USA.  

As far as housing goes, I claim to be building one, though progress is mighty slow.  So far it is all concrete and steel.  I'm not sure where that rebar was made, but it was purchased locally and I didn't see anybody there that looked like and "Illegal."  The Concrete was made with local sand and gravel.  There will be no foreign wood in the house.  I've already arranged to buy my framing from a mill down the road, and it will all be local SYP.  My plywood will come from Coastal Plywood, direct from their plant here in our county.  I've already arranged to purchase it through their offices in NC, and to pick it up at the plant.  Again, it will all be local SYP.  Any OSB I use will almost surely come from the GP plant in the county south of me, you guessed it...local SYP.  I can't say for sure where the tin for the roof originated, but it will be cut and formed at Garrison Engineering in Tallahassee.  The windows and doors I've selected are made in USA, and just about everything else will come off of my own mill.  In other words, I'm doing my best to keep it at home.

[Rocky_Ranger]

Of course it’s much more complex than we can discuss, it’s truly a “global” network/economy now and whatever we do individually won’t make a hill of beans anyway.  Might make us feel better though.  The Walmart discussion only tends to align the Union vs non-Union views.  I like Walmart, it allows me to buy goods and groceries for a fair price.  Their selection is good, quality seems fine, and they do sell many USA brands – especially in the grocery line.  I’ve lived where there weren’t Walmarts and can attest to the greed others show every chance they get.   

We’ll climb out of this mess but it’ll take some time.  With the election this year that will probably give us plenty of rhetoric on what to do, and hopefully all that hot air will shave a penny or two off our heating bills….