341–350 of 518 posts
These are the same guys who rated subprime mortgage backed bonds AAA. How the rating agencies still have any credibility is completely incomprehensible to me. I hope someone in the press has the wherewithal to make this point.
S&P is the same agency that rated AAA mortgage backed securities. not exactly a brain trust over there. my guess is they took this route for publicity. again the same group that rated a bunch of debt AAA when it was junk. what is their motivation?
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That's probably because the market thought they hit rock bottom. Markets like uncertainty less than bad news, so they are much happier knowing about the downgrade.
p.s. To your earlier point, the '40 ACT details investment requirements for Money Market Funds [can't think of them now, but you are right, there are numerous statutory requirements related to the grade of security certain bodies may invest in]: http://taft.law.uc.edu/CCL/InvCoRls/rule2a-7.html
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You're more liberal than conservative. I'm more conservative than liberal. Bless your heart, I agree with all of your points. At the end of the Cold War, other conservatives were making the same noises that you're making now. For their pains, their careers were destroyed by the people who run the current mainstream conservative movement. Let's take a look at those points of yours. Points 1 & 2. Cut defense spending a…
Thanks. I have no refutations to any of your comments. I know exactly what you mean. One interesting thing about your first statement, "At the end of the Cold War, other conservatives were making the same noises that you're making now". A few years ago I had the opportunity to hear Francis Fukuyama speak. He was the author of The End of History and a later follow up book. I never knew it before then, but he was one o…
"Time magazine's Joe Klein has suggested it is legitimate to look at the religion of neoconservatives. He does not say there was a conspiracy but says there is a case to be made for disproportionate influence of Jewish neoconservative figures in US foreign policy, and that several of them supported the Iraq war because of Israel's interests, though sometimes in an unconscious contradiction to American interests: "I do believe that there is a group of people who got involved and had a disproportionate influence on U.S. foreign policy. There were people out there in the Jewish community who saw this as a way to create a benign domino theory and eliminate all of Israel's enemies....I think it represents a really dangerous anachronistic neocolonial sensibility. And I think it is a very, very dangerous form of extremism. I think it's bad for Israel and it's bad for America. And these guys have been getting a free ride. And now these people are backing the notion of a war with Iran and not all of them, but some of them, are doing it because they believe that Iran is an existential threat to Israel."[75]"
Phases of political maturity:
1) Apathy. Political parties are like football teams. You pick one and they're your guys. You root for them no matter what. If anything, there might be something wrong about folks who take these things too seriously.
2) Emotion. The other political party is the devil. They are out to destroy America.
3) Enlightenment. The other party is just full of people like me. There are some smart folks, but the problem is that they have all the wrong incentives and conclusions.
4) Understanding. Gee, there are those same bad conclusions and wrong incentives in my favorite party too. Ergo, parties don't matter. There are smart people everywhere. When the system fails, it's a problem of the system, not of the people or parties.
The problem in the U.S. is that the majority of folks are in stage 1 or 2 when we need them to be in 4. So when deep structural conversations come along, they're still either rooting for their team or blaming the other guys, when they should be talking about principles that need to be changed for the entire system to work better, no matter what the actual goals of any party.
There is another problem that helps create deadlock -- an understanding of where the money comes from. I think many folks view the economy as something the government grows so that it can harvest money in the form of taxes. (This is not a Keynesian discussion, simply a discussion about taxes in general.) Other folks view the government as something the economy grows in order to keep it functioning. These are two deeply conflicting world-views. I'm not sure you'll ever reconcile them. Some put trading first and sharing second. Many put sharing first and trading second. These two camps have come to demonize the others, sadly. (Which takes us back to the observation above)
For this problem to be solved, we need to give up on arguing specific issues or philosophical positions and instead talk about fixing structures so that the budget stays balanced long-term no matter who is in power or what their priorities are. This is a meta conversation, the kind the framers had. I am very doubtful there is anyone around today in power that can handle it. Not a happy outlook. All of the people in political power got that way by playing ideological and rhetorical games and by being fiercely loyal to their party. It's the exact opposite qualifications for folks that would have a chance at actually solving anything.
I think we could talk forever and reach general agreement informally on all number of things, but if the system remains broken, it's all going to be for nothing, sadly. Without an honest look at meta systemic issues, a free-for-all discussion around U.S. policy is all so much activity without results.
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1. 85% of the $14 Trillion deficit over the past 3 years was not any items you described but these items: -TARP Until we decide to have the bank lobbyists pay for their transgressions we will continue to be in deficit no matter what entitlement cuts are passed. Two options: Right now individuals pay 2/3rds of gov expenditures not corporations. 1. Reform corp tax law. There should be no Google or MSFT only paying 5% i…
>85% of the $14 Trillion deficit over the past 3 years was not any items you described but these items: -TARP TARP was $300B, of which the government will recover all but $25B, according to the CBO. The "bailout" in general (considering all acts that fall under that umbrella term) consisted of about $3.5T in payouts, the vast majority of which is expected to be recouped. Also, you're confusing debt with deficit. The…
The US budget deficit is far more than $1 billion.
http://www.bloomberg.com/news/2011-03-10/u-s-had-record-222-...
One thing to keep in mind is that many institutional investors, including those in Europe, are required to invest exclusively into triple-A instruments. This downgrade means a major sell-off of US bonds and whatnots currently held by such investors, and that could have an interesting avalanche effect.
Is it really imaginable that institutional investors won't just change their rules to allow an exception for US bonds? Honest question.
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You're making a spurious correlation. If your assertion was correct, the French, British, Danish, Portuguese, and Spanish, et al.--the great colonial powers--should be stronger economies than the United States. http://qed.princeton.edu/getfile.php?f=European_Colonialism_... In conclusion, you've made a spurious correlation.
They were stronger. Much stronger. They collapsed for varied reasons, but suffice to say if the British Empire was as big today as it was in its heyday, it would be a larger economy than the US. Also, no need to say "in conclusion" when the sum total of your argument is a single sentence.
(Reference: http://www.federalbudget.com/ ) Steps to recovery: 1) End all offensive military actions overseas. Finish winding down Iraq and abandon Afghanistan wholesale. These actions have cost several trillion dollars over the last 10 years. We can't get that money back, but we can stop spending more. 2) Defense spending is in the top 3 highest budget expenditures. Cut it by 1 third across the board. Maintain impor…
If the government that produces the reserve currency can't hold up a AAA rating, what can? The idea that anything else should have a AAA rating if the US gov't doesn't seems a little ridiculous to me on face value.
To me it seems a little ridiculous that the US and these countries shared the same rating for such a long time. On the other hand, there are AAA countries like UK, France, Germany that do not seem to fit into the same category either.
I have no real opinion if the US deserves the AAA rating, but thinking treasuries are the safest investment in the world seems a bit optimistic.