"Treasury officials noticed a $2 trillion error in S&P's math that delayed an announcement for several hours." - http://professional.wsj.com/article/SB1000142405311190336650....
Says it all.
United States loses AAA credit rating from S&P
221–230 of 518 posts
Re: United States loses AAA credit rating from S&P
#222from the S&P rationale section of their press release:
"Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act."
Re: United States loses AAA credit rating from S&P
#223Earlier quoted context omitted.
Why do you - as a conservative - consider it rational to cut social security? The program is popular and self-sustaining. and if you read the trustees' reports you'll see it has been in surplus and perfectly solvent since 1985. In a few years it will stop generating surplus revenue for a few decades as the baby boomers move through the system, but it isn't threatened with insolvency. There is an ethical problem with…
First, both parties have raided Social Security, not just Republicans. In fact, both parties have been complicit in the government's financial misfeasance for a long time. Second, you mention the money "to pay back the workers who contributed." There was never any money to pay back. Social Security was always a pay-as-you-go system. Current revenue pays for current appropriations. There was never any "trust fund," an…
1. Social security reform was a core part of the Democratic platform in 2000. "I will keep Social Security in a lockbox, and that pays down the national debt and the interest savings I would put right back into Social Security." (Al Gore, Oct 4, 2000). Put simply, the Democratic policy aim was to divert the surplus into paying off the debt while preventing lower interest rates from spiking government borrowing/spending by also putting interest savings into the trustee account. You can compare this with the Republican plan at your leisure.
2. Your characterization of the "feasibility" of the social security program is wildly inaccurate. Seriously, instead of turning yourself inside out trying to claim that Republicans didn't setup a system that had workers pay MORE into the system than they were taking out for 30 years, why not just roll back the Bush tax cuts and call it a day?
Re: United States loses AAA credit rating from S&P
#224Earlier quoted context omitted.
You cannot compare 'person' and 'business' with government. The government has the ability to print money, whereas the other two do not. The only reason they don't print money to pay off all their debts is because it will result in massive inflation. The reason the European debt crises is so serious is because the adoption of the euro means that no individual contry can print their own money to avoid default.
"The reason the European debt crises is so serious is because the adoption of the euro means that no individual contry can print their own money to avoid default." It's more because each individual country issues bonds. The ECB can't issue debt.
I am not sure I agree. The primary difference between pre and post EURO Europe is that, individual EURO countries no longer control their own currency. In times of economic crisis, countries can manipulate their currencies to make their economies more competitive internationally, and/or inflate their way out of a debt crisis. Despite what the media is saying, the U.S. is not in a debt crisis, we have many tools at our disposal to prevent default, including currency manipulation. The EU on the other hand has a handful of countries that are in serious jeopardy of defaulting.
Re: United States loses AAA credit rating from S&P
#225(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…
"Maintain important overseas installations such as Japan and Taiwan." - there are no US bases in Taiwan currently. Perhaps this is referring to Korea?
http://en.wikipedia.org/wiki/List_of_United_States_Air_Force...
Re: United States loses AAA credit rating from S&P
#226One 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.
I'm sorry but this seems alarmist to me. Any automated system can make an exception. For your logic to hold these institutional investors would have to not take notice of the U.S. Government having its credit rating dropped. You're arguing they'd treat the United States and "any other investment" and rely on an automated system. That's not going to happen. Plus S&P's logic is shaky on this. The whole reason the threa…
I think they sending a clear message to the US government to get their financial house in order. The fact this has never happened (to either democratic or republican presidents in the history of the country) is a major issue.
Imagine if we actually passed the balanced budget amendment back in 1997 - things would be a LOT different.
Re: United States loses AAA credit rating from S&P
#227Earlier quoted context omitted.
Ah, followup. Here's the link to the talk I referenced if anyone cares to take a listen. http://longnow.org/seminars/02007/jun/28/the-end-of-history-...
I'd love to listen to this, but it seems like the mp3 is corrupted. It won'd play in iTunes or Quicktime. Shame.
It seems to work fine for me in QuickTime X under Snow Leopard.
Re: United States loses AAA credit rating from S&P
#228Earlier quoted context omitted.
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".
We don't have any such thing in the US.
In 2000, voters thought they picked "humble foreign policy", "deregulation" and "lower spending" in the primary. It turns out they voted for the exact opposite.
About 2 years ago, voters thought they picked "not forcing people to buy insurance they can't afford". They also voted for the exact opposite.
Re: United States loses AAA credit rating from S&P
#229Earlier quoted context omitted.
I'm sorry but that's bull. Anything can be changed. Contracts can be revised and even charters can be updated by a Board of Directors. If you hold a significant amount of U.S. Bonds you aren't going to ditch them on S&P's say so. You're going to call a meeting of the Board of Directors or Trustees or whoever and decide based on your own judgement. The whole point of a rating agency is to provide you with research tha…
There is a lot of hope in your post. Investors will just move money to another country and there are enough who have much better grow rates. (China / India). Or entities who will bet on the downfall of the U.S and there will be countries who have a high interest in this. On Monday you can short every major company the downfall will be significant. This will be very interesting to watch the next world recession is on…
Well, you might be surprised. Japan's market rallied 3% the day after their downgrade.
Re: United States loses AAA credit rating from S&P
#230Yeah, the US deserves a downgrade. What pisses me off is that my wife and I have savings, live within our means, and if you believe Harvard economist Kenneth Rogoff (which I do), there is going to be 5% to 10% yearly inflation for a good while that takes money from savers and basically gives it to debtors. I am actually sympathetic to some debt forgiveness - it is not the people in need that I am pissed off at. Anywa…
So buy Canadian Bonds or Chilean Bonds or Gold or Silver or Apple stock.