I just wonder how most here feel about these law changes as Americans are basically tapped out. They took on too much debt in the form of underwater homes, inflated student loans, credit cards and now job insecurity. In this age when we need to give consumers more ability to save and pay off debt, is this the time to be forcing environmental regulations and cap and trade policies on already tight consumers? These policies and many of the entitlement programs will increase energy and most costs to consumers for many of the same services they recieve today. Can we really afford this at this juncture? I'm not getting into the Global Warming/ Cap and Trade debate but who here truly believes that increasing costs to consumers for what they're already recieving will benefit our citizens in light of these recessionary conditions? Many of the recent bills ideas will force higher costs onto companies and individuals. The companies will turn around and raise prices or lay people off and either way this hurts the consumers that we're trying to help dig their way out of their personal holes. Thoughts on the horrendous timing for these programs to be unveiled?
Depends what the regulation is and what the effects are. For example, if cap & trade results in R&D in new technologies, you could spawn entirely new industries. Raising fuel efficiency would produce higher cost cars - but less gasoline consumption could save money both by using less gasoline as well per gallon costs due to lower aggregate gas usage. You can't just look at the first effect of the rule/regulation. The Clean Air & Water acts, for example, cost lots of money upfront - but have saved consumers billions in medical bills and lost wages from illnesses and other health problems, not to mention the improved quality of life benefits.
My concern with the 'new technologies' is that they weren't cost savings when oil was at $147 let alone where it is now. For example there is an energy mandate for alt/wind etc in Texas and because the cost is higher every individual in Texas pays more more energy because of it. A guy like Michael Skelly made a fortune off of this but a few people benefitted whereas everyone in the state paid more for energy. I agree that there may be future benefits, but the immediate costs come at a time when the consumer (Not unlike the typical I-bank) is teetering close to insolvency as well. I think we need to keep prices on everything low to allow them more financial flexibility to pay off debt and remain paying on things like their mortgage which is at the heart of this whole problem.
It's the perfect time to impose them as things are in enough disarray where you can start over in a new paradigm. If you tried to do the same thing a few years ago, the chorus would be the same 'why mess up a good thing?!?!" A lot of these things it's basically now or never anyway for.
I think it'd have been better to do these things back when things were going well, but we didn't do it then, so we're stuck with now. I think there is a danger in procrastinating till later. There will always be some reason to not do it -- if not this recession, it'll be something else. So, we may as well do it now. As far as cap & trade goes, I don't believe it raises the cost of energy; I think it merely monetizes the cost. We were already paying the price in inefficiency, environmental impact, and so on. With cap and trade, that price can be quantified (though the cap does introduce an artificial variable that will probably cause some mis-pricing).
NOW THE TIME TO PASS THESE LAWS AND REGULATIONS CUZ FOLKS WON'T SEE WHAT'S GOING DOWN OR UNDERSTAND SLAP MY BACK I SLAP YOURS bigtexxx
Except none of these changes are occurring overnight. These are regulations being put in place over the course of many years. The fuel efficiency changes are for 2016, for example. Unless you think we're in for an extended depression, none of these regulations are going to affect the recession.
But doesn't this increase the chances of a more pronounced recession? So you think the economy is in disarray so throw out stuff that some people want to get done though its not truly based on helping turn around the economy?
I actually agree that there is a lot of shadiness by the CC companies. The fact that the companies didn't manage their risk well enough and needed a bailout diminishes their opinion anyway. When they had to depend on the kindness of strangers (Buffet) there's usually a short leash. This legislation will eventually increase annual fees for all card holders etc. though.
Until the leveraged derivative securities of the traded credits cause a financial market meltdown in 2025. j/j
No - because a lot of these changes are backloaded for future years when the recession will be over. For example, everybody is whining because Obama allowed some of Bush's most egregious tax cuts to expire - as they were supposed to in the original legislation - hence teabag parties and the rest of it. THose tax cuts, however, expire at the end of tax year 2010, meaning no effects should be felt until 2011, by which time the economy should have at least stabilized a bit. You can make the argument that rather than r****d the economy, this type of future-loaded move would stimulate it, as people would try to avoid long term tax increases by realizing more gains/consumption in teh short term.
But doesn't the market reflect future information in today's prices? If the expectations are that X will happen that becomes a part of todays valuation of companies/economy based on future cash flow. If expectations are that taxes will rise, people will act accordingly. I'm not a fan of the efficient market theories, but these future changes will affect todays actions.
THe expectation already was that taxes will rise . . . remember this is a natural expiration of the tax cut as writtien into the 2003 statute.
Well, there's different forms of the EMH -> weak-form efficient is pretty widely recognized. For example the Dow fell about 50 points today on concerns of discretionary spending going down as a result the new CC legislation. In the end, however, the deleveraging of the consumer is an important step to economic recovery. The low savings rate has been affecting our GDP for some time now. Meanwhile, hopefully CAPEX and consumer spending projections start to improve in 2010.
Thank goodness for Obama's tax plans. That gave me some extra discretionary spending. I did put some of my tax money back into the economy. I also hope increased regulation on banks, and companies that have bailout money will prevent them from needing additional bail out money and huge waste.
Those concerns didn't exist this morning when the Dow was up 100+ pts? Everyone knew the bill was going through. I think the Dow moved for all sorts of reasons, but the media needs a reason to pin on everything, and today was conveniently the CC legislation that everyone already knew about and would have already priced in.
I think it is a good time on the sense that you have the power to do it (for instance Detroit is sucking off Barack pretty good) but not a good time for the business to succeed. The increasing of the MPG requirements will hurt the auto market even more and push more consumers to cheaper korean and in the future, chinese cars.
"It will drive us into bankruptcy!" is no longer a valid excuse from the automakers - ultimately, those korean & chinese cars wil have to comply with the same MPG requirements so I don't see the issue.
