Barron's: [Obama] Follow Me We Can Be Like Greece

[momo]

What do you think about the newest issue of Barron's?

http://online.barrons.com/article/SB50001424052748704852604578298123148082456.html?mod=BOL_twm_ls#articleTabs_article%3D1

Thoughts? Ideas? Would like to know are the facts reported remotely accurate? Thanks.

[Deano]

It's the business press (as most press is), I don't think we can take it too seriously. Business promotes the interest of business, not lil' Mustachians trying to exit the rat race.

On the other hand, spending cuts could be made, to the military! The US could probably cut 60% from that budget and still have the largest in the world. Wait, how many defence companies listed on the DOW? Yeah, Barron's won't touch that. The only spending cuts on their table will be medicare and infrastructure.

[projekt]

If we want to be like Greece, we have to do several things.

1. Give control of the Federal Reserve to Germany.
2. Lie about our economic numbers for about 10 years so that we can create lavish pensions and the like.
3. Suddenly cut our government spending like 50% across the board, everything except interest payments.

I know Obama hasn't proposed #1. I don't think #2 is happening but I'm sure some people will disagree. Only "Very Serious People" would propose #3.

[Jamesqf]

It's the business press (as most press is), I don't think we can take it too seriously. Business promotes the interest of business, not lil' Mustachians trying to exit the rat race.

Except that those lil' Mustachians are (if they're sensible lil' Mustachians) saving a lot of their income, and investing most of those savings in stocks (or mutual funds).  And guess what?  Every single one of those stocks represents a business, so all us lil' Mustachians have a vested interest in keeping them profitable.

I'm sure that Barron's has their own set of interests, but I'm also sure that 1) there are lots of places to make significant cuts without hurting the general public; and 2) every one of those places has a loud vested interest protecting it.

[arebelspy]

Anyone arguing this doesn't understand the basic structure of the debt held by each country.

Greece's debt was in Euros, which they couldn't just print more of.  Our debt is in dollars, which we can.

If we ever get to a really terrible Debt to GDP ratio, we can print our way out of it.  Greece couldn't (nor Iceland, leading to bankruptcy).  State and local governments can't. 

The logical result of this is inflation.

Thus I'd worry more about inflation, which you can protect yourself against and hedge against, than government spending, something out of your control.  Worry about what you can control, not what you can't.

(My apologies if this was covered in the article.  I skimmed the first page, but wasn't interested in reading four pages of fear mongering.)

[projekt]

I think the interests of Business, w.r.t. the popular business press, are

• make executives into heros
• obfuscate business to make it seem much more difficult than it is
• make stock trading seem akin to soothsaying
• propose cutting taxes as a panacea

While some FIRE people buy into all of this, I think it is explicitly not Mustachian.

• Executive hagiographies talk about how someone makes kazillions of dollars by working 90hrs/week and flying all over the country in private jets, relaxing occasionally at golf courses whose membership fees are in the millions.
• Businesses may have a lot of moving parts and be complicated but the basics are pretty straightforward. Mustachians are interested in real estate and other mostly passive income sources, and so they should become knowledgeable about business. This will not happen by reading Barrons.
• There are several Mustachian investment strategies, MMM's being mainly to trust the wisdom of the index, and others buy into various value investement approaches. The business press is all about "hot" companies and opaque expert opinion.
• MMM has addressed his view of tax cutting and blindly trying to shrink government, especially in human services. Other Mustachians may disagree with MMM, that's fine. However, the business press generally believes that taxes should be paid by little people. Flat taxes and sales tax schemes are concrete approaches that the business press thinks will enable multimillionaires to save a ton of money while increasing the "participation rate" of low earners. From a selfish POV, Mustachians need to accumulate their stache, usually with salaried work, and then live off of it where most of the returns (interest, dividends) count as income. Tax schemes that increase the share paid by the lower end of income will delay retirement for most of us.

[tooqk4u22]

It's the business press (as most press is), I don't think we can take it too seriously. Business promotes the interest of business, not lil' Mustachians trying to exit the rat race.

Except that those lil' Mustachians are (if they're sensible lil' Mustachians) saving a lot of their income, and investing most of those savings in stocks (or mutual funds).  And guess what?  Every single one of those stocks represents a business, so all us lil' Mustachians have a vested interest in keeping them profitable.

I'm sure that Barron's has their own set of interests, but I'm also sure that 1) there are lots of places to make significant cuts without hurting the general public; and 2) every one of those places has a loud vested interest protecting it.

This.

Thus I'd worry more about inflation, which you can protect yourself against and hedge against, than government spending, something out of your control.  Worry about what you can control, not what you can't.

And this.  Although even people such as Arebelspy understand this, I don't think they fully appreciate how bad this can be. 

This is also why it is important to have a diveresified AA including foreign investments and those with inflation hedge characteristics.

[Spork]

My complaint:

It ain't Obama.  It's Congress.  Presidents shouldn't get credit (or blame) for the economy.  The president can suggest/cajole/strategize/veto, but (outside of executive order) he doesn't make monetary policy.  We love to blame presidents because it's a single foe we can hate (or love, if you prefer).  But to really screw things up, you need a committee. 

I do get concerned by the whole "if we want out of this we can print money" thing.  That's a game.  Yes, I understand how that works.  I also understand it doesn't work forever.  You can only screw over your creditors with inflation so many times before it starts coming apart.

Politics of *what* we spend on aside -- that's a whole argument to itself, left to vote and Constitutionality -- I'd seriously like to see mustacian concepts put into play for the government itself:  Live within your means

[tooqk4u22]

My complaint:

It ain't Obama.  It's Congress.  Presidents shouldn't get credit (or blame) for the economy.  The president can suggest/cajole/strategize/veto, but (outside of executive order) he doesn't make monetary policy.  We love to blame presidents because it's a single foe we can hate (or love, if you prefer).  But to really screw things up, you need a committee. 

While agree with you that the presitdent shouldn't realize all the blame or praise - they do bear some.  Blame in this case does in part lie with Obama because unlike prior presidents he has shown no willingness to move toward the middle, compromise or even demonstrate true leadership and he as acted like a child with the my way or highway approach.

Politics of *what* we spend on aside -- that's a whole argument to itself, left to vote and Constitutionality -- I'd seriously like to see mustacian concepts put into play for the government itself:  Live within your means

Good luck - I looked up the definition of anti-MMM and it read "government" ;)

And setting aside what to cut as you say, if nothing else the US spent a trillion dollars plus a decade ago less than we do now - just on that alone suggests there is room to cut without much pain. The increase in spending on defense and entitlements (excluding SSI) over this time was about the same - ergo cut both equally and piss off/make happy both sides.

[Spork]

While agree with you that the presitdent shouldn't realize all the blame or praise - they do bear some.  Blame in this case does in part lie with Obama because unlike prior presidents he has shown no willingness to move toward the middle, compromise or even demonstrate true leadership and he as acted like a child with the my way or highway approach.

From where I sit: the left and right are both equally big spenders.  The right talks a good game.  But they're spendy, too.

I hate (HATE) taxes.  I do.  I have some serious moral issues with how they work that I won't diatribe here.  But that said: I think we have this ideal that it's either "raise taxes" or "cut spending".  And "raise taxes" generally means "raise taxes on those other guys, not me."  Taxing the rich may be popular, but taxing the middle class raises more money.  I say that will full knowledge that puts me right in the cross hairs.

When I think of "compromise" I don't think of arguing about one or the other -- but that we probably need a bunch of both to get things in order.

Yeah, it'll hit the economy.  I know. 

[tooqk4u22]

From where I sit: the left and right are both equally big spenders.  The right talks a good game.  But they're spendy, too.

Absolutely agree, I just think that Obama does share some of the blame with congress (both sides) for aforementioned reasons.

As public reminder - even if the left gets its tax increases (on top of those already gotten) and the right gets its cuts we are still looking at $1 trillion dollar deficits for the foreseeable future.  That is the best case, which sucks. 

Say it with me...."Slowing the rate of spending growth is not the same as cutting."

[Spork]

Say it with me...."Slowing the rate of spending growth is not the same as cutting."

Bless you tooqk4u22.  You bring a tear to my eye.

[Deano]

It's the business press (as most press is), I don't think we can take it too seriously. Business promotes the interest of business, not lil' Mustachians trying to exit the rat race.

Except that those lil' Mustachians are (if they're sensible lil' Mustachians) saving a lot of their income, and investing most of those savings in stocks (or mutual funds).  And guess what?  Every single one of those stocks represents a business, so all us lil' Mustachians have a vested interest in keeping them profitable.

I'm sure that Barron's has their own set of interests, but I'm also sure that 1) there are lots of places to make significant cuts without hurting the general public; and 2) every one of those places has a loud vested interest protecting it.

Fair enough, that's true and it includes me. Most Americans not owning stock to any significant degree makes my point still valid, save for perhaps our lil' Mustachians.

Business, btw, doesn't give a rats ass about you or anyone not on the board of directors and their buddies. We need to be honest about that fact, we merely hoover up their droppings.