News S&P Downgrades US To AA+, Outlook Negative

[DevilsAvocado]

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...

@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: http://news.yahoo.com/tel-aviv-exchange-halts-trade-6-fall-082839508.html"

 

[DevilsAvocado]

and raise taxes appropriately, and reduce spending appropriately, and pay down the debt.

Yep, that’s the way to do it!

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...

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.

 

[DevilsAvocado]

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??

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...?

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.

 

[xAstronomer]

This is what happens in the United States of Corporate America.

 

[DoggerDan]

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.

 

[WhoWee]

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/article/0,,id=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.

 

[WhoWee]

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:
http://economix.blogs.nytimes.com/2011/07/12/are-we-about-to-repeat-the-mistakes-of-1937/"



Talking about crap, this woman is a "problem solver"??


https://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.

 

[Proton Soup]

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?

 

[russ_watters]

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.

 

[WhoWee]

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.

 

[SixNein]

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.

 

[SixNein]

I think asian markets are going to be interesting to watch tonight.

 

[WhoWee]

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.

I find the (apparent) need to identify the TEA Party movement as part of the Republican Party to be counter-productive to the Left. I've talked to many independents and moderate Democrats (in OH and PA mostly, but NY, VA and MD as well) that consider themselves part of the TEA Party - ridiculing this group in 2012 will be a BIG mistake.

 

[SixNein]

I find the (apparent) need to identify the TEA Party movement as part of the Republican Party to be counter-productive to the Left. I've talked to many independents and moderate Democrats (in OH and PA mostly, but NY, VA and MD as well) that consider themselves part of the TEA Party - ridiculing this group in 2012 will be a BIG mistake.

The tea party is a part of the republican base.

http://www.sourcewatch.org/index.php?title=FreedomWorks

 

[OmCheeto]

Anyone else besides me doing substantial* ACH transfers into their investment accounts?

Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics is equally unpredictable, both as to duration and degree. Therefore we never try to anticipate the arrival or departure of either. We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

*"substantial" of course being every last penny of cash I have in my bank account. Which amounts to little more than $200. Gads I hate being poor.

But I do love roller coaster rides. Yippie!

 

[russ_watters]

The tea party is a part of the republican base.

http://www.sourcewatch.org/index.php?title=FreedomWorks

That link has nothing to do with your claim.

 

[turbo]

Anyone else besides me doing substantial* ACH transfers into their investment accounts?

I'm not moving my assets around because I don't need access to them right now. Actually, I hope the Fed has to raise the short-term lending rate soon, because I'm earning practically nothing on my liquid assets.

 

[ParticleGrl]

That would only necessarily be true if imports and exports were the only components of the economy.

Its a basic accounting identity. Consider, GDP (Y) is C+I+G+NX. Your total GDP is consumption+investment+Governmentspending+net exports.

Now, also, Y = C+S+T (consumption+savings+taxes). Any dollar not consumed or taxed is saved.

Put them together, and you find

NX = (S-I)+(T-G).

If net exports is negative, then either I is bigger than S, or G is bigger than T. A trade deficit requires negative household balances or deficit government spending. If you have a macroeconomics book, crack it open to the section on twin deficits to read more.

 

[Jimmy Snyder]

https://www.youtube.com/watch?v=mSPYC2NFYyY
Did she really say "He's got to come up with a new deal" at 1:31?

 

[OmCheeto]

https://www.youtube.com/watch?v=mSPYC2NFYyY
Did she really say "He's got to come up with a new deal" at 1:31?

Yes. He and she repeated it later.

Thanks a lot for making me watch that.

I almost threw up.

...
You were ahead of the curve.
...
You said something that was very profound...

...
You can't fool the markets.
...
The markets have said that this deal stinks.
...

I would like to remind people that I've been without cable for the last 18 months now, and this is actually the first time I've listened to [STRIKE]Sarah[/STRIKE] Michele Bachmann speak.

And thank you Jimmy for making me watch that. If she's our new leadership, I think I'll just cash out my whole portfolio and move to Waterworld.

Who the **** elects these kind of ******* morons?

moderator deletion precognitived...

 

[WhoWee]

https://www.youtube.com/watch?v=mSPYC2NFYyY
Did she really say "He's got to come up with a new deal" at 1:31?

At 3:25 she explains the comment.

 

[WhoWee]

The tea party is a part of the republican base.

http://www.sourcewatch.org/index.php?title=FreedomWorks

Here's my point - there are hundreds of "TEA Parties" across the country. They are local groups - many actually formed around kitchen tables.

Yes, I agree they came together at a few large events including the tax day rallies and the DC events. Also, I agree that Glen Beck motivated a great many people to form groups with his 9/12 Project.

However, I challenge you to name the leader.

Last, the new House Republicans along with Michelle Bachman have formed a group and taken the name TEA Party Caucus - and this causes some confusion. The members of the TEA Party Caucus happen to be Republicans but answer to their respective local groups (voters of both Parties and Independents in some cases) - not a national organization.

 

[DevilsAvocado]

I almost threw up.

I would like to remind people that I've been without cable for the last 18 months now, and this is actually the first time I've listened to [STRIKE]Sarah[/STRIKE] Michele Bachmann speak.

And thank you Jimmy for making me watch that. If she's our new leadership, I think I'll just cash out my whole portfolio and move to Waterworld.

Who the **** elects these kind of ******* morons?

OmCheeto, you’re the last person I want to make any sicker, but at the same time I think it is good if as many people as possible understands what we’re dealing with here:

Michele Bachmann Says The Darndest Things

https://www.youtube.com/watch?v=e9bvreW08X0

Did I hear someone (who seems to have lost it completely) mention "Breivik-inspired rhetoric"??

 

[WhoWee]

Did I hear someone (who seems to have lost it completely) mention "Breivik-inspired rhetoric"??

It's nonsense like this comment that the Left has trouble competing on talk radio - IMO.
(I mean without a Government subsidy of course)

 

[DevilsAvocado]

It's nonsense like this comment that the Left has trouble competing on talk radio - IMO.

Agree, Michele Bachmann is pure nonsense, but IMHO the problem is she’s Running for President, and before even starting the campaign – she’s involved in a possible threat to the global economy.

Asia is opening in 1½ hr, let’s cross our fingers...

Anyhow, thanks a lot WhoWee for bringing up talk radio! Here comes the truth (@0:59) about "Breivik-inspired rhetoric" and extreme rightwing fanatics:


https://www.youtube.com/watch?v=bscp0ou3o40

 

[WhoWee]

Agree, Michele Bachmann is pure nonsense, but IMHO the problem is she’s Running for President, and before even starting the campaign – she’s involved in a possible threat to the global economy.

Asia is opening in 1½ hr, let’s cross our fingers...

Anyhow, thanks a lot WhoWee for bringing up talk radio! Here comes the truth (@0:59) about "Breivik-inspired rhetoric" and extreme rightwing fanatics:


https://www.youtube.com/watch?v=bscp0ou3o40

I already offered to defend the TEA Party against Van Jones in the other thread maybe you should post this over there or in the Breivik thread and move on?

Btw - that was a REALLY lame attack on Beck - and a mis-characterization of the content (by YOU).

 

[DevilsAvocado]

I already offered to defend the TEA Party against Van Jones in the other thread maybe you should post this over there or in the Breivik thread and move on?

I understand this is embarrassing for you and maybe for someone else in this thread (unless completely lost), however I did not bring this "topic" up, nevertheless it’s always nice to stick to the facts – don’t you think?

Btw - that was a REALLY lame attack on Beck - and a mis-characterization of the content (by YOU).

WhoWee, I do feel sorry for you, honestly. You probably only have good and sincere intentions in actually "saving the economy", but the people you protect (ad absurdum)... on the road to this goal, turns the whole thing into a 'joke'... I’m afraid...

I didn’t attack Glen Beck. I just provided the sound of the man accusing the poor teenage victims on the Utoya Island for being "Hitler Youths".

There’s no point in attacking a person who does "the job" himself, right?

 

[DevilsAvocado]

1 min left too market openings in Asia... will this just be a "silly whisper" or a "Great Depression Thunderstorm"...?

 

[WhoWee]

I understand this is embarrassing for you and maybe for someone else in this thread (unless completely lost), however I did not bring this "topic" up, nevertheless it’s always nice to stick to the facts – don’t you think?



WhoWee, I do feel sorry for you, honestly. You probably only have good and sincere intentions in actually "saving the economy", but the people you protect (ad absurdum)... on the road to this goal, turns the whole thing into a 'joke'... I’m afraid...

I didn’t attack Glen Beck. I just provided the sound of the man accusing the poor teenage victims on the Utoya Island for being "Hitler Youths".

There’s no point in attacking a person who does "the job" himself, right?

Actually, what you did was present a clip from an (apparently) low budget (perhaps) college radio show that played a very select and chopped Glen Beck clip. Worse yet, you did it in a thread regarding the "S&P Downgrades US To AA+, Outlook Negative" - is it because your primary intent is to be a troll?

 

[mheslep]

... The irony of Bush's bailout (TARP) is it shows up as spending on his balance sheet and income on Obama's. It's a trillion dollar misleading swing in their balance sheets!

I didn't like it, but it was ultimately completely painless...

Well yes TARP was ~painless to the government's balance sheet, but it remains to be seen if the bailouts contributed to even worse behaviour in the future via http://en.wikipedia.org/wiki/Moral_hazard" (and perhaps that is what you meant).