TPS

That's just an ignorant interpretation of what i said. Spending is the short-run issue; long-run growth depends on capital and technology, education, infrastructure, and a few others.

As I've stated (which is K's position), the deficit is falling as economic growth takes hold. Cutting too much spending today could slow that process down and cause the deficit to increase again--pushing us into another recession. You can certainly decide about cuts next year, or the next few years, but don't make the cuts this year when the economy is actually gaining momentum. The logical argument is that one person's (or government) spending is another's income. Someone's income will be smaller, and therefore they will spend less. The impact does not stop at the first cut in spending. For example, the economy around Ft. Brag is suffering as military spending cuts are made. Unless other sectors of the economy increase today to offset the government cuts today, then the cuts will cause a slowdown, causing taxes to decline and very little impact on the deficit, and possibly worsen the deficit if the decline is sharp enough. This is why Europe is floundering. They make cuts to meet deficit requirements; those cuts cause the economy to decline causing lower taxes and increased deficits; so they cut again, causing the same impact. If your goal is to prevent unemployment from worsening in the short term, then that is a true statement. That's what unemployment insurance does--it's a transfer of money to the newly unemployed which helps maintain demand in the economy, helping to prevent an even worse outcome. That is the purpose of short term stimulus--make sure a recession doesn't become a depression.

The government always spends. What you mean is that in bad times the government borrows a lot, and in good times under Republicans following supply-side economics government borrows a lot. You're only supposed to borrow a lot during bad times to offset the private sectors fall in spending. As you quoted, he says for the next 10 years. that means we don't have to work out the solutions today, we can do it over the next few years. the other main point that he's making is that stability means getting to a point where the debt/GDP ratio is stable or falling. the number he quotes ($400+ billion) represents the deficit that could be maintained at full employment for a given interest rate.Growth cures most deficit problems.

Slightly better than your usual response.

Ownership doesn't mean control. Having a stake in the company formally establishes the relationship that currently exists, and the government would receive a portion of their investment back in the form of dividends. Think of it as a sovereign wealth fund. I wasn't being critical about the R&D. It makes perfect sense to include it as part of the cost-plus contract.

They currently wouldn't exist without the government; but we need them to exist to build war machinery. Majority means just over 50%. If you're uncomfortable with that, how's a minority stake of 49%? Or how about we make it preferred shares like we did when we saved AIG and the banks? Without the government, L-M would not be an on-going concern, and the current shares would therefore be worthless. Accounting rules make cost of Sales reflect variable costs only. The government has allowed defense companies to include R&D. I'm sure it's done because the cost of planes like the F-35 aren't determined in a market; more likely some type of cost-plus contract arrangement.

Talk about reading comprehension. Did my post say you claimed hyperinflation was coming? Did I say the negative oil-dollar link was permanent? Sheesh!

Spare or excess capacity, same concept for any discussion about prices. It's microeconomics 101.If you can't remember me posting that hyperinflation wouldn't happen in the US, then you better get tested for memory loss. I have not said there is no relation between prices and currency devaluation (if you mean exchange rate); I have a disagreement with your explanation of the process. I can point you to a thread from two years ago (or do your own damn search) where I stated the correlation between the $ and oil was -0.82 from 2004-2010, but before 2004 there is no consistent relationship between oil and the $--there are periods of positive correlation and negative. The most significant period begins when investors are allowed to dominate the commodity markets, and significant money inflows begin in 2003-4.

Yes, yes, whatever you say must be true....

According to their 10K, Sorry, their revenues were actually 82% from government contracts.

Read my other post. You obviously don't understand basic economic balances. Regarding capacity, that's such a basic overall economic concept in pricing that it wasn't worth responding to. The general level of (under) capacity utilization in the US economy is the reason I've constantly argued there will be no macro inflation. Re dollar and oil, I understand there is a relationship, I've done the correlations, and I resonded to that a year or so ago. Since the 1970s, there have been periods of negative correlation and periods of positive correlation. Your explanation can't fit those facts. Someone who is not pragmatic can't exlain reality. I think I have a pretty good track record in my predictions. You pooh-poohed my prediction that the economy was gaining strength until your guru jumped on the bandwagon. While I still think we'll do well overall this year, I'm not sure we wont' see some bumps from spending cuts--there I go again....

Just looking at a couple companies, it looks like R&D expenditures are allowed to be included as overhead in cost of sales. They are highly leveraged too. In the case of Lockheed-Martin, 99% of their sales are government related. The US government should hold a majority equity stake in this company since it owes its existence to US.

You can't have high private sector savings without having either a high public sector deficit and/or Balance of Trade surplus. Any countries with significant private sector savings will have one or both of those conditions. In the US, since the crisis began, private sector decisions to save vs spending is the main cause of high public sector deficits, and our trade deficit also contributes (causes) to the public sector deficits. This is why Magox if "fundamentally wrong."

Since the primary need/goal is growth and deficit reduction, household spending generates sales, and sales generate jobs, and jobs generate taxes.

That is so totally wrong-headed.

Hmmm....someone just decided to agree with my prediction.... http://www.bloomberg.com/news/2013-03-08/gross-raises-u-s-economic-growth-forecast-to-3-in-2013.html

Crony capitalism dude...

Wow, sounds like America....

It's not socialism or communism; it's more akin to the Chinese model--state directed Capitalism. The market is alive and well in Ecuador and Bolivia. The difference is these governments decided to take a greater share of the revenues from the companies extracting their resources, renegotiating the contracts. The increased revenues are being used to fund health, education, and infrastructure, and Ecuador is doing quite well with this model. In fact it is listed as one of the most popular countries in the world to retire to. My mistake then. I've been talking about Bolivia and Ecuador in this thread, staying away from the Chavez debate.

Ummm, Correa, who I was talking about, is the president of Ecuador.

Renegotiating contracts to keep more of the country's wealth generated from its natural resources, yes. Especially when there were corrupt regimes that preceded. This has allowed Correa to pay for his social programs without attacking the rich and pursuing your wealth distribution from within. Over the long run, a healthy, better educated population will generate more wealth and growth than the extremes of poverty that existed prior to the Bolivarian Revolution.

It was my projection for 2013 denso.

There you go again...Do you truly want to claim that QE was responsible for price increases dating to the the near bottom of the post-bubble crash? Any objective person would understand that stabilizing the economy would lead to a recovery in prices to some level. I know we've had this discussion, but it's really a specious argument. Don't you think we should look at "relative demand" as magox claims? Wouldn't it be more honest to look at where C-price indexes were relative to the pre-bubble level of global GDP? As I stated then, the first half of the year will be slowed by the payroll tax increase and now spending cuts. I said the second half would generate most of the growth. Starting from the low number justifies his world view. You won't change that.

If by transfer of wealth you mean renegotiating contracts with global resource extraction corps and renegotiating a bond issue that was deemed illegal from the previous administration, yes. So if reading and traveling to a country are not adequate sources, then what exactly gives one the ability to pontificate oh wise one? That socialist president Bachelet was smart enough to set up a sovereign wealth fund when copper prices were high, which allowed Chili (I like that spelling better) to weather the crisis better than other SA countries.

No dumbass, I 've been to Ecuador 4 times and Bolivia once. maybe you don't remember that you and I were both travelling there around the same time, 2009, yes?