S&P Downgrades US To AA+, Outlook Negative

P: 1,123
 Quote by jreelawg Like Obama, he may be a leader, but the power to lead is not in his control. Unless you expect them to inspire their piers to do their will somehow. Maybe they should get to work on a poem.

"I remember hearing Wolf Blitzer saying something like, he thinks we will avert default, but that at this point you can't be sure. And one side of the debate made it clear that they were willing to default if they didn't get their way. "

Again, the Republican Leader - Speaker of the House John Boehner did not threaten to allow default. Also, the media hyped a possible default - and blamed Republicans throughout the debate.
P: 1,123
 Quote by Astronuc I indicated equitable division. The person earning $30 K might pay$1K, while the person earning $300K might pay$10K. Basically, the federal debt is owned by the people - it is money borrowed in the name of the American people. The debt has to be paid down, because it is unmanageable as it is!
Let's not forget the people earning less than $30K astro - will the Politicians give them money so they can pay their fair share? (sorry) Admin P: 21,597  Quote by WhoWee Let's not forget the people earning less than$30K astro - will the Politicians give them money so they can pay their fair share? (sorry)
I didn't pick a limit on income. I merely stated an equitable division of debt allocation - to be determined.

As for the poor paying taxes - don't they already pay taxes in the sense that they pay exhorbitant fees (interest) to pay-day lenders? I see folks in the check-cashing store across from my office paying excessive fees on every bill they pay. They don't earn enough to have a bank account, so they often borrow to pay for food, rent, . . . before payday.

But there are some that cash their federal and state subsidies. I would expect federal and state subsidies would be reduced to manageable levels.

Then there are those on EITC. I read somewhere, and probably have the link buried in my library of files, that a substantial portion of those in the EITC program are military families (mostly families of enlisted ranks).
http://www.irs.gov/individuals/artic...177571,00.html

My main point is, and has been, the systemic problems with the US economy, including the chronic federal and trade deficits, burgeoning debt, . . . . We've reached a point where the only solutions seem to be drastic, but not all viable solutions need to be drastic. However, we seem to lack the necessary leadership to resolve what has become a crisis.
Mentor
P: 15,403
 Quote by Astronuc I indicated equitable division. The person earning $30 K might pay$1K, while the person earning $300K might pay$10K. Basically, the federal debt is owned by the people - it is money borrowed in the name of the American people.
Here are the numbers.

A person (strictly speaking, a tax filer - so married filed jointly is one "person") making $30K would have to pay$51,900. A person making $300K would have to pay$519,000. (Calculated from $14.5T in national debt and$8.4T in adjusted gross income)
PF Gold
P: 1,608
 Quote by WhoWee Total crap! How much spending is attributed to the TEA Party?
I don’t think you get it.

Yes, there are problems in the U.S. economy, as in most other western countries. We were on the brink to global depression in 2008/2009, remember? But the U.S. is nowhere near the full-blown crises in Europe, where Greece, Italy, Spain and Portugal are on the edge to bankruptcy.

In this situation, to just get hysterical fixated with the trillion dollars in national debt + the ridicules aversion for current President, is not going to fix the problem. Everybody has to act like adults and take responsibility for their actions, and not make up fantasy rules that the market does not believe in.

I hope you know that most important factor when it comes to the national debt is the relation to GDP. If you have $15 trillion dollars in GDP and$14 trillion dollars in national debt, it’s not good, but still manageable. If you have $10 trillion dollars in GDP and$14 trillion dollars in national debt, you’re in a "Greece situation", with bankruptcy knocking on the door.

My question to you:
– Do you really think that if you and the Tea Extremists hits the all brakes all the way down in a "historical" situation like this, U.S. companies ('sitting' on $1.5 trillion dollars) will wake up and start investing and hiring people, just like that? If the answer is yes, please back it up with some professional financial facts – personal fantasyland won’t do. And before answering, maybe you should read this: Are We About to Repeat the Mistakes of 1937?  Quote by WhoWee Please consider this: Would anyone be surprised if a global public corporation hired a CEO with no business or executive experience at a time of extreme financial distress - and the value of the stock dropped after the new hires policies failed to solve the problems and shareholders took steps to place problem solvers on the board? Talking about crap, this woman is a "problem solver"?? http://www.youtube.com/watch?v=mSPYC2NFYyY That’s just hilarious. She’s the dysfunctional root of "the problem", as S&P points out. PF Gold P: 1,608  Quote by Ivan Seeking Yep. Obama and Boehner could have cut a$4 trillion dollar deal - just what S&P wanted to see. But the requirement that we can't raise taxes under any circumstances, no matter how many cuts were made, even when facing a downgrade, drove this into the dirt.
Yeah, I know, the tea drinkers humiliated Boehner in public:

Tea Party’s War on America
http://www.nytimes.com/2011/08/02/op...n-america.html

I’m wondering... for how long are the (true) Republicans going to tolerate this destructive behavior from the tea sandpit?

 Quote by Ivan Seeking The problem isn't the debt. The problem is the gridlock caused by the tea party. But many tea drinkers want the economy to collapse so we can start from scratch, so there you go.
Wow... it’s seems crazy and very dangerous to the whole global economy... no wonder they accuse them for waging jihad on the American people...

Isn’t it time for the (true) Republicans and Democrats to form some kind of "crisis alliance", to 'bypass' this immature and dangerous behavior, until we get out of this crisis??
PF Gold
P: 1,608
 Quote by Pengwuino I don't even think we'll need to wait months. Enough things have happened over the past couple of years and especially the last month or two for everyone to downgrade the US. Unless the S&P decision was grossly flawed, I believe Moody's will be next to downgrade.
I sure hope you are wrong...

 Quote by Pengwuino @DevilsAvacado No one 'ranks' ratings agencies (I have a feeling you are curious as to who oversees them). Would any investor feel confident investing in US Treasuries if the US government oversaw the ratings agency that told you US T-bills are AAA quality? Ha. Why not have dairies be in charge of inspecting and reporting on their own facilities? Or have people in charge of their own credit scores?
I don’t know what I was asking for... but it would be real interesting to see both the names & faces of the clients who paid for this rating report... i.e. if "global hell" breaks out on Monday...

Today, it’s already chaotic in Israel: Tel Aviv exchange halts trade after 6% fall
PF Gold
P: 1,608
 Quote by Astronuc and raise taxes appropriately, and reduce spending appropriately, and pay down the debt.
Yep, that’s the way to do it!

 Quote by Astronuc And a bigger question is - "How can we make it (the US economy) work for everyone?"
Extremely good question, when 46 million Americans live on food stamps...

 Quote by Astronuc As I see it, the US economy is imbalanced by virtue of being heavily dependent on consumption and services. I heard sometime ago, a claim (by Sen. Bernie Sanders, IIRC) that 40% of profits in the economy came from the financial sector (or banks). The financial sector doesn't create wealth, but rather shifts it around.
My personal guess is that whit 1.3 billion Chinese and 1.2 Indians willing to work in the industry at very low salaries, the only way to compete is thru technology, knowledge and innovations.
PF Gold
P: 1,608
 Quote by Proton Soup a few points. first, your violent rhetoric is irresponsible. holding out for a balanced budget amendment is not a violent act, but your use of that rhetoric just may lead in that direction.
I’m not quite sure I’m able to follow your 'logic'...? My "violent rhetoric" is going to cause violence? Where and by whom??

 Quote by Proton Soup we'd just have to cut out a bunch of government. i'm sure you know how that works, states do it all the time. where i live it's called "proration" usually. and what it has meant is that we haven't been able to keep as many courthouses open, people may have to drive a bit further to renew their driver's license, etc.
That’s some real piece of innovative economics you’ve got there, dude. All we have to do is to close down a few courthouses, get in the car, drive around, and bada bing bada boom! You just saved $14 trillion dollars!! Amazing, why didn’t anyone think of that before... Dumb question: These 46 million Americans on food stamps... eh... how are they going to participate in this solution of yours...?  Quote by Proton Soup so how about you tone down the partisanship and the Breivik-inspired rhetoric Give me a call when you return to earth, I miss the old Proton Soup, very much.  P: n/a This is what happens in the United States of Corporate America. P: 77  Quote by xAstronomer This is what happens in the United States of Corporate America. We the Incorporated. I'm surprised it wasn't downgraded years ago. No corporation, much less a country, can be healthy while maintaining such a high debt ratio. Apple's debt ratio: 0%. There's a reason Apple is very healthy Fortune 500 company, and it's innovative products are only a small part of its success. Other Fortune 500 companies lack Apple's eye-catching products, yet share in Apple's debt-free, Fortune 500 success because they know how to govern themselves responsible. That's a skill America lost a long time ago. P: 1,123  Quote by Astronuc I didn't pick a limit on income. I merely stated an equitable division of debt allocation - to be determined. As for the poor paying taxes - don't they already pay taxes in the sense that they pay exhorbitant fees (interest) to pay-day lenders? I see folks in the check-cashing store across from my office paying excessive fees on every bill they pay. They don't earn enough to have a bank account, so they often borrow to pay for food, rent, . . . before payday. But there are some that cash their federal and state subsidies. I would expect federal and state subsidies would be reduced to manageable levels. Then there are those on EITC. I read somewhere, and probably have the link buried in my library of files, that a substantial portion of those in the EITC program are military families (mostly families of enlisted ranks). http://www.irs.gov/individuals/artic...177571,00.html My main point is, and has been, the systemic problems with the US economy, including the chronic federal and trade deficits, burgeoning debt, . . . . We've reached a point where the only solutions seem to be drastic, but not all viable solutions need to be drastic. However, we seem to lack the necessary leadership to resolve what has become a crisis. This discussion probably belongs in the other thread regarding raising tax rates. The solution to this problem is clearly going to require multiple components including cost controls, tax increases and a wider base, entitlement reform (as David Beers of S&P described in an interview this morning with Chris Wallace - can't find a link yet), GDP growth, and a major reduction of unemployment. However, the US Government is currently borrowing$.43 per $1.00 it spends - the first step of the solution can't be another spending program without cutting first. The last "stimulus" was poorly conceived as evidenced by the President's comment about projects not being "shovel ready" as thought. Worse yet, some of the spending went to states to continue their bloated spending programs and to expand Medicaid - when they should have been making cuts instead. Now the states are making cuts. I think it's possible all the stimulus accomplished was to delay recovery at the state level. The same argument can be made for trying to prop up real estate prices - the market won't recover until it bottoms - why delay it? Again, we can address repayment of the debt in the other thread. I think we need a plan to deal with not only the$14.3+Trillion debt but the other $100Trillion+ unfunded liabilities that are in our future. This is the time to do it - not when we start chasing higher interest rates. P: 1,123  Quote by DevilsAvocado I don’t think you get it. Yes, there are problems in the U.S. economy, as in most other western countries. We were on the brink to global depression in 2008/2009, remember? But the U.S. is nowhere near the full-blown crises in Europe, where Greece, Italy, Spain and Portugal are on the edge to bankruptcy. In this situation, to just get hysterical fixated with the trillion dollars in national debt + the ridicules aversion for current President, is not going to fix the problem. Everybody has to act like adults and take responsibility for their actions, and not make up fantasy rules that the market does not believe in. I hope you know that most important factor when it comes to the national debt is the relation to GDP. If you have$15 trillion dollars in GDP and $14 trillion dollars in national debt, it’s not good, but still manageable. If you have$10 trillion dollars in GDP and $14 trillion dollars in national debt, you’re in a "Greece situation", with bankruptcy knocking on the door. My question to you: – Do you really think that if you and the Tea Extremists hits the all brakes all the way down in a "historical" situation like this, U.S. companies ('sitting' on$1.5 trillion dollars) will wake up and start investing and hiring people, just like that? If the answer is yes, please back it up with some professional financial facts – personal fantasyland won’t do. And before answering, maybe you should read this: Are We About to Repeat the Mistakes of 1937? Talking about crap, this woman is a "problem solver"?? http://www.youtube.com/watch?v=mSPYC2NFYyY That’s just hilarious. She’s the dysfunctional root of "the problem", as S&P points out.
It's quite clear to me we picked the wrong time to elect a President with absolutely ZERO financial or executive experience. I find it easy to make an argument that he allowed Harry Reid and Nancy Pelosi to take the lead legislatively - while he has toured the globe giving speeches, "earning" a Nobel, closing Gitmo(?), holding terrorist trials in NY(?), holding a "beer summit", lobbying for the Olympics in Chicago (failed), working as a "rain maker" for GE in India, supporting oil production in South America (but working against drilling and production in the US?), creating and saving a few million jobs (yet unemployment is still over 9%?), entering into yet another war in Libya, (I'm honestly not sure what he's doing in) Egypt, and continues to blame Bush (even for tax cuts that he adopted as his own a few months ago?) - as the media continues to praise him. I think this is much more relevant than whatever Michele Bachman is talking about in Iowa. Please label this post - IMO.
P: 1,070
 Quote by DevilsAvocado I’m not quite sure I’m able to follow your 'logic'...? My "violent rhetoric" is going to cause violence? Where and by whom?? That’s some real piece of innovative economics you’ve got there, dude. All we have to do is to close down a few courthouses, get in the car, drive around, and bada bing bada boom! You just saved \$14 trillion dollars!! Amazing, why didn’t anyone think of that before... Dumb question: These 46 million Americans on food stamps... eh... how are they going to participate in this solution of yours...? Give me a call when you return to earth, I miss the old Proton Soup, very much.
you're calling people terrorists. there is something wrong with you. it's simply politics. and everybody has been holding out to get their way. tea party only makes up about 12% of congress. they simply don't have the numbers to force anything. the real problem, which you can't seem to bring yourself to address, is that we simply spend too much, democrats and republicans. but the major parties do not want to compromise or give in on anything. it is a bipartisan failure. 88% of congress acts like spoiled children.

as for food stamps, is that really what you think needs to be cut?
Mentor
P: 21,886
 Quote by ParticleGrl If you believe household debt is bad AND you believe government debt is bad, then you must also believe a trade deficit is bad. A trade deficit means that on average, the country is buying more expensive products then it sells. To do this, it must be accumulating debt. It is impossible to run a trade deficit without government deficits or increasing household debt.
That would only necessarily be true if imports and exports were the only components of the economy.
P: 1,123
 Quote by DoggerDan We the Incorporated. I'm surprised it wasn't downgraded years ago. No corporation, much less a country, can be healthy while maintaining such a high debt ratio. Apple's debt ratio: 0%. There's a reason Apple is very healthy Fortune 500 company, and it's innovative products are only a small part of its success. Other Fortune 500 companies lack Apple's eye-catching products, yet share in Apple's debt-free, Fortune 500 success because they know how to govern themselves responsible. That's a skill America lost a long time ago.
Not to be a wet blanket - but Apple was "saved" by Microsoft a few years ago.
PF Gold
P: 183
 Quote by DevilsAvocado I’m wondering... for how long are the (true) Republicans going to tolerate this destructive behavior from the tea sandpit?
The tea party is a misnomer in the sense that it is a party; instead, its a movement within the GOP base. In other words, the tea party is a part of the base of the republican party.
 PF Gold P: 183 I think asian markets are going to be interesting to watch tonight.

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