Corporate America's debt load is nearing $10 trillion, a record 47% of the overall economy

deg said:
Fed's Powell: Debt is growing fast than economy, and that's not sustainable

good luck world economy seeing that the world currency is still the USA dollars so its bound to domino effect around the world too

deg said:
@Freshell

i did not know that corporate debt cannot be tied with the national debt like in my mind they are related in a way that they are simply debt by the country, i mean didnt the 2008 recession started by corporate debt from Wall Street and they are bailed out by the tax payers and borrowing from other countries like China that further increase the national debt? so they are link

Freshell said:

@Orhunaa
Consider what happens when the next recession happens and corporations are unable to pay off their record levels of debt. Who will want to invest? Investors will sell off their assets and run for the hills. Banks will tighten their lending practices. Perhaps we could give banks access to low interest loans to prompt them to loosen their standar- oh, we already massively cut interest rates before the recession. Common wisdom is that you cut rates during a recession and you raise them during an expansion.

Orhunaa said:


Oh I see so it should be reserved for dire times, thank you very cool! Wait, does that mean recession is pretty much inevitable?

Yudina said:
Private/individual debt has pretty bad consequences for individuals but up to this point I don't think anyone's been able to properly explain to me why debt is bad for governments and corporations. I haven't gone through academic papers in a long time, but based on academic/work experience the answer is it's not nearly as big of a deal. For the record, it's seen as bad for a company to have no debt, but obviously we're talking here about "historic" levels of debt. Regardless, we as individuals naturally have an inclination to be fearful of debt because to us it means foreclosure, bankruptcy, and so forth, but debt is just another instrument in the financial arsenal.

There was some study by a Harvard professor a while ago by the name of Ken Rogoff and he was probably one of the last big pushes to definitively prove that high levels of debt led to austerity, but the guy's conclusions were based off the back of extremely poorly built Excel spreadsheets so it's hard to trust anything he had to say.

This is a very neoliberal take on economics and one that's very ahistorical. Recessions in 18th and 19th century America could stretch between thirty to almost a hundred years and trends like that were similar elsewhere on the globe. Economies didn't boom or bust in the same way they did before the industrial revolution, just another sign that our modern cyclical nature of economics is not one that's bred from human civilization but the specific form of industrial/private enterprise that we have, for whatever reason, decided best fits our interests.

Yudina said:
Okay, but the financial crisis in '08 didn't really happen because there was too much debt. Debt is merely a symptom rather than a cause, really.

I mean American presidents have little to no impact on the economy so, yes, I don't see much consequential difference between any political party because the economy sits above the political level in terms of what America can reasonably control.

SpamuraiSensei said:
Job reports indicate the USA has the best numbers in decades now.
But keep reaching. They're winning the trade war.

Soverign said:
Whom are these risky corporations in debt to though? Basically, Trump cut taxes so that they would borrow huge sums of money from the guberment. Or more precisely if you follow the stream all the way back to its source, The Federal Reserve?
Besides, you can never trust these fucks. Hurr hurr we have been losing money since the sixties that is why your wages have have remained stagnant you blue collar wagecuck, We only raise minimum wage because of inflation or you would be working to starve to death hurr hurr. Then you might wise up and opt out.
Like, private companies was underestimating their own oil field reserves by such a degree in the seventies that scientists thought the world would be depleted of crude oil by the nineties.

Silverstorm said:
Never heard numbers aren't quality? Almost 50% of those jobs are low wage and offer no benefits for health insurance, development nor opportunities to advance.
Just cause someone gets a shiny handmedown, and polishes it more doesn't mean the item is exactly "better"

So you understand the corporations owe some of it to the government and the larger majority to banks, but wondering how it would impact the nation?

Silverstorm said:

So you understand the corporations owe some of it to the government and the larger majority to banks, but wondering how it would impact the nation?

Soverign said:


It would seem quite dire indeed if these same corporations wasn't outed ever other year for tax evasion with offshore tax havens. Made all the easier by free trade and globalism. So obviously, the only way to protect the nation is to pass more free trade laws and let the market self regulate. I feel like corporations owing the guberment nearly 50% to be blatant communism.

Silverstorm said:
How does free trade and globalism allow corporations to more easily setup offshore accounts?
And if true how would increasing those mechanisms with less oversight into their practices protect the nation from companies not paying back?--seems that would only increase such tax evasion practices by increasing the things you said make it easier to begin with

Edward Kleinbard, a former corporate lawyer who is a professor of tax law at the University of Southern California, told the International Consortium of Investigative Journalists: “US multinational firms are the global grandmasters of tax avoidance schemes that deplete not just US tax collection, but the tax collection of almost every large economy in the world.”

Silverstorm said:
American Presidents have little to no impact on the economy? Surely that is a mistype

Not surprising results seeing how interest rates are low, but risky none the less.

Soverign said:

You gotta be kidding me.


https://www.theguardian.com/news/2017/nov/06/apple-secretly-moved-jersey-ireland-tax-row-paradise-papers

That doesn't even take into account the loss of jobs from offshore outsourcing, Because it is cheaper to pay someone pennies on the dollar in a lesser developed country. Then turn around and sell the finished products for a premium in a first world country.
If that isn't putright feasible they will make all of the components outside the country then assemble them in one central location then put made in Murica on it.

The Fed isn't controlled by the elected government you know.

Silverstorm said:
It is good to know all that but it didn't answer my questions to what you raised. You moved the goalpost. So some companies decide to conduct business in a country with less regulatory laws (harming the workers in most cases), and sell said product at higher prices (unfair to consumers). Meanwhile they go to lower rated tax spots to keep taxes on their profits--wheres the offshore accounts part? This was offshore factories and legal tax-rate skipping. In the context of offshore accounts, there are only a few countries with legislation that allows their banks to conduct business in such a way and those aren't the ones the companies produce in. This is legal evasion by picking the places that would tax the least; still evasion but not the same as hiding profits entirely.

Soverign said:
I can only pray God Emperor Trump makes me the commander of such a glorious expedition so that I may shout from my M1 Abrams tank. "FEDERAL RESERVE!!! LET MY PEOPLE GO!!!". As I part their reinforced vault doors with a depleted uranium sabot round.

Freshell said:

Sadly, God Emperor Trump doesn't want to stop at the Fed handing out low interest loans but wants them to give no interest loans plus when they're paid off, hand out some free money. Unless him saying he wants to fire Powell over not lowering interests more is some sort of 5D chess I'm not seeing.
dun dun dun

Yudina said:
They don't? Not sure what's so controversial here. Presidents rarely make decisions that affect the economy as a whole.

Yudina said:
This is like trying to answer the question of someone who doesn't look at markets all day long and therefore doesn't know what the economy looks like. You learn about all these institutions and generic principles and then treat them as if they're by default important when they aren't. Pointing to the Fed immediately is like every online keyboard warrior's virtue signalling starter pack and is by far the worst example of trying to say that the president makes an impact.

The last time the Federal Reserve made a seemingly important decision was under Alan Greenspan, but that's a choice that was made by Greenspan (and then maintained and defended by other chairs unrelated to the original president who nominated him). You can ostensibly argue that the low federal fund's rate has had a long standing impact, but any central bank has the same power and not all of them are answerable to a higher executive office (neither is the Fed by the way), so to say that this links to the president is pretty daft. Even in the case of the low interest rate environment, that's not something that impacts the ordinary lives of regular people, which is what this eventually all leads back to anyway in terms of general economic discussion. Sure the stock markets are up but the average person does not see the historic gains we've seen since 2011, but that's the immediate and most notable impact of the Fed policy. There's a clear distinction between stock market performance and the general state of the economy.

Even to suggest that the choice/appointment of the Fed chairman itself matters is ridiculous, since the pool of candidates have always acted in relative consistency to one another. Bernanke, Yellen, Greenspan, Volcker, they're all cut from the same cloth despite being in completely different political eras, so the idea that the president's choice matters in this regard is pretty pointless and reflects a poor understanding of history. Janet Yellen is especially hilarious considering everyone originally thought she would breath fresh air into the Board but ended up just kowtowing to same kind of Fed mantra that's been passed down from the Greenspan era.

As for tariffs and treaties, this is just pretty silly because there's no real contemporary tariff or treaty that has had outstanding effects on the economy. Sure, the markets tanks for a day when the president decides to set a new tariff on scotch or Chinese productions, or European producer, or pork, or whatever, but these have extremely minute effects on the economy as a whole. What was the last economic treaty that really changed anything? The answer is there hasn't been. NAFTA's been around for two decades now and the impact of that on the U.S. economy is extremely muted compared to other things that people talk about. There are tons of buzzwords about NAFTA's opening of the American worker into the global market or the supply chain integration between Canada, Mexico, and the U.S., none of which really means anything unless you can put it on a calculator.

If you believe that the president has extraordinary control of the economy, then you must by proxy argue that the crash in 2008 was Bush's fault (it wasn't). That the recovery from 2008 - 2010 was to Obama's credit (it wasn't). That the economic boom of the post-Obama era has been Trump's achievement (it isn't). So on and so forth. There are very few times where economic performance is tied to what the president actually does (Glass-Steagall is a notable example), but this country thinks that is the case because that's what the election seasons trains them to think.

Yudina said:
What does this even mean? By what economic metric are you saying the fed cut is "premature?" What does it even mean to be premature in this sense and what is so much? The fed almost always has cut rates by 25 basis points in the post-08 economy and 1-200 basis points over the course of a year or two is not "so much." Seriously, you people do know the Fed has cut rates three times this year already right?

Yudina said:
The fed almost always has cut rates by 25 basis points in the post-08 economy and 1-200 basis points over the course of a year or two is not "so much." Seriously, you people do know the Fed has cut rates three times this year already right?

Yudina said:
You're free to believe or disbelieve whatever you want, I really don't care, I'm merely drawing experience to explain why you're wrong.

Either way, at the end of the day, you're the one that's always saying you're too lazy to look up sources but then never respond to actual pressing examples. Just sayin'.

The entire premise of my point is that the president does not have a lot of control over the economy; I don't care if the president has influence, they clearly do, my original point was an offshoot about how they simply do not exercise as much control as people would believe. It takes some of the most centralized and planned economies to enact sweeping changes to the economy and parliamentary/democratic/republics do not have the political capacity to imbue their executive branch with that kind of power.

Do you read what you're writing before you post? It works independently but it works with the government?

I mean I won't deny that there's a collaborative effort, but my point was never that the Fed does not work with the government, but rather that it relieves itself from political pressures. This is why the Fed has a routine of making calls during election years that damage or improve the sitting president's reputation. You'd think that if the Fed was somehow swayed politically as a result of the president they wouldn't make these kinds of seemingly political decisions, but they act on behalf of what they think financial markets need.

And no, they don't look majorly at how the executive branch conducts policy. Do you even read Fed minutes? Like sure they've cautioned against trade tensions, but some of their primary economic metrics are inflation and the jobs report, neither of which has been heavily influenced by most presidential administrations. Where did all the jobs go that Obama created for instance? Most of them were temporary jobs that evaporated after the recession had passed.

It's not a stupid assumption. You literally cannot prove the sorts of claims that you're making, so you're just wrong lol

I always love it when people try to reframe these arguments in the broader context of the thread, as if more and more people need to read my "bs" because they'll see how much of an idiot I am. I don't really care for these observations, but really all it tells me is that you have nothing to say and hope that someone more intelligent than me comes over and tries to put me in my place so you can "agree" with their take down.

Yudina said:
This is just grasping at straws lmfao. Anyone who looks at Fed policy knows jobs numbers and inflation is their primary objective, but go ahead and think that I'm just doing these rhetorical flourishes to mess with you like some Socratic act put on by Plato.

Yudina said:
If you knew what the Fed did you wouldn't be so daft as to only mention that they make moves on "how the executive branch conducts policy," which is one of the least of their worries.

So not only do you not know how the economy works, you also are illiterate? Good to know. :3

Another competitor with bank loans was commercial paper (CP), a short term debt contract issued directly in the capital markets....Over the 1980s, the CP market grew at a 17% average annual compound growth rate. And as charter values declined in the face of all this competition, deregulation added to the ongoing transformation of the banking industry.... In order to stay competitive with nonbanks and their products, banks had to restore their profitability levels....banks needed to innovate in order to survive as profitable companies. The most important bank inmovation was securitization.
Gorton, Misunderstanding Financial Crisis, pg 127-129

DreamingBeats said:

as for hating the Fed, the answer is obvious. billions of tax payer dollars on bail outs.
nobody was punished, as popular opinion says should have happened.
it so happened that Fed had to do its job, even if it was unpopular. as Gordon explained in the paradox of financial crisis: to help the common folk, the government must help the guys on wall street. it is a paradox because it goes contrary to what seems fair.

Yudina said:
I don't know what you mean by ironically. Capitalism encourages the development of these kinds of instruments that go unregulated and have unwarranted catastrophic effects on the economy. That's all part of the plan.

This just seems wrong in every way. What do you mean by there was no crisis in decades? Even as early as the 2000s there was the Dot Com bubble burst, then there was the Savings and Loans Crisis in the 80s to 90s not to mention the ripple effects of the Asian Debt Crisis at the end of the 20th century that coincided with dot com. A recession wasn't even that far from memory. There were two recessions at the end of the 90s and beginning of the 2000s, the former marked by high inflation and the oil shock of the 90s and the latter by the aforementioned dot com bubble.

As for economists, people as early as 2004 were commenting on the risks of mortgage backed securities. In 2005, the NYU economist Nouriel Roubini predicted that the economy was in the midst of a housing crisis bound for a bubble. The investigative findings almost certainly definitively proved that Moody's, S&P, and Fitch were all aware that the CDOs, CDS's, and MBS that were being graded on the market were garbage but because they needed to keep their client base, they spun them as AAA.

Eh, if billions of tax payer dollars on bail outs was enough to hate one institution, you'd think Americans would hate their military or the industry that funds it, but they don't. If anything, the bailouts had a net positive effect on the balance sheet because the banks paid back everything that was given to them and then some.

Yudina said:

Eh, if billions of tax payer dollars on bail outs was enough to hate one institution, you'd think Americans would hate their military or the industry that funds it, but they don't. If anything, the bailouts had a net positive effect on the balance sheet because the banks paid back everything that was given to them and then some. Think the government made at least half a billion from the bailouts.

Yudina said:
I'm not here to defend the Fed, mind you. I'm just saying you could ostensibly hate on every other institution for similar reasons; I'm mostly just amused by how much people hate the Fed in particular. Like why not hate bankers instead like I do? :3

Yudina said:
I'm not here to defend the Fed, mind you. I'm just saying you could ostensibly hate on every other institution for similar reasons; I'm mostly just amused by how much people hate the Fed in particular. Like why not hate bankers instead like I do? :3

Freshell said:

I don't. I just like phrasing things in incendiary ways when I get the chance. ;P Makes the thread more fun, ya know? Trump ostensibly wants the Fed to intervene more despite his base being the kind who don't even want it to exist.

Plus it's a traditional American pass time. When I stub my toe, I say "Fed damn you!" Back in my day, you could get a bag of throat lozenges for a nickel and a dime I tell ya. Kids don't have any sense these days cuz they don't even save their cents!

In 2002, Ben Bernanke, then a member of the Federal Reserve Board of Governors, acknowledged publicly what economists have long believed. The Federal Reserve’s mistakes contributed to the “worst economic disaster in American history” (Bernanke 2002).

Bernanke, like other economic historians, characterized the Great Depression as a disaster because of its length, depth, and consequences. The Depression lasted a decade, beginning in 1929 and ending during World War II. Industrial production plummeted. Unemployment soared. Families suffered. Marriage rates fell. The contraction began in the United States and spread around the globe. The Depression was the longest and deepest downturn in the history of the United States and the modern industrial economy.

It was a remarkable speech. The next day depositors lined up to redeposit their money in the banks. The Emergency Banking Act was passed with alacrity, and there was no legal challenge to the bank holiday.
- Gorton, pg 117

Yudina said:
Funny we spent this weekend talking about the Fed since Paul Volcker died this morning. :3

Good good good.

I mean all in all he didn't seem that bad a guy. Didn't like the banks. Fine with me

lmfao

Your last point tried to establish that the president had a majority control over a monthly jobs report which is ridiculous and you've conveniently changed your position from "president" to the "executive branch," so how's that for trying to dodge the inevitable? Further, you literally could not provide a single example of the president influencing inflation or employment figures, even though there have been clear times when it's happened (TARP, Obama's 1bn stimulus, 70/80s negotiation with OPEC, etc. etc.). The fact you yourself cannot provide these examples outside of "common sense logic" is a tell tale sign that you don't know anything about finances or economics. Or history. Or maybe anything to be honest.

I apologize if you think me dropping a discussion with a philistine is cowardice. I hope the boots of capitalism don't kick you on the way out. o/

ezikialrage said:

I would hate to be the countries that the US owes money to. Because what caused the downfall of the Templar knights is that Phillip the IV owed the Templar knights money and had no way of paying them back. So he accused the knights of heresy, homosexuality and other shit and tortured them to confess to those things.

Baphomet is a deity that the Knights Templar were accused of worshipping and that subsequently was incorporated into occult and mystical traditions.

The name Baphomet appeared in trial transcripts for the Inquisition of the Knights Templar starting in 1307. It first came into popular English usage in the 19th century during debate and speculation on the reasons for the suppression of the Templars.

When DeMolay was asked to repeat his confession of guilt for heresy, he hesitated. Looking around at the devilish grins of the demonic attendants fueling the flames of lies around him, DeMolay protested his innocence by recanting his story as he summoned Pope Clement to appear before the judgment-seat of God in forty days and King of France, Philip the Fair within a year, and both, it is well known, died within the periods specified.

Soverign said:


The Templars also apparently swore fealty to Baphomet.


https://en.wikipedia.org/wiki/Baphomet

It is funny watching hipsters appropriate things like wearing a cross upside down, when that is still a Christian symbol, the cross of St, Peter. Whom felt he was unworthy of being crucified in the same fashion as Jesus. The orthodox cross however is very, very close to the satanic cross.

That whole Templar assassin vidya game thing came from Jacques DeMolay and francophile Ubisoft. Jesus, just let the past lie will ya?


Didn't Notre Dame burn not that long ago?


Ironic.



>:3