| Author | Message | ||
     Dbird29 |
$700 billion is about the cost of the Iraq war so far. From New York Times: http://www.nytimes.com/2009/11/23/business/23rates .html?hp=&pagewanted=all " With the national debt now topping $12 trillion, the White House estimates that the government’s tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher. In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan… Even a small increase in interest rates has a big impact. An increase of one percentage point in the Treasury’s average cost of borrowing would cost American taxpayers an extra $80 billion this year — about equal to the combined budgets of the Department of Energy and the Department of Education. But that could seem like a relatively modest pinch. Alan Levenson, chief economist at T. Rowe Price, estimated that the Treasury’s tab for debt service this year would have been $221 billion higher if it had faced the same interest rates as it did last year. The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years." | ||
| Cityxslicker |
Its good to know that there is job security in Iraq, look at that growth opportunity | ||
| Aesquire |
At a certain point, ( under 10 years ) the debt exceeds the GNP. That's only obscene. But shortly after that, the yearly payments will exceed the GNP. http://www.nbc.com/saturday-night-live/video/clips /china-cold-open/1178451/ | ||
| Rocketman |
What you see above is why Buell cease to exists anymore. Rocket | ||
| Reepicheep |
Without solid facts Rocket (which we all lack), that kind of statement is pretty offensive. | ||
| Liquorwhere |
What you see above is why Buell cease to exists anymore. Please connect the dots for me Sean, because I do not see how that is even remotely connected..... | ||
| Ferris_von_bueller |
I think some of you may misunderstand. "That's an Iraq War every year" refers to the INTEREST on the debt and not the debt itself. The actual debt will be in the tens of trillions of dollars. Face it, we will be broke within a decade. Wait to the entitlement programs kick in. The fun hasn't even begun. Hey Rocket, your country is in worse shape, as is most of Europe. Your debt to GDP ratio is even higher. | ||
| Rocketman |
Ferris, even my small business is feeling the squeeze. We are f*cked over here. If you're fortunate enough to be in the right business, and there are plenty, you'll be ok. The motor industry is not one of them unless you're doing something unique or special or different from the norm that appeals to people who can still afford to spend. The Saab business is not one of them. One only has to ask where the money is and it is not filtering back down to the man in the street. So who benefits from the profiteering of war? Whoever it is, they are not lending their money to Harley to finance motorcycle sales. Nor are they lending it to finance houses for the man in the street to borrow from to buy his Harley. Somewhere in the quagmire of war machine and finance there are a few dots the join the plot to Buells now closed door. Or maybe I'm stupid as well as offensive then. Rocket | ||
| Xl1200r |
What you see above is why Buell cease to exists anymore. I think it makes perfect sense, and if you can't connect the dots on your own, then maybe you just weren't meant to get it. The National Debt is pretty sickening, and I wonder what in the hell anyone plans to do about it... | ||
| Bluzm2 |
I guess this is the "Hope and Change" everyone was looking for..... More come for sure. | ||
| Dbird29 |
I hate to agree with Rocketman but he may be right about the thinking of corporations in this environment. | ||
| Ferris_von_bueller |
I still think you're missing the point. The Iraq/Afghan War is only referenced in the article because the cost of the war is or shall be approximately equal to the interest on the debt. Whereas the war will eventually end, hopefully, the interest on the debt does not. The war is not the focus of the article nor is it the main driving force behind the exploding debt. The government's response to the financial crisis IS. I think the vast majority of Americans have no clue we are heading for bankruptcy ( not literally but in affect). The coming costs of entitlement programs, estimated to be 40-60 trillion dollars will sink our ship, even if we don't increase the debt a penny more. This is why I personally find the government's attempt to fund new health care programs extremely irresponsible. Folks, we can't afford what we have now. We have communist countries lecturing us on how to run our country. I never thought I'd live to see the day | ||
| Liquorwhere |
I think it makes perfect sense, and if you can't connect the dots on your own, then maybe you just weren't meant to get it. The dots for a particular closure as stated by Rocket do not connect. If you are speaking of over economic hardship, Buell may or may not be a causality of war or in this case debt, mismanagement and rampant unemployment. Some facts: 1. Base economies are fueled through the construction market with relatively high wages paid to unskilled as well as skilled labor. Those wages on average are spent much faster with this class of worker with little to no savings and therefore their dollars circulate faster heating the ancillary economy faster than any other market. Construction is also manpower intensive, so therefore they employ more people to get the job done than in other sectors of the economy. High circulation of money, above average incomes that are disposed of rapidly all contribute positively to the surrounding economy. 2. Housing starts are way down, commercial construction is almost nonexistent, infrastructure construction (roads, bridges, water and power) have not received a tenth of the funding bail outs of financial markets have received and we are behind the 8 ball in terms of our base infrastructure. 3. Money is circulated on average 7 times, that means every dollar you spend today will make 7 exchanges during the course of the day...on average. 4. Entitlement programs, health care, bail outs, and so called stimulus through taxation do not contribute to the overall purchasing power of the masses and therefore do not circulate. 5. The servicing of the debt incurred by our country for the above programs further decreases purchasing power by the average citizen as unemployment rises those contributing to the tax base decreases in size placing a higher burden on those with disposable income reducing their purchasing power....it is trickle down economics in reverse. 6. The only way to fuel the base economy is to get construction moving again, our current administration would have you believe that if credit is flowing then the economy is starting to move in an upward trend. This is not the case, you cannot borrow your way out of debt. Developers are not spending money or borrowing money to develop to any great degree, so even if the money is available, the NPV on those projects do not come out as a positive and are not being undertaken. 7. While the closure of large businesses is has a direct and lasting effect on economies of scale, small businesses employ more people than large corporations, so too big to fail was a fallacy that will cost us for generations to come and while the world may embrace this administrations policies as we move to socialism, a strong American economy is vital to the world economy as we are by far the largest consumer nation on the planet. Socialism does not contribute to a strong economy. Economists and benchracing economists can, through math and manipulated statistics, blame the beating of a butterflies wings in china for the closing of Buell or other company, but in reality none of us here know why, for a fact why, HD decided to close this company at this time. None of us were in the board meetings, none of us knew of the decision prior to and the reasoning behind it and although we are all saddened by the loss of the the company that to a person on this board are passionate about, we can only speculate. More went into the loss than we can calculate. To blame the closure of Buell on ONE SPECIFIC AREA is false. Just my two pennies. Rocket I don't think you are offensive, but I do think as a small business owner, you have a definite insight to the economy. In this case I would have to disagree with you, but your point is well put and noted. | ||
| Strokizator |
Yep, Liquorwhere, you pegged the facts right on in item #1. As an owner of a construction company I'd say you nailed it in describing the typical construction worker. I've had guys working 70 hour weeks (85 hours pay when you factor in OT + $55/day for expenses) for months on end only to hear they are pennyless a couple of weeks later. We're working 32 hours/wk now and they've smartened up pretty quickly. I encourage all my guys to get married and buy a house. That way I'm pretty sure they'll show up for work every Monday. Hunger is a great motivator. (Message edited by strokizator on November 24, 2009) | ||
| Cityxslicker |
Ha, married, mortgaged and shackled. Somebody shoot me please. Though that was the "Firms" stand in the Cruise movie, make sure your partners are married, kidded, mortgaged and billing hours. | ||
| Ferris_von_bueller |
Since you're in the construction industry, you might tend to view it that way but as a percentage of GDP construction accounts for about 5%. Manufacturing is about 12% and all government at about 13%. http://www.bea.gov/scb/pdf/2008/05%20May/0508_indy _acct.pdf Furthermore, construction isn't a leading indicator - it's a lagging indicator. That is, when the economy takes a nose dive the downturn in construction lags behind by a few quarters. Similarly, as the economy improves construction lags behind. The economy drives construction not the other way around. When there is a need people build. For the government to artificially create jobs building does nothing to sustain the economy. This is what was tried by Roosevelt and it did nothing to end the Great Depression. Some argue it actually prolonged the pain. However, if we are going to spend trillions on fat cats on Wall Street we might as well build roads to nowhere and buildings for government bureaucrats. | ||
| Liquorwhere |
This is what was tried by Roosevelt and it did nothing to end the Great Depression. Some argue it actually prolonged the pain. However, if we are going to spend trillions on fat cats on Wall Street we might as well build roads to nowhere and buildings for government bureaucrats. I am not advocating a WPA type of infrastructure, just the opposite in fact, use your brain and you will figure it out. Capitalism at it's finest, not government funds for a new road crew, instead a pay for use style of infrastructure management. As far as construction being a lagging indicator, if that were true then why are housing starts a leading indicator of an improving economy? If major developers were to decide to put their money in construction projects right now, kick off projects that have been back burnered people would see that as a sign of the economy stabilizing. I will concede that some building lags after the money comes available, but we have moved to a service based economy. The large manufacturing companies are outsourced to a large degree. Service industries need more concrete industries to support them, and construction is the largest employer of unprofessional work forces outside of food service. There are no needs for "roads to nowhere, or building for government bureaucrats" check your state for how many bridges do not meet code, the average loss of power from plant to end user because the grid is so poor, outdated and over used, how much water is leached on a daily basis and you will come to the same conclusion I have. We are falling apart. It was not the depression era construction that helped the economy in the 30's, it was actually WWII that pulled us out in 1943. The post war economy had an explosion in construction and infrastructure jobs that built most of what you see today. They are outdated and needing repair. That is the new economy, servicing the old one. I do know one thing for sure, a repeat Hawley-Smoot Tariff act to support protectionism is not the answer. | ||
| Jammin_joules |
Liquor, Ferris, et al +++ 1 +++ This is just another reason why I find this board so refreshing, enabling and time consuming. Maybe if more people would shut up & ride, I would spend less time on these lonely boards, but alas, it is winter and waxing poetic is a good use of electrons. ~jammer | ||
| Dbird29 |
Paying for the equivalent of a seven year war every year just to pay the interest on the national debt is crazy. It is just strange how some are upset by a war's cost but not the current plunder of our future. Weird. | ||
| Ferris_von_bueller |
People can't see past their nose | ||
| Jammin_joules |
" It is just strange how some are upset by a war's cost but not the current plunder of our future. " Not disagreeing with you but have to consider this. Our national debt is, in part, our collective gluttonous behavior, gotta have it all right now bought on credit. It is a decision each of us makes in small part when we consume things built overseas and paid for on credit. The war debt is not so easily a choice for each of us and it has a human cost, killed in action as well as a huge multiple more wounded mentally & physically. It is an activity that is not as directly beneficial to our citizenry either, albeit this can be debated infinitum. ~jammer | ||
| Ferris_von_bueller |
It's like asking your wife why she bought a car on a credit card and she admonishes you for buying a cheeseburger on the same card. There is no comparison. (Message edited by Ferris_von_bueller on November 24, 2009) | ||
| Gaesati |
I grew up being taught that Roosevelt's "New Deal" was the salvation of the US from the depression. Now it seems the view is different. Can someone explain the economic reasoning? Thanks. | ||
| Jammin_joules |
Liquor, Ferris, et al, Point and counter points that don't seem to fit some of the proposed thesis assumptions or prepositions. * TARP monies and other stimulus funds seem to be going right to construction around me. I can not find a route to work, a hockey game or the bank without running into roads and bridges being redone. Not patched, major tear it out, rebuild it bigger stuff. * Yes credit is still tight even after tens of billion$ given to numerous banks. They shored up their balance sheets, improved earnings, and paid executives rather than help small business. * Consumer credit not much better. how else can you explain Harley/Buell down in sales only half of Honda, Suzuki, BMW etc. In the past 18 months I have had countless sales of first time buyers who were considering imports but either could not get financing or refused the outrageous terms they would have had to pay through private institutions. Dealers have Eaglemark Savings, a Harley finance unit, and imports rely on local banks. Surely it is not the continued demand for chrome couches on wheels. For what it's worth, at least 60% of my Buell sales since 15Oct were made possible by ESB-Harley based loans. Even with near half off pricing, most buyers would not have been able to purchase without ESB and their reasonable loan terms. (downpayment, rate & length of loan). * Consumer credit was given a kick-start when banks held on to bailout funds instead of stimulating spending thru Cash for Clunkers. It was like instant $4,500 free cash that made loans right sized for a good many consumers. * US may have been the largest (albeit gluttonous) consumer in the world but ROW growth potential is staggering. BRIC, Brazil India and China dwarf our population and as they mechanize and stimulate their economy, they will over shadow us. gubmint motors is predicting to sell more cars in China than the US and is nearly neck and neck with overseas sales as they are with US. * What of our GDP in relation to our trade deficit? If we remain gross importers and our GDP remains flat or falls, where does our wealth come from if not making products? Surely we can't all be involved in building roads and bridges to housing developments that the rest of us are working on and buying on credit? Will only career soldiers coming home be flush with cash therefore able to buy new homes? * Healthcare, war costs, national debt - costs, some real, some on paper, that must be dealt with or hinder, continue to hinder our economy. | ||
| Johnnymceldoo |
Maybe the cap and trade legislation will give our small business and average consumer a big boost. We'll all be riding unicorns and dancing on lollipop brick roads. | ||
| Ferris_von_bueller |
gubmint motors is predicting to sell more cars in China than the US and is nearly neck and neck with overseas sales as they are with US. Government Motors soon to become China Motors. I sure hope not http://money.cnn.com/2009/11/23/news/companies/gm_ china/index.htm | ||
| Liquorwhere |
What of our GDP in relation to our trade deficit? If we remain gross importers and our GDP remains flat or falls, where does our wealth come from if not making products? Surely we can't all be involved in building roads and bridges to housing developments that the rest of us are working on and buying on credit? Will only career soldiers coming home be flush with cash therefore able to buy new homes? You make other good points I will try to address, but let's start with this one. I agree we cannot all be building roads and bridges, but those dollars recirculate into ancillary economies heating them up, a store owner is selling, can buy more so the price he is paying goes down, profit margins go up, he adds labor, this adds to the tax base and to the consumer base and they in turn buy other products around them but it all starts with one economy. This used to be many different things, manufacturing, oil production, construction, mining, farming and ranching and now there is a dwindling base to pull from to support the service economy. We cannot as a country be a tourist destination and completely reliant on those services to act as the base. Besides construction workers spend their money faster than most. How many bikes have you sold to construction workers as opposed to professionals in the last decade? Think about it. I grew up in Colorado so I see where you are coming from with construction up there as well, but you must also be aware that while there are small project in the Denver metro area, and small I mean less than a $100 million, the overall construction market in Colorado is bleak. My brother owns a company up there and it is BLEAK. Most of the "stimulus" funds were earmarked for shovel projects aimed at community centers and very little allocated for major infrastructure. While you may see some there in your area, nation wide we are trillions behind. If the dollar remains weak and we keep building in foreign countries and either selling here or using a value added model to then sell directly to Europe it will not sustain us for the long haul. Why? Because there are direct pipelines from china, central and south america, and other pacific rim countries directly to Europe. They can bypass us cutting out the middle man. The real problem has always been muscle jobs go where muscle is cheap, always has, always will, and we as a country are not innovating like we used to. We were a leader in technological innovation in the past and that has dropped off. Our post secondary education system is still very strong, but we are putting less and less of our young men in college, women and overall minorities are going to college more and there is still a robust enrollment from overseas students that in turn take what they learned, go home and innovate, the biggest problem with all of that is that many of those students received federally funded student aid, largely made up of grants that never reap any benefits in this country, yet you and are are paying for it. More so than we are, that is hurting us badly. While it is not a bad thing to have more women in college, I kinda liked it when I went to school, the soft sciences that are the preferred degrees are not innovating in our market. We are not producing engineers, scientists, chemists and so forth like we used to, we seem to only truly produce health care workers, IT, and beaurocrats. This is not helping us find new base economies to draw from. We also have a wicked oil addiction that is not being properly redirected and therefore ship hundreds of billions of dollars a year to OPEC and those dollars are not coming back into America in the form of investment, it is going to the Pacific Rim, India and South America. Those investment dollars leaving, coupled with a stagnant base economy, further complicated by our labor costs have really hurt american manufacturing and the gap between our production and that of the world in terms of base manufacturing is widening, our trade deficit gets larger and our GDP is shrinking as we are still constantly tapped for social programs, debt management, military commitments and think about this we borrow money from China to GIVE THESE COUNTRIES THAT ARE PRODUCING MORE AND STARTING TO BOOM FINANCIAL AID!!! That is right. Giving away our money to aid countries that in the end will be a competitor for our products. Literally a person could write a version of War and Peace here and still not touch on every point, but to sum up what my points really are, it goes like this. The "stimulus" funds are not completely allocated, they are being held until we get closer to mid term elections so the administration can try and keep the majority in both houses, people vote their wallet, so even if those monies arrive in the next six months and start to have some effect we cannot overcome the loss of the last year and a half in terms of jobs, tax base, consumer base and the amount of debt we acquired trying to keep it all going. We as a country have been mismanaged from the top down and now that the economic booms of the 90's and early 2000's is over we are feeling the pinch, it will be difficult to recover without a "saudi oil" type of event that creates a cash cow in the United States to sell to the world. We are receiving less and less invested monies, we are riddled with illegal immigrants that contribute little to the tax base, mostly only in local communities in terms of sales tax but no federal contribution, yet are using federally subsidized services. Our people and government have priced our goods out of the market due to higher labor costs and restrictions on manufacturing coupled with lower quality than in the past, not true off all things, but many things ie CARS. (even if the quality is the same, if it is perceived by the buy public as less, it will hurt sales) We have global commitments that are financed by China and we as taxpayers are servicing the debt on and that keeps growing and growing each year. Not one person in congress or the white house in the last decade has spoken up to say STOP!! We are bankrupt, we cannot do this anymore!! No they didn't, not with any long term vigor, only when it served to oppose the other party on something. Corruption in our political process is taxing all of us that put them in office. | ||
| Jammin_joules |
a Foolish article of relevance. Last month, something fun happened for the first time in a long while, sparking a renewed sense of optimism. The economy grew, at a brisk 3.5%. Then, yesterday, reality made a comeback. Third-quarter GDP growth was revised down to 2.8%. Whoops. These revisions are fairly routine, and 2.8% is nothing sneeze at compared with the negative 6% rates we endured earlier this year. But the news is nonetheless a bucketful of cold water doused on anyone who might have hoped we were back to good times. Of the revised 2.8% growth figure, the BEA (the agency that reports this stuff) notes that "Motor vehicle output added 1.45 percentage points." Last month, the BEA made a point to note that the gain from motor vehicle output "largely reflected motor vehicle purchases under the Consumer Assistance to Recycle and Save Act of 2009 (popularly called, 'Cash for Clunkers' Program)." But Cash for Clunkers -- a sales-boosting godsend for GM, Chrysler, and Ford -- is now history. So if we were to look at GDP on a normalized, sustainable basis, growth would have come in at something in the neighborhood of 1.35%. Ouch. Moreover, changes in inventory levels added 0.87% to the updated GDP figure. As the BEA notes, "Private businesses decreased inventories $133.4 billion in the third quarter, following decreases of $160.2 billion in the second quarter." In other words, fewer fire sales, compared with the everything-must-go mentality of earlier this year. Without a doubt, changes in inventory are legitimate contributions to GDP growth. But are they sustainable? That's another question. Much like the cost-cutting measures that have juiced profits at companies such as Caterpillar, Procter & Gamble, and Starbucks this year, inventory restocking can't sustain growth forever. Sooner or later, you need real demand. As the finance blog Calculated Risk put it, "Changes in private inventories [are] transitory, and without a pickup in end demand, the boost will end soon." So if you assume the non-Cash for Clunkers GDP growth rate was around 1.4%, and inventory changes made up more than 60% of that figure, where does that leave real, sustainable growth? I'll let you do the math. | ||
| Jammin_joules |
How many bikes have you sold to construction workers as opposed to professionals in the last decade? I can honestly say that the vast majority of purchasers, Buell and Harley, have been defense workers or Air Force, contractors in support of those industries, software workers & engineers or business owners, and private business people who range from pool installers to carpet cleaners. A large portion were in the auto business; sales or service techs. Of late, the last couple years at least, oil industry workers. There have been some iron workers and state road crew members, although I would venture they are hardly a large portion. our trade deficit gets larger and our GDP is shrinking as we are still constantly tapped for social programs, debt management, military commitments and think about this we borrow money from China to GIVE THESE COUNTRIES THAT ARE PRODUCING MORE AND STARTING TO BOOM FINANCIAL AID!!! That is right. Giving away our money to aid countries that in the end will be a competitor for our products. Never more evident than gubmint motors recent developments to maintain Opel & Saab with funds from US tax payers, build 6 new vehicles in Canada including the American Muscle Car Camero, and has numerous popular US vehicles being built in Mexico while they negotiate with China to teach them how to build low cost autos so they can apply far cheaper labor only to import them to the US. |
