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TCO
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Richmond, VA
Jan 1970
time: 00:25
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quote:
Originally posted by HershOstropoler
Ad US investment: well, how is US performance better ? |
Given free movement of capitol, most economists and finance professors and such would say that after movement, performance will be the same. In other words, the dollars will go to the best investments. If there are more dollars and less good investments in Europe, some dollars will flow over to the US. Of course, this is at the most simplistic. If you want to discuss differences, feel free. For instance, there is the example of Japan. Lots of crappy investment. Racial pride, perhaps?
quote:
Ad deficits: Bush's tax cuts and the spendingtrousers congress. If you remember, in 2000 I said the usual post-bubble budget deficit swing is about 8-10 % of GDP. We're at 5 % at the fed level now, add the states. I can't see any turnaround in US public finances. |
How much of the defecit is from tax cuts. How much from spending increases? How much from revenue shrotfalls that are a result of a hurting economy? How much from greater outflows (unemployment compensation, welfare at same rate but to more people)? I suspect the latter two are the bigger drivers.
quote:
GP:
"YOU were the one claiming a larger proof (that there is little superior in the US)."
Negativa non sunt probanda. So what is superior ? Explain, Mr superiorbusinesscommunication. "freer labor and capitol mobility" sounds nice, and more sunshine. Specifics, please. |
Roland,
1. I have no proof of the contrary to Colon's statement. I just want to jump on him for assuming that disproving a few poor claims of others (or in this case me "not proving" something) is the same as him PROVING it. I'm not a Latin-quoting rhetoritician (don't understand your comment for instance), but I sense a flaw here. It reminds me of an argument that Ramo and I had about nature versus nurture. Ramo was claiming that he had PROOF that nature was not the cause of the difference. But his proof boiled down to nobody has proved to me the contrary. To me that means that the question is very much open, not that we have proved that a factor is not important in the regression.
2. I think that the subject of "who is better" is an interesting one. Unofrtunately, there are a lot of differences between the different countries, not just labor laws. Things like geography, natural resources, education levels, culture, etc.
Do you think that labor laws in the US are less rigid than in Germany? And that this is part of the reason for the 10% unemployment in Germany?
I guess we have to look at several things if we consider a statement like, "America has a stronger economy because of freer labor and capital laws." First, we have to say what a "stronger economy" is and see which country has that. And I guess we have to look over a decent time range. Then, we need to examine which country has freer labor/capital laws. So, "does America really have freer labor laws for instance." Finally we need to see how much of an effect is caused BY just these facotors (versus other confounding factors).
The whole thing is actually a very cool problem/situation. Unfortunately, sometimes I get the impression you all are more interested in defending Euro honor and pricking the American bubble of self-praise, than in really thinking through the problem.
quote:
Sten: "Perhaps it would be useful to look at the income and savings definitions to see what is included in those before we get too excited about how americans all have negative personal balance sheets..."
National gross savings or household savings rate ? Amd who said anything about negative balance sheets ? |
I guess we could start with the definition of the terms in ef and Sten's statistics. The two headers for the tables: "household savings rate" and "Gross National Savings rate". Yeah, I guess those are the two you mentioned also...(I think that Sten was using the term "negative balance sheet" in a colloquial way...but I'll let him clarify.)
Last edited by TCO on 20-01-2003 at 20:30
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HershOstropoler
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GP:
"If there are more dollars and less good investments in Europe, some dollars will flow over to the US. Of course, this is at the most simplistic."
Well, there could just be a higher demand in the US for borrowing for consumption and bad investments.
"How much from revenue shrotfalls that are a result of a hurting economy? How much from greater outflows (unemployment compensation, welfare at same rate but to more people)? I suspect the latter two are the bigger drivers."
They are. Result of reverse bubble.
"I'm not a Latin-quoting rhetoritician (don't understand your comment for instance), but I sense a flaw here."
It's difficult to prove a negative. If someone makes the claim "X is better", the onus of proof is on him.
"Do you think that labor laws in the US are less rigid than in Germany? And that this is part of the reason for the 10% unemployment in Germany?"
I'm not sure. One thing is, measured by ILO standards, Germany's unemployment is about 8.5 %, the US 6 %. A specific "rigidity" ****s up the labour market in the east; in the west it is about 6.5 %. Also, the rigidities identified by economists barely correlate with unemployment rates.
"Then, we need to examine which country has freer labor/capital laws."
I'm still waiting for an economist to come up with a meaningful quantification of "freedom". Esp in labour law, the conceptual differences are so big that you can only compare some specifics.
"Unfortunately, sometimes I get the impression you all are more interested in defending Euro honor and pricking the American bubble of self-praise, than in really thinking through the problem."
Funny. I get the impression you all are more interested in selling your american self-praise than thinking about a problem. Without pricking the bubble, how can there be a starting point for thinking anything beyond "USA! USA! USA!" ?
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HershOstropoler
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"Than the interest rate will reflect likelihood of default."
It will, but the effect can be delayed.
"As long as the borrowing is by individuals and such and not guaranteed by the government, though, I'm cool with it."
Foriegners are holding about 30 % of treasuries, 20 % of corp etc bonds and 10 % of equity (nrs should be a bit higher in the meantime). Somewhere in the corp etc bonds, we have the GSE debt - and that is de facto government guaranteed.
How the big dollar recycling works exactly is an interesting question....
"Clinton set him up the bomb!!"
He and more importantly, Greenspan and Rubin. The difference to standard recessions is one of degree only.
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TCO
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Richmond, VA
Jan 1970
time: 00:25
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quote:
Originally posted by HershOstropoler
It's difficult to prove a negative. If someone makes the claim "X is better", the onus of proof is on him. |
Right on--agreed. I just jump when I see this type of flaw: A and B have not proven X>Y. Therofore I (C) have proven X not > Y. This is a bit too much of a jump for me. If he wants to say, X has not been proven greater than Y, I'm cool with that. (And in this case, I think it would be useful for Colon to look at some of the older claims...not getting too exercised about New Economy stuff. The older claims might have a little more substance. No point in killing a strawman.)
Let's think about it in terms of statistics. A lack of effective proof of X being a factor causing Y does not prove that X is irrelevant in the equation. (In the extreme, it could be a case of noone even trying to prove this. In a less extreme, it could be that only a few people have tried to prove it and have used very bad methods. If we point out flaws in their methods, that does not prove the counter.)
Now, if we want to say that we HAVE PROVED that X is an irrelevant factor in the regression producing Y, we need to do a little more. For instance, show that after controlling for Z, G and R, that X produces no statistically relevant effect at the 95% confidence interval or something to that effect. Of course, you could always have a confounding factor that is unidentified so it is hard to prove the negative. (The same is true about difficutly in proving the positive!) But this type of "proof" is much more compelling than just trying to destroy the arguments of X advocates--if you want to make the positive statement that X is proven irrelevant.
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TCO
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Richmond, VA
Jan 1970
time: 00:25
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quote:
Originally posted by HershOstropoler
"Than the interest rate will reflect likelihood of default."
It will, but the effect can be delayed. |
Sure. It can bounce around a lot. It could be too much of a penalty also. That's just life in the volatile world of uncertainty. I don't see a good arguemnt for "delay" though.
quote:
Foriegners are holding about 30 % of treasuries, 20 % of corp etc bonds and 10 % of equity (nrs should be a bit higher in the meantime). Somewhere in the corp etc bonds, we have the GSE debt - and that is de facto government guaranteed.
How the big dollar recycling works exactly is an interesting question.... |
1. I would assume that the treasuries turn over pretty quickly. If default becomes a greater risk, they will charge a higher premium to buy those bonds. Or if future inflation is a bigger risk, they will charge a higher rate on the long-terms. But I think the US has shifted to alot of short term borrowing and TIPS. We'll se what happens. Obviously the market is making a judgement right now and changing it all the time.
2. "de facto garuanteed" will need to be nailed down if there is a default. (What is "GSE"?) Brealey and Myers have a very nice comment to the effect that "there is a reason for all those pages of legalese on debt agreements". (It affects the interest rate.)
3. Yes, the recycling is an interesting question. Do you have any feel for this? In other words, do temporary imbalences exist only for short amounts of time? Or is it possible for these to stay around for a long time?
quote:
"Clinton set him up the bomb!!"
He and more importantly, Greenspan and Rubin. |
Rubin's pals at GS did well the last few years, no? 
And why is it that C gets credit for the good stuff but has a fall guy for the failures (Magadishu, etc.) Anyway, it's not Bush's tax cuts that are driving the deficit, its the bomb that Cats left.
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HershOstropoler
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"I just jump when I see this type of flaw: A and B have not proven X>Y."
Well you claimed superior investment opportunities, did you not ?
"What is the ILO standard and how is it different from whereever I got that 10% figure."
10 % is the german standard, ILO is what the US or eurostat use. It's just comparable. National standards like germany's or the UK insured unemployment rate are based on completely different standards.
"Regarding lack of correlation, we would need to look at a lot fo confounding factors and over a time range as well."
Well primarily an understanding of legal regimes is required. The OECD for example did a study on obstacles to firing, and labelled an ex ante control of layoffs as a huuuge rigidity. Total bollcoks - can be horrible, can be the best thing that can happen to an employer....
"I love the US, no doubt."
Strange idea.
""de facto garuanteed" will need to be nailed down if there is a default. (What is "GSE"?)"
Government sponsored enterprises. Fannie and Freddie will be bailed out if something goes wrong. They're just too big.
"Yes, the recycling is an interesting question. Do you have any feel for this? In other words, do temporary imbalences exist only for short amounts of time? Or is it possible for these to stay around for a long time?"
Imbalances of this scale aren't very lasting. The problem with the recycling game is that it includes many intermediaries. I wonder how much hedging and manufacturing of A rated securities is involved in this....
"Rubin's pals at GS did well the last few years, no?"
With the treasury and fed as your *****..... 
"Anyway, it's not Bush's tax cuts that are driving the deficit, its the bomb that Cats left."
For now. Bush's tax cuts will really hit in the 2nd half of the decade.
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:25
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Ad deficits: Bush's tax cuts and the spendingtrousers congress. If you remember, in 2000 I said the usual post-bubble budget deficit swing is about 8-10 % of GDP. We're at 5 % at the fed level now, add the states. I can't see any turnaround in US public finances.
The FY '02 deficit was $157 billion at the Federal Level. The peak surplus (FY '00) was $232 billion. IOW, a 4% swing, not 5%.
http://www.cbo.gov/showdoc.cfm?index=3858&sequence=0
http://www.cbo.gov/showdoc.cfm?index=2552&sequence=0
If you want to dicker about calendar year versus fiscal year, it is true that you might add .6% or so to the swing, I guess. But that should make itself up this calendar year.
On a calendar year basis, the IMF puts the swing at the federal level at 4.1 % through '02. A total of 4.3 % counting '03 as the trough. As discussed previously, most states have to close their deficits, which as I understand for '03 is about $60 billion. Don't know how much state/local deficit will flow through to the bottom line. Perhaps ef can tighten up these numbers.
As to how much of the swing is due to tax cuts, it is said in the press to be about 1/3, although I haven't had occassion to to do the math myself. The White House says about 30% of it is due to tax cuts in FY '02, 40% in FY '03.
Another thing to consider is that much of the increase in '02 and '03 spending is for non-discretionary items. Increased medicaid and medicare costs, for instance. The spending habits of this congress has little impact on these amounts. Rather, it's more of an agreement to go with the policy status quo. Discretionary items, such as kicking OBL's and Saddam's butt, account for only about 7% of GDP.
Anyway, we are taking the magnitude of this swing out of context when we only compare it to GDP and seek to make some comparisons among nations. It seems to me that the swing in value of long-term assets and liabilities of the government dwarfs these figures.
Long story short, I think you're barking up the wrong tree. A swing of 2 or 3 % attributable to economic conditions is pretty miniscule IMO.
Last edited by DanS on 21-01-2003 at 02:41
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:25
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Some more context in this argument. Considering Bush's further tax cuts (which are by no means assured), FY '03 would have a deficit of about $200 billion and '04 a deficit of about $300 billion. This does not include the war costs.
http://story.news.yahoo.com/news?tm...of__200_billion
Again, as a fiscal conservative, any deficit is at best a necessary evil. But a 3% of GDP federal deficit at trough is no big deal. And the label "evergrowing" is inaccurate--typical Hershell overheating when discussing the US.
Last edited by DanS on 21-01-2003 at 02:18
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HershOstropoler
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"The FY '02 deficit was $157 billion at the Federal Level. The peak surplus (FY '00) was $232 billion. IOW, a 4% swing, not 5%."
2003 will be 200-250 billion $ under current estimates. That's roughly 5 %.
"But a 3% of GDP federal deficit at trough is no big deal."
What trough ?
"And the label "evergrowing" is inaccurate--typical Hershell overheating when discussing the US."
From 2000 on we have growing deficits and evergrowing budget deficit forecasts, now out to 2004. And as I added, I can't see a breaking of that trend.
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HershOstropoler
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I think it would take some hefty growth to swing the budget into surplus.
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HershOstropoler
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That's just guesstimating. Tax cuts, defense spending, prescription drugs plans, "homeland security", pork, subsidies....
If I had to say a number, I'd guesstimate north of 4 % over maybe 5 years.
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HershOstropoler
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Sorry, I got overwhelmed by my economist side.
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TCO
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Richmond, VA
Jan 1970
time: 00:25
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Couple good articles in the Journal today:
One was on a company in Canada that stopped making 7.8cm Mason jars (for home-canning). All the pioneer wives in Asher-land are up in arms. They say that they have jars from their grandmothers. It's part of their heritage. The jars last forever, but they need replacement lids each time.
The comment from one of the company shills was really funny: "You know I have a lot of old stuff from my grandmother that I can't get replacement parts for either..."
Last edited by TCO on 21-01-2003 at 22:05
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HershOstropoler
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"Another good one was extolling the virtues of bankrunptcy law and saying that it is fine if the company reorganizes and stays as a going concern."
In which context ?
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19-01-2003 09:31
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