700 Billion divided by.....

[we vs us]

Our entire worldwide financial system is reliant on credit and the trustworthiness of lenders. If we don't have credit we don't have an economy, period.  This crisis has gone way way beyond what individual mortgage holders did or didn't do, and is now at the point where shipping companies can't get enough credit to shoulder the costs of moving goods from one port to another.

Grain Piles Up In Ports

quote:  The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.  

Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.  

"There's all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit," said Bill Gary, president of Commodity Information Systems in Oklahoma City. "The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy."

If we're at the point where international trade is starting to freeze up, we're in dire straits indeed.  And perhaps at a point where we have to ignore moral hazard altogether and just find some way to prop our economy up, including bailing out whoever needs to be bailed out.  

[iplaw]

quote:If we don't have credit we don't have an economy, period.

That's a major part of why we're in the mess we're in right now.  We must get away from operating in the negative and considering that to be acceptable. But that's going to require something that we don't have, and that's restraint.

We have obligations that were imposed upon us 70 years ago that we simply can't afford to fulfill.

We're in deep and I don't see a way out.

[we vs us]

quote:Originally posted by iplaw

quote:If we don't have credit we don't have an economy, period.

That's a major part of why we're in the mess we're in right now.  We must get away from operating in the negative and considering that to be acceptable. But that's going to require something that we don't have, and that's restraint.

We have obligations that were imposed upon us 70 years ago that we simply can't afford to fulfill.

We're in deep and I don't see a way out.

Credit is the foundation of capitalism, Ip.  It's based on investing (loaning) capital for a return on that investment (loan).  Pretty much everything back to the renaissance is based on credit (trace mercantilism and trade to the rise of corporations).  Actually, now that I say that, credit has been debated since biblical times.  You know, usury?  

[iplaw]

quote:Originally posted by we vs us

quote:Originally posted by iplaw

quote:If we don't have credit we don't have an economy, period.

That's a major part of why we're in the mess we're in right now.  We must get away from operating in the negative and considering that to be acceptable. But that's going to require something that we don't have, and that's restraint.

We have obligations that were imposed upon us 70 years ago that we simply can't afford to fulfill.

We're in deep and I don't see a way out.

Credit is the foundation of capitalism, Ip.  It's based on investing (loaning) capital for a return on that investment (loan).  Pretty much everything back to the renaissance is based on credit (trace mercantilism and trade to the rise of corporations).  Actually, now that I say that, credit has been debated since biblical times.  You know, usury?  

Credit is NOT the foundation of capitalism. Competition is.  You can run a business without credit, just as you can run your personal finances without debt.  It just takes more patience and restraint.

Debt can be leveraged by creative business people, but it can be a dangerous and unforgiving tool.

[Conan71]

I'll agree it's got a certain function in capitalism but disagree about it being "the foundation" of capitalism. This is worth reading from Oct. of '05 when tougher bankruptcy laws went into affect.

http://www.monthlyreview.org/mrzine/wolff151005.html

Original capitalist principles weren't based on 30 year debt, nor over-inflating entire economies with an overage of credit or debt.  

[we vs us]

Let me slightly revise what I said.  Debt is one of the main components of capitalism.  That's why that "capital" is there.  It's all about lending it, borrowing it, and leveraging it.  Investing it.  Free markets are also part of capitalism, and private ownership of the means of production are another.  But leveraging capital for growth and riches IS most definitely a cornerstone of our economic system.  If every business had to wait until it had enough money to make a complete investment, our economy would come to a total standstill.  

Investment (which is another way of saying credit and debt) is an undeniably good thing.  I'm a little stunned I have to tell you two free marketers that.

[shadows]

There is good news on the horizon.  By changing the weight of the paper we print the $20 Dollars promise notes on we are able to print 11 of them where we were getting only 10 on the same amount of paper.  

Recent articles of the billions of dollars being transferred to the Mexico banks by the workers in the US should alarm the people as it could indicate a run on the banks like forced their closures in the 1930's.  During this administration the National Debt has doubled.  The debt/taxpayer ratio in our money system is possible beyond repair.  The once value of the dollar to foreign currency has disappeared.  The billions of dollars in bundled mortgage's is being called for through the Stock Market by these foreign investors, as they see the clasping of the dollar by our production resources being outsourced and our bloated government salaries being received by a ever expanding bureaucracy.  The working taxpayers that are provided W2 and 1099 forms will disappear as the job losses increase thus the National Debt will become as the Mill
Stone around our neck and will become a hindrance to future generations.  We like to think we are the smartest people on this planet and refuse to acknowledge there are smart people in other places that anticipate our recession can be turned into another Great Depression as we are forced to step down from our plateau as the leading world power.  The Markets wound indicate we have been striped of the Midas touch.  Whether history will be repeated is not a flip of the coin as many high paid employees of the working public are assuring them that it is only printing more promissory Federal notes and passing them around is only their solution to securing their own turf.

The same condition exist today was in existence in the 1929-33 area.  The only difference the population was rural which created an abundance of food.  It is time to tighten our seat belts because the touchdown may be little rough.

[Neptune]

I wouldn't be surprise if farm subsidies ended up being important.  In one way or another.

I think it was back in 2003 or 2004; US became a net importer of agricultural products.  That's an odd position for us to be in, and historically it's a bad sign.  But part of it is global economics, part of it is domestic production.

Subsidies depend on the price of basic agricultural products.  If we see significant price hikes, we may have to produce more to keep prices down: that equals subsidies to gear up smaller farms for higher production.  Corporate producers have no interest in lower prices, and lower prices have the tendency to wipe out smaller farms.  If we see a significant decline in prices due to the economy, we may have to produce less to stabilize both corporate and small farms: that equals "Great Depression"-type subsidies, where people are paid for not exceeding production quotas.  Except for maybe big corporate producers, it's in no ones interest for small farms to fail.  And it's in no ones interest for prices to dramatically change, one way or another.

Family farms are the "diverse" part, the "flexible" part of our agricultural production economy.  They're also largely ignored.  For many small towns, small farms are almost their sole source of incoming revenues.  And like private businesses, their existence has a stabilizing effect on our economy.

[shadows]

Iplaw quoted; I'm fine with increasing taxes. Maybe if we got the bottom 50% of the population to contribute a little more than 2.9% of the overall tax revenue we'd be further along. If we're going to raise taxes it should be across the board[quote/]

As you are aware the taxes are collected with W2 forms, which the worker is required to justify whether he has the responsibility to get back any  overcharges.   The non-taxpayer wears a $1000 dollar suit  and $500 dollar shoes which is exempted as not suitable for street wear.  He rents his clothing to play golf in as well as everyday wear because they are uniforms, not suitable for street wear..  He uses in portfolio revenue bonds issued by trusts, that's interest  is tax exempted; does off shore banking beyond the scrutiny of our tax laws, while living in an off-shore estate.

I have gotten letters say saying  they have foreign clients with cash dollars wanting to buy my  property. (this is our home lands they want to buy)

The side of the fence one stands on  to count  the contributions in the centuries old tax system, that has fail, is like the other empires who even required its citizens to report in person to be included on the tax rolls.  SS, with its many exemptions is our nearest approach, to identify only a small portion of the taxpayers.

Who's taxes should we cut ?