TPS

"Higher" not high. And speculators are fine as long as they don't dominate markets, unlike current markets. That was meant for 3rd.

Meanwhile gasoline demand is down 7.2% over the last 12 months, oil inventories are rising, and the Saudis say they will meet any "real" increase in demand, which isn't currently the case. My link

I wonder if Mario had the veal chop?

This is about what I said in the paper I wrote 7 years ago. The only possible replacement at this point would be a true international currency which is what the SDR was supposed to be, but the US made sure it would not supplant the $. While an international currency could be used as a unit of account (pricing global commodities for example), you need a highly liquid currency with broad financial markets to meet the store of value function--especially when there is a flight to global safety. As for your second point, while I made that same point in the old paper, here's the argument I made in a presentation Friday: Financialization of commodity markets now makes it possible for anyone to bet on commodity prices. Financial interests have flipped the futures market, and now dominate price determination in the short run (position limits had constrained financial interests to 20% of the market historically, but through innovations and deregulation they now represent 80%). The quantity of money flowing in from non-commercial (financial) interests really took off around 2004 via swaps, ETFs, ETNs, ETPs, etc. This has allowed the recent dollar-oil relation to emerge. If you look prior to 2004, you can't find a trend in the correlation between oil prices and the dollar--there were periods of negative correlation and periods of positive correlation. Since 2004 the correlation has averaged -0.82. The second necessary component is a widespread belief that the FED is debasing the dollar via QE1-?. Combine the two and you get this "financial fad." Traders have it programmed in--when the dollar falls, oil rises, or vice versa. Oil has become an alternative to gold in this way too. The difference and problem is that oil prices are subject to underlying demand and supply at some point, so these guys will get burned once in a while like last May's drop. The $ was steady, but the oil price bubble created a glut which popped fairly dramatically that first week of May 2011. Btw, regarding the price of oil post, the most recent and best study I've seen (published last month by Fed researchers) measured the impact from financial interests at 15% of the price. It's a Wall Street tax.

Ok, just want to say "I was wrong Stevie." I did not think you would end up signing here, because given your attempts to gain attention, I figured you would go to a bigger market. Good on you!

Gee, the part of investment spending which has not recovered--housing and structures. Wonder why? As for consumers, real expenditures are back to the level they were at in 2007--5 years later. However, as someone who works in finance, you must know that debt financed expenditures drive growth. Household debt is still contracting, and has been since 2008--the number one factor keeping growth down. Also, state and local governments are contracting, which offsets some of the federal government stimulus. So, businesses are investing in equipment, they aren't building new structures, and won't until capacity gets back to 81-82%.

I don't disagree with any of your micro points. There are a lot of issues that will make it difficult to create a sustainable recovery. My argument is about the macro effect of government deficits and how they sustain private sector surpluses. It's a matter of simple accounting. The reason households and businesses are net savers right now (improving their balance sheets) is because the government sector is running a deficit. The fact that the government spends more than it takes in taxes means the private sector and international sector are accumulating the bonds the government issues. In 2010, the total government deficit (includes state and local) was $1.556 trillion. Of that, households accumulated $535 billion in assets (they were net lenders); businesses accumulated $541 billion; and the international sector accumulated $480 billion. Again, it's accounting. The fact that government spends more than it takes in taxes means private sector incomes and assets are increasing. This is why businesses are accumulating and hoarding cash. As businesses and households decide to start saving less and spending more, then the economy will pick up, their surpluses will fall, and the growing economy will generate more tax revenues and there will be less spending--the government deficit will fall as the private sector starts to save less (spend more). Then there's the international sector and China...

No. We ran into a self-imposed political budget constraint.

Kicking the can in the short run, but as I said the long term unfunded liabilities--mainly Medicare--has to be addressed. The primary objective right now is to get back to full employment. If you think austerity will do that, then you miss the point on the UK. If the economy is taking hold now (given the revision yesterday) then no need for additional stimulus, and the deficit will come down. Anyone want to answer the question why bond markets don't seem to care about the current deficits? Ps. I love you too Darin.

As I said in the quick post, I have some things that are keeping me occupied, so I will post bits when I can. It's not something that can be answered with a quick post. I started with saying I'd answer the easy part of Rob's post--equating the US to Greece. But of course people have to jump on that and say I'm off topic. While the OP is on the UK, the topic concerns whether a country that issues its own currency can "run out of money." Rob's concern is that the US is going to end up like Greece. I say it can't. Rob's post also brings out two issues regarding deficits and debt--there is a long term problem regarding unfunded liabilities; and there is a short term problem of trillion dollar deficits. I agree that there is a long term issue that needs to be addressed, but in the short term expansionary deficits are necessary to maintain total demand in the economy, otherwise balancing the budget will cause a depression. While I believe that deficits are a necessary evil in the short run, they don't have to come about from increased spending, you can cut taxes and/or give various business investment credits. This is NOT to argue that government is good or bad, rather it's about the expansionary impact of deficits on the economy as a whole. The short term issue is to get the economy back to its average real growth rate of 3% and unemployment close to 5%, and most of the short term deficit will be resolved. So the belief is that the US is going to go bankrupt because the federal government has run deficits of $1 trillion over the past three years, and will continue to run deficits until the economy recovers. If you believe that the US can't pay, then one would expect interest rates to be extremely high reflecting that risk premium, but they remain at historic lows. Are bond traders just stupid (and they should be reading PPP)? Can any of the doomsayers explain why the bond markets don't reflect the belief that the US will go bankrupt? I'll get to the main argument--why deficits are necessary--next time.

I'll take the challenge, but I'll have to do bits at a time given my time constraints. The easiest part: you can't compare Greece and the US, because Greece doesn't issue its own currency. They are equivalent to a US state, bound by a political budget constraint. Also, there are two issues you raise about deficits and debt: one is short term related to high unemployment, and the other is the long term unfunded liabilities. I'll return...

Wait a minute, weren't most people here singing the praises of the UK's austerity plan a year or so ago? I seem to recall a nice thread about that... If Osborne thinks the UK is out of money, then he should be out of office. What a dolt.

Given Buddy's comments about D-line and CBs, someone like Dre Kirkpatrick could be in play as well. I initially thought Upshaw should be the pick, but given his comments from yesterday, they could go DL, LT, or CB. Whatever they do, there will still be some good edge rushers available in R2.

The OP mentions the "next financial crisis." Everyone was focusing on blaming the borrower and nothing else. I was trying to point out that there's more than one guilty party to blame for this, if or when the debt bubble bursts.

No where in my statement did I say anyone was at the top of a list. The point was that it's a combination of factors. She's an idiot for taking that much debt; banks are reckless, but they don't care because there's a government guarantee, and the government guarantee of a private loan by a bank is bad policy.

So if there's a crisis, it's obviously her fault. Let's ignore the fact that banks continued lending her money even though that level of debt has an unrealistic chance of payback; but, hey, it's guaranteed by the government, so who cares about risk...

The point I was trying to make is that if you see put him at LDE on 3rd downs (pass rushing situations in general) and insert Merriman (or whoever they would get in my R2 scenario), then you've upgraded.

Courtney Upshaw. Like many here, I've been going back and forth on who should be the pick, and I finally have concluded Upshaw SHOULD be it. Here's why... He's the most NFL ready, and will step in from day one as a starter. He is both a good pass rusher, and run defender. However, he lacks the "measurables" to be the pass rushing RDE... Here's what I would hope to see. Standard front 4 of Kelsey, Dareus, Williams, Upshaw. However, in passing situations, I'd flip Upshaw to LDE in place of Kelsey, then use Merriman as strictly a pass rushing RDE; so passing situations would be Upshaw, Dareus, Williams, Merriman. This brings me to R2. I'd select the best pure pass rusher available as insurance and backup to Merriman. This could be anyone from Perry, Brown, Branch, Curry, to Massaquoi. Finally, in R3, I'd select the best pass defense OLB available, someone like Nigel Bradham of FSU (6-2, 4.67). He would back up Barnett, but more importantly, take over the role that Bryan Scott plays in passing situations. Given the 2 TE attack of the Pats, the Bills need someone with size and speed to cover (one of) those guys. This focus on D again means the Bills must sign their important FAs on O--SJ, Bell, Chandler. For external FAs, they should target Strong-side LB, WR, and CB. It must be the offseason...

Seems to me all this report is predicting is that we'll be back to the long run ratio of taxes to GDP in 2 years. Maybe their headline should have read, "Taxes to shoot back up to historical average in 2 years"?????

Or lenders just fudged the data to meet any minimums, as they did with income data.

Stability=I want SJ back

The two significant tax cut experiments by Reagan and Bush2 resulted in significant increases in deficits. Bush2 added over $2 trillion in debt and he started with surpluses left over from Clinton.

Having just come back from the west coast, I'm reminded of how high property taxes are in WNY. True. I think the wheels are slowly grinding in a positive way to finally rein things in, but it will take some time. Almost tried Mike A's b-o-w sushi last time there, but I'm really a traditionalist when it comes to sushi--tuna and octopus. Btw, he is the one opening up the steakhouse in the Lafayette.

Hey, if the report said income declined, many people here would have been all over it with the "Buffalo sucks" comments and how bad NYS is. It's almost as if some ex-pats enjoy (need?) negative news about WNY. There are a lot of good things happening in the city. A great site to keep up is www.buffalorising.com One spectacular change is the Lafayette Hotel. I'm really looking forward to it's opening in May. The old Tap Room will re-open, a brew pub is going in, and a steakhouse. Also, the rejuvenated Statler had 4,000 people for New Year's Eve. Now if we could only have a winning sports team...

And in the midst of all the negative, Buffalo ranks 4th in the world for income growth over the past two years... My link