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Debt Deal Reached
Global markets are on the rise in response to a deal between President Obama and congressional Republicans on the debt. The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
As an engineer that uses math on a daily basis, the more I read about the rising debt the more confused I am. It seems that a strategy of Reagan's was to take in less money in taxes than the government spends and this strategy has been intact for far too long. So if you're trying to balance a budget, how in the hell do you justify spending way more money than you take in? Either you have to raise taxes or cut spending. It's pretty clear that Clinton was the only president to break from this norm since then and now we're shocked that our debt crises get worse and worse every term?
... so basic that when you're taught how to balance a checkbook in high school, they don't even teach it in Math class. It's a general life skill and our country is failing at life in general.
I don't spend more money than I take in. I see commercials for people like that who have credit card debt because they couldn't do some simple balancing and see that they were spending more than they made. Why on Earth are we still implementing tax cuts and deficit spending?! Have we given up any hope of ever getting out of the red as a country?
This is very basic math
My work here is dung.
Debtor says, "I would like to borrow some money."
Creditor says, "And what do you owe now?"
Debtor: "So much I need at least 145 years to pay it back."
Creditor: "Tell me your plan."
Debtor: "I have no plan to pay it back. I will only pay the
interest."
Creditor: "You want your kids, grand kids, and great grand kids to pay it back?"
Debtor: "It will be very painful for me not to get the loan. I can print up some money if I need to."
Creditor: "You have no plan."
Debtor: "I am working on a plan to borrow a little less than usual - 10% less."
Creditor: "You have no plan to balance the budget, you plan only to keep borrowing, you print up money, you dump your debt on 3 future generations and counting, and you want us to believe you have integrity, and are worthy of credit and trust?"
Debtor: "I want what I want when I want it, and I want it right now.
Give me the loan or I will print the money!"
Can someone explain to me why US Treasuries should be rated AAA in the first place?
Money is paid out to investors out of new investor's money, and the cycle continues. Last time I checked, this is also known as a Ponzi Scheme and it is inevitable that it eventually collapses.
These are the same people who rated junk mortgage bonds as a good investment, so I'm not surprised.
I dream of a nation where a man is not judged by his skin color but by an number assigned by a credit rating agency.
An agreement has been reached, but it hasn't been passed by either the house or senate yet. (It's almost certain to pass the senate, as that's where the compromise originated. The house, on the other hand...well, we'll see.)
Yet, in the back of my mind, there was a part of me wondering whether an agreement would ever be reached. The conspiracy theory in me kept saying that there were enough rich fat cats who were paying off key congressmen to sabotage the process and make sure that no agreement was ever reached. Why? Because billions of dollars had been invested in credit-default swaps against the United States debt.
According to Lexington at the Economist, this whole hoopla was the Republican's fault.
the Republican House has come up with is a non-solution (since the Senate cannot buy it) to a problem entirely of the Republicans' own making. The reason for this crisis is that instead of just raising the debt ceiling in the customary way so that the government can pay the bills Congress has already run up, the Republicans decided to point a pistol at the American economy and threaten to pull the trigger if they did not get the spending cuts they wanted.
Also, I think it was horribly hypocritical of the Republicans to blame "entitlement programs" for the problems and never mentioning the wars and their action of lowering taxes during war time - that's what killed us. All the other reasons like Obama Care are just distractions - especially when you consider that it hasn't even taken effect yet. And why is SS on the table in this context? Bullshit!
Yes eventually Social Security will have to be addressed but to include it in the debt ceiling was ludicrous.
By the way, the debt ceiling allow the government to pay it's current bills and nothing more. Thinking that it allows for increasing government spending just shows how little we Americans truly understand how our government operates - myself included.
The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
Of course it's not going to do anything substantial. You really thought the Republicans were fighting this fight truly to solve and end the debt woes of this country rather than politicking for 2012? Especially when the terms of last 3 Republican presidents accounted for $9.5 trillion of the $14 trillion this country carries? This in no way makes excuses Obama pushing even more debt on pile, but the Republicans hardly have a case for being "fiscally conservative" when Reagan, Bush and Bush Jr piled on 67% of the current debt.
...There was no Federal Reserve prior to 1913 when it was created in a secret agreement by bankers and then spun to the public as a way to "regulate" and prevent abuses in the banking industry.
However Jefferson opposed the first bank of the United States which was similar to the Federal Reserve system but yet entirely different because it didn't deal in fiat currency and money creation.
Taxation is legalized theft, no more, no less.
Yes, but when using your checkbook you take the value of the currency as a given. A state has (limited) control over the value of it's currency (by limiting or expanding the available sum of printed money), thereby it also has (again, limited) control over the value of it's own dept. Now you might say that playing with the value of the currency can have complex consequences, and that would be true. Still, macro economics work differently than micro economics.
I completely agree that the analogy is not perfect (never is). What I'm asking is why, if people like Cheney said that "Reagan proved deficits don't matter" then why are we seeing negative effects? Suddenly we're concerned about our AAA rating? Why should we care? Deficits don't matter, right? If you're saying that a checkbook deficit and national deficit are two completely different things then why are we seeing a threat of losing our credit rating and other money problems that are associated with drowning yourself in debt on a personal level?
My work here is dung.
The actual funny part is.... You all still think there is a difference between republicans and democrats.
They've kept that thru all of this. It's outstanding. Best scam ever. Wish i'd thought of it.
Keep the population arguing over D/R while we rob them all blind. It's genius!
Oh wait... i live here too.. shit.
"No plan under serious consideration cuts spending in the way you and I think about it. Instead, the cuts being discussed are illusory and are not cuts from current amounts being spent, but cuts in prospective spending increases. This is akin to a family saving $100,000 in expenses by deciding not to buy a Lamborghini and instead getting a fully loaded Mercedes when really their budget dictates that they need to stick with their perfectly serviceable Honda." http://www.ronpaul2012.net/2011/08/01/ron-paul-on-the-debt-ceiling-debate-just-freeze-the-budget/
Dallas Real Estate
The potential downgrade has little to do with the amount of debt owed - rather, it is a reflection of the rating agencies' assessment of how likely we are to repay our bonds. Originally, simply raising the debt ceiling would have been sufficient to satisfy the rating agencies. However, now that Republicans have made clear that raising the debt ceiling is an opportunity to extract concessions with the nation's credit rating on the line, some of the rating agencies wanted to see that Congress was capable of reaching agreements without blowing up the world economy.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
Mr. Cheney, your breakfast is ready. Now leave the computer alone and get over to the table.
We've got your favorite today, Lucky Charms and fresh-squeezed baby's blood!
You are welcome on my lawn.
About the only thing right about the summary is the spelling.
The deal would cut more than $2 trillion from federal spending over a decade. However, most economists think this isn't enough and does not remove the threat that the nation's AAA credit rating could be downgraded.
This debt crisis is entirely manufactured and artificial, the reason the country's AAA rating could be downgraded is because idiots are playing political games with our credit worthiness, and most economists think that the economy needs stimulus, not immediate cuts in spending. (Oh, and since current Congresses can't bind future Congresses, the $ 2 trillion number is also meaningless.)
This entire debt crisis is a blatant attack on the working class. Our legislators knew what was coming back when they were busy cutting taxes for the rich and funneling billions into banks. Things will only get worse from here!
Let me help you get this straight: no rating agency was seriuosly suggesting downgrading the U.S. credit rating UNTIL Republicans threatened not to raise the debt ceiling. They were a long way from worrying about whether we would have enough revenue to pay interest, even with the great recession.
That's because there is a big difference between being in a lot of debt (federal deficit) while having a job you won't lose (taxes), and starting to tell your bank you won't be making your next credit card payment not because you don't have the lower interest credit line (HELOC) to offload the debt to, but because you simply refuse to. Once you start acting irrationally (teabagger) then you become a less reliable debt issuer (borrower).
Is that clear enough now?
Someone had to do it.
Adding on to what skids just said, Ezra Klein did a pretty good job of summarizing S&P's movement over the past year, so I'll let him do the work:
In short, our debt/GDP ratio is not what's driving the potential downgrade; rather, it's the concern that we won't be able to make the decisions necessary to eventually get our debt/GDP ratio stable. As I said, the amount the US owes has little to do with our credit rating (note: not "nothing," but "little"), since we are financially able to repay our obligations and any likely new obligations for the foreseeable future.
I'm a lawyer, but not yours. I wouldn't represent someone who thinks taking legal advice from Slashdot is a good idea.
Sounds more than a bit far out and almost totally misinformed.
China's military options for collecting on their debts are almost zero. Where will China export the goods it needs to keep its economy going if they start a war with the United States?
Further, China buys US treasuries to keep their currency valuation down so that they can continue to be the low-cost contract manufacturer to the world. Without keeping their currency low, the strength of their economy would push their currency higher, making them uncompetitive as exporters and pretty much derailing the vast majority of their economy.
A derailed economy REALLY scares the Chinese leadership, as their number one focus is maintaining order and putting a couple hundred million people out of work does not help with order.
The US is almost totally in control when it comes to Chinese owned debt. Its denominated in our own currency. Any threat to dump it would probably be met by a US threat to simply void it. They could stop buying it, but it would have a deleterious impact on their currency valuation.
What's missing from the recent coverage over the the debt ceiling dust up is the sentiment of many Republicans that Government is too big and by squeezing it from a revenue side they hope to stop its expansion and try to shrink it. This has been a long-term Republican strategy, but its largely been a failure. It may have slowed some expansion, but generally speaking the net outcome has been to cause deficits to be run up.
I largely think that some tax increase is necessary. I'd personally like to see a tax increase across the board, including low-income earners. I'd eliminate the earned income tax credit that basically allows some 40 percent of the population to pay no taxes -- I don't think a reasonable tax on them would amount to much, but I think it creates a free ride which is a poor tax policy. I think it would also philosophically undermine the "40 percent of Americans pay no taxes" line which is used to refute increasing taxes on the wealthy who can frankly afford to pay them.
More importantly, we need to have a long discussion in this country as to what's vital from the government (roads, infrastructure, safe food and medicine as a start) and what's merely nice if we can afford it.
This is factually incorrect, and honestly it's not even hard to check. Why didn't you?
over Reagan's 8 years, Congress approved smaller budgets than he requested on average, and the deviation from what he requested averaged less than half a percent. He raised the debt by $1,860 billion and Congress reduced his budgets by $16 billion. Otherwise he would have raised the debt by $1,876 billion.
Everyone is entitled to their own opinion, but we all have to work from the same set of facts. If your political stance requires that you believe things that are not true, that doesn't necessarily mean that your politics are wrong. But it's a strong indication.
Take some time. Familiarize yourself with the numbers. Decide what you really believe, not what other people have told you. Then resume posting to Slashdot.