Election 2010: Teabaggin' the Ds & Rs

[Replaced_Texan]

I attended a conference today where there was an update on the upcoming state legislative session. The bloodbath was much more severe here than anticipated. My fairly safe liberal district lost its D incumbent by less than 800 votes. We went from a 76(R)-74(D) house to 99(R)-51(D). The Senate isn't much better (19(R)-12(D)). The Governor had the highest percentage he's ever had. The GOTV efforts for the GOP were amazing.

We're $30 billion in the hole and there is no way in hell that any sort of revenue generating measures will be passed. No increased fees. No gambling. No increased alcohol tax. Nothing.

So the cuts are coming. And unemployment in this state is going to sky rocket because a shit ton of state workers, especially in higher education because it's more expendable than k-12, CHIP, and Medicaid, are going to be shit canned. Though I did hear a suggestion that Texas may just go ahead and opt out of Medicaid.

And these fuckers get to redistrict the state, too, this session.

I know that Rs all over the country are celebrating, but even the Rs at the conference were fairly terrified about the upcoming session. Thank god they only have 4 and a half months to inflict their carnage.

If ya'll wanna see what slash and burn republicans look like, keep an eye on Texas.

[LessinSF]

Originally Posted by Replaced_Texan

We're $30 billion in the hole and there is no way in hell that any sort of revenue generating measures will be passed. No increased fees. No gambling. No increased alcohol tax. Nothing.

And Wash. is no different.

But, that's not what I am interested in. I have read several articles, and I am probably too jargon unsavvy, but does this - http://www.washingtonpost.com/wp-dyn...T2010110305743 - mean what I think it means? The Fed finally did what everyone knew was the only way out - they manufactured $600,000,000,000?

[Adder]

Originally Posted by LessinSF

And Wash. is no different.

Except (1) Washington can borrow and (2) the senate and white house will prevent the kinds if cuts she foresees from Texas. Meaning the story in Washington is likely to just be continued bug deficits that dint matter much.

But, that's not what I am interested in. I have read several articles, and I am probably too jargon unsavvy, but does this - http://www.washingtonpost.com/wp-dyn...T2010110305743 - mean what I think it means? The Fed finally did what everyone knew was the only way out - they manufactured $600,000,000,000?

What do you mean finally? This is round two. And like the first time, no, it isn't going to mean massive inflation.

[sebastian_dangerfield]

Originally Posted by Adder

Except (1) Washington can borrow and (2) the senate and white house will prevent the kinds if cuts she foresees from Texas. Meaning the story in Washington is likely to just be continued bug deficits that dint matter much.



What do you mean finally? This is round two. And like the first time, no, it isn't going to mean massive inflation.

Why is lowering mortgage rates a target? They're already at historic lows. The Fed could lower them to zero and still, few of the people who need them would be able to borrow.* These superlow rates are only available to people with substantial equity in their homes. The people who need the money are underwater and no lender is refi'ing them unless they bring a bag of money to closing. All this shit does is drive more first time buyers into FHA mortgages. It does nothing to stem the strategic and regular defaults which remain the cancer at the center of the market.

*Nevermind the inverse relationship between prices and rates, which shuts many potential new buyers out of the market.

[sebastian_dangerfield]

Originally Posted by Replaced_Texan

I attended a conference today where there was an update on the upcoming state legislative session. The bloodbath was much more severe here than anticipated. My fairly safe liberal district lost its D incumbent by less than 800 votes. We went from a 76(R)-74(D) house to 99(R)-51(D). The Senate isn't much better (19(R)-12(D)). The Governor had the highest percentage he's ever had. The GOTV efforts for the GOP were amazing.

We're $30 billion in the hole and there is no way in hell that any sort of revenue generating measures will be passed. No increased fees. No gambling. No increased alcohol tax. Nothing.

So the cuts are coming. And unemployment in this state is going to sky rocket because a shit ton of state workers, especially in higher education because it's more expendable than k-12, CHIP, and Medicaid, are going to be shit canned. Though I did hear a suggestion that Texas may just go ahead and opt out of Medicaid.

And these fuckers get to redistrict the state, too, this session.

I know that Rs all over the country are celebrating, but even the Rs at the conference were fairly terrified about the upcoming session. Thank god they only have 4 and a half months to inflict their carnage.

If ya'll wanna see what slash and burn republicans look like, keep an eye on Texas.

PA: GOP Gov, GOP senator, GOP state house. And they all ran on the same cut/slash/burn austerity platform.

I'm going to have a good year next year.

[Adder]

Originally Posted by sebastian_dangerfield

Why is lowering mortgage rates a target?

I don't really understand the theory behind why this is supposed to work, but I think it is less about mortgage rates than that article suggested.

Also as I think about it more, I'm not sure that this accurately thought of as "printing money" because what I think is happening is replacing longer-term government debt with shorter term government debt. But again, I don't really understand it.

[sgtclub]

Originally Posted by Cletus Miller

So, who *did* start it?

And don't cite the "india times" or whatever it was. I want to know who introduced the absurdity to America.

I saw a link on Drudge but I don't recall what outlet. The actual number may not be $200 million/day, but it certainly is big, and the entourage sounds really big, but maybe that is standard for POTUS international travel.

[sgtclub]

Originally Posted by Adder

I don't really understand the theory behind why this is supposed to work, but I think it is less about mortgage rates than that article suggested.

Also as I think about it more, I'm not sure that this accurately thought of as "printing money" because what I think is happening is replacing longer-term government debt with shorter term government debt. But again, I don't really understand it.

It is supposed to bring liquidity to the market place and lower long term interest rates.

[sgtclub]

I find it sad that every rank and file GOPer that has been asked about spending cuts has no fucking idea/plan for what is going to be cut. Even funnier is the blank look on their face when asked "how can you cut taxes and cut the deficit" - I suspect there are about 3 republicans that have a clue and the message hasn't yet been distributed to the parrots.

Another thought - does anyone know whether SS and medicaid are funded solely out of payroll deductions or is part from the general budget?*

[sebastian_dangerfield]

Originally Posted by sgtclub

It is supposed to bring liquidity to the market place and lower long term interest rates.

...The most common form of long term interest being mortgages. And the idea is people with mortgages can refinance and the cash flow freed up will go into consumption.

Except for this problem: Banks can't refi an asset worth less than the remainder outstanding on the note. The debt has to reset to the fair market value of the asset, and that reset can only occur via foreclosure sale and repurchase by a third party at lower cost, with a smaller mortgage, or a principal write down. The latter is not happening.

[Adder]

Originally Posted by sgtclub

I find it sad that every rank and file GOPer that has been asked about spending cuts has no fucking idea/plan for what is going to be cut. Even funnier is the blank look on their face when asked "how can you cut taxes and cut the deficit" - I suspect there are about 3 republicans that have a clue and the message hasn't yet been distributed to the parrots.

Funny in a rather disturbing way, yes.

Another thought - does anyone know whether SS and medicaid are funded solely out of payroll deductions or is part from the general budget?*

Don't they both still have surpluses (from payroll taxes)?

[Adder]

Originally Posted by sebastian_dangerfield

...The most common form of long term interest being mortgages.

Yeah, but companies borrow for the long term too.

[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

Why is lowering mortgage rates a target? They're already at historic lows. The Fed could lower them to zero and still, few of the people who need them would be able to borrow.* These superlow rates are only available to people with substantial equity in their homes. The people who need the money are underwater and no lender is refi'ing them unless they bring a bag of money to closing. All this shit does is drive more first time buyers into FHA mortgages. It does nothing to stem the strategic and regular defaults which remain the cancer at the center of the market.

*Nevermind the inverse relationship between prices and rates, which shuts many potential new buyers out of the market.

I'm not getting why you think QE is about mortgage rates. It's like saying that raising the gasoline tax is about deterring people from going out to eat at restaurants. The two are not completely unrelated, true.

eta: I see now that the confusion comes from the Washington Post. Expecting that paper to explain economic or business concepts is a fool's errand. NPR's Planet Money does a better job:

Everywhere you turn in the financial media lately, you hear people talking about "quantitative easing."

It's one of the more impressive financial phrases out there — impressive for the distance between how boring it sounds and how dramatic it actually is.

It means creating massive amounts of money out of thin air with the hope of getting the economy back on track.


Economists — at least some economists — believe that when you want to improve the economy you need to get more money out there, circulating around.

The problem is, there are only a few ways to do this.

One way: Have the government spend money by, say, paying people to build roads or install solar panels. That would get money into people's pockets.

But we already did that, with the big stimulus last year — and it's a politically unpopular idea at the moment, so Congress isn't about to do it again.

Option two: The Federal Reserve can cut interest rates, which makes it cheaper to borrow. So people borrow more, buy more, build more new things.

But we already did that, too. The Fed lowered interest rates all the way down to zero. Can't go any lower.

For almost all of modern economic history, policy makers have used those two tools — government spending or Fed interest rate cuts. That's it. But with this financial crisis, for the first time in U.S. history, those two tools won't work.

Enter quantitative easing, an idea the Fed is borrowing from Japan, which used it a decade ago when it had a similar problem.

It works like this.

A big bank — Bank of America, say — has $50 billion in government bonds. They'd sell those bonds if anyone would pay enough for them, but nobody is willing to pay that much. So the bank just holds on to them.

With quantitative easing, the Fed comes along and says, "Hey, Bank of America, we'll buy those bonds for a little more than anyone else is willing to pay." Bank of America says, "OK, great, send us the money."

This is where the Fed gets to use central-bank magic. They pay for that $50 billion purchase in new money. They just invent it. That's what the Fed — but nobody else — gets to do.

So now Bank of America has $50 billion they need to do something with. The Fed is hoping that Bank of America will decide to lend that $50 billion to companies and people to invest or spend. That stimulates the whole economy.

It sounds great. Create new money, get it out there, everyone wins. But — of course there's a but.

Nobody really knows if this works. It's still really controversial among economists. It's only been tried a few times and, as in the case of Japan, hasn't had the greatest results.

The Fed first used quantitative easing in 2008. It's now considering a second round, even though a lot of folks are against it.

While the economy is still this bad, the Fed really might only have two options: Do this as a desperation move, or do nothing.

It's worth pointing out that while it sounds like a lot of money, it really isn't when you compare it to the size of the economy.

[Tyrone Slothrop]

Originally Posted by sgtclub

I find it sad that every rank and file GOPer that has been asked about spending cuts has no fucking idea/plan for what is going to be cut. Even funnier is the blank look on their face when asked "how can you cut taxes and cut the deficit" - I suspect there are about 3 republicans that have a clue and the message hasn't yet been distributed to the parrots.

Tim Pawlenty is more honest than most:

[M]ost Republicans in Congress refuse to propose specifics that would actually cut spending in any significant way. Recognizing the extreme unpopularity of cutting Social Security and Medicare, and the aversion of their base to military cuts, these self-styled fiscal conservatives often take entitlement and defense spending off the table, removing nearly 60 percent of the federal budget from scrutiny. Of the remaining spending, another sizable portion goes to debt payments — which are untouchable — and most Republicans also take homeland security and other security spending off the table, leaving only a small fraction of the total federal budget from which to find cuts.

Despite this stark reality, Republicans still try to claim the mantle of fiscal responsibility....

Appearing on MSNBC’s Morning Joe today, Minnesota Gov. Tim Pawlenty... [tells us that] anybody says they want to cut spending but won’t touch entitlements or defesne is “lying to you”:

[Adder]

Originally Posted by Tyrone Slothrop

Tim Pawlenty is more honest than most:

I'm not sure that is more honest. To me, he was saying, "I want to use people's over-inflated sense of our current budget difficulties (which are mostly caused by (1) weak revenues resulting from a weak economy, (2) two wars, (3) automatic stabilizers, and (4) one time stimulus spending and tax cuts) as an excuse to cut safety net programs that I oppose but won't admit that I oppose in public because that is political suicide."

In other words, the current deficit and the longer-term projected issues that social security and medicare will create because of demographics really are not related to one another.