Our financial system is crumbling this week.

[Popeye_Card]

I've always wanted to see Bernanke just crush Ron Paul whenever he asks stupid Austrian questions at Bernanke's testimonies. This is just as good.

Video: Krugman vs Paul on Various Economic Issues

I've gotten to the point where Ron Paul says that it's not a big deal (talking about the debt and 'printing money') as long as the world continues to value it.

But, yeah, the obvious doom and gloom is the dollar is no longer the new gold and countries start to get away from valuing it. Like China and Russia starting to trade in whatever currency it is, not the USD. The IMF saying the world needs a new currency. Stuff like that.

Ron Paul politicizes at certain times the economic policy, but correct me if I'm wrong....isn't the dollar on a bubble right now only because other countries continue to value it regardless of a current economic policy that doesn't appear to be sustainable? Looking at the year to year budget (and I'll blame the huge debt on Bush) if they continue to run the debt up 2 trillion or so a year to get out of the recession, how long can that last?

12 years ago the debt was what 4 trillion and it's now 15 trillion. Like...that doesn't seem like a plausible path, regardless of what party you support.

The issue is the large gap between revenues and expenses:



Obviously the expense side is higher than ideal. However a good portion of that was wrapped up in fighting two wars, the stimulus plans, increased unemployment payouts, etc. It is expected for expenses to rise significantly during recessions.

Just as big of problem though is the revenue side. The combination of the Bush tax cuts (which unfortunately keep getting extended), additional tax cuts from Obama, and high unemployment is killing the revenue side.

So while I applaud Paul's desire to cut spending, I cannot agree with him regarding tax policy. In a time of record corporate profits, somehow we need to close that gap between revenues and expenses. *Somebody* is making money in this economy. Not to vilify them, but this problem isn't going to magically fix itself.

[planet planet]

All is not so rosy in the euro zone.

[Hungary Jack]

Despite the fact that nationwide, state tax receipts are up 9%, California's revenue situation has not improved. Governor Brown reported that tax collections were $3.5B below forecast in his budget, and spending was $2B higher, leading to a projected deficit of $16B vs. a plan of $9B. The primary culprit appears to be state capital gains and income tax rates which, frankly, are punitive. One of Facebook's founders even renounced his US citizenship and moved to Singapore.

Now CA wants to double down on taxes by raising its sales tax, already the highest in the US, and jacking up its state income tax on high earners to 13% from 10%.

Good luck fellas.

[AdmiralKird]

Europe needs to get its act together. If you're going to form a commonwealth, you better be prepared to do whats necessary in bad times so you get the benefits in the good times. Greece's political situation is also a mess. They just elected leaders that have basically criticized everyone giving them aid.

[vinsanity]

Now CA wants to double down on taxes by raising its sales tax, already the highest in the US, and jacking up its state income tax on high earners to 13% from 10%.

Good luck fellas.

I think the reason they have to do these things is Prop 13 where Reagan slashed property taxes then required a 2/3 vote in the legislature to raise them more than 2% a year and all 'special' taxes need a 2/3 vote in local elections.

[cpebbles]

The primary culprit appears to be state capital gains and income tax rates which, frankly, are punitive. One of Facebook's founders even renounced his US citizenship and moved to Singapore.

Pretty sure Saverin has never lived in California and wasn't subject to their punitive tax rates.

[Freed Roger]

whoa, wait - I thought Arnold fixed California.

[AdmiralKird]

whoa, wait - I thought Arnold fixed California.

He came in with much fanfare and did his best, but he just didn't have a strong enough supporting cast to get a better result, much like his appearance in Terminator 3.

[AdmiralKird]

When you think American Politics are messed up, just read this:

http://www.cbsnews.com/8301-505123_162- ... tion-woes/

[cpebbles]

Greek politics are indeed screwed up, but anything that increases the likelihood of a default and an exit from the Euro is probably good for the average Greek.