We are a commune of inquiring, skeptical, politically centrist, capitalist, anglophile, traditionalist New England Yankee humans, humanoids, and animals with many interests beyond and above politics. Each of us has had a high-school education (or GED), but all had ADD so didn't pay attention very well, especially the dogs. Each one of us does "try my best to be just like I am," and none of us enjoys working for others, including for Maggie, from whom we receive neither a nickel nor a dime. Freedom from nags, cranks, government, do-gooders, control-freaks and idiots is all that we ask for.
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Monday, August 8. 2011
Only the names and the dates change
Bird Dog is returning from a brief vacation, and asked me to do today’s morning links. I’ve mostly been on a staycation the past month (actually, better than that; wife and sons off in Europe visiting family; P-A-R-T-Y!), so I’ve been spending relatively little time following the news and blogs. If one skips the newspaper for days or weeks, it’s largely true that only the names and the dates change. The stories are much the same. But, current events and developments taken together are some of the most negative for the US that I’ve experienced in my 63-years, about 50 of which I’ve closely followed the happenings. As President Obama’s former chair of his Council of Economic Advisors admits, we're "pretty darn f—ked." -– Met up with a Black guy, Rich, who went through Parris Island same time I did. Both still USMC green, not Black or White. He’s now retired from the Corps. He from poverty in No. Carolina, me from NYC. Agreed that following our grandparents’ rule to be frugal and save, don’t gamble, and keep moving forward is best advice we ever received and what we try to pass on to our children.
Washington, D.C. residential real estate: The only part of the country not suffering the recession-depression. – Bet the Washingtonians don’t like this: Debt deal could trigger federal employee job, benefit cuts -- They’d rather have a hollowed military, as they defend their own skim.
S&P gets it right: S&P credit rating analysis values spending cuts more than tax revenue. – We have to grow our way out of this hole, and that is less likely with higher taxes or more regulations. – 18 Countries with higher credit ratings than the US -- S&P warns of a second downgrade; 1 in 3 chance of further U.S. downgrade: S&P's Chambers – Second Recession in U.S. Could Be Worse Than First (Huh?The first recession ended?)
The Other Debt Crisis: Reforms for post-secondary education
Zombie literature review. -- Flesh eaters, tax eating politicians, what’s the diff? They both eat our guts.
The West’s Rube Goldberg Schemes in the Balkans Come Apart
The 64 Thousand Dollar Question. Where's Code Pink?
Posted by Bruce Kesler at 06:00 | Comments (14) | Trackbacks (0)
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Our economy, which was a corpse was killed off years ago. We are trying to keep the corpse alive with massive blood transfusions ( money printing ). Savings and capitol investment has now been replaced by the printing press. For years we have over consumed and under produced. The road back, if we can come back will be extremely painful.
(you kids today have no respect for tradition -- much less for the vows you once made)
I said at the beginning of this whole "ceiling" fiasco that the S&P would downgrade US debt and I was right. My reasoning was pretty simple - S&P wanted revenge for the beating they took from politicians during the mortgage backed security - collateralized debt obligations ratings which caused the housing collapse. It is as simple as that. Look at what happened - S&P made a $2.7 Trillion dollar mistake in their calculations, they made a huge mistake in percentage of debt to GDP ratios and a couple of other issues in the report I can't remember at the moment and when all this was pointed out to them, they still pulled the trigger. Revenge is a powerful motivator and S&P, and the three guys who run the sovereign debt desks, took it.
Secondly, something that I should have picked up on because I hold McGraw - Hill stock and remember this conference call item which I heard again on CNBC this morning. McGraw wants badly to get into the Euro market for credit/debt ratings - they have no presence there at all. The downgrade helped their positioning as being an "honest" debt grader in Europe by showing they would downgrade US debt and give them some credibility. Another piece of the puzzle is that the ECB is looking at how to set up an independent credit/debt ratings organization and this was a "HEY LOOK AT US - WE DOWN GRADED US DEBT!!!" moment.
What about Moody's? Well, they didn't take as much heat as S&P did and, from a political POV, are taking a wait and see attitude with respect to what might happen to S&P from a pollitical standpoint.
Anyway, that's my story and I'm sticking to it. :>)
I've had similar experiences when meeting former Marines of any age - its like no matter how different we are politically, physically, color or not, we all bleed Marine Corps green.
It makes some sense to downgrade US debt - after all, we are borrowing to pay the interest on our debt (as well as all the other ridiculous "great ideas" politicians have had). As Warren Buffet said, we are always good for our debt because we can print money - but obviously that can't be the only criteria or Zimbabwe would deserve a AAA rating. On the other hand France and England still have AAA ratings. England is a basket case and France is in worse shape. It has a ton of Greek debt and no ability to print money.
I think Tom is right that part of this is political payback for their failure to catch the mortgage crisis. I mean, they were no more astute than Barney Frank!
What it is MB is pure politics. They kept France's rating at AAA because France raised the retirement age by two years - otherwise they are in worse shape than we are because they hold an incredible amount of Greek bonds.
They aren't gonna stop until the US cries uncle.
My only disagreement with you is that I think the US deserved a downgrade. The result of the debt ceiling dance was a cruel joke - on us. But I do agree with you that there was a sizable slice of politics to it. There is no reason that France should be AAA while we are AA. If they were honest, they would have downgraded a lot more than just us (and from my previous post, they are trying to catch up but then it is US centric).
I just read that S&P downgraded Freddie and Fannie from AAA to AA. Man, those guys are on the ball!
The Balkans, the Balkans. Leave them alone, and they'll go home, shooting each other until they get tired of it. (They should be so lucky.)
A $2.7 TRILLION mistake? In the words of Murphy Brown not so many years ago, "What just happened here?" And Little Timmy Geithner isn't resigning? Surely even Obama has another crony with more brains than Timmy. And more honesty ... oh, wait, I'm wrong. Our present Administration is woefully short on honesty.
Criticism of S&P for making a $2T "mistake" in projecting the US indebtedness 10 years from today, in 2021, is completely unwarranted. The CBO figures, which the Treasury Dept. cited, are no more "accurate" than are S&P's estimates. In scoring the debt ceiling agreement, the CBO projected the US indebtedness would be $22T in 2021; S&P scored the same bill and came up with a figure of $20T. That's a difference of 10%. The difference is minor, and in no way alters the worrisome fact that according to both analyses the US debt is projected to rise by almost 50% over the coming decade.
As the official S&P statement mentioned, even more troubling are the signs that the Administration and Congress lack the political will to abide by the so-called triggers in the debt ceiling agreement. In the past, neither one has shown the discipline to curtail out-of-control spending on the major social programs like Medicare that are driving the annual budget deficits (a good example I can cite is the yearly suspension of earlier legislation that Congress enacted, which called for reductions in the level of Medicare reimbursements to hospitals and physicians). If this sort of past history is a guide, the US debt in 2021 will likely exceed either estimate by the CBO or S&P, and by a wide margin. The difference of $2T will be nothing compared to the likely error when we look back from 2021 at these theoretical projections that people are squabbling over today. Neither figure is a "real number" and neither one is likely to be any more reliable than the other one.
As for the credibility of the CBO, it might be useful to see how well their previous projections have turned out. Another blogger has reminded people that in 2001 the CBO projected a US indebtedness in 2011 of MINUS $2.5T, meaning that according to the CBO, by this very year the US would have eliminated all of its accumulated debt and gone into the black by an astonishing $2.5T. Today, the actual debt stands at $14T. Accordingly, the entirely fallible CBO's estimate in 2001 was in error by $16T ! The magnitude of that enormous misjudgment by the CBO makes a $2T difference of opinion about the projected size of the 2021 US debt pale in comparison.
Sorry, I mistyped the numbers and got them backwards in paragraph 1: the CBO projection for 2021 was $20T, the S&P projection was the $22T figure.
The CBO figures, which the Treasury Dept. cited, are no more "accurate" than are S&P's estimates
Then neither agency should be doing any sort of financial scoring.
I watched the Sharma interview with Bartiromo this evening on CNBC - he clearly did it for political reasons - he couldn't defend his companies rating of France or the United Kingdom but he had 2.7 trillion reasons for downgrading the US?
Bullfeathers as my Maternal Grandfather used to say in polite company. It's pay back for the mortgage scandal - plain and simple. The states are next - watch and see.
There's a world of difference between France and the US. France is not so large that it can't be bailed out by the European central banks. It might be a struggle, but it probably can be done. On the other hand, as the largest economy in the world, the US economy is too big to be bailed out by anyone. When France gets a cold, no one else sneezes; when Uncle Sam gets a cold, the rest of the world gets pneumonia. In any case, France is likely to be downgraded in the near future. When that happens, will you be writing that S&P was just getting revenge for some bad fromage or for a bad shipment of Bordeaux?
You say S&P is getting revenge. I say it is doing the job it is supposed to do...and which people like you criticize it for NOT doing in the years leading up to the collapse of the economy in 2008. You say, What goes around, comes around. I say that deficit spending in the US has reached reckless levels which threaten to destabilize the entire world's economy, and that S&P has now done what needed to be done. In my opinion, S&P did not go far enough. The US deserves to be downgraded another notch. That will come soon enough, fortunately well before Obama and the Dems succeed in their goal to turn us into a pauper state like Greece.
we listen to rating agencies? egads, what's with that?
that said, US deserves a downgrade. No political will to do the right thing, which can be done.
Tracked: Aug 08, 09:42