Stock Market Tanking Globally

[o_mlly]

... You are in a higher danger than for example people in Europe, where people are more protected against poverty or homelesness, where education or healthcare is free etc. ...

Education and healthcare are never free. Financing these services through government programs requires funding -- doctors, teachers, etc. need to be paid for services rendered. A government already deeply in debt will likely need to incur even more debt (if they can) or increase taxes to continue "free" services.

 

[trophy33]

Education and healthcare are never free. Financing these services through government programs requires funding -- doctors, teachers, etc. need to be paid for services rendered. A government already deeply in debt will likely need to incur even more debt (if they can) or increase taxes to continue "free" services.

Free in the meaning you do not need to care about it in recession, when you, for example, loose your job - your children can still study, you can still go to a dentist etc. Therefore you do not need to prepare an individual financial reserve for it, in the most of Europe. Its paid automatically from everyone's salary by an employer, before the salary is paid to an employee. The same applies to maternal leaves etc.

In the USA, the economy is more individualistic and therefore higher individual financial reserve is needed.

 

[o_mlly]

Free in the meaning you do not need to care about it in recession ...

Not always, and certainly not forever.

If your government does not in good times aggregate its surpluses for the bad times (as Keynes thought) then the inevitable bad times will substantially increase deficits in two ways. Unemployment increases will reduce tax revenues and transfer payments will increase government outflows.

 

[trophy33]

Not always, and certainly not forever.

If your government does not in good times aggregate its surpluses for the bad times (as Keynes thought) then the inevitable bad times will substantially increase deficits in two ways. Unemployment increases will reduce tax revenues and transfer payments will increase government outflows.

In 2008/2009 the unemployment was about 10% here, I think. It was totally possible to pay the housing, education, leaves or health care from the social/health care insurance, for 10% of people, temporarily.

However, the difference in economical models does not change the fact that an American needs to create a much higher individual financial reserve than in the EU, Canada, Australia, Russia, most of Asia and similar. And now, most probably before another US recession, its important to stress that.

 

[timewerx]

You are in a higher danger than for example people in Europe, where people are more protected against poverty or homelesness, where education or healthcare is free etc. You must be prepared more, as an individual.

Ain't that the harsh truth about SOCIAL welfare countries!

Actually, the only people in danger are those paying for an expensive mortgage and other loans, in other words, those in debt.

I know because I'm paying for a parent's debt. It really sucks when you realize it wasn't even needed because it feels like you're wasting precious time and hard work for nothing.

 

[timewerx]

Not always, and certainly not forever.

If your government does not in good times aggregate its surpluses for the bad times (as Keynes thought) then the inevitable bad times will substantially increase deficits in two ways. Unemployment increases will reduce tax revenues and transfer payments will increase government outflows.

Sister's friends in Canada tells her you don't need to save money in Canada.

I thought it's a suicidal financial plan but her friends have been in living in Canada for around 20 years now so they probably know much more about living in Canada than I do.

 

[civilwarbuff]

If we somehow managed to make a $200B payment against the national debt every year, without adding one dime to the debt, it would take approx 175yrs to pay it off. Which means your great x5/6/7(depending on your age) will still be paying for it (assuming they are still around of course). The so-called "budget nonsense" has to stop......

 

[o_mlly]

In 2008/2009 the unemployment was about 10% ...

The peak unemployment rate in Oct. 2009 reached 10.1% in this relatively mild 18-month recession. It's worth noting the difference between recessions that are endured with external supply shocks (Nov. 1973 - Mar. 1975) or consumers responding to stagflation (July 1981 - Nov. 1982) where peak unemployment reached 9.0% and 10.8% respectively.

We recover quite well if the recovery (essentially, a redeployment of our scarce resources) is not hampered by conducting foreign wars, or dramatic price increases in essential imports, or consumers trying to stay in front of perduring inflation.

Presently, imo there is considerable nervous money in the stock market. The pending decreases in interest rates make the bond option less attractive than before. The nervous money would prefer exiting before a market crash, so equity investors are in a kind of Musical Chairs game.

I don't want to go into a rant here, it's just my opinion, I could be wrong. (A tip of the hat to Dennis Miller.)

However, the difference in economical models does not change the fact that an American needs to create a much higher individual financial reserve

We agree. Aggregate saving equals private investment in supplying more or improved goods and services. The caveat is, of course, Iff government borrowing does not crowd out private investment.

 

[Pommer]

Recovering from a hangover is always painful. Your alternative?

A military budget in the neighborhood of $400 billion, would be a nice start.

 

[Pommer]

If we somehow managed to make a $200B payment against the national debt every year, without adding one dime to the debt, it would take approx 175yrs to pay it off. Which means your great x5/6/7(depending on your age) will still be paying for it (assuming they are still around of course). The so-called "budget nonsense" has to stop......

Of course most of our nation’s public debt are monies that we owe to ourselves.

 

[trophy33]

Of course most of our nation’s public debt are monies that we owe to ourselves.

Which is not as "OK" as it may seem at the first glance. The debt owners are made of the individual US retirees, families, retirement funds etc. If they will not get their money back, it may have a catastrophic impact on the social situation and on the functioning of the social system as such.

 

[civilwarbuff]

Of course most of our nation’s public debt are monies that we owe to ourselves.

Unless you own treasury notes, bills, savings bonds, etc you won't see any of it. You'll just pay for it. And even if you do own some you will still pay far more than you own. Currently that stands at about $106,000.00 for every man, woman and child based on a pop. of 330,000,000 and a debt of $35,000,000,000,000.00 and rising.....

 

[timewerx]

A military budget in the neighborhood of $400 billion, would be a nice start.

I thought it's a lot higher than that.

Maybe part of the budget is used to develop a convoluted scheme to eliminate national debt

 

[o_mlly]

A military budget in the neighborhood of $400 billion, would be a nice start.

The budgeting process for defense spending begins with the president receiving advice from the 18 organization that comprise the US Intelligence Community (IC) agencies. He then decides the threat level and directs DoD to submit a plan and budget to have the capability to defend against those threats -- currently to have the capability to wage a two-front war.

The FY 2024 budget request, $886.3 billion, goes to the House for approval. The House approval for FY 2024 is $814.4 billion.

Now, you suggest that approval be halved. DoD would ask the president, "Which of those 2 wars is it OK for us to lose?"

 

[o_mlly]

Of course most of our nation’s public debt are monies that we owe to ourselves.

Not exactly. "We" and "ourselves" are not the same. All of our nation's public debt (as is all debt) is owed by the debtors to its creditors. It does not matter if those creditors are US citizens or not.

Krugman floated this fallacy in 2015.

 

[Merrill]

Not exactly. "We" and "ourselves" are not the same. All of our nation's public debt (as is all debt) is owed by the debtors to its creditors. It does not matter if those creditors are US citizens or not.

Krugman floated this fallacy in 2015.

Krugman has done more to impart false ideas and bad economic science onto the public than anyone else

I do not have a PhD in economics, but there have been several examples where that guy has said something so wrong, even I easily saw it (like your example above). He does this deliberately

 

[oikonomia]

Someone once asked "Do you know how much wealth Howard Hughs left when he died?"
I said I did not know. He replied "All of it."

 

[Merrill]

A military budget in the neighborhood of $400 billion, would be a nice start.

Agreed

but I don't see either party willing to cut defense spending by a penny

remember when Bill Clinton actually cut defense spending, closed bases, etc.? Back when the Democratic Party was sane and rational?

we can't afford to police the entire world anymore, and we better figure out an alternative

 

[timewerx]

we can't afford to police the entire world anymore, and we better figure out an alternative

When Russia used to be USSR, it made a bit of sense. If NATO not intervene in the latest Ukraine vs Russia war and Ukraine surrendered early, casualty figures might have been a lot less.

Israel and USA is like UK to Australia. It isn't about managing terrorist orgs in the middle East. If Israel decides to go to war against Russia, USA will involve itself no matter how catastrophically stupid the consequences are.

And maybe giving tons of money to defense contractors is good for the economy? War is good for business? Perhaps that's America's business model we'll never know.

 

[NxNW]

Well, this thread hasn't aged well.