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Old 12-11-2013, 10:36 AM  
Taco John Taco John is offline
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Undoing the Sequester Is a Step Backward

I'm hoping this thing gets voted down. It's a terrible deal that gives away the only real conservative accomplishment of the last 6 years. Why is Paul Ryan and Boehner willing to cut it open when Obama's not willing to gut the ACA?

It's a terrible deal, and it shows why the Republican leadership needs to be primaried and replaced - Paul Ryan included. I don't care how conservative he makes himself out to be when he so willingly guts our accomplishments, he's acting for the left.


TODAY’S BUDGET AGREEMENT: GOOD POLITICS, MAYBE, BUT NOT GOOD POLICY

The current continuing resolution on federal spending expires in January, and Paul Ryan (on behalf of the Republican House) has been negotiating with Patty Murray (on behalf of the Democratic Senate) for an agreement to set spending levels for the remainder of FY 2014. It is not hard to understand the political considerations that drive House Republicans: the Democrats have been threatening to shut down the government again, as a means of diverting attention from the Obamacare fiasco. Republican understandably don’t want that to happen. But in policy terms, today’s agreement, while not terrible, represents a step backward.

Spending levels under current law were set by the Budget Control Act of 2011, which was the resolution of that year’s epic budget battle. Republicans agreed to increase the debt limit by $2.1 trillion, in exchange for which they supposedly got $2.1 trillion in spending cuts over the following ten years. Because the parties were unable to agree on a different set of cuts (i.e., slower increases), those specified in the sequester portion of the Act kicked in. The sequester had its faults, but it was the Republicans’ biggest domestic policy achievement of recent years. Unless I am mistaken, it represented the most significant restraint on federal spending of the post-World War II era. Under the sequester/BCA, discretionary spending for 2014 was set at $967 billion.

The Democrats hated the sequester, and have been trying to bust it ever since it went into effect. Today, they succeeded. The Ryan/Murray deal pegs FY 2014 spending at $1.012 trillion, which Ryan’s press release described as “about halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion.” What Ryan didn’t say is that $967 billion isn’t just the House proposal, it is the discretionary spending limit under current law. The sequester is now out the window.

Republicans did get something in exchange for increasing spending: notably, federal employees will have to increase their pension contributions. But we can say goodbye to the $2.1 trillion in spending cuts that the GOP trumpeted following the 2011 Budget Control Act. That is the real moral of the story–long-term budget agreements are meaningless. Typically, minuscule spending cuts up front are augmented by major cuts in the out-years. But the reality is that the out-years never come. No Congress can bind a future Congress, and political will to reduce spending is always in short supply. Consequently, any spending deal is meaningless, except insofar as it applies to the current year or next year’s spending. Beyond that, all claims to have cut government spending are fatuous.

We will probably have more to say about today’s agreement–which, of course, needs to clear the House to become effective–as more details become available.

UPDATE: A number of observers are praising today’s deal as a “compromise.” Patty Murray set the tone: “‘Compromise has been a dirty word” in Washington, D.C., Murray complained in an evening news conference, but “we have broken through the partisanship and the gridlock.” But wait! The 2011 Budget Control Act was itself a compromise. The $967 billion discretionary spending limit was a compromise, just two years ago. So why should a higher spending number now be lauded as a “compromise”? How about if we reduce spending by another $50 billion, to $917 billion? That would be a compromise too, wouldn’t it? But somehow that isn’t the sort of compromise that is ever entertained in Washington.

http://www.powerlineblog.com/archive...ood-policy.php
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Old 12-13-2013, 08:02 PM   #61
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http://www.washingtonpost.com/theres...mUW_story.html

Topical commentary here.
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There’s nothing new about uncertainty

By Barry Ritholtz, Published: July 7, 2012

Back in fall 2010, one of those absurd memes began circulating in think tanks, on the Internet and around trading desks regarding the impact of uncertainty. “Oh no!” declared pundits. “The economy cannot recover so long as it is racked with uncertainty.”

Not coincidentally, the first go-round was right before the midterm elections in the United States. The “uncertainty trope” is back again, and — what a surprising coincidence! — during another election year.

Indeed, Google Trends reveals that there is a pattern to the media use of the term “uncertainty.” It starts high in the beginning of the year, as media outlets trot out their year-in-preview pieces. It hits its nadir over the summer as families vacation and the latest fun and sun articles are de rigueur. It ramps up to a distinct peak in October and November, just as voters head to the polls in state, local and federal elections. In a fairly evenly divided country, there is surely uncertainty about election contests. Then it bottoms out around the holidays. While you may not know what you are getting for Christmas, Google’s not high on “uncertainty” either.

Uncertainty has become a news media darling since 2008. The recession, credit crisis and market collapse drive lots of interest in the idea.

It does not take much deep thought to recognize the utter nonsense of this. Anyone complaining about a lack of certainty — in policy, in the economy, in markets or even the weather — simply reveals how little they understand about all of these things.

From the investor’s perspective, markets require uncertainty to function. Indeed, they thrive on doubt, imperfect information and a lack of consensus. Uncertainty drives the market’s price-discovery mechanism. Investing requires differences of opinion, for when there is broad agreement about an asset’s fair value, trading volume falls.

Without uncertainty, who would take the opposite side of your trade?

History teaches us that whenever the opposite occurs — when groupthink and consensus overwhelm doubt — the herd tends to be embarrassingly wrong. In those rare instances when there is a near-total lack of uncertainty in the market, the outcome usually is a spectacular disaster.

Think of the false certainty surrounding the peak of the dot-com bubble (profits don’t matter!), or the nadir in March 2009 (the abyss awaits!) to validate just how true this is.

Indeed, during the dot-com era, everyone knew that profits no longer mattered — it was all about eyeballs and clicks! With uncertainty banished, an epic crash followed.

After that implosion, the pendulum swung to the opposite extreme. There were lots of profitable, debt-free tech companies trading for less than book value. I recall that the stock of MicroMuse, a former high-flying telecom that had traded for more than $200 at its peak, was trading at $1.43. That was less than the $2-a-share cash it had on its debt-free balance sheets and far below its $3 book value. Investors had become certain that a dollar was worth only 75 cents. (IBM eventually bought MicroMuse for more than $10 a share).

The March 2009 stock-market lows were not so long ago. At the time, nearly everyone was sure the world was falling into the abyss. There was little uncertainty then, causing massive and indiscriminate selling. I wonder whether those certain panicked sellers are happy they followed the consensus on dumping equities ahead of a 109-percent rally.

Caroline Baum, the savvy longtime economics observer and Bloomberg columnist, notes: “The future is always uncertain. It was uncertain in 1999, yet investors were buying stocks of Internet companies that had no revenue, no profits and no real business plan. It was uncertain during the condo-flipping frenzy in 2005, as well. And no one mistook irrational exuberance for uncertainty.”

Since then, the uncertainty trope has become the general catch-all for explaining (or mis-explaining) a variety of future events. The list of uncertainties is long: The fiscal cliff, U.S. tax policy, health-care laws, what happens in Greece, will we have a recession next year or not, is housing recovering, what happens to the euro zone, will the euro currency collapse, what about the U.S. elections?

I recall no one saying that investing was difficult due to the uncertainty caused by a potential nuclear conflagration between the United States and the Soviet Union during the Cold War. The sword of Damocles hung over everyone’s head. Is the Greek situation today more dire or uncertain than the policy of mutually assured destruction ever was?

Regardless, all of these unknown events will be resolved one way or another at some point in the future. Which is, of course, how all ambiguities eventually get resolved — at some future unknown date. That is why the uncertainty claim is so absurdist. The lack of understanding today of an unknowable future always gets revealed as the future becomes known to us.

This is how things unfold in a linear timeline.

It finally dawned on me what the uncertainty trope is all about. It took a conversation with a nervous chief executive to reveal it, but I teased out the answer.

Most of the time, people exist in a happy little bubble of self-created delusion. We engage in selective perception, seeing only the things that agree with us. Our selective retention retains the good stuff and disregards most of the rest. In our minds, we are all younger, better-looking, slimmer, with more hair than the camera reveals.

In short, we construct a reality that bears only passing resemblance to the objective universe.

During those brief instances when the facade fades, the curtain gets pulled back and the ugly reality becomes clear. We get a glimmer of understanding about our own lack of understanding. That’s when the grim reality of the human condition is revealed — and it terrifies us.

The next time you hear someone mention uncertainty, ask yourself this: How much less do they actually know about the future today vs. what they knew last week or year? How much less do they think they know?

We need only consider the track record of Wall Street’s prognosticators to recognize how little we know about what awaits down the line.

Ritholtz is chief executive of FusionIQ, a quantitative research firm. He is the author of “Bailout Nation” and runs a finance blog, the Big Picture. You can follow him on Twitter: @Ritholtz
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Old 12-13-2013, 08:03 PM   #62
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We've already gone over your uncertainty trope before. It is not the prevailing thought and you cited an extremely flawed paper that didn't say what you thought it did.

Also, it seems you haven't read what I'm talking about because there is no model that came from it. They admit it is a limited sample size but point to the commonalities among the recoveries coming out of a credit crisis.

It's funny that you knock Reinhardt and Rogoff for a small sample and then hold out the CEO survey as authoritative too.
I didn;t say their sample was small I said LIMITED. They rely on a number of foreign samples that have confounding factors involved that don't apply here. Even they admit that the Japanese crisis of the early 90s is a pretty special case.

Headed out now but I'll address the rest of the bullshit in your post later.
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Old 05-08-2014, 06:57 AM   #63
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Despite doomsday predictions, report finds only 1 layoff from sequester cuts
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Despite doomsday warnings from the White House and lawmakers on both sides that hundreds of thousands would lose their jobs as a result of the sequester, it turns out the budget cuts have only led to one job being lost among 23 federal agencies.

The March report by the Government Accountability Office describes how 23 agencies and departments -- which appear to span most of the federal government -- complied with the cuts. Only one, the Department of Justice, decided to lay off a single employee in fiscal year 2013.

A spokeswoman for the GAO told FoxNews.com the DOJ reported that the laid-off worker was from the the U.S. Parole Commission, but they had no other information about the employee. Virtually every other arm of the government turned to tactics like cutting overtime, reducing employee travel and putting workers on furlough to avoid actual firings.

The report is a stark contrast from the dire predictions from the Obama administration and Democratic leadership, who blamed Republicans for the cuts.
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Old 05-08-2014, 07:54 PM   #64
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I assume the cuts are DC cuts meaning a decrease in the size of the increase not actually spending less money.
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Old 05-08-2014, 10:54 PM   #65
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They need to find this guy. His is the tragic face of heartless budget cuts.
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Old 05-08-2014, 10:59 PM   #66
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They need to find this guy. His is the tragic face of heartless budget cuts.
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