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United States loses AAA credit rating from S&P

reuters.com

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Re: United States loses AAA credit rating from S&P

#191

Post by bubbleRefuge »

latch wrote: post #46

For those who aren't sure why this matters there are two things to note. First, interest will go up. US Bonds are now considered riskier than they were before. This means investors in US Bonds will expect to collect more interest due to the greater risk they are taking. Instead of paying China and Japan 3% (for example) on $1 trilion (each), the US will now have to pay 3.5% (and climbing). Of course, the higher the i…

Federal interest rates will not go up because interest rates are controlled endogenously. They will go wherever the fed wants them to go.

Re: United States loses AAA credit rating from S&P

#193

Post by eazolan »

BrentRitterbeck wrote: post #112
mbreese wrote: post #59

Earlier quoted context omitted.

Some institutions are obligated (by charter or contract) to only buy AAA rated bonds. That's why it's a big deal... Now that being said, I have no idea how this would work in practice.

Now that being said, I have no idea how this would work in practice. That's the problem. No one else knows either. Monday is not going to be a good day.

Flux happens.

Re: United States loses AAA credit rating from S&P

#194

Post by sbierwagen »

ubernostrum wrote: post #149
winestock wrote: post #72

Earlier quoted context omitted.

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…

The thing with Social Security is that it's such a huge, tempting cookie jar for Congress to reach into -- remember that this is a program that easily runs a surplus when we just leave it the hell alone. So instead of cutting it, how about we build a big damn electrified fence around it? ;)

There already is one?

Other departments can't touch the SSA's budget-- because it's the SSA's budget.

Re: United States loses AAA credit rating from S&P

#195

Post by AretNCarlsen »

canadaduane wrote: post #169
chc wrote: post #143

Earlier quoted context omitted.

The thought of how this would actually lead to a better allocation of money baffles me. It sounds like the first half of the tragedy of the commons.

I'm not sure if the tragedy of the commons would apply in this case. The "mandatory" aspect of elevating discretionary spending into social spending via taxation seems to fundamentally alter the psychology of spending. "Well, if I absolutely must spend this money on other people, then I guess I'll spend it on ___" (education comes to mind as one area people in America might universally agree should get more dollars).…

In the U.S., we call the template spending ballots "primaries".

Re: United States loses AAA credit rating from S&P

#196

Post by atsaloli »

geuis wrote: post #52

(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…

Check out www.downsizedc.org

They are proponents of ending all offensive military action overseas, and cutting government spending and red tape.

They have an excellent system that makes it easier for USA people to contact their government -- you put in your name and address, and they give you a simple "contact us" form (just a single text area) where you can write your comments and they automatically get routed to your reps in Congress and Senate -- very efficient use of the voter's time!

Re: United States loses AAA credit rating from S&P

#197

Post by bubbleRefuge »

veyron wrote: post #127
mdkess wrote: post #56

I am not American, and here's what I don't get: America can borrow money right now at 1.5% for five years. Why is there such a clamour to stop? I would hope that the government would be able to get better than 1.5% return with the money - if the CEO of any company chose not to take on debt at this rate they'd get fired. It seems like all of the media coverage is glossing over this.

The real problem is that the republicans are zealots of the church of voodoo economics. The reality is that demand-side economics has stronger and more intelligent underpinnings (give money to individuals --> they spend --> increase demand --> hiring). Giving more cash to companies doesn't induce hiring; demand for products induces hiring.

You are absolutely correct here. When people have more money they tend to spend more and sales at corporations increase and thus the invest and hire more employees to meet the increased demand. How do we get more money in hand? Full payroll tax holiday + New deal 2.0.

Re: United States loses AAA credit rating from S&P

#198

Post by gte910h »

aaronbrethorst wrote: post #69
winestock wrote: post #9

So it begins. A quote: "The outlook on the new U.S. credit rating is negative, S&P said in a statement, a sign that another downgrade is possible in the next 12 to 18 months." I.e., things are going to get a lot worse before they get worse. Time to bring this back to a hacker's perspective. Is there any way to "hack" the system so as to get government finances to within commuting distance of sanity? Or have recent ev…

Letting the Bush tax cuts expire next year, and winding down operations in Iraq and Afghanistan would go a long way to balancing the Federal budget. As far as reducing the deficit goes, I have less insight into this. Except that making the Federal government's budget revenue-neutral is a critical first step.

The terms of the debt ceiling deal look like it will force one/the other/both:

http://www.editedforclarity.com/2011/08/01/debt-ceiling-deal...

Re: United States loses AAA credit rating from S&P

#199

Post by ImperatorLunae »

darksaga wrote: post #142
ohyes wrote: post #73

Earlier quoted context omitted.

Don't think it this really matters. The US still has the strongest economy of pretty much anyone (even with recession). There isn't going to be a massive dumping of US bonds. The AAA credit rating is helpful, but is only used by certain investors, and those big enough to make a real difference have their own assessors of risk. I think the cutoff for the smaller guys to be legal to invest in is something like AA-. We…

Even if you tax the hell out of the rich, it still leaves this country TRILLIONS in debt. It's a fact - you don't tax your way out of a recession and you sure as hell don't tax people to create jobs. It simply doesn't work. And yeah, great idea. Let's cut military funding while we're fighting a war on terror in three countries. Apparently you don't remember Clinton's military cuts which removed almost 300,000 people…

you sure as hell don't tax people to create jobs vs military cuts ... sending a lot of people to the unemployment line.

so, you don't tax people to sustain jobs, yet you don't cut jobs to lower spending. That is paradoxical.

Re: United States loses AAA credit rating from S&P

#200

Post by ubernostrum »

sbierwagen wrote: post #194
ubernostrum wrote: post #149

Earlier quoted context omitted.

The thing with Social Security is that it's such a huge, tempting cookie jar for Congress to reach into -- remember that this is a program that easily runs a surplus when we just leave it the hell alone. So instead of cutting it, how about we build a big damn electrified fence around it? ;)

There already is one? Other departments can't touch the SSA's budget-- because it's the SSA's budget.

Except for the gaping hole in the fence, which dictates that the trust funds have to invest in Treasury bonds. Which means the money goes in and straight back out again, and that threats of default carry an implicit threat of "Social Security won't be able to pay out".
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