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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

#321

Post by com »

logjam wrote: post #220
chailatte wrote: post #190

Earlier quoted context omitted.

The potential implosion of EU, caused by Italy or The rich is alerted the downgrade first, naturally.

Yep. I'm more than a bit suspicious that it's your option 2, given that it's been "Greece"..."Italy"..."Ireland"..."Greece"...Euro-disaster talk for months now without the kind of precipitous one-day decline that just happened to precede this announcement.

Well, just before the precipitous fall on the markets there were letters between various parties in Europe (European Commission President, European Central Bank President and the German Chancellor) which showed that they had some fundamental disagreements about what to do - vastly scale up or not - with the European sovereign bailout fund. That seems to have spooked the markets somewhat.

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

#322

Post by ww520 »

logjam wrote: post #159

One minor elephant in the room that only a few seem to be mentioning is the 500+ point selloff on Thursday. On Thursday evening, the economist talking-heads expressed some confusion about what was driving that sell-off on that particular day. There was vague talk of problems in Europe, although there has been worse news out of the Eurozone for months without that kind of drop. On Friday, we get the S & P announcement…

Someone in S&P leaked the downgrade ahead of time?

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

#323

Post by chc »

jsz0 wrote: post #278
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.

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…

That is not an inherent part of democracy, at least not as it's practiced in any sane nation on the scale we're talking here. And we do put people through rigorous testing before they are allowed to vote on laws and budget issues — it's called an election. You might argue the test is flawed (I would agree), but it's not exactly open season. Opposition to direct democracy was one of the founding principles of the United States — at the time, it was generally accepted that the history of direct democracies had shown it to be an utter failure in actually making people free or happy. That's why we have a representative democracy.

Now, if we could vote on Congressional salaries, that might be interesting.

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

#324

Post by beagle3 »

3pt14159 wrote: post #230
mark_l_watson wrote: post #109

Yeah, 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.

You can't just quit the game.

You bought gold, which conserves your wealth ... and the government takes 15% to 50% of your "profit" (depending on your circumstances). Debasing by the fed together with the tax systems guarantees there's nothing you can do against it.

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

#325

Post by pmorici »

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…

It's interesting the Treasury Department Issued this statement after the downgrade news basically saying, for all practical purposes we still consider the debt to be AAA regardless of what S&P thinks.

http://www.occ.treas.gov/news-issuances/news-releases/2011/n...

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

#326

Post by pyre »

rwmj wrote: post #296
notatoad wrote: post #145

Earlier quoted context omitted.

the actual step 1: admit you have a problem. the US still spends with the attitude that it is a rich country. it needs to start spending with the attitude of a country that is rapidly going broke. of course, this can't happen because any politician who doesn't parrot the "America is the greatest country in the world" message gets ousted.

Why do they get ousted? Surely you'd vote for them?

Not enough people would though. They would flock to the other candidate that would inevitably reassure them that everything was going to be ok. Heaven forbid that people should vote by thinking about the issues rather than just digestion a handful of sound-bites.

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

#327

Post by bermanoid »

sliverstorm wrote: post #306
Someone wrote: post #290

Earlier quoted context omitted.

I think indirect costs are higher than that. Prisons, for example, cost over 60 billion a year. Legalize cannabis, and I guess you can easily cut that by 25% (I know those costs probably are not federal, but do not think that matters. If your kid overspends, your family suffers) Also, the 'It is only a small fraction' argument is weak. If you really try, you can cut the entire budget into smaller parts.

If you really try, you can cut the entire budget into smaller parts Sure. And just because it's a small fraction doesn't mean it shouldn't ever be addressed. But should a 0.5% line item take precedent over three items which combined total to 70%? When you need drastic improvement fast, it's just a waste of time to dally on pet agendas that don't represent a significant chunk. Get to them later when you have the time…

But should a 0.5% line item take precedent over three items which combined total to 70%?

Is it any less of a waste of time to talk about those three items, each of which is considered a core concern of one of the two parties in control and will likely never be properly gutted?

If you can't afford the shit that you're unwilling to live without, you need to find a way to make more money. To me, America seems to be in this situation, yet the anti-tax sentiment is so strong here that that stark reality is never addressed honestly. People fairly broadly want these things, so we best find a way to pay for them.

Personally, I'd love to see a situation where the tax rates are mandated to be mere functions of spending, rather than being negotiated as if they're completely disconnected entities. Then Congress has only one knob to fiddle with, how much they want to spend. By letting them decide completely independently how much they want to make we expose ourselves to the obvious outcome, that a lot more goes out than comes in, and that's never going to be properly addressed unless we take it on directly.

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

#328

Post by jackolas »

daemonize wrote: post #42
thematt wrote: post #37

Earlier quoted context omitted.

They would do that without hesitation. The problem (at the moment) is they have nowhere else to put that much money.

China could either put it back in their coffers or invest in Brazil. Consider that they have Sino-Brazilian trade and technology agreement.

That and Congress keeps banning all collaboration with them in space and energy technologies.

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

#329

Post by tjogin »

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 about the single biggest contribution to the deficit, the Bush tax cuts?

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

#330

Post by crander »

simonsarris wrote: post #233
ramanujan wrote: post #203

Earlier quoted context omitted.

You take the Keynesian view. It's difficult to discuss this in more than a soundbite, but the Hayekian view is well explained by these two videos: http://www.youtube.com/watch?v=d0nERTFo-Sk http://www.youtube.com/watch?v=GTQnarzmTOc Well worth watching if you haven't seen them. In short, the opposite/Hayekian view contends that taxation is seizure of resources from profitable/efficient entities and redistribution tow…

The Hayekian view here seems patently false according to Moody's research firm, which determined in 2008 that the most cost effective stimulus was food stamps and the least effective was business incentives such as tax breaks for buying new equipment. http://money.cnn.com/2008/01/29/news/economy/stimulus_analys...

Sure, but you are arguing for short-term spending vs long term capital investment. Basically you are arguing that you don't need to get more sleep, you'll just have a red-bull tonight. So the red-bull is better than getting more sleep in general.

If you take all the money (100%) from people who build and make things and give it to people who don't have jobs to spent, in the short term things will be bought and everything thing will appear stimulated. In the long run your entire economy will collapse as your capital base erodes. The basic Keynesian error is to not distinguish between purely consumptive (why don't create jobs to build ships, fill them full of gold and new technology, and then drive them into the Pacific and sink them?) and productive goods which actually build economic wealth and raise the standard of living.

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