Oof-dah, I can’t even.
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Speaker of the House Mike Johnson as an example of what's wrong with evangelicalism
- Thread starter Bartato
- Start date
They’re the same thing, or at least one doesn’t exist without the other.
Not.
If your factory workers find a faster way to finish building product and nothing else has changed what will happen?
Accounting will notice a lower direct labor and claim profit is up, while cash flow won't change since workers on salary are being payed same. Only now workers have more free time.
This usually dooms process imorovement teams. They release tons of capacity which remains unfilled while financial statements mostly stay the same. So conclusion is we don't need such a team and by by team.
Only in simple business like home cake baking will cash flow and profit/loss statements be same
This is some weird, debt fueled, MMT stuff you’ve googled this time.
Nope. Why can't you just believe I have gigantic database in my head? For over 15 years I read 50 or more books per year. And 50 books is equivalent of college.
Have you ever heard of lean accounting? Why is was created? After business started firing their business improvement teams, lean people asked themselves what is wrong. One key reason is how accounting is done as standard and their obsession with profit, allocation and standard variancies.
When you figure out how desire max utilization in business causes huge financial penalties, you will understand.
I’m sorry Memefan, I don’t accept that you have a massive database in your head. I think you are smart and articulate but a college degree a year is pushing it, especially when you say things like “profits don’t matter.”
I say something controversial and explain. You are unable to move from controversial toward why.
@MemeFan, I think you have too much book knowledge and too little practical experience to interpret it. For example, to back up your point you quoted this:
Well, technically, for an accountant, "positive cash flow" and "profit" are slightly different because of how accountants categorise things, mainly around the timing of when figures are entered into the "cash flow" vs the "profit" calculation (e.g. profit is calculated at the time an invoice is issued, while cash flow is calculated at the time it is paid, hence your quote differentiating between positive cash flow and profit). Sometimes there can be years difference between when things are accounted for in one or the other, resulting in one looking positive and the other negative in a particular year. But in practical terms, in the long run, they're the same thing.
So your argument is silly. But what is your point anyway? I'm really quite lost as to what relevance the difference between cash flow and profit has to anything in this discussion.
The article you quote is talking about positive cash flow. But you have never said "positive" yourself. You've just been talking about lots of cash flow being good. That is ridiculous. But the people you are citing are saying you need "positive cash flow". And what is another word for positive cash flow? Profit.
Well, technically, for an accountant, "positive cash flow" and "profit" are slightly different because of how accountants categorise things, mainly around the timing of when figures are entered into the "cash flow" vs the "profit" calculation (e.g. profit is calculated at the time an invoice is issued, while cash flow is calculated at the time it is paid, hence your quote differentiating between positive cash flow and profit). Sometimes there can be years difference between when things are accounted for in one or the other, resulting in one looking positive and the other negative in a particular year. But in practical terms, in the long run, they're the same thing.
So your argument is silly. But what is your point anyway? I'm really quite lost as to what relevance the difference between cash flow and profit has to anything in this discussion.
I am unable to move from fanciful to why.
Actually, that sounds like something a college egghead would say.
Jumping back to the original topic about Mike Johnson, he may be about to throw a major spanner in the works of the US financial system:
www.zerohedge.com
In summary - when the USA "froze Russian assets", in effect much of these "assets" were actually money that Russia had loaned to the US government, and by "freezing" it the US was effectively choosing to delay repaying these loans. If the US government were to "seize" these assets, that would in reality mean the US defaulting on the loans - the fact that they were choosing to send the money they would have used to repay the loans to someone else is somewhat immaterial. The reality is that it would be a US government default on a loan.
The US financial system relies on the government being able to borrow endlessly. And this relies on people seeing lending to the US government (by buying treasuries) as being a completely sound investment. In this situation, the worst thing you can possibly do is to default on government debt. Whatever rosy excuse you make, it's still a debt default. Do it once, and everyone else will be more reluctant to buy treasuries, as they will no longer be perceived to be as secure. This could ultimately bring down the whole house of cards.
It's really interesting how the rhetoric around these "Russian assets" has not discussed what they really are, and has simply focussed on them being financial "assets" of some form. It seems superficially reasonable to confiscate someone's assets as punishment for something bad, so it is completely understandable how Johnson has come to this proposal. And given that rhetoric, it would be very difficult politically for him to give those assets back to Russia, he really needs to confiscate them to rebuild Ukraine in some way as that is what the electorate now expects.
But when you consider what they really are, the implications of this are actually existential for the USA itself. Media rhetoric and domestic politics may have backed the US into a corner where it has to make a very bad decision.
The Recipe For $150 Oil | ZeroHedge
ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero
www.zerohedge.com
The US financial system relies on the government being able to borrow endlessly. And this relies on people seeing lending to the US government (by buying treasuries) as being a completely sound investment. In this situation, the worst thing you can possibly do is to default on government debt. Whatever rosy excuse you make, it's still a debt default. Do it once, and everyone else will be more reluctant to buy treasuries, as they will no longer be perceived to be as secure. This could ultimately bring down the whole house of cards.
It's really interesting how the rhetoric around these "Russian assets" has not discussed what they really are, and has simply focussed on them being financial "assets" of some form. It seems superficially reasonable to confiscate someone's assets as punishment for something bad, so it is completely understandable how Johnson has come to this proposal. And given that rhetoric, it would be very difficult politically for him to give those assets back to Russia, he really needs to confiscate them to rebuild Ukraine in some way as that is what the electorate now expects.
But when you consider what they really are, the implications of this are actually existential for the USA itself. Media rhetoric and domestic politics may have backed the US into a corner where it has to make a very bad decision.
Nope. Not how that works.
T-bills are monetized and to a degree considered the same as US currency. Banks routinely exchange them to settle balances although T-bills these days are mostly electronic as opposed to printed.
It is difficult for individuals to transact T-bills the same way banks do so they're not a ready medium of exchange for the retail market. But they're still a very tangible asset for the banking sector.
A fair share of the short term Russian-held T-bills will have matured and will be redeemable at their face values. Which makes those T-bills pretty much the same as cash. They can be redeemed with the US Treasury or they can enter the market as financial instruments.
They do not need to be redeemed in order to hold a theoretical value. And seizing them isn't a default when they're not necessarily designed to be redeemed anyway.
I should add that all US currency is and has been monetized debt ever since the 1950's. Just like T-bills.
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I am aware @MeganC that this can be described in a way other than as a loan default. But it's still a case of one party lending the other money ("purchasing their debt"), and then not receiving repayment upon the maturity date. In any other circumstance that would be described as a default.
The question is not how you or I view it, but solely how other major purchasers of US debt will view the situation - most crucially Japan and China, but also all the smaller players including all those countries already negatively predisposed towards the US. If they agree with you and don't worry about it, then it won't matter. However, if they see it as a debt default and are more reluctant to buy, the US government will quickly get into severe financial difficulty.
The problem is that this risks others seeing it as a default, so risks putting the US government into financial difficulty. Whether or not that happens we'll only find out at the time.
The question is not how you or I view it, but solely how other major purchasers of US debt will view the situation - most crucially Japan and China, but also all the smaller players including all those countries already negatively predisposed towards the US. If they agree with you and don't worry about it, then it won't matter. However, if they see it as a debt default and are more reluctant to buy, the US government will quickly get into severe financial difficulty.
The problem is that this risks others seeing it as a default, so risks putting the US government into financial difficulty. Whether or not that happens we'll only find out at the time.
Othere are already reducing buying US government debt before this "incident".
In last month or two auction of US government bonds has failed. Treasury wasn't able to find enough willing buyers.
No, like MemeFan points out the faith and credit of the United States of America is already in doubt by the international and domestic markets. T-bill sales are declining because the total US national debt (Federal+state+municipal+district) exceeds 741% of GDP and it is mathematically impossible for that debt to be paid unless there is runaway inflation...which is a different form of default.
And utterly no one who trades in T-bills would see a seizure of T-bills as a form of default because like I pointed out they'd be functioning in a business environment where T-bills and cash are interchangeable. If the assets being seized by the US were ECB Debt Certificates would you argue that Europe is defaulting because the US seized their debt instruments? Of course not. The same logic applies.
Getting back to the root of the problem the Russian state is waging a war of conquest and annihilation against Ukraine and they're being made to pay a price. Russia took a risk that they could invade Ukraine and the West would let them. They were wrong. Their Western assets are being seized and confiscated. Western assets in Russia are being seized and confiscated.
These are reasons to avoid war.
I'm talking about this:
Nobody wants U.S. Treasury bonds | Semafor
The most tradable security in the world and a sign of the U.S.’s global economic might is badly out of favor, with serious consequences for taxpayers and financial markets.
www.semafor.com
Anyway, US will be one paying price, not Russia due to seize of Russian assets. US state doesn't like you, it will take your property. Why would any foreigner invest anything in US?
And US debt problem is solvable without default. It's just policians have trouble stopping themselves with vote buying.
$300 million dollars is barely more than a rounding error when it comes to US debt. No one is going to consider this a default because the payments could have been made. This event doesn’t indicate and unknown risk in the American economy. And so few countries are actually so interested in invading their neighbors that few will consider this a deterrent.
It would be problematic.
From when it's acceptable that debtor chooses whether he will pay his debt? From borrower persoective never unless "higher power" situation.
And America is the higher power in this situation. Whether you agree with the process or not there was an observable legal process that was gone through. And don’t forget that Russia was warned that there would be consequences for this invasion.
It’s not like Russia was walking along minding its own business when suddenly America ran up and mugged it out of nowhere.
And this isn’t me being rah rah America. We are defaulting on our debt, inflation is a default. I actually think we should declare bankruptcy and default honestly and default all at once.
Except this "legal process" will be seen as fakery and unjust by practically everyone. It will also break customs of behaviour between states. It will make USA look like thiefs (just clothed in decent clothes, more crooked than burgulars).
Sell off of US treasuries will accelerate and all US debt will move toward worthless.
Shooting in head move.