United States loses AAA credit rating from S&P • Hacker News Board

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

#271

Post by qqqqrrrr » Sat, Aug 06, 2011, 5:52 AM UTC

winestock wrote: post #134

geuis wrote: post #102

Earlier quoted context omitted.

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…

When Fukuyama was talking about the Evangelical Christians, I think that he meant their doctrine of "The Rapture" and how it motivates their support for Israel. It's scary just how much of their politics rotate around that. Seriously, Christopher Hitchens (yes, that Christopher Hitchens, the atheist) can get published in National Review because of his support for Israel and for wars to bring democracy to the Middle E…

I find this obsession with Israel downright eerie. Do you seriously think that if there were no Israel there would have been no war in Iraq and Afghanistan? Maybe not 9/11 even?

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

#272

Post by nazgulnarsil » Sat, Aug 06, 2011, 5:53 AM UTC

giardini wrote: post #239

thematt wrote: post #29

Earlier quoted context omitted.

People put faith in them because not everyone can hire an army of experts to evaluate all possible investments. S&P supplies their ratings to life insurance companies, pensions funds and even municipal governments. These entities don't have the resources to employ that expertise in-house, so they rely on companies like S&P and Moody's to give them guidance.

thematt says "so they rely on companies like S&P and Moody's to give them guidance." And those companies fabricate data and sell it to them. Perhaps not everyone should invest in areas where they have no possibility of understanding the risks.

"Perhaps not everyone should invest in areas where they have no possibility of understanding the risks."

You just managed to sum up the vast majority of economics problems. Humans are dumb though. Not much you can do.

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

#273

Post by ck2 » Sat, Aug 06, 2011, 5:56 AM UTC

Regardless how you take this news, S&P just bought themselves a whole bunch of free advertising.

I don't think that was their primary goal but their name is now going to be mentioned on every newscast and in every paper everywhere for weeks.

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

#274

Post by nkassis » Sat, Aug 06, 2011, 5:58 AM UTC

prostoalex wrote: post #98

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…

What constitutes defense spending nowadays? Is it largely salary payments to current troops? Wouldn't we have to deal with a large unemployment problem in case we laid off a bunch of military employees and told them to go find a job somewhere else? Or is it payment to defense contractors, such as Valley's own Lockheed Martin? Wouldn't this cause a large number of people to be unemployed, contributing to recession?

Well at least if they live in the US the government does not have to feed them all and provide shelter etc... At home they support the economy of the US by buying things whit their salaries here. Soldiers at home are cheaper than soldiers on a battleground. Add to that lower amount of injured soldiers etc... That's also a cost when you factor in the medical costs on the battlefield with the need for quick transport to a hospital etc and future disabilities.

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

#275

Post by Benjo » Sat, Aug 06, 2011, 5:58 AM UTC

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…

There are lots of things we could do to end the recovery. They won't happen because they are not in the best short term interest of the politicians making the decisions. Natural selection has weeded out the congressmen that make decisions contrary to their ability to raise campaign money.

That is the root cause of the problem. Until that is solved, there's no point in dreaming up efficient solutions, because they won't happen.

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

#276

Post by dreamdu5t » Sat, Aug 06, 2011, 6:03 AM UTC

gnosis wrote: post #178

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…

You forgot the War on Drugs. Get rid of it, free all the people in prison for non-violent drug-related offenses, and tax the newly legalized drugs. This should free up a lot of money that's being wasted on ruining people's lives right now, and make more money from taxing legal drugs. As a bonus, it'll get rid of a lot of organized crime. Witness what happened with the repeal of Prohibition.

The war on drugs is only 0.5% (approx. $18 billion) of the Federal budget (approx. $3,456 billion), so it's inconsequential to our debt crisis.

I whole heartedly agree that drug prohibition should be repealed, and that we need to put an end to the war on (some) drugs.

But, the military, social security, and medicare comprise approx. 70% of the budget, so it's really not going to help us solve the debt.

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

#277

Post by adulau » Sat, Aug 06, 2011, 6:03 AM UTC

thematt wrote: post #29

fletchowns wrote: post #18

Didn't S&P maintain that Lehman Brothers had a favorable rating up until they collapsed? And in the subsequent congressional hearings the rating agencies simply responded that the rating is their opinion. Why do people put so much faith in these ratings when they have proven to be not very useful in evaluating the risk associated with investing in an institution?

People put faith in them because not everyone can hire an army of experts to evaluate all possible investments. S&P supplies their ratings to life insurance companies, pensions funds and even municipal governments. These entities don't have the resources to employ that expertise in-house, so they rely on companies like S&P and Moody's to give them guidance.

The interesting part is who is paying the credit rating companies... usually, it's the emitter of the bonds[1]. The emitter can be a state, a local region or some other organization. The emission of the bound is quite often managed by a financial organization. So the interface between the bond, the credit rating company and the state is "a financial organization". Of course, they don't have any conflicting roles in working in the field...

[1] http://en.wikipedia.org/wiki/Credit_rating_agencies#CRA_busi...

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

#278

Post by jsz0 » Sat, Aug 06, 2011, 6:03 AM UTC

chc wrote: post #143

jsz0 wrote: post #136

Earlier quoted context omitted.

I have an easy solution. Let's make your federal income taxes look less like a bill and more like an order form. So for example some portion of your income taxes are pre-allocated for essential services (say 50%) and everything else is your choice. You get 50 points to spend and a variety of categories to choose from: education, defense, infrastructure, green energy, science research, enhanced Medicare services, NASA…

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.

That's part of democracy isn't it? We might be better off if we only let highly educated people vote and only after they passed a series of intelligence and psychological tests but we don't do that. As long as essential spending was covered I do think it would lead to a better allocation of federal dollars simply because it would add an additional check & balance to the system.

You could now (effectively) vote for a candidate or party and through your allocation of tax dollars keep them on a leash. It would allow for a more nuanced political system. For example I might vote for a deficit reducing Republican but I don't trust them to keep their hands off the EPA so I give environmental protection 50 points. Maybe I vote for a Democrat but I still think the deficit is really important so I put 50 points on deficit reduction. This would add a whole new dimension to politics and give some power back to the people. It would in my opinion make the commons relevant again. As it stands today I think many Americans are feeling like their vote is no longer all that important. You get two choices, you vote for one or the other, pat them on the back and cross your fingers. That's just not good enough. By controlling a few hundred billion dollars of the budget we might find ourselves on equal footing with PACS, lobbyists, media tycoons, etc.

Of course there are a lot of practical details I didn't address. It may be this could only cover domestic discretionary spending, or perhaps you could only allocate your tax points every 2 or 4 years to provide for more stability and of course for long-term deficit reduction it would have questionable value since the overall level of spending/revenue would still be playing a central role.

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

#279

Post by tsotha » Sat, Aug 06, 2011, 6:03 AM UTC

trevelyan wrote: post #185

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…

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…

The program is popular and self-sustaining.

Social Security was never self-sustaining. It's doomed by demographics and has been since the day it was enacted.

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

#280

Post by mbreese » Sat, Aug 06, 2011, 6:04 AM UTC

radicaldreamer wrote: post #229

spdy wrote: post #113

Earlier quoted context omitted.

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.

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.