IMF proposes 50% gas price hike in Canada

Like me.

 

It's hard to find function in the dysfunction. At least the veterans bill passed last week to be signed. Here we have thrown money at the problem, without fixing most of it. At least $10B is being used as a safety valve to allow those that served to get health care with the general population. Those creating the fraud and abuse though got bonuses. The bill did little to fix the government system or punish those that committed the fraud that actually cost people their lives. No accountability.

What is it, the president has a 40% approval rating, and congress much much lower. We can't even house all the illegal kids that have streamed across the border, but congress to a pass at that. What are the odds that they will wisely spend the money coming in from a new oil tax.

I agree we should do it, but it needs to be used to cut other taxes. IMHO the medicare payroll tax would be a good place. It is not that we are taxed too little, or spend too little. It is that we spend in more and more stupid ways, and don't spend money where it is needed.

 

What are the odds that the Congress could pass a bill, largely supported by one party, which creates the exact opposite results it sought to achieve, and then blames the other party for not fixing it? The odds are extremely high in fact. It used to be that Dodd Frank was just a very complex, and expensive burden on the financial community. While it is a huge burden and a boon to lawyers and compliance officers, it's been enormously useless in preventing banks from becoming what they are today. Bigger, more profitable, more consolidated, and an even bigger threat to economic stability should they fail.

An interesting tidbit. The ten largest banks now receive an $83 billion annual subsidy. That's enough to practically fund the entire SNAP program for a year.

 

Circular logic. What would the banks be sans Dodd-Frank ?

The real problem is lack of transparency in derivatives trading. It is extremely unfortunate that the Republicans vetoed the attempts to force reporting transparency requirements. The next credit bubble is on its way.

 

I agree with you on the derivatives markets, that's what happened last time. I think what's happened is that while subsidies and bailouts were plentiful, Congress assumed that adding more agencies and layer upon layer of costly bureaucracy would solve everything. It's honestly hard to tell what's been implemented and what's not, parts of Dodd Frank haven't even been written yet. It's ironic that the two the bill was named after, not only didn't understand the scope of the problem, but watched it happen under their own noses.

Not surprising that they would get the answers correct.

 

The only thing of real importance is that the derivatives market remains massively under-funded and without valid risk assessment. Thank the Republicans for that. Again.

Fannie and Freddy are not my cup of tea, but they are side-shows.

It is like whining about Social Security and ignoring Medicare.
Or whining about Medicare and ignoring the military budget.

 

Mortgage derivatives, creation of mortgage paper, ability of investment banks to handle these was championed by none other than barney Frank of dodd frank. Although former congressman frank had a unique position to understand what the government did wrong, he was one of the people who helped create the crisis. What are the odds that he got it right this time?

Dodd-Frank Goes 0 for 11 - WSJ
Yep, all 11 are too big to fail, with equity requirements not nearly large enough to prevent failure. There is a bipartisan collusion with the big banks, and against proper regulation. Proper regulation would probably just kill freddie, fanny, turn back the law clinton reversed and make it illegal again for commercial banks to be investment banks, break appart those too big to fail, jail those that commited fraud, etc. Much shorter than dodd frank, but you need to stop the government give aways to big banks. Its not that we don't know what the banks are doing, transparancy, the problem has been that it is legal and profitable to do it. These punnishments for fraud that the big banks have paid are tiny compared to what they earn. How about some jail time, if you sold derivatives to clients that you knew were bad, or created mortgages that you knew where high risk, but didn't care because you were going to sell them to clients that would be left holding the bag, or the government if they failed.

Elizabeth warren seems to understand, and the education to put up some better regulations, but the bulk of those elected in her own party are against her.

 

In other news, GM receives about $3.5B a year in taxpayer subsidy.
Ford and Fiat are both about $2B a year.

And you thought the ~70B or so given to GM to avoid BK was the end of it. HAh!

http://wallstcheatsheet.com/business/high-on-the-hog-the-top-8-corporate-welfare-recipients.html/6/

 

The dichotomy is, cheep energy is what enables our economy to hum along. If gas were $10/gallon, most could not afford the dually pickup,the motor home, the toy hauler, or the 26' tri hull. Then those industries cave in. Then the folks in the excess toy industry stop buying, and the construction industry cave in, etc etc etc. We're designed to waste.

 

No they don't cave in. You cut your cloth accordingly.

We have pickups, they're just smaller than the humongous ones you have. We have motorhomes and very popular they are too. Boats are towed here and used regularly. So don't understand all the doom and gloom.

By not wasting as much you might sell your pickups in other jurisdictions helping that industry. If your motorhomes weren't 35 footers running on a 10 litre engine doing 3 mpg you might sell them elsewhere in the world too. Now I'm not telling you what you should do, but there are other markets out there and by being more economical and less wasteful, your industry would have more access to them.

So rather than dying your industry could gain and expand. The Model T was an economical car and kick started the US auto revolution. It sold Worldwide. Why? It wasn't a 7 litre massive monstrosity, rather a small and economical (for the day) 3 litre engine. It was so popular that Ford set up a factory here in the UK and Fords become a popular car and are still selling number one. But the models are now tuned for here. Your F250+ doesn't sell outside the US. Why?

Just think of all those untapped customers out the World, a growing population of consumers who want cars, but I don't see many folk in India or China queuing up for a big Ford or GM. Missed opportunities guys.

 

The new FORD F150 pick up is aluminum. Interesing to see how it sells.

 

'Waste' is something of a judgement. I think it is more accurate to say the US economy is inefficient and polluting. Neither of those two are necessary for a strong economy, despite what the extractions industries and their Republican talking heads say.

Industries shift. Instead of selling motorhomes people can sell PV.

 

There are 1 billion impoverished children (UN stats). This almost 20-trillion indebted country. doesn't have the resources to take even 1/1000th of that number. So maybe the US should stop advertsing, "Send your children here... they'll get free home, food, education," to these billion children. IMHO

The motorhome, toy hauler, tril hull are all doomed to disappear anyway, because there will be an energy shortage when oil becomes as rare as gold. So it's probably better to make the transition now, gradually, rather than get hit in 2030 with a sudden pricehike to $30/gallon.

No the gasoline tax should remain a "road toll" to fund the building of bridges, signs, highways, et cetera. If they want to reduce gasoline usage, just continue passing laws for 55 MPG cars, sub-130 g/mile exhausts, and so on.

Besides a gasoline tax is regressive: It hurts the poor people more than the middle or upper incomes. $1000/year for an increased gasoline tax is about 10% of a poor person's income. (I strongly suspect that is what the rich people at the IMF desire..... to harm poor persons and keep them down.)

 

In theory, but in practice poor people in the US *prefer* big cars. Only more expensive fuel is going to change that attitude.

In any case, this argument is silly. Fuel should be taxed to include externality costs; forget the morality arguments. End of story.

 

I don't think the RV industry is big enough to worry about. Higher gas raises cost of flying or driving and hotels also, so relatively RVs may be fine, but leasure travel will suffer from a huge doubling of fuel prices. That is a bigger worry.

The bigger economy shock comes from commuters. Those living far from their jobs, may not be able to afford the trip. This is especially true of areas of long commutes like california. This likely reduces real estate values away from the jobs, and if not done with incentives to buy more efficient cars it hurts auto. So auto and real estate going down, plus higher food prices because more and more this is trucked long distance, could take a big bite out of the economy.

The vicious cycle only really happens on spikes, if it is managed as a small increase each year, people may have time to adjust.

 

So it sounds like the bottom line is that none of our great ideas will come to fruition - till the consequences really bring on the hurt. In the meantime the big money lobbies will keep the system rolling along status quo. Ya gotta admit - if it's your protected interests that are being secured - it's a wonderful system.

.

 

+1

Yes, the sad thing is the left and right wing economists could probably agree to a tax reform package. Higher oil taxes, slowly increasing (not percentage of cost, but perhaps tied to inflation), lower payroll and corporate tax rates, elimination of tax distortions like carried interest, make illegal fake moves of property to overseas (irish moves are most prevenent now for lower taxes on really us assets), remove oil subsidies, etc. But the politicians each get bribed by the lobbies to actually add more loopholes in stead of closeng the ones we have.

As US war planes start bombing iraq again, something that seems like a proper move to prevent something worse, we need to untie the US national security and economic security from the middle east.

Actually we have statistics on these attempts. 55 mpg speed limit reduced oil consumption approximately 1%. It was a total failure as far as reducing oil use or death toll. Since the federal law was abolished, death toll in deaths per 100,000 miles has decreased significantly. Oil price spikes reduce oil use a great deal more, and we can assume slow rises will have the same effect.

Raising cafe standards does reduce oil use, but most economists find that raising prices reduce use more. CAFE standards raise the price of cars, but allow choice of efficient vehicles. The price of cafe goes down quite a bit if demand for efficient vehicles goes up. The average car in california gets 20 mpg. Raising cafe only affects new vehicles. With fleet age averaging 11 years, cafe is much slower. When oil spiked up, we did get rid of some inefficient cars.

You know this is one of those arguments that rich politicians use to demogogue the issue. If you actually lower payroll taxes at the same time, those working at lower incomes actually benefit. Raising oil prices from opec is much more damaging to the working poor in this country than a tax. By the government encouraging less efficient vehicles, it is likely that this recession is deeper and longer than if during clinton we had started increasing oil prices and cafe.

 

It is just some urban myth that specific taxes go only to specific uses.

 

If you review the numbers, you will see the amount of dollars collected from gas taxes == the number of dollars spent on road maintenance (approximately). The *original* reason the U.S. and state gas tax was created was to fund the roads, and it's still true today.

 

well that sure makes it sound simple. Problem is if they collect billions in road tax dollars - that doesn't buy us billions of off ramps - concrete and asphalt and bridges and traffic lights. The taxes also pay for the additional behemoth agency that hires their own buddy contractors... & the agency's administrators - their HR department... their life insurance, and their (top dollar) health insurance ... and their (nearly full salary) retirement program, & the administration that run those programs. Then there's the actual hourly grunts ... often you will see a team of 6 Cal Trans workers .... 4 or 5 watching the other one or two doing the actual work. And on and on it goes. All that to say I do not know how true that really is today ... road taxes going to fund the roads . But yeah I suppose there is a sliver of the giant budget that goes to do the little bit of work that actually gets done.
.