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United States Loses S&P AAA Credit Rating
oxide7 writes with this excerpt from the International Business Times: "The United States lost its top-notch AAA credit rating from Standard & Poor's on Friday in an unprecedented reversal of fortune for the world's largest economy. S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government's budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the American government, companies and consumers."
Thx Pres. Obama !!
Obummer
Just the fact that we were even thinking about defaulting or raising the debt limit should have lowered our credit rating.
...that this could end the culture of borrowing the US has?
"People don't want to learn linux" hasn't been a valid excuse since '03.
With a fractional reserve banking system these highs & lows are an inherit trait. Either we accept them & roll the dice for riding it out or economic collapse, or we abolish the central bank for a third time. I for one think an entire society built on inherit debt is but a ticking time-bomb, set off purely by our own fear.
I'm sure retards are going to blame Obama, while ignoring the Republican asshattery that got everyone in this mess in the first place
Two, who the fuck cares about ratings agencys? Werent they the ones putting AAA on CDO's? Shouldnt we burn those fuckers to the ground as the turds they are?
At this rate, I will have a better credit score than our government, at least i can pay my bills on time.
I mean for one, these debt limit things always tend to be a "to the wire" affair so nobody takes it that seriously. However the other thing was the executive branch made it clear they wouldn't default on bond payments. That they don't have enough money means they have to choose what not to pay. That could be things like social security payments, and instead pay bond holders which is what they said was likely to happen.
Makes sense too, not only does the US have an obligation to pay its debts and want to maintain its credit, but doing something like that would piss people off and cause them to put pressure on congress to reach a deal.
Really I don't think this downgrade should have happened. While there are quite likely to be other problems for the US (spending cuts, tax increases, slow economy) it does not at all look like default is in the cards. Since bond ratings are supposed to be a rating of how likely that is, the rating seems to be incorrect. My opinion is it is politicking. The S&P people in power wanted a different deal and this is their politicking of it.
What this is, is the private sector telling the US government to raise interest rates.
Right, teabaggers? Of course, this is the same S&P that told us that all those bullshit mortgage-backed securities were legit.
I swear to God...I swear to God! That is NOT how you treat your human!
Regardless of their rating being just or not - isn't it "interesting" how much power these few rating companies have?
Do like the Greeks, have the richer and harder working guys feed you, for the Greeks it is EU. In the case of the US it will be China.
That would make an interesting poll. How many months since you bought anything "Made in USA".
After all, if the ratings agencies had done their jobs a few years ago, we wouldn't be in a lot of this mess.
and neither are Moody's or Fitch.
If you read the books about the Synethic CDO industry, you will realize that S&P and Moody's are elaborate frauds.
I hope this will drive into the thick skulls of many americans that the lawyeristic infested, paper based economy is long gone and USA needs to GET BACK TO MAKE THINGS and CUT THE LEGALESE MORASS that thas resulted in too much copyright of basic ideas, red tape for any f...ing simple thing and so on...
Shit ! I start sounding like them populists, but it is jus THE HARD FACTS...
Welcome to the brave new world people...
The Canadian government did, back when they tried to make the country's debt into a bigger emergency than it was.
I wonder if the US did?
And they're right. This debt ceiling deal did absolutely nothing to deal with the US's budget problems (except for 'Ohshi we need money to pay the rent this week, dude! Call your mom.') It's smoke and mirrors on imaginary future savings - one more way in which California blazes the way for the nation. The other rating agencies that are keeping the AAA are indulging in the same sort of wishful thinking that rated junk mortgages bundles AAA. S&P did too, maybe they learned.
At least they did the administration a favor and waited till Friday long after market close to announce it.
I only have a background in economics 101 and I'm not an investment banker, but could someone tell me how the worlds biggest borrower, the most in debt country in the world, a country so in debt that we're talking about grandchildren repaying the loans, and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?
I thought the purpose of these credit ratings were to determine what is a good investment, with AAA being safe, but how is an economy which has never repaid and only ever printed money a safe investment?
Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies) yet it is only NOW that some ratings agency (which also caused much of the financial crisis to begin with) actually decides to reduce the credit rating, and even then only to AA+?
You don't have to worry about your borrowing costs if you stop borrowing.
Time to start cutting Federal programs we can no longer afford.
Income went down 15.2% in 2009 for Americans. Unless you happen to be taxing the other 85% of the people, your taxes will be going down also.
And unless income bounced back up 115% in 2010, you won't be making enough in taxes to cover your existing programs.
Democrats or Republicans. They are both taking us to the same place and they are not afraid of us anymore.
The real reason was the US politicians were being insane/assholes/idiots about it. Not that the debt ceiling was raised, or had to be raised.
If you just "somehow find the money" to make the interest payments (as you did for how many dozen times), the banks wouldn't give a damn (even if it meant creating more US dollars out of thin air). Because the people working in those banks would just hope that the time you guys finally blow up, they might be safely retired in the Bahamas.
BUT the minute you have a very public discussion about whether you are going to bother to find the money or not, the banks will get worried. And rightfully so.
That's why many around the world were calling the US politicians all sorts of things: irresponsible, reckless, absurd etc.
They can't peacefully farm on the rich dirt by the volcano once the volcano makes crazy noises...
/Obama/Bush - fixed that for you
How many large entities who regularly invest $billions in bonds or other debt actually look up the grade rating in S&P's investment index when deciding whether or not to buy debt from the U.S. Government? It's not like the U.S.A. is some obscure Elbonia country where your average economist would have to look up what that country's assets and liabilities are, it has an economy larger than the 7 next-richest countries combined and any investor worth his salt has these figures memorized for the U.S.A.
The reasoning behind the downgrade is of much larger concern to investors -- that the national debt to GDP ratio keeps increasing quickly, and the vast majority of federal government is strongly opposed to either reducing spending or increasing taxes.
I see this as the financial equivalent to moving the Doomsday Clock one minute forward.
Corruption is convincing someone that the selfless ideal is the same as their selfish ideal.
This is sorta the result of nearly thirty years of political conservatism's push. You have to realize a few things. Much of this behavior of US Conservatives came from the civil rights movement. It really boils down to the fact they don't like what the US has become. So they in the leadership are doing everything they can to drive the US into a ditch. The white christian supremacist world they knew of is gone. That is why this is happening. If they can't own the US they will cry and scream about the evils of 'government' and 'liberty'. even when it is a complete lie.
Because this country has also been the primary driver of innovation and increases in standard of living, which matter more than debt. Debt is a tool of bankers used to emotionally manipulate people to such a degree that they forget to ask why bankers should have an exclusive, divine right to create money and automatically attach debt to it, and charge interest on top of that. What bankers are most afraid of is that ppl will realize we can elect officials to create debt-free money and use it to provide us with a basic income so we can unleash our creativity and innovate without the need for the hierarchies and middle managers and the sales forces of business. In this age of the internet (a creation of govt), communication is orders of magnitude easier than ever before. Let's use the technology of money creation to benefit us, to empower individuals, instead of corporations that are sitting on trillions!
Anyone can choose to listen or not listen to them.
It's like challenging why a guy with lots of Twitter followers deserves to have so many.
But if there are a lot of people listening to them, it's because they believe in their track record.
Think about it - if someone came along giving me better advice, why wouldn't I switch to him?
Link to the S&P report which contains their rationale for downgrading, future outlook, etc.
I guess S&P didn't like the 'grand bargain' either.
"I am an Adept of Tantric VAX."
NOW the DOJ can feel free to investigate the ratings agencies that gave those CDOs a AAA rating. Or at least S&P
how is an economy which has never repaid and only ever printed money a safe investment?
The USA repays the borrowed money, with interest, all the time. But the volume of the offering grows. It's not a concern until the point where you start suspecting that the country won't be able to service its debt. In other words, your one-year T-bills mature but the government says "fsck you, come later."
That point was reached in several ways. First, the very discussion of default undermines the reliability of country's debt. But then the amount of outstanding debt also makes it possible that the country will either physically run out of money to pay interest and buy matured bonds back, or it prints so much paper money that the profit of those bonds becomes negative, or does something else equally displeasing. The US debt stops being a safe store of value. It wasn't for about a decade already, but events like that serve as excuses for policy makers of countries to reevaluate the allocation of their currency reserves without being crucified.
Also why is it that for the past 2 years people have been steadily divesting from the American economy (which can be seen in the fall of the USD vs all other currencies)
The USD loses to other currencies not because "people are divesting" but because its value drops, and that happens because the printing press works day and night. For most of 2011 the US government borrows money from Federal Reserve which makes it out of thin air. When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?
Besides, most of investments in the US economy are done not by rich foreigners but by mutual funds and the like. This money remains in the system. If you take the money out of the market there will be excess of stock without buyers, and that will result in a serious crash of the stock market. That hasn't been observed. The US economy flounders because the business climate is bad, taxes are high, future is uncertain, labor is very expensive, and whatever you do or don't do you get sued. Can you open a small business and sell goods to China? Chinese can do that and sell their goods to the USA.
They don't. If you have some money, you are free to loan it to your neighbor to start a new company in his garage. You can even charge him interest for it. Now, if you happen to have a supply trading company yourself, and your neighbor uses some of that borrowed money to buy your supplies, you can loan the same money again. Presto, you've created money!
America has the most external debt of any country but is far from the worst borrower. As a % of gross GDP our debt isnt even in the top 30. All of Europe leads us in debt compared to GDP, which is proof socialism doesnt fucking work.
What exactly does this mean for the citizens of the United States of America?
Out here in Middle of Nowhere, West Virginia, the poverty margin is 80% of all households, and it only rises as the economy gets worse. For a quick comparison, in Clinton's era it was "only" about 17% of all households. No jobs, no hope for the government, shops keep closing because they can't make enough to stay open... So what's the next thing those disconnected people in Washington are going to do to Main Street?
Obama has raised the national debt by over three trillion dollars. He added more debt in the first 19 months of his presidency than all presidents from Washington through Reagan combined. If Obama supporters are really going to try to pin everything on Republicans, they're going to be in for a big disappointment in next year's election.
First of all, I don't know where you're getting "three trillion dollars" from. Would be awesome if you could, y'know, provide the source for this data.
Second of all, the President didn't increase the debt single-handedly. You cannot point out any amount of programs that he himself pushed for that led to a deficit of $3 trillion since his first budget (the 2010 budget, since the 2009 budget was Bush's).
Thirdly, the deficit would have been greatly reduced if not for the continued impact of the 2001/2003 tax cuts for the wealthy instituted by President Bush and his congress. Obama is opposed to this and claimed to try to get rid of these (although he didn't, really, in my opinion try that hard. He sold out, in my opinion). Anyway, this would have reduced the deficit.
The bottom line -- you can't blame Obama for an addition to the debt of three trillion dollars. Did he preside over a three trillion dollar increase in the debt? Yes....well, maybe -- I'd still like to see the math on this. But George Bush presided over the worst terrorist attack the United States has suffered. Does that mean that he caused it? No -- any number of things led to the attacks; he was just the guy in the seat for when it happened. Obama is the guy in the seat during the period the debt increased.
One other note -- the President doesn't get to choose what gets funded and what doesn't get funded. You know that there are programs that he wants gone, spending that he wants gone that the republicans insist on funding.
Make sense though. Apple computer has more in the bank than our Gov't. Unless Americans wise up and grow enough balls to start taking back the money they themselves earned from the super rich that hoard it, our economy is just going to tank and tank and tank. There's 3 types of people in America right now: Socialists, super rich, and rubes. Jesus people, wake up. There's a class war on, and you don't even know you're fighting!
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
What you can't do though is loan money out to your neighbor and then borrow very cheaply against the outstanding payments and loan that borrowed money out again.
I don't have a master's degree in credit rating, so the mathematical difference between "AAA" and "AA+" eludes me. Why can't they assign a number as a rating, e.g. AAA=100="We expect that you will on average receive 100% of the principal and interest promised by the borrower.", Caa1=40="We expect that you will on average get 40% of the principal and interest promised by the borrower.
Seems using numbers like that would be simpler, more informative, and less obscure than "We rate this debt Baa2." Or do the raters like obscurity?
Regardless, I would be interested in knowing how accurate the past ratings have been. We all know the agencies absolutely blew the whole sub-prime "AAA" crap a few years ago.
Sure, the banks have, due their size, more financial options. But suppose you have good credit, and your neighbor has maxed out his credit cards, you can still borrow cheaply, and loan it to your neighbor for a higher rate.
Of course, what you are doing by that transaction is taking over some of his default risk for a premium. That's a perfectly good business method, and that kind of risk trading is beneficial to a smooth running society.
A credit rating has NOTHING to do with how much you borrow, it has to do with how well you pay your debts. And the US has always payed its debts. It really is not that complex. Borrow lots and pay the interest every single time and you people want to lend you more. Borrow a little and don't pay the interest and people won't want to lend to you anymore.
Isn't this covered in economics 101?
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
Although you raise an intriguing point, I strongly doubt that S&P is willing to do this as a favor to Washington while the US Treasury is calling BS on their math:
S&P officials notified the Treasury Department early Friday afternoon it was planning to downgrade the U.S. government’s debt from the AAA rating it has held for decades, a government official said, and it presented its report to the White House. S&P has previously warned such a downgrade might come if Washington didn’t move to comprehensively tackle its long-term fiscal woes.
After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.
CostOfWar.com: BOTH wars cost $1.1 trillion
According to the CBO, the cost of Obamacare alone: $2 trillion
First of all -- where are you getting that $2 trillion figure? Sounds like a talk radio number, honestly. Your argument is really very uncredible if you don't link to a reputable source. You're at your computer right now -- you don't have to do this stuff from memory.
Yes, but $2T which way?
It's amazing to me that until September 2008, S&P was giving AIG a AAA rating, even though AIG was taking the bad side of everyone's bets on the mortgage market, but now S&P downgrades U.S. debt over concerns about "budget deficits and rising debt burden." The U.S. government still has plenty of room to raise revenue to pay off Treasury Bills, and may even be Constitutionally obligated to do so.
It's just hard to believe that the U.S. Treasury is now considered a riskier borrower than AIG was in 2008. It's also ironic, since a good part of the U.S. debt burden was incurred bailing out AIG and the rest of the financial industry (which assumed AIG credit-default swaps would protect them, in part due to S&P's high rating of AIG).
So why can't the govt do it, and not attach debt or interest to it? And use the money to empower individuals to innovate and create and advance knowledge, so that others continue to want what we produce and therefore the currency stays strong?
While the credit rating thing is unprecedented and sort of iconic moment, the real test of the credit-worthiness of the USA will take place in the bond market.
Computers are useless. They can only give you answers - Pablo Picasso
The republicans are pretty damn obvious with their policies, cut back anything that benefits the poor and keep and increase benefits oops tax cuts for the rich. They don't even bother to try to disguise this as trickle down economics anymore.
Yet West Virigina, which you claim is filled with poor people, colors very red on the election maps I can find.
But hey, if I am a small shop-keeper why should I pay for medi-care or social security for other people. I AM NOT UN-EMPLOYED, I got my own business, I don't need a handout... why isn't there anyone in my store? People to afraid to spend because if they loose their job they need every penny they got? Oops, now my store has gone bust... I need social security to stay alive!
Really, the republicans in the recent debt talks insisited openly that a tax cut for people making more then 250.000 dollars introduced by econimic wonder boy Bush was extended. And every single republican making less then 50.000 was in favor through their vote for the republican party. Because when you are on minimum wage, guys making a quarter of a million are your first priority.
It must be the American dream. Someday I will be rich so I better make sure I vote in the tax cuts for my future self right now.
In most of the rest of the world people vote in social security should their future self need it.
At 25 I stopped drinking to save the liver of a 40 year old man. An American commits suicide at 25 to stop a man from dying at 40.
Washington will take care of Main Street when the people in Main Street stop making it very clear with their votes that the people in Richville are their main concern.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
We can no longer afford 2 wars anfd the Bush Tax Cuts.
We couldn't really afford the wars in the first place really.
The Bush Tax cuts were due to expire anyway, they should have let that happen.
I have news:
The first-ever audit of the Fed (which was restricted by statute to the period from TARP to today) is completed, and the Congressional committee in charge of it has announced that during the period Americans were worrying that $700 Billion was too much for bailing out corporate deadbeats, the Fed -- unannounced to anyone, including government -- made $16 TRILLION in loans to both US banks and foreign interests.
That's $16 TRILLION dollars -- actual, U.S., newly printed dollars -- while we were all engaged in debating whether $700 Billion would be inflationary!
We need to get rid of the f**ing Fed. Immediately.
The 'grand bargain' never made it to vote. Boehner walked away from it twice.
Could you provide a source for your 80% statistic? It seems unusually outlandish, and the Census Bureau says that the 2009 number for West Virginia was still 17.8% of individuals.
Taxes are lower than ever right now. Business is booming actually - note the prices of stocks, the amount of cash reserves on hand, etc. The problem is continuing long term unemployment, which suppresses demand, thereby causing more unemployment. Wages have stayed the same or even decreased in almost all sectors, although foreign labor is still cheaper (but still not as productive). I don't see lawsuits having anything to do with the matter.
http://www.youtube.com/watch?v=ZPWH5TlbloU
That's all nice in principle, until you take actual interest numbers into account. You couldn't even implement that scheme profitably once over, because you'd have to provide much more in the way of collateral than any bank does, and you still wouldn't get the money nearly as cheaply as banks do. Banks have refinancing options that are only accessible to them because they're banks, not because of their size.
Lowering sovereign debt rating means that all businesses and individual ratings in US are also now lower than before. That's because sovereign debt rating is always considered to be the highest rating and all other ratings are below it. Of-course that's because the government can unfortunately print money and companies/people cannot legally do that.
Of-course being able to print money is the reason that the credit rating is lowered for USA, and AFAIC the rating of any entity that can print money should always be the lowest out of all businesses that actually produce something. If you can print money means that you can monetize your debts, and that's default. US government has been defaulting for decades now, always printing more money, always issuing more debt, never paying debts out.
This credit lowering is of-course political, everybody knows US bonds are junk and US debts will not be paid with anything of any value.
Now think about how much harder it will be for businesses to get credit in US that government credit rating is lowered. This is what I am talking about when I say that government credit crowds out private credit and prevents any business activity because government gets all the credit first and whatever measly leftovers go to some businesses for investment (if any is going there in a country that decided that destroying its currency and thus investment capital is the way to go, while also destroying business via most regulations in the world and some of the world's highest taxes on work and with most debt in history of the world.)
The fix for the economic problems requires cutting the spending of government by some enormous amount, as during the 1921 depression, which ended in 1923, the government spending was cut by 70%. Of-course at that time personal savings were high, country had an enormous manufacturing sector and was largest creditor in the world. Today none of that is true.
The real GDP is much lower than the government admits at the very minimum because the real inflation is about 13%, not 2%, and they must deflate the GDP by inflation number, and since this year the GDP is seeing under 1% growth, last year it was 2.9% and years before that it was shrinking, the real GDP has actually being shrinking by maybe 10% a year for years now.
So when you are talking about tax to GDP ratio and saying that in US the taxes are lowest ever compared to GDP, this misses all the important points: GDP is shrinking and in absolute terms taxes are highest ever. The raising of taxes on only the 'rich' will never do the trick. The most economic activity and money is in the middle of the country, so if you want to raise taxes to raise government revenue, that's where the taxes will go up, while the 'rich' will simply move their money quicker than they are doing now and you will see even less of revenue from them.
The only solution is enormous cuts, and that's the politically impossible solution because the people are bought by the promise of cradle to grave welfare state, and it's an impossible promise.
You can't handle the truth.
The reason GDP has plummeted is that high tax rates,labor rates, and costs of massive regulation have encouraged business and manufacturing to leave the country in droves for decades for friendlier business pastures.
Labor rates in the US relative to corporate profits are very low today:
Corporate earnings are the highest they've been relative to worker wages (including benefits) since just before the Great Depression...If earnings were to suddenly revert to their historic average relative to wages...stocks would have to fall about 40% to return to their average level relative to earnings.
Have some companies moved production abroad? Yeah. But there are still 150 million people at work in this country full time. That's a freaking lot of people at work.
USA Today reported on a trend way back in 2010 of companies moving manufacturing work back to the US, despite what you characterize as high labor costs and massive regulation:
Chinese wages and shipping costs have risen sharply in the past few years while U.S. salaries have stayed flat, or in some cases, fallen in the recession. Meanwhile, U.S. manufacturers have been frustrated by the sometimes poor quality of goods made by foreign contractors, theft of their intellectual property and long product-delivery cycles that make them less responsive to customer demand.
With the cost gap between the U.S. and other countries narrowing for other expenses, such as class-action lawsuits, making products in the USA is now about 22% higher than the average of nine of its largest trading partners, down from 32% in 2006.
Why is it that the government gets downgraded to AA+, but if I was in the massive debt and shitty debt/income ratio that the gov was in, I'd be downgraded from A to "don't let this guy buy a pack of gum" status?
I'd like to thank the TEA Party and the Republicans for this 10% tax on my ( and everyone else's ) 401K.
Michele Bachman and other TEA/Republican party members got on the television last week and told the American people flat out that the U.S. government defaulting on its debts wouldn't hurt anything.
Now we have this new economic burden as a result of only solving that argument too late.
I don't expect anyone who is a Republican or a TEA party member to admit that they were wrong about that. People who supported playing chicken with the U.S. economy last week just don't have the character and integrity.
I hope OTHER people now see what these people are about. They are angry, ignorant and DANGEROUS denialists just like the people who will not vaccinate their children and who believe global warming is a hoax.
On the other hand, it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really?
Shoes for Industry. Shoes for the Dead.
I've read that this credit rating downgrade will result in at least a 10% loss in most American's 401Ks. This was the result of the Republicans and TEA party playing chicken with the U.S. Economy during the debt ceiling negotiations.....which they did so they could cut money from medicare.
If their conscious, stated goal was to make Americans poor and miserable when they are old, then this "serendipitous" result would be called synergy.
So many people on this list believe in probability, why is it so hard for them to understand that risk is mathematics, not politics.
But start with money. What is money? Money is a measurement standard, used to measure whether people who are trading goods and services get fair value for their trades. Money can ONLY be spent or invested. (Currency, however, can be destroyed by melting or burning, etc..)
The amount of money has to be stable against the amount of goods and services, or no one will trust it. The risk comes in two forms: First, people hold money in the hopes that they will be able to trade it back for a fair amount of goods and services. Since the US Government doesn't have any money of its own, it has to take away money that would otherwise be spent in producing and trading goods and services. If the government takes too much money, it diminishes the ability of the country to provide enough goods and services to trade with the people and countries holding the measurement. Ooops, now there's too much money and the prices rise to suck up the excess; the measurement is skewed. Big risk, puts downward pressure on the credit rating.
Second, Debt: Now the government has borrowed against the future productivity of the nation, but it may have over-borrowed against the ability to trade enough goods and services in a timely manner to acquire enough money to pay the debt in a timely manner. The longer the money is owed, the higher the interest paid for a longer period of time. And the risk is that an irresponsible government, instead of keeping the money supply stable in relation to the amount of goods and services provided, may create/print money instead. The money is worth less and can buy fewer goods and services when the debt is finally paid. Again, fair measurement is compromised, and the more debt, the higher the risk of this happening. The higher risk, the more pressure on the credit rating.
I've been asked to explain this before, so let me try: Suppose the government issued a finite amount of inches and you had to use them all somewhere. Today, if you buy a piece of lumber 24 inches long it will fit into the space you want exactly. But if the government issued more inches, and you had to use them up, then vendors would end cramming more inches into the same size of lumber. Now, if you buy a piece of lumber "24 inches" long, it might be too short to fit into that space. Or, if you do buy a piece long enough to fit into that space, you will end up with more inches. We depend on the measurement to be stable. We also depend on the lumberyard to be able to provide enough wood of the right type to accommodate our project. If the lumberyard messes with the measurement or the amount of lumber it can promise, then it becomes undependable and we start looking for other sources. Either way, the ability of the lumberyard to provide what we need is a probability, and the higher the probability the better the choice. The lower the probability, the more risky the choice.
"The mind works quicker than you think!"
S&P had such a major effect when they downgraded Japan's debt in 2002!!!!!! I'm sure S&P etc are still hoping for another 4 or 5 disasters to make that come true. Let's of course, not forget that S&P rated the rags that we previously knew as collective mortgage assets AAA up unto the last day... and I'm supposed to invest? Heh.
A lot of Americans will not go to vote for President Obama on election day because they are disappointed in his performance and that he has not lived up to 100% of their hopes.
Please don't be like that. Please remember this and go out to vote.
As we have seen the Republicans and the TEA Party are working hard to take things away from you.
This credit downgrade will make you lose money in your 401K and increase the costs of credit........whether buying a home if you are one of the shrinking middle class that can still hope to do that.....or starting a business.
Govenor Scott Walker cut people's jobs so he could give a tax cut to the reach and the TEA Party showed up to counterprotest the Americans who were fighting for their jobs.
Republicans at the state level fought to redefine rape away and to deny coverage for abortions to women as a result of rape.
That is what these people are about. Trying to take things away from you either by conscious design or ignorance. They are turning the US into a 3rd world country.
Please go out and vote to keep them out in 2012 elections.
We need to get rid of fucking liars who intentionally misrepresent repaid loans as an aggregate figure. Can you tell me what we should do about brain dead idiots like yourself who keep repeating those lies?
Actually,
http://www.city-data.com/county/Barbour_County-WV.html
Thank you for questioning - It's probably any where from 1/4 to 1/5 of population right now in county.
I had always heard 4/5 as the number over the past couple of years and never really questioned it, but you have double points against it.
In city it gets a bit more absurd, according to the same site about 1/3 of the city rests under the poverty line.
So, no, we're not as bad as I had blindly accepted (again, thanks for questioning), but we're still in bad shape and still just getting worse.
"...and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?"
It's a little like if you took out a $10k loan from your bank, then took out another $5k before that was up, then another $10k before the previous debt was finished, then $20k, so on and growing for decades and decades. You'd end up in a huge amount of debt, but if you *always* managed to pay your repayments on time and in full, and you weren't doing anything that appeared to jeopardise that in the future, youd get your AAA credit rating - it's a measure of how well you handle the debt you have, even if that debt is growing. In the same way someone who has NEVER borrowed money will never get a high credit rating - because there's no credit given to them or any debt they have to re-pay, they're not even in the debt game.
...GWB spent too much.
Obama didn't reverse it, tho, did he? No, he made it worse.
The way to fix this is to pass the Fair Tax. That results in 0% income taxes, a wildly expanding manufacturing sector, and ultimate prosperity for the American people. FT proponents believe it will result in a 3% unemployment rate in 2 years. When asked what they would do if America passed the Fair Tax, 500 foreign CEO's were split, with 400 responding that they would build their next factory in the USA, while the remaining 100 said they would move their entire company to the USA.
The income tax has been chasing jobs out of the country to shores that have less business expense either because of low wages or low taxes or both. We can't expect to have the 2nd highest corporate income tax on the planet, and the highest wage scale on the planet, and not expect industry to invest anywhere-but-here.
But we're going to continue with the income taxes, I'm afraid, even tho they're the 2nd-worst idea this country has ever had right behind slavery, and we will eventually have an economy that will be envious of the prosperity of places like Costa Rica.
"We need to get rid of fucking liars who intentionally misrepresent repaid loans as an aggregate figure. Can you tell me what we should do about brain dead idiots like yourself who keep repeating those lies?"
I'm not terribly surprised that this comment came from an AC. But to give the benefit of the doubt: you are saying that most of -- or even s significant amount of -- $16 Trillion in loans from the past 2.5 years have already been paid back? Really?
I'd like to see that paperwork.
The US government spends, what? 40% (and growing) more than it takes in?
The US hasn't deserved a AAA rating for years. Hell there are trillions in junk MBS which S&P rated as AAA. All you have to do is look at the direction of the chart to see if it is sustainable. Screw the rating agencies.
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What do I do? Where do I go if I can't pay my rent? What will be the quality of my life? I've put in decades of income into the system. And I have no family to fall back on for support. Will I loose everything I currently have? I'm considered way too old to work but still sharp enough to have a good conversation with. I don't eat much either. I can live without bingo and some of the small activities I do to keep myself active and happy but my social security checks are vital to my living independently. A retirement home isn't a desirable alternative.
( Hypothetical questions from a hypothetical elderly man/woman. Some food for thought to bring a little humanity into the discussion. )
That means all governments have increased it by about the same percentage. Go watch Albert Bartlett on growth.
Bush. Reagan, Clinton, Obama. Republican, Democrat. All, completely irrelevant, they are all the same. Which makes perfect sense when you see that their contributors are the same people; the US government has been bought and paid for for decades.
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The only reason the GOP have run up 80% is they were most recently in power and therefore have been subject to the most recent part of the exponential curve.
The fact that the debt increases exponentially (and it is an almost perfect fit) means that both parties have increased it by the same percentage when in power.
That is... Both parties spend like there is no consequence. They are the same.
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That's not what they said at all:
We have a spending problem. S&P wanted to see debt reduction, they wanted to see a bigger amount of savings, but they didn't care where the savings came from. If anything, they listed cuts to entitlement programs like medicare and social security as more important than anything else (because they quite frankly are).
Laying this entirely at the feet of the Republicans is just more blind partisanship. Both parties are worthless and ineffective. Arguing about which one is worse than the other isn't going to help us get out of this situation. Our entire system of government needs a massive shakeup at all levels, and it's going to happen one way or another: either at the ballot box in the short term, or in a complete collapse of the government in the long-term.
Maxim: People cannot follow directions.
Increases in truth directly with the length of time spent explaining them
Even if we ignore how half-assed your suggestions are, the time has come and gone for the late, great, USA.
Yeah, sure, one of the big problems is that we no longer have many companies that actually make a *thing* and the whole sue Sue SUE! thing has got way out of control, but those are but symptoms of the sickness that is the core of US politics and business. The future has been written by the past and the US will be, at best, a minor player, if we survive at all.
You sir are the fine example of why usa is so stuffed up. Blaming someone else, blame yourself looser.
Blame yourself for voting ex nazis and old shits.
Blame yourself for overspending the CC, letting corporates steal the wealth and deposit in the cayman islands with zero taxes.
DICK, usa was fucked 5 years ago, before the tea partry, growup and go live in mexico, land of the free.
Liberty freedom are no1, not dicks in suits.
Would lend to again
That's the total sum of the loans that were issued. Many of them were overnight loans.
There was never $16 trillion in outstanding loans.
Nerd rage is the funniest rage.
Because if you have a degree in economics you would then realize that comparing debt size is not adaquite since some countries have a higher GDP than others. Rather a GDP to assets ratio is used. In that ratio the US is fine compared to Japan, Greece, Ireland, Spain, Italy, and many other countries.
Our debt to assets ratio was much worse in the great depression and WW2 and the 1950s than today. Part of the problem is the low taxes this country has on the rich compared to the past and other countries.
Yes it is high, but if you did study economics 101 you would realize in a recession that people who are not working do not pay taxes. Also businesses that lose money do not pay taxes and so on. In good economic times like 2000 we had a surplus because .com companies and corporate America made bank and kept money here rather than outsource money and other assets overseas.
Trust me the US is fine and this is all right wing scare tactics and manufactored fabrication.
http://saveie6.com/
Going from AAA to AA and we are told this is the AAApocalypse.
Who watches the watchmen ?
Basically a bond rating is supposed to mean how likely is the issuer to default within a given time frame. For AAA it more or less means no risk of default in a year. So the question with regards to US debt is not one of if taxes have to go up or cuts have to be made or how much it might suck for taxpayers, it is if the US is likely to make good on the debt.
Well for that you have the fact that the US hasn't eve defaulted on its debt, which isn't something many countries can say. There's a very strong commitment to pay it back, with history to show that commitment is serious.
There's also the fact that the debt has been higher, as a percentage of GDP, before. After WWII the debt was over 100% GDP, and the US continued to pay.
Also there's countries with more that have made good on payments. Japan is over 200% debt to GDP, and yet has not defaulted. While I'm not arguing that is the way to do things, it is clear that it can be done, and yet not default.
Credit rating isn't, or at least isn't supposed to be, how happy you are with a country's economic policy or how you think there economy will do, only how likely they are to repay their debt.
Finally in terms of people divesting from US securities, I encourage you to take a look at prices on them. On Friday 6 months notes had 0% yield, meaning you loaned the government money for free. The 10 year note was 2.5% and the 30 year was 3.8%. Those are at or near historic lows.
Then remember that for treasuries, lower price equals higher demand. They go out for bid and people bid the interest down. The more demand, the lower an interest the government has to pay.
The government is only paying 3.8% for a 30 year loan, which translates to about 1-1.5% real interest (real being nominal - inflation) and nothing at all for 6 months. That is strong, STRONG demand. People want US securities. Compare it to, say, Mexico, which has far less debt to GDP (41%) which had a yield of 6.6% for 10 years.
People aren't putting all their eggs in the US government basket, but demand for US securities is still very high. Consider in the 1990s the 10 year note was above 5% for most of the decade and in the 70s it was as high as 14%. At this point, many investors are voting that they think US securities are safe. You don't take 2.5% for 10 years when inflation is usually targeted at 2% if you don't think the investment is safe.
The $16 trillion was not made out like a loan.
Basically the fed reserve made a nightly loan that the banks paid back each day and retook and paid back and so on and so on. After 30 days it was $16 trillion, but it is more like I give you $1 and you give it back then I give it to you again and then you pay it back 16 times. Then I say I gave you $16 worth of debt when we only played hot potato. This is a lot like Beavis and Butthead in the girlscout cookie episode if you have seen it 15 years ago hehe?
This of course made the banks sheets better but the fed reserve did this to keep them afloat until the bailout became law. No money was lost in the process but it is strange accounting.
Not that I agree with what is going on, but I do wonder and feared what would of happened if we did nothing? Our debt to assets ratio would be much much worse if half of us were unemployed right now and so would our credit rating. This assumes we would enter an even worse depression than the 1930s and the fact is we do not know.
http://saveie6.com/
Welcome on the same boat as other lands
same roots, same effects
Not true.
Again, the US debt to assets ratio is good compared to more than a half a dozen countries.
AIG made no income and betted agaisn't gambling errr investing $76 trillion in assets. That is scary.
http://saveie6.com/
Apart from this not being true. Yes, some European countries do have a higher % of debt vs GDP than the US, but many don't, including one of the most socialistic countries in Europe, Sweden (and Finland, Norway, Denmark, Croatia, Poland, Latvia, Turkey, Russia, Bulgaria + more).
The move is likely to raise borrowing costs eventually for the American government, companies and consumers.
Spoken like a true talking [air] head. It won't raise costs at all because:
The FED/SEC already said organizations can still treat US Treasurys as treasury grade. So Banks do not have to increase capitalization at all. Not that it would be an issue anyway, the FED has goosed the M3 so much Mellon Bank is talking about paying large depositors a negative interest rate, in other words they are so well capitalized they don't want deposits!
Investors do not think about the rating of large sovereign western nations, the way they do about a business or individual because the risk profile is not remotely an analog. Its kinda dumb to even rate sovereigns bonds this way as politics can redefine terms and rules any time; see my first point.
US Treasurys are still a safety play, witness market action all last week. Banks will continue parking money there just like they have been; business as usual all the way.
People will continue buying Treasurys at near zero rates; their is little in the way of better options out there if you need to park a great deal of capital.
Treasurys are at near zero rates, some types like TIPS have even gone NEGATIVE lately. They are therefore not competition for consumer debt, when it comes to shopping for a good interest rate for an investment. If rates don't go up and they won't consumer rates won't go up either.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
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Why has it become so commonplace to think about government debt in a macroeconomic way? US citizens and companies hold 68% of the US debt.
Or to use the modern way of thinking about this issue: if you have $10, but you owe Billy $3 and owe yourself $7, how much money do you have?
is here: http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s-debt-rating-press-release/
It is interesting that deficit isn't the only, nor it seems, most important issue. FTA:
Business is booming actually - note the prices of stocks, the amount of cash reserves on hand, etc.
Factor the fall of the USD in to the stock prices as well; you'll find a hefty chunk of those increases is gone. Add in real inflation, and stock prices are nearly flat for the last 4 years.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
US the taxes are lowest ever compared to GDP
GDP is shrinking and in absolute terms taxes are highest ever
Does not compute.
Well they dropped and kicked the ball last time around so this time they're making sure they get way out ahead of any issue so they can't take any flack when the US debt nose dives in 10-15years like Greece or Ireland did given run away spending and worthless and stupidly complex loophole ridden tax code that lets multi-billion dollar companies like GE pay no real taxes. We don't need to raise taxes we need to fix the shit pile that is the US tax code so people actually pay the existing taxes
well, that's unfortunate for you that you can't read.
My EXACT statement:
So when you are talking about tax to GDP ratio and saying that in US the taxes are lowest ever compared to GDP, this misses all the important points: GDP is shrinking and in absolute terms taxes are highest ever.
Which means that I am telling anybody, who says that US taxes are lowest compared to GDP, that they are wrong. GDP is much lower than the government admits and GDP is shrinking at the rate of 10% a year due to inflation, which is more than 10% higher than the government admits.
An advice for you: learn to read.
You can't handle the truth.
"which can be seen in the fall of the USD vs all other currencies" -- doesn't hold up under scrutiny. Compare the dollar to the next biggest currency in the world which doesn't have its exchange rate officially manipulated -- the Euro. They've danced around each other for the last five years with little relative change. During the 2008-09 financial crisis there was a flight to the USD (because it was/is considered a safe haven); much of its relative decline since then can be attributed to unwinding those holdings.
The USA repays the borrowed money, with interest, all the time.
So did Bernie Madoff... until he didn't.
#naabhaprzrag, #sverubfr-000, #agi-fcbafberq, negvpyr[pynff*=' negvpyr-ary-'] { qvfcynl: abar !vzcbegnag; }
BLUE TEAM RULEZ ...We're fucked. No, not the US.
Humanity.
Seriously. The US is on the downswing. Who's going to step up? Europe? Please. There's a reason we had a little party back in the 18th century, and then another, much more violent party in the 19th century. Europe is shit. Europe has failed.
The Middle East? We go down, I'd like to see where their oil profits are going to come from. No where, that's where; the Middle East is going to descend into craptidude.
Captcha: Terror. Fitting.
China? The next superpower, to be sure. Let me know how well selling to say, India, is going to work out for them. If we fall, China is fucked.
Speaking of India - India? Land of endless slums? Hahaha. Give me a break.
South America? Any candidates there? With so many countries greedily sucking at the teat of US aid?
Africa? Hah.
If we fall, the world falls. And we're falling.
And progress will be set back. And humanity will rue it. Mark my words. All because of our fucking arrogance. All because on one hand, we have religious fucks who can't take dicks out of their asses long enough to realize it. Because on the other, we have leftist pricks who feign intellectualism, deeming themselves just as right, just as wrongly, as the righ thtye despise.
Go fucking team.
Fuck you, my fellow Americans. Fuck you. You're the harbingers of death. You're leading us all to our end.
And it isn't going to be a fucking new planet where we can fuck robot chicks.
And the prime reason for that is?
The TEA Party and the sensationalist horse shit from Fox and the AM Talk Radio dipshits. The Republican TEA Party candidates and the morons who voted for them are the ones who made all the fuss and caused the problems.
you hit the nail on the head.
100% agreement.
imo, much has been done to divide the american population through manipulative politics and the engineering of consent to conquer it.
the longer they can keep one partisan zealot believing their group can do no wrong, and all the wrong has been coming from the other side, the longer it will prevent the majority of the population from realizing every possible side has failed us-- most importantly, ourselves.
ultimately, we the people are to blame. not bush, not obama. us.
our laziness has compelled us to believe what we watch on the screen in those tiny 5-15-60 minute segments to be truth, rather than study the matters out for ourselves. indeed, had we, there would have already been bloody revolution decades ago like when the USA was selling arms to actively participate in the genocide of the people of east timor (all while simultaneously denouncing pol pot for his).
much blood is on our hands because we have allowed ourselves to become self seeking, lazy, vain, pathetic creatures that only seek enjoyment and relaxation rather than putting our head on the chopping block to stand for the greater good. those that do are few and far between, and their willingness to stand for the right only brings choler to our hearts and sardonic insults from our lips because we are too afraid to admit that they are in fact morally superior to us.
http://edition.cnn.com/2011/BUSINESS/08/02/china.us.rating/
"Beijing (CNN) -- Although the United States narrowly avoided an unprecedented default following congressional approval of a last-minute compromise plan to raise the debt ceiling, China's leading credit rating agency Wednesday downgraded U.S. sovereign debt after putting it on negative watch last month.
The Dagong Global Credit Rating Company, which lowered the United States to A+ last November after the U.S. Federal Reserve decided to continue loosening its monetary policy, announced a further downgrade to A, indicating heightened doubts over Washington's long-term ability to repay its debts."
After the US itself, China is apparently the single largest holder of US debt, followed closely by Japan, so perhaps we should be more worried about how they perceive US debt than US ratings agencies?
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
This has happened to many economies... even to Japan which at the time was the world's second largest economy. Japan has a debt to GDP ratio of over 100% (USA is about 90% depending upon which set of numbers are used).
Who was it said, "Reagan proved deficits don't matter"? Oh ya... Dick Cheney. No wonder we're in this mess.
No one ever had to evacuate a city because the solar panels broke!
Yes the Chineese can do that, but they cannot afford the same standard of living as the Americans (or rest of the "western world"), and that is the real problem. That we are living over our standards. We want a better life than we can afford. The Chineese (on average) are still on a very low standard which means that the wages are low and they can produce cheap stuff. (even if the actual engineer that designs the "cheap stuff" earns 50% of an American that doesn't matter if the 10 factory workers, the cleaning lady, the truckdrivers and the cargohandlers at the dock all earn 5% of an average American equivalent).
I don't think the "high" taxes and bed business climate are the basis of the problem, the basis is that we (I say we bacuse I live in Sweden, as you could probably tell from my spelling, and we face the same problems, albeit of a different scale) choose to live above our standards.
Our govenrnments needs to start breaking even, govenrments should only lend money for investments, never for running bills, and absolutely never to cover old debts.
"The raising of taxes on only the 'rich' will never do the trick. "
Alone, yes. But it still makes sense to do so because you *can*, whereas raising taxes on everyone to increase revenues would be foolish and counterproductive at this point. Everybody I've ever heard advocating that the Bush-era tax cuts should be rolled back for people with high incomes has also said that cuts in spending must also occur. Purely cutting government spending has risks too, because cutting government spending will affect jobs and economic activity negatively.
A "candle to grave welfare state" isn't an "impossible promise", although it may be for quite a while now because the debt has been run up too high. However, it doesn't have to be this way. Other countries managed just fine providing more services than the USA did (e.g., universal healthcare), albeit with higher tax levels, and were running budget surpluses until the economic crisis of 2008 (e.g., Canada). The US government could have continued running budget surpluses itself and started paying down its long-term debt (thus decreasing interest payments) if it and its legislators hadn't changed course in about 2002 and decided that keeping more money in the hands of its citizens was more important than paying the accumulating bills for the services it did provide. It's that decision that has slowly but surely backed the country into a corner from which neither pure cuts nor tax increases alone are the way out, because you've basically been living on a credit card for the last decade or so. The seemingly prosperous economic activity of that period was a sham built on cheap credit and bogus investments, a problem that came to roost in 2008 and which won't be sorted out for years. And to make things worse, you've got people in power now that think blackmailing the country over its debt ceiling and resolving the matter with only one strategy (cuts) is the only acceptable way forward. It's going to take more than that. Making cuts *and* eventually rolling back the clearly unsustainable Bush-era tax cuts is the only sensible way forward.
The right thing to do would have been to decrease taxes AND implement corresponding deep spending cuts and service decreases back then when the tax cuts were made. That would have been honoring the principle of achieving a smaller government. But no, they did dick all and just kept on spending into a hole. Starving a government of funds and then doing nothing to cut services gives you crappy services and a huge debt. But at least we can say the experiment has been done. Now the problem is several times worse than if it had been dealt with back then, and yet you still have people in power who think radical cuts alone will somehow lead to better government and a better future. No, it will probably put the economy into a tailspin. Meanwhile you have half the multi-millionaires out there saying "No, please, we can't survive on a few percent less net income", and sending big donations to their representatives to obstruct any thought of tax increase on them to help the country get out of this financial mess.
The problem isn't the "cradle to grave welfare state", it's that nobody was willing to pay what it actually cost to get the services they did have, and when the costs and revenue seriously started to diverge, you had a bunch of idiots in power who thought "starving the government" would somehow magically work out better. Except, you didn't starve the government, you just put it on a tab. Heck, you even had the vice president at the time saying that "deficits don't matter", and at least half his party thinking the same thing as they presided over a spectacular deficit increase.
Congrats. You've conclusively proven deficits do matter, you fricking idiots, and now the tab is due.
We don't really pay off debt as much as we keep rolling it over to another set of bonds. The best analogy would be using one credit card to pay for another. It doesn't really matter at all though as we can not pay off the debt under our current monetary and banking system. Even if done slowly, it would be a massive deflationary event that would remove more reserves from banks than could possibly be made up for by reserves from the Fed, which would have to be paid back, and the system would collapse. That's the price we pay for fractional reserve accounting.
So Linus, what are we going to do tonight?
The same thing we do every night Tux. Try to take over the world!
The real question IMO, is: Will we see increased interest costs for federal borrowing?
Right now, the federal government spends roughly $400 billion per year at ~2.5% rate on the federal debt. If the rate goes up 0.5% as a result of the downgrade, it costs us roughly $80 billion / year in increased interest payments...that is money the feds need to come up with from taxes that result in NO services or benefits to the taxpayers.
So the tea party asshats may end up costing us 10% (or more) of our 401k's and shrinking the amount of services delivered by the feds without actually shrinking the amount of money we have to pay in taxes. That's not a good deal. On the other hand, if the dollar falls precipitously against other currencies that helps.
Since when does US have high taxes? Hello, Sweden! At least in some states you can get by with far less than in EU, mostly because of laxer standards of living and cheaper gasoline. Even in redneck parts of EU from where this Anon hails many of your redneck cars would get scrapped as too broken down to even consider repairing (for thousands of EURs) and then trying to pass the state's rigorous car safety requirements like having good painting and no serious dents and obviously not being too rusty under the hood. And did I mention exhaust gasses being within EU standards? Lastly, a real American pick-up here would have yearly taxes equal to about 100% monthly income, yes, that's roughly 10% of your yearly income just so that you can drive your 4L small truck (did i mention mandatory insurance yet or the gasoline price being north of 1.50 EUR per litre?).
Business and finance bought themselves a whole bunch of Tea Party candidates back in 2010 and now they're unhappy with the results.
QQ moar.
The reason this is such a big deal is because there are many, many, many large edge funds and mutual funds that have contractual obligations that PROHIBIT them from taking on non-AAA rated debit. The main source of debt for these companies used to be the USA. Now it is going to have to go to other countries (like Canada,Finlaned,Sweeden, etc) and/or AAA rated corporations, like Microsoft or Johnson & Johnson.
No the rating systems are different here sovereign debt vs corp. debt.... not that this doesn't seem political (as you said plenty of room to pay debt and possibly required to do so).
Funnily enough, the regulations that require those groups of investments be placed in certain quality of investments were written to say either AAA investments or US Treasuries.
SEC's got the Government's back, yo.
Each and every one of you that is blaming the Republicans or the Democrats for this are being fooled and you should, as critical thinking engineers / scientists, cut through the noise and find the signal.
The Banks are in charge. This is the Banks punishing us for not piling on debt as quickly as they would like. Remember how the Republican Bush gave the Banks $750 billion then the Democrat Obama gave them $800 billion?
The end goal is 100% of GDP being paid as interest to the Banks each year.
Yes we repay the borrowed money... by borrowing more money. If a business borrows money from new investors to pay the older ones, they call that a Ponzi Scheme. Here we call it Government.
it's supposed to show the risks that might be in foreseeable or unforeseeable future as well and not just next year or the year after that, so you can assess your risks better. of course the rating is just that, a rating, it doesn't tell the future so the lenders have to read the news on their own.
so of course there should have been a downgrade, the debt/budget ratio is such and it was growing in an unsustainable fashion. in fact, they should have downgraded years and years ago, not to junk status but some other one, one that would give meaningful indication of their debt paying ability vs. amount of debt. also, the expected or guessed future value of dollar is of course a major part of if you'll get back your moneys worth.
world was created 5 seconds before this post as it is.
Here's the report:
http://sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf
Feel free to read it.
Nerd rage is the funniest rage.
Because if you have a degree in economics you would then realize that comparing debt size is not adaquite since some countries have a higher GDP than others. Rather a GDP to assets ratio is used. In that ratio the US is fine compared to...
Japan
Been in recession for decades.
Greece
Needed 2 bail outs from Europe and going though a massive austerity program that has caused civil unrest.
Ireland
Economy collapsed, needed a bail out.
Spain
Property market collapsed. Economy in real trouble. May need a bail out shortly.
Italy
In real trouble and may need a bail out too. Also marred by corruption.
Thankyou!
Out here in Middle of Nowhere, West Virginia, the poverty margin is 80% of all households
You will believe anything "they" tell you, wont you?
If you stop LISTENING to them, and instead start WATCHING them.. you will enlighten yourself to the actual real-deal situation.
Nobody in the media has a vested interest in the truth, and investigative journalism died 30 years ago. Everyone in government has a reason to mislead you, and the media just reports what those misleading fucks in the government are saying (when they arent manufacturing news themselves.) You can go on about FoxNews or MSNBC, but these are just two sides of the same coin. They have divided up the market, one settling for conservative eyes the other settling for liberal eyes. Neither has a vested interest in telling you what the truth is.
Stop listening to what the people in government are saying. Start watching what they are doing.
You will find that the Democrats have been especially bad these past 30 years.. telling you one thing but doing exactly the opposite of what they say. The Democrats had the House, the Senate, and the Oval Office starting in 2008 with such a majority that they never needed a single Republican vote for anything (the Health Care Bill got exactly 1 (unnecessary!) Republican vote in both House and Senate combined.) What did they *do* during this period of Democrat dominance? and compare that to what they *said* during this period.
They did things that are pretty much the exact opposite of what they are always saying. They never raised taxes. They increased spending at the fastest rate ever. They gave Wall Street trillions of dollars. They gave the insurance companies the biggest gift ever given to any industry in the history of the world. They continued the Wars. They strengthened and renewed The Patriot Act. They gave the RIAA and MPAA a front-stage pass to legislation... we can go on and on about what the Democrats did with their dominance of the House, Senate, and Oval Office.
When you compare what they did to what they said, you cannot conclude that the Democrats have the solution. They are the biggest part of the problem.
"His name was James Damore."
I'll recap one of my earlier points from a few days ago, and say that "Oh Really, *now* we have decided that too many/much deficits are bad? After ten years of the most expensive yet useless propaganda campaign in history?"
Also, I'm not buying the credit downgrade either. Some bankers are going to make a killing on the spreads of "new higher riskier debt", but I don't have the vocabulary to describe it. (Selling Short?)
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
The obvious solution to this is to declare war on credit ratings. But who to make the focus of this evil?
- Dan.
~ People that think they are better than anyone else for any reason are the cause of all the strife in the world.
If you threw a party that cost more than you could afford, and it went on day after day after day and everyone that came enjoyed it, of COURSE you'd be pissed when the nerd shows up and says, "Er, your credit cards are maxed, you're deep in debt ... maybe we should turn the music down, close the open bar, and start figuring out how to pay for this?"
Yeah, it's HIS fault. Let's blame him!
-Styopa
06August2011; Saturday & the markets are closed - however...,
"some" bankers "might" take S&P for real. However in the real world S&P says
'look at me, I'm important'! Since we botched the mortgage crisis in such a bad
way - still singing the **buy & buy more** mantra (with 'AAA' reports - even up to & after trillion dollar defaults)
to banks up and over their ears in toxic mortgage paper. I guess this downgrade news will generate
a lot of ink plus bits and bytes on computer screens and smart phones worldwide
and change about nothing. Except the big "I" (as in Me/Myself&I) officially downgrade S&P cred
to that rock band out-of-Texas. "ZZ" __ ha, ha a millions laughs... cheers world debt crisis,
cheers, USA {and, of course, Long Live the Naked Emperor}
ps: album title of a early Supertramp album from the mid-70's 'Crisis, What Crisis'?
It repays and at the same time, prints money, so the only point of borrowing money to US was to level the inflatory losses, i.e. to mantain the value (compared to most common goods). Now they will have to print even more.
It is interesting how other countries in debt, like Greece easily got to junk bond, yet it was that hard to downgrade US (and it wouldn't happen without the debt ceiling crysis). I think the problem is that all these rating agencies are a part of the same circle of power, people who know each other, are immensely rich, and decide where US and world politics and economy will go (so even stranger how only S&P downgraded, I guess others will join too).
Grandparent post: It seems to me that S&P, along with the other credit rating agencies, lost a lot of credibility when they were giving AAA ratings to the guys holding bundles of sub-prime mortgages in the lead up to the financial crisis.
Yea, that's what I thought. People are still treating the ratings agencies- who so obviously got it wrong- seriously after 2007/08?! (But see below)
Parent reply: Caveat emptor. If you don't do your own due diligence on your investments then don't complain about the consequences.
The question is how much do people actually believe these ratings in the first place, and how much are they privately sceptical but playing along? I can guess two "good" reasons the industry still supports them... neither of which are to do with their accuracy.
The first is that maintaining the pretence retains confidence in the market, even if that confidence is ultimately baseless.
If the industry was to openly accept that they were unreliable and couldn't predict financial crises like 07/08, and if there wasn't anything that could replace them (which there isn't, AFAICT), there's the danger that they- and people in general- would lose confidence and panic.
In this first case, I'm unclear how much of it would be intentional self-delusion by those in the industry, and how much is everyone knowing it's crap but keeping their mouths shut because it benefits no-one to say otherwise?
Secondly, they're a very useful back-covering mechanism for those in the industry, basically, the "no-one ever got fired for buying IBM" of the financial world. By which I mean one is *way* less likely to be hauled over the coals for a bad decision if they can point to the fact that an industry "respected" rating supported that choice. Or put another way, using them to demonstrate that "due diligence" was supposedly done.
This would work for individuals within companies, and for companies justifying themselves to investors and/or courts.
I don't know all of this for a fact, but it seems a sensible guess given the way that corporate behaviour and humans in general work.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
Apparently hubris continues to dominate the financial sector. The whole world financial market charade is BS. I learned as a young boy that "what goes around comes around". These idiots at S&P and elsewhere had better brace for the onslaught that is coming their way. I for one will laugh at their plight -especially when the underlyings roll on their masters ;)
Three of the four credit rating companies are *IN* that country (Standard & Poor's, Moody's, Fitch Ratings).
The fourth one, Dagong Global, is in the PR China.
Recently Barroso grumbled about needing a European credit rating agency, when Portugal (where he also comes from) was downgraded again just for the kicks.
In other news, Dagong downgraded USA from "A+" to "A" with a negative outlook; that's a bit between Poland and Spain on table 3 (p.4-5) of "Review summary at 1st anniversary of issuance of sovereign credit ratings for 50 countries and regions by Dagong" (PDF) .
You may think Dagong is probably a tool of the Chinese government. Yes, that's probably so. So what? I find it hard to believe that the three US credit rating agencies would be 100% independent if their government would lean on them.
To be, or not to be: isn't that quite logical, Slashdot Beta?
A large number of congressmen said 'We need to stop paying our bills.'
Congressmen that wanted to pay our bills were only willing to do so if other congressmen agreed to their pet projects.
Many congressmen were willing to stop paying our bills if they didn't get what they want.
A deal wasn't struck until the last possible minute.
While the deal passed on a heavy centrist vote, both parties are moving away from the center, indicated that things will get worse.
how the FUCK do we still have a AAA rating with any agency? Yes, we have the money to pay our bills, but we just showed that we are very willing to not pay anyways, even when we are fully capable of paying.
When dollars are created at the rate of a few billion per day, why anyone is surprised that they get diluted?
Yes, that would explain the record high inflation we've had since the start of the recession:
https://research.stlouisfed.org/fred2/graph/?graph_id=50467&category_id=0
Err, wait. OK, but surely exchange rates went off a cliff? Um, OK, I'm not turning up much there either....
Can you open a small business and sell goods to China?
Googling.... From http://www.cato.org/testimony/ct-dg06132007.html, "In 2003, the most recent year for figures, a total 16,874 U.S. SMEs exported to China." Too lazy to find something more up-to-date.
And if you want to help exports, you could worrying about the dollar being to *low* against foreign currencies....
taxes are high
Compared to other countries: http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP
Historical revenues for US: http://en.wikipedia.org/wiki/File:Revenue_and_Expense_to_GDP_Chart_1993_-_2008.png
It's just like all credit ratings. You don't get a good credit rating by saving money and not getting into debt. You get a good credit rating by borrowing a lot and repaying it, borrowing more, repaying it, and so on and so on.
The US is king of that game.
This is simply the industry doing payback to Obama for regulating the financial industry. They dearly want to get a rubber-stamp president back in the WH to line their pockets. Always follow the money- it's Wall Street, it exists solely out of greed and is driven only by greed.
We raised the debt limit, but did not address the problem. Note that they hope this raising will get us through another year or two until it needs raised again!
If I was nearing the limit of debt that our household could sustain, and our solution was to get another credit card, the credit agency would not give us a favorable credit rating either.
As long as US-politicians give presents to the rich, this is not going to change. And while the rich became richer and the poor became poorer, the US needs more money for social security (at least it should). As the existential minimum to live has to be provided. I know this is not the fact in developing countries. However, in the so called Western World, this is possible and done by many Western states.
As more money for the poor requires more money. This money has to come from the rich. As it is their obligation to help their fellow humans. And BTW they get almost the total GDP so they are able to pay for their poor fellows. And before someone cries: "The poor shall go to work, then they have money". I have to point out three things:
a) Many of them work, but they get not enough money for their work to get a decent living.
b) There are no jobs (especially ones where you get paid).
c) It doesn't matter if they are lazy or not. They are humans, they deserve support from all of us, so they can have food, housing, health care, education etc. (see the human rights declaration if in doubt).
However, all these things do not play any role in Us politics. And therefor the US is in big trouble and will get in bigger trouble in the near future. I am really afraid that the US can become a failing state in one or two decades.
That we're worried about having a credit rating downgrade from the people who graded those junk mortgages and got us into this mess in the first place?
for toying with the likes of assholes like bin laden and all those other motherfucking terrorists. We should have first declared a new name for them, something like puddledgraymatter or pink termites. Then we just blow up general areas where they could be hiding promising to anihilate their countries if their nationalities are determined from post attack forensics. This would have saved The US approximately $10 Trillion. We promise the rest of the world a swift asskicking if they can't keep their radicals under lock and key. We would be looking at a completely different world. We would only have been acting in self defense as reactionary policies would be beyond reproach. Look at what we are in the middle of now and come up with your own conclusions.
Wall Street the place were anybody can make money except investors.
... until you run out of other peoples money. (Margaret Thatcher)
This is what just happened.
Not entirely true. One of the fairly common criticisms of Reagan is that it was during that particular administration that debt accelerated so much, in spite of a so-called "conservative" president. (Not that it really makes sense to hold presidents totally responsible for Congress' budgets, but they do deserve a share of the blame at least, and for better or worse the president tends to be the highest profile person in government.) Republicans explain this by saying that luxurious military spending was justified to win the cold war.
If they want to make that argument, ok, but that's just becomes another one of that many ways that Republicans distinguish themselves from their laughably inaccurate stereotype. (It's one of the reasons that when someone says they want small government, but then also say they support Republicans, that person it outed as either a liar or a fool. You an take one position or the other and still look principled, but taking both positions just looks silly.)
Of course, we have Bush II to use for illustrations now; there's really no reason to bring up Reagan anymore. Bush II is not only more recent and relevant to the current situation, but helps make the point to a more extreme degree. It's in retrospect that we've stopped batting our eyes at the Reagan years; at the time, though, the huge deficit was a big deal. It's almost quaint to think that people used to be pretty concerned when the debt exceeded one and two trillion dollar milestones, since even at that time, so many people thought it could never be paid off, and would therefore be a permanent injury to the country.
Even multiples of trillion might be arbitrary places to draw lines but still hold some pretty big psychological powers. This century we think in tens of trillions, though. At least until we hit one hundred trillion... ;-)
As copyright owner of this comment, I authorize everyone to defeat any technological measure which limits access to it.
Well, logically if you want to blame a single administration, or really a point in time, look to the Urban Renewal and Development Program which looked to loan money to the disadvantaged. Now add Bank deregulation to aid the programs development, regulated capitalism which will punish all Banks which do not play the game, and you have set the stage for the nightmare we are in. A bunch of parties owing money they can never pay back.
Thank you Bill Clinton and Newt Gingrich.
Sure there was a surplus....of borrowed money.
Now had the money stayed in the country, it may not have been all the bad, but thanks to Ronald Regan and George H. Bush, money was traded out for foreign goods, many times to countries with less than good intentions for the US.
Now enter dumb and dumber, followers of Keynesian economics. You cannot buy your way out of money being gone by borrowing more money. George W. Bush (large ears) tried with stimulus 1, then Barack Obama (larger ears) with stimulus 2 (now twice as big as stimulus 1).
It's done now, US Presidents where not supposed to have so much power, and that is Congress's fault for not stepping up. You cannot place blame on this Congress's for trying to do what the previous congress failed to even address (even though it was their job, for two years).. And you cannot blame a group of good intentioned people for pointing out the obvious (The Tea party). We are screwed.
Based on data just released by the IRS How many Millionaires are out there? Millionaire defined as a person or family earning more than $1,000,000 per year.. People and households earning $1 million or more annually made up just 0.1 percent, or just over 235,000, of the 140 million tax returns filed in 2009, and just 8,274 returns were filed by people making $10 million or more. So then.. 235,000 people/families making $1 million or more and only 8,274 people/families making $10m or more. Lets tax them more and solve ALL our problems!! How does that work out mathematically? The Fed collects = if we raise their taxes by $X $235,000 = 1 $2,350,000 = 10 $23,500,000 = 100 $235,000,000 = 1,000 $2,350,000,000 = 10,000 $23,500,000,000 = 100,000 $235,000,000,000 = 1,000,000 So.. if we take EVERYTHING from the people making $1 million per year, almost everything of the majority of the rest and an extra 10% of the remaining 8,000 or so people the Government will collect a staggering $235 billion. So then.. We only need to find another $1,200 BILLION more to cover the deficit ALONE.. Not taking into account the future growth of spending. But that's not fair.. only 10% from the 8000 making over $10 million!! Well then.. Let's take an additional $4,000,000 from them making it 50% of their wealth.. $32bn Extra!! WOOHOO!! $267bn total!! We're still $1.1 TRILLION short. For the DEFICIT alone. We haven't even touched paying for Obamacare yet. We haven't even touched the fact that SS and Medicare will be completely bankrupt in 20-30 years.. We haven't touched the baseline accounting that guarantees increases in spending for every single Government entity. So. Since it's mathematically impossible to generate enough revenue through tax increases on the rich.. No matter how severe.. Why do it? It's like trying to balance a household budget by cutting your $0.50 weekly gum allowance out. Tax the businesses as well!! I looked that up too. According to the Forbes list of most profitable companies.. If you confiscated 100% of their profits of the top 2-300 US companies you'd end up with another $500bn or so. Lets be very generous though.. We'll call it $700 bn for the sake of Argument. So. $267 from the tax increase on the rich.. and $700 bn from the tax increase on corporations. ALMOST $1tn. We're still $400-$500bn short.. For now. That doesn't take into account the massive increases that are coming. And you can only take ti all once. So by taking everything from the corporations and everything to nearly everything from the rich you've managed to come within a half trillion of cutting out the deficit.. for this year alone. So.. Solving this through taxation is mathematically IMPOSSIBLE. Say it with me. MATHEMATICALLY IMPOSSIBLE. So now what? What do we do? What choices do we make? A balanced approach of taxation and cuts? Remember.. The only way we got to our high numbers of revenue through taxation was to take EVERYTHING or nearly everything. You can't do that. Ever. You can't even do ½ of that. But lets say that you can. The country pulls together (meaning the rich and corporations pay more while the almost 50% who pay nothing continue to pay nothing) and we get $450 bn in new revenue. That leave $1 trillion in cuts.. PER YEAR. Not 10 years. Not 5 years. You must cut $1 TRILLION dollars today. Right now. This very second. And then you need to freeze spending where it's at. Not 1 more dime in increased expenditures. Not 1 dime in growth. Not 1 dime in increased SS/Medicaid/Medicare spending. At that point and time we're living paycheck to paycheck. A water heater failure away from disaster. I NEED for someone to explain to me how this is sustainable. How it's just a matter of squeezing a few more dollars out of businesses and the rich.
"The U.S. government still has plenty of room to raise revenue to pay off Treasury Bills, and may even be Constitutionally obligated to do so."
Except as others point out, it's obvious to pretty much everyone that the US Government:
1. Is unlikely to ever cut it's spending until after it defaults and thus has no choice.
2. Is unlikely to institute a sane taxation system - and in any case where it DOES manage to raise taxes, it won't last past the very next election when a republican gets back in office and axes them.
3. Has been shitting on it's own constitution for the last decade or more and proven that it will ignore it when it suits it.
This.
Why anyone would listen to any of the ratings companies that whitewashed the mortgage debt disaster that got us into this mess is beyond me. It's astounding that they are even in business, and that people would pay them money to rate anything. There should be Federal indictments coming down for the executives of every one of these guys, not news stories on their "ratings" of the Federal debt.
I got the worst grade imaginable:
An A-minus-minus!
Good post by Klein: how our debt happened.
It is also worth to note that the downgrade is not because of any near term debt problem in the US. The reason given by S&P is that the disfunctional political system in the US at the moment (i.e. the extreme elements taken over the republican party) makes S&P believe that the long term debt problem (i.e. the next decades) will not be dealt with properly. Like this statement:
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.
A last point is how misinformed people in general is on this topic about the US economy and debt (just read some of the slashdot posts here getting modded up). It seems to be the medias responsibility to be fair and balanced and actually call out republicans talking nonsense about what the debt problem is.
--- guns don't kill people, people with guns kill people ---
http://www.bbc.co.uk/news/world-us-canada-14430598
"China has scolded the US over its "addiction to debt" after rating agency Standard & Poor's downgraded the US' top-notch AAA rating to AA+.
State news agency Xinhua said unless the US cut its "gigantic military expenditure and bloated welfare costs," another downgrade would be inevitable."
It may go faster than anyone would like.
Thank you, I will. If I am the victim of bad reporting (wouldn't be the first time), then at least I have the information to correct it.
The hubris of the American Empire continues even as they eat their system from within. Decades of indoctrination has left a population incapable of doing much more than chanting "USA! USA!" while the Chinese own the US debt and the mid-east keeps thumbing its nose at Uncle Sam. Empires fall from arrogance and the US is one of the leading producers. Naturally when the US does inevitably default their political masters will convince the populace that it is everyone's fault but the American people: still believing that the world owes their resources to the US economy. Training the population to salute the flag while spending themselves into debt is the national pastime now: keep them stupid and give them a credit card.
Didn't know there were so many stupid people that read /. "It's the Republicans fault. It's the tea parties fault." Guess what it's not, it's a combined fault between both democrats who want to spend more, and Republicans. As a country we are out of money, though if the 50% of americans who don't pay taxes paid, we wouldn't be as bad off. We need to cut spending, like in areas like welfare. I am gosh darn tired of going to school and seeing people who are on welfare have their parents drive up in Escalades, benz's, bmw's, or some other luxury vehicle. While their kids in tattered or tacky clothing come in, and they are on federal free lunches, which they throw away and whip out cash to buy a bag or doritoes(everyday occurance). If the government stop paying these people to reproduce, then we wouldn't be in the shit situation we are today. Kill this mundane healthcare bill and kill medicaid as well. I don't mind helping people who need it, for instance I will be more that happy to help veterans, and disabled people(mentally, or born physically). But helping the so called "poor", what a load of crap that is. While I sat at the doctors office one day, a couple came in who happened to have medicaid (I only knew cause I overheard the overly loud secretary). Once the couple sat down they began to both pull out ipads, well geez I work full time and can't afford one of those overpriced hunks of crap...But I am a bigot if I say something about that. See America garauntee's you have rights, none of those rights included success. This means in simple terms for you liberals out there, Gov't help programs aren't out there so you can keep up with the Jones's. If someone decides that they are not going to succeed at a career or higher education, well that's their fault, they chose that path. You don't deserve nice things and use Gov't programs to provide the ammenities that you NEED. It's not my job as a taxpayer to provide these things. Your responsibility as an American or just a person in general is to provide yourself and your family with necessities before ammenities. Though America did provide the right to fail, I've come to determine that the democrats have come in to "save" us from that so everyone can be equal, but some are more equal than others. But, I believe if we target the 50% of americans that don't pay taxes, kill the healthcare bill, and cut the hell out of medicaid. Money wise are country would be better off, though it still would take a couple of years to pay off China for all of our debts. Thanks Obama, real good one there.
Use yer brain. People respond to incentives and punishment. When we want normal folk to put out extra effort we reward them with overtime. Most new jobs are created by small business. An expanding small business is typified by the small business owner working hundred hour weeks, chugging maalox and chasing a dream of becoming a medium or large business. So his reward for extra effort is to keep a smaller share of any additional income? You really believe smart, motivated folk won't respond to incentives and punishments in the tax code?
It is documented fact that in the bad old days when we had 90% marginal tax rates Hollywood types would work until they hit that bracket and then coast until Jan 1. Who in their right mind will work for ten cents on the dollar? And in England it was 95%, see the Beatles' Tax Man. So if we can agree that 90 or 95% taxes kill the motivation for any work, and would certainly stop people from making the sort of extreme efforts that would create jobs, we are left with the Laffer Curve and the eternal arguments over where the peak is for various taxation schemes. I'd assert that 50% is danger territory and we are there now.
Simple question for those who talk about fairness. Riddle me this: Elin could only take half of Tiger Wood's stash, but that was after tax loot of course. So what share of Tiger's income stream do unwed mothers in housing projects who didn't have to screw Tiger deserve to rake off the top before Elin can take her half of what is left? If over half, please explain.
Democrat delenda est
The debt ceiling may have increased with Clinton (don't know), but debt was on heavy decline when he left.
I rarely respond to comments. Also, don't ask for clarifications: a brain and Google are faster, believe me!
The US "debt burden" is due to tax cuts and ridiculous military spending as well as the bailouts. How many military budgets would be dwarfed by the Pentagon's budget? How many countries present a legitimate threat to US security? The way to destroy the US is by pandering to the American need to spend: give them enough credit to hang themselves. There is a good sized chunk of the American public that believes their country has no need to deal with foreigners, that US "exceptionalism" and their role as dog's real chosen people will let them keep running up the bills. They believe that the US has the right to obtain resources through any means necessary, and they will believe any lie that helps them justify killing innocents to fuel the US economy.
Debt ratings agencies are part of the problem with the economy. They are not independent bodies: they have vested interests in maintaining the fiction of stability and profitability. The bond rating agencies were complicit in the collapse of the Greek economy, as well as collapses in the private sector, because they are not providing unbiased information. They are subject to the same payoffs as the SEC and other oversight agencies that failed horribly. The system is corrupt and corruption erodes confidence and confidence rules the market.
This, without further documentation, demonstrates that the $16 trillion figure isn't mean what people parrot it to be. As in, $16 trillion was never loaned out as such, money has been flowing back and forth with the total outgoing transaction amount being $16 trillion, something entirely different.
... and you still won't be able to solve the debt problem.
Rating agencies tend to be lagging indicators about the stability of debt. They react far after the crisis has hit or when the crisis becomes exceedingly obvious. In this case, a large number of US policies have been building in an unsustainable fashion for a long time. S&P is reacting only now.
Any reaction from the bond rating agencies is a clear sign of a massive unresolved problem. The US is almost certain to short foreign owners of US debt, either by devaluing the dollar or by defaulting, and will probably do so much sooner than most are expecting.
I only have a background in economics 101 and I'm not an investment banker, but could someone tell me how the worlds biggest borrower, the most in debt country in the world, a country so in debt that we're talking about grandchildren repaying the loans, and a country which seems to have for the last 50 years shown only a steady increase in spending and debt manages to have a AAA credit rating anyway?
Because it's also the largest economy in the world? The US debt is just reaching a 1:1 ratio with GDP (~$14T). Japan for example has a debt that is over 200% of their GDP!.
Now while I would NEVER argue this is a good position to be in, you have to understand that up until a couple years ago we weren't in dire straits.
dammit, meant "commonplace to think about government debt in a microeconomic way?"
The only solution is enormous cuts, and that's the politically impossible solution because the people are bought by the promise of cradle to grave welfare state, and it's an impossible promise.
There is only a grain of truth to this. In most countries, social security is self-funded by payroll taxes and compulsory employee contributions. i.e.: you pay for your retirement.
In the USA, the lowest taxed developed country, some people have invested themselves in the notion that "welfare" thinking is what is behind economic decline. There are many reasons for the decline of prosperity in the USA, and one of them is unbridled faith in "job creators", who have pissed a lot of money up the wall.
Hayek was the father of modern laissez-faire capitalism, and ideological champion of Thatcher and Reagan. Hayek understood full well the consequence of concentrations of power with a free market -- that the market would fail. Hayek saw the governments responsibility to intervene in the market, and break up powerful corporate interests. In the USA, in particular, his ideas have taken on a sharp twist of irony, in that laissez-faire capitalism is the cover for the new corporate oligarchy, which is proving more powerful then congress.
The republican party in particular is invested in destroying government regulation, which will simply raise the bar of corporate malfeasance, which is an economic inefficiency. I am sure that tea-partiers will always continue to blame "welfare-thinking" for the stagnant nature of an economy run by corporate interests that legislated their way out of free and fair competition.
Like all pain, suffering is a signal that something isn't right
The House Republicans took a lot of heat for wanting to decrease spending so we can merely lower our planned and projected annual budget deficits. Meaning, we stop adding to the accumulated debt. I think that is the absolute LEAST we should be doing right now. Not only are they not even attempting to actually pay off the current accumulated national debt, but President Obama's current projections are that we will owe more than $20 trillion in 2020. And this assumes someone is willing to loan us that money so we can continue our deficit financing.
Last week, even before S&P lowered our rating, China's largest rating agency lowered our credit rating. Their evaluation of our fiscal situation is much more pessimistic than our own. That should say something, considering China is are largest lender.
China's Yuan is expected to become the world's reserve currency by 2020. Their monetary policy is much more strategically long term than our own. Also notice that China isn't wasting trillions of dollars on wars in Iraq, Afghanistan, Libya, and the so-called drug war from our failed drug prohibition policy. And while the President can fume about Congress pushing for real spending cuts, the truth is as the President, Obama can stop the wars immediately as Commander and Chief. If he did just this one thing alone, he could take those trillions being spent on all our wars and actually invest in rebuilding America for the 21st Century. More than a campaign slogan with pretty patriotic banners, but actual change. You'd think of all people, a Democrat would do that. He hasn't. We aren't. But China is.
I've read over a dozen posts in this topic by you, and every single one has contained massive factual errors that are trivial to contradict with ten seconds and a search engine. How do you get to hold such strong opinions based entirely on wilful ignorance?
I am TheRaven on Soylent News
Yeah, you can't legislate competition, when all your actions are directed against it.
Government is the only reason for formation of monopolies, there is no reason more pervasive than government regulations (laws), taxes, subsidies.
As to US being lowest taxed - this is nonsense. In particular when I had corporation in Canada, it was paying much below what corporation in USA would be paying. Same with Switzerland, and more so with Asian economies.
You can't handle the truth.
And your comment was so good up until that point...
I think you mean least regulations and lowest taxes.
If you want to see a country with many regulations and high taxes, look at Germany.
Which also happened to have a really bad debt after two world wars...
US banks were definitely given ratings they didn't deserve.
But that doesn't mean the US debt isn't a risky investment.
You didn't actually think the US government (or any indebted government, for that matter) really planned to pay back the debt?
At some point, creditors are just going to stop lending.
Then how are governments going to meet their obligations?
Yes We Can have some dipshit president like Obama.
I'm going to save the world. Here, let us spend money we don't have. That will fix things.
Idiot.
As for the US being lowest taxed
Tax as % of GDP.
To really make the measurement fair, you would need to add private medical insurance (and comparative bills) onto the US tax base, but that starts to make things very complex.
As for monopolies coming from government regulation, perhaps you should read something about the history of the Sherman Antitrust Act. Human nature doesn't change, but the laws we make to curtail abuses of power are important.
Like all pain, suffering is a signal that something isn't right
I am right now sitting in Baden Baden, that would be Germany. I can see and compare, since I spent 16 years in America and moved out 2 years ago, moved my business to Asia.
Now, Germany is in much better position than the US, because Germany is a net producer, Germany allows cheap labor to enter the country from Eastern Europe and some Middle Eastern countries. Germany has a trade surplus with China. But Germany also prints Euro and is actively bailing out various banks, that loaned money to failing European states.
Eventually Europe will have problems that USA is in right now, but at this very moment, European problems are much smaller. The entire Greek problem is tiny, compared to the US problem. Germany could in principle bail out half of the European Union, but of-course if it does, then that would mean imminent destruction of Euro and European economy, just like bail outs in USA mean imminent destruction of US economy.
You can't handle the truth.
We can start with federal subsidies to build highways and bridges, airport subsidies (and not just for the ones in democrat voting states), and mortgage interest tax breaks. Oh wait, you probably don't want to cut *those* entitlements, you mean you want to cut entitlements that other people use instead.
Why would reducing the subsidies increase the price of gas? Why wouldn't it just eat into the massive profits? Are you suggesting it would reduce the supply?
Sherman antitrust act is a bunch of political nonsense. It didn't have anything to do with fighting actual monopolies, there were no monopolies to fight. It was there to provide some people, who had access to government with ability to enter business on terms, that would undermine the market, because they could not actually compete with effective economies of scale.
As to GDP, I wrote on this. GDP is nonsense, it's overestimated, it consists of nonsense, not of anything productive and because US government underestimates inflation by 10-12%, the last 5 years should have been showing a 10%/year decline in GDP numbers.
You can't handle the truth.
A better, more precise link to the comment I made on GDP.
GDP is as meaningless as it is weak, since it was revised down this way:
GDP estimates for the first quarter of 2011 were revised downward to 0.4 percent growth, a sharp drop from the previous estimate of 1.9 percent. GDP for 2007 through 2010, previously thought to have grown by an average of less than 0.1 percent each year during that period, was also revised downward, to show an average decrease of 0.3 percent per year.
Besides, GDP in US is fake, the way it's measured is fake, it's based on a fake economy and one more thing about it: they didn't use the appropriate deflator, because they believe that the inflation is about 2%, but in reality inflation is at about 10% level, and closer to 13% the way I calculate it:
sugar Dec 2003: 20.40 cents/pound, Apr 2011: 36.97 cents/pound, price up by over 81%
Beef Dec 2003: 105.40 cents/pound, Apr 2011: 193.00 cents/pound, price up by over 83%
Barley Dec 2003: 100.77 USD/Metric Ton, Apr 2011: 208.70 USD/Metric Ton, price up by over 107%
Rice Dec 2003: 197.00 USD/Metric Ton, Apr 2011: 500.57 USD/Metric Ton, price up by over 154%
Cocoa Beans Dec 2003: 1,646.58 USD/Metric Ton, Apr 2011: 3,113.52 USD/Metric Ton, price up by over 89%
Tea Dec 2003: 205.22 cents/KG, Apr 2011: 325.33 cents/KG, price up by over 58%
Rubber Dec 2003: 57.31cents/pound, Apr 2011: 265.49cents/pound, price up by over 363%
Corn Dec 2003: 111.98 USD/Metric Ton, Apr 2011: 318.45 USD/Metric Ton, price up by over 184%
Bananas Dec 2003: 371.43 USD/Metric Ton, Apr 2011: 1,013.47 USD/Metric Ton, price up by over 172%
Propane Dec 2003: 0.63 USD/Gallon, Apr 2011: 1.45 USD/Gallon, price up by over 130%
Wheat Dec 2003: 165.57 USD/Metric Ton, Apr 2011: 336.30 USD/Metric Ton, price up by over 103%
Oranges Dec 2003: 583.00 USD/Metric Ton, Apr 2011: 881.00 USD/Metric Ton, price up by over 51%
Salmon Dec 2003: 3.12 USD/Kg, Apr 2011: 7.86 USD/Kg, price up by over 151%
Chicken Dec 2003: 68.98 cents/pound, Apr 2011: 86.42 cents/pound, price up by over 25%
Pork Dec 2003: 48.68 cents/pound, Apr 2011: 92.06 cents/pound, price up by over 89%
Silver Dec 2003: 565.33 cents/Troy ounce, Apr 2011: 4,279.79 cents/Troy ounce, price up by over 657%
Alluminum Dec 2003: 1,557.78 USD/Metric Ton, Apr 2011: 2,667.44 USD/Metric Ton, price up by
You can't handle the truth.
The US had 1-2% deflation per year during the years after the Civil War.
Anyone who borrowed money complained, farmers and small businessmen, that was the basis of the silver-standard populism of the time.
However, the economy grew normally, interest rates adjusted to the expectation of low deflation, ...
The idea that inflation is necessary, or even desirable, is based in Keynesian ideology. I think there isn't empirical evidence to support that notion. Certainly all of the countries that have followed the Keynesian ideology/policies are going through the same economic crises as the US ( sovereign debt load, banks bankrupt as a result, low economic growth, ...), and none have gotten out of their problems via Keynesian policies.
In fact, what country has succeeded over 50+ years with Keynesian policies? (Everyone answers 'Germany', but Germany has only done relatively well, not absolutely well, e.g. 1% average GDP growth over the last 12 years.)
"The Constitution, the WHOLE Constitution, and nothing but the CONSTITUTION."
The S&P *said* they would do this if the deal wasn't larger.
Oh well.
Sic gorgiamus allos subjectatos nunc
You didn't respond with real arguments to the parent post.
Also, how is it that all of Western Europe, with no Republican Party and no Tea Party, have exactly the same problem as the US? Much worse in most cases.
You base your assertions on Keynesian ideology. No country has prospered in the long term basing policy on Keynesian notions.
More and more people are waking up to the reality of things. Politicians play politics, period. It doesn't really matter which side you happen to be on. The "game" has the same goals for either party, really. It's all about getting enough votes to get into and stay in power. I blame just about everyone in the Senate, in Congress, our current and past few presidents, and the rest of the folks more concerned about their short-term political success than the long-term welfare of the nation.
It's immensely clear when you look at the lies spread, all around, about the entire issue. EG. Threatening the American people with the fear of a default if the debt ceiling legislation wasn't passed by a specific time? Pure B.S.! If the debt ceiling wasn't raised, government would simply have to prioritize who it paid first and who had to wait longer.
Heck, we spent most of the debt limit increase in a DAY:
http://www.washingtontimes.com/news/2011/aug/3/us-eats-most-debt-limit-one-day/
'+' comes before 'A' so 'AA+' is smaller than 'AAA'. A small step to SMall Government, but an important one. Go TeaBaggers!
Here's the relevant chart. Screw GDP. GDP is a function of money creation... From debt creation. Jeez.
Federal debt (all debt growth) is an exponential curve. You notice Clinton did NOT reduce the debt, or even stop it growing, he merely slowed it a little.
http://www.project.org/images/graphs/US%20National%20Debt%20.jpg
And here's one with an 8.3% pa increase exponential curve fitted to it.
http://8m.quarkweb.com/images/FedDebt_02b.png
You also notice that 8.3% fitted curve, means that the more recent 8.3% increase numbers are much larger than the earlier 8.3% increase numbers.
All the governments are the same. 8.3% increase. Obama's 2.5 trillion increase? 2 years.... Then it'll be 18.3 trillion, then 19.7 etc etc. Doubling every 8 years.
Deleted
Probably yes. People who were owed money by AIG got their money because the AAA rated US government bailed them out. The concern now is that they US government doesn't have any headroom to raise revenue to pay of Treasury Bills because the Tea Party will block any measures to increase taxation.
If we were to put those people unemployed to work we would be able to produce and consume much more than we do now, so how is it that we can't afford to consume again?
That is the most "down the rabbit hole" definition of "production" that I have ever heard of. What BS.
No, not borrowed, invested. If a company uses money invested in it to pay off initial investors it's called a Ponzi scheme.
they make money. Most of the real innovation, meaning base line research, is being done on the public dime. Then businesses refine it into a product. Take a look at the state of Bell Labs, or the state of cancer research in the world. Innovation costs money. Why spend it if you don't have to? Remember, the world's all about capitalism for the poor and socialism for the rich.
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One more thing you may have missed in all the political theatre is that the Senate Democrats filabustered their own bill!
http://paul.senate.gov/?id=275&p=press_release
The debt deal was a manufactured crisis and everyone except the poitical class lost.
Bring back the old version of slashdot.
Judging by the vast majority of comments on here blaming the Tea party for this crisis, remind me not to ask Slashdot anything related to stocks, finances, running a business or even which bank to use. The users on this website have all fallen into the trap of group think and swallowed the Keynesian Economic model hook, line and sinker. Just wait till you realize your mistake and end up top deck flopping around like a freshly caught fish.
http://en.wikipedia.org/wiki/Credit_rating_agencies_and_the_subprime_crisis
"The Financial Crisis Inquiry Commission reported in January 2011 that: "The three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. This crisis could not have happened without the rating agencies. Their ratings helped the market soar and their downgrades through 2007 and 2008 wreaked havoc across markets and firms."
I am not saying our credit/money printing ability is correect - but why not ignore them as incompetent?
Well, he said we would have "change". The people who voted for him didn't realize he meant thats what their savings was going to be... Pocket change.
"Computers are a lot like Air Conditioners" "They both work great until you start opening Windows"
Because the last motherfucker kept lying about cost of his his holywars in the middle east.
Here is an excellent video reviewing the event in question.
You can't handle the truth.
"Now a days a president has only one, solid good chance to have a [memorable] legacy" /. so i'll add my .02
It hasn't been raised on
Vietnam
No president since, incl BOB, has been free of its shadow. Barack goes to bed at night refraining
"i'm not going to be remembered as the guy who lost another war". In fact, quaint and old as it is, I'd say that the bulk of USA's ills are comming from the blowback of the 60's.
From 3 assinations to gov dope dealing to agent-orange. Those memories may not be in most people's headspace, but you can bet it looms large from highest command to the homeless and incarcerated.
Obama needs the military for his legacy more than he needs the people who elected him. "His war" is what drives him at the end of the day.
No public option, no closing gitmo, renditions, domestic surveilance, sucking bankster ass...
With a big sigh of relief GWB wispered in BOB's ear: "at least i managed not to lose a war, that's all yours now"; and now the full magnitude of body bags and returning vets with missing bits
(to say nothing of the costs of what we owe them)
being 'his legacy' intrudes upon his sweeter dreams of being the great mediator.
Banish the warmongers and everyone will have better health care.
resist propaganda
Am I wrong or is it not the banking community that sets the credit rating? The same banks that were given bail outs so that THEY would not go under.
Why doesn't the government simply require those same bailed out banks ( and there were a lot of them,) to give back the bail out money with interest. I'm sure the amount would cover a good portion of the debt. As a ruff estimate of the amount given out for bail outs as in excess of 100 Billion.
If we were to put those people unemployed to work we would be able to produce and consume much more than we do now, so how is it that we can't afford to consume again?
Well, of course the situation is not unrecoverable. But there are obstacles.
Currently (before I apply your "if") working for anything less than the social security and unemployment assistance pays you is a bad business decision. People still do that if they intend to maintain continuous employment on their resumes. OTOH an engineer can't say that he was working for 3 months flipping burgers. He'd better say that he was a self-employed contractor, try to disprove that. But most people are actively prevented from working.
Another obstacle is the minimum salary. It's currently something like $6 or $8 per hour. This makes sure that jobs that are less productive than that can't exist (or are paid for under the table.)
Another obstacle is payroll taxes. Some of them count toward your income tax; other are paid by the employer. This increases the cost of labor even further, guaranteeing that cheap jobs are illegal in the USA.
Now if we apply your "if" and all these problems are corrected, we still need to outcompete China and India and other developing nations if we want to sell. This can be done by lowering prices on common goods (TV, phones, etc.) or by maintaining high prices on goods that the USA has near-monopoly on (high-tech R&D, CPU, etc.) The latter can't occupy many people, and those are already employed anyway. The former is an option, assuming that tens of millions of unemployed people can overcome their habit of not working and go to work every day (instead of going to work on some nights, when the Moon is not shining.)
However you do it, the whole structure of prices in the USA will have to go down, about to 1% of what it is now - to match Chinese quality of life. Cars will be a luxury; bicycles will be the common way to move around; horses may become a good option for rural dwellers. The USA will survive, but it will not be the USA that we know today. Perhaps that is unavoidable, and perhaps it is better than the Mad Max scenario that is the other possibility.
With regard to "consume again" thing, the USA is living on borrowed money and borrowed time. We aren't supposed to be consuming what we are consuming. This level of consumption is unsustainable. You should be able to consume only as much as you are producing. If you are mowing lawns five days a week, expect to pay 20% of your salary to have your own lawn mowed by someone else one day of the week. But right now you are sitting in the office 5 days a week, playing games on the computer, and you expect to pay 0.5% of your salary to have your lawn mowed.
isn't the rating agencies to be blamed for missing the whole sub-prime mortgage crises .........not a confidence booster in their abilities.
we deserve a lower credit rating....until we can balance
I honestly don't understand where you're coming from here. You do agree that the point of these agencies is to evaluate how likely US is to pay its debts in the future, right? But you disagree that the stability of the government (which is affected by the changes in political climate) and the attitude of the government towards its obligations (which has also been less certain recently than before) affects the likelihood of government paying its debts?
One thing I hardly see in official discussions of the debt ceiling is any hint that they know voluntarily defaulting is not just fiscally, but _morally_ wrong.
Nowhere do I read about direct concern for those who have invested in the US. Only, sometimes, indirect concern that they might not take the same risks.
I know it is unlikely that these people wouldn't have been paid, (and I know that many of these people aren't totally deserving of compassion), but isn't refusing to pay people that you owe, when you can, morally wrong, akin to theft?
Not sure if this has been said before somewhere significant (or even here), maybe it's just chance I haven't seen this said. But it irks me.
You agree with me.
You will care when interest rates rise for everyone from the local bonds building your schools to state bonds building roads and bridges because those levels of gov't are dependent on federal funds, that is taxes paid by state residents and laundered through the federal government and returned at varying ratios with strings attached. It may even effect the interest rate on your home mortgage if it's not fixed.
The ratings agencies have warned the feds for months. They wanted to see $4 trillion in cuts and only one plan offered that. It was the one called "Cut, Cap & Balance" and passed by the Republican-led House first with some Democrats joining in. The Democrat-controlled Senate voted immediately to table the bill. It never even got a debate.
The White House belittled the plan as "Duck, Dodge & Dismantle" when all the cuts talked about are reductions in automatic increases. Since the Budget Act of 1974, the federal government depends on "baseline budgeting" and today that means a guarantee that budgets will rise 7.5% over the prior year every year. We should be using "zero-based budgeting" where departments must justify every budget dollar.
We know from debt commissions and other studies, there are billions--maybe $100-200 billion according to the non-partisan GAO--in overlapping and duplicative spending but we have Democrats screaming nothing should be touched and anyone who wants spending reform is a "terrorist" (Vice Pres. Biden) or wants to "destroy" government (Minority Leader Pelosi). This is NOT helpful.
Republicans offered their long term reform ideas months ago in the form of the so-called "Ryan plan." Democrats offered criticism all year but no formal counter proposal. There was nothing in writing that could be "scored" by the CBO and Obama's budget received ZERO votes in the Senate. Senator Majority Leader Reid said it would be foolish for his congressional Democrats to offer a budget. That body hasn't passed a budget period in 829 days. Way to avoid responsibility and accountability!
Instead the president's party and its allies used the GOP proposal in divisive, misleading campaign ads. One even showed a doppelgänger of Congressman Ryan pushing an wheelchair-bound elderly woman over a cliff when the plan itself doesn't effect existing benefits for anyone 55 or older. Again, NOT helpful. (Hey, what happened to the "new tone" of "civility" after the Tuscan shooting?)
The president talks about "millionaires and billionaires" when the actual tax changes would effect, not those super rich alone, but persons making $200,000 or couples at $250,000. Small business people filing as S-corps or a cops and teachers in some high cost of living areas like NYC. Taxation needs fundamental reform not just higher rates on easy political targets who are also the most able to avoid taxation. Just as Ireland about Bono.
For anyone reading here who doesn't know and feels guilty a
Reminds me of http://math-www.uni-paderborn.de/~axel/us-d.html, an article I came across that compared US culture to German culture. (not sure how applicable it is to Europe in general
I listen to both RIAA and non-RIAA stuff if I like the music, tangential business/politics nonwithstanding.
Dumocrats have controlled the congress for over 40 years, now we all have to pay!
Say thanks to GWB and RC.
Leslie Satenstein Montreal Quebec Canada
We've obviously all been hoodwinked. This is just another move to make fortunes for the ruling elite leaving the poor man holding the bag(and only the bag it wasn't worth stealing).
How is it possible when dollar is pegged to OPEC oil?
Slashdot = Sarcasm
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The debt and deficit are permanent problems. Raising the debt ceiling, while necessary, is a band aid. Until we change our policy of money as debt we are just seeing the beginnings of this problem. We need something like The Monetary Reform Act to drive a stake in the heart of debt and the central banks that own us.
Google: /tin foil hat comments in 3... 2....
Money As Debt
The Monetary Reform Act
The Money Masters
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Should of?? Righto chap. That explains why the conjunction is spelled should'f.
But seriously, it's "should have" and if you don't know that you're kinda retarded.
Who cares.
Everyone who has counted the US out has ended up being wrong and loosing.
Get on the winning team.
Monetary policy is a complex thing. The short answer: Sovereign nations do not "borrow" money as you borrow money. They create money. The purpose of taxation is to create demand for money within the political sphere of influence of a given power as well as control the inflationary effects that necessarily come from money creation. Modern economies issue debt to provide financial stability, while the US has gone even further in a system some call imperialist (Read Michael Hudson's Super Imperialism). The US Empire as it exists today would be impossible without the vast issuance of debt.
But, when it comes to the ratings agencies, you'll just have to read this.
http://bilbo.economicoutlook.net/blog/?p=15580
I don't read or respond to AC posts
It is not in the hands of US President, Administration, The House, The Senate or Supreme Court.
Americans should mold USA into low cost, high quality and exported oriented nation and amend Constitution accordingly.
Slashdot = Sarcasm
I feel a big driver of this downgrade was to restore credibility to the ratings agencies. The ratings agencies have been considered a joke since the financial crisis started. Either to avoid being completely dismantled after having a AAA rated US government default, or more likely to bare their teeth after being shown to be fools, S&P was trying to be aggressive about this downgrade.
I work in the industry, and I can assure you that the big short was pretty spot-on about the ratings agencies. They are hardly on the street and considered a bunch of hacks that have to be dealt with, not anyone doing any serious work.
As I recall this happened to Canada years ago, back in the 1990's. It put the scare into people. Allowed politicians to make the hard unpopular decisions like raising taxes and limiting services. After that, we ran pretty much balanced or surplus budgets until ironically we put the "Conservatives" into power. Who then proceeded to run the largest deficit ever in Canadian history. Granted this was because they did the whole bailout and throw money at the problem hoping it will go away policy like every other government in the world. I love how the argument now is, well just imagine how much worse it would be now if we hadn't done that, it would be way worse! Politics would be funny if it wasn't so real...
Anyway maybe this will allow politicians to make some correct decisions for a change. Because despite what people say about politicians acting all stupid, they act this way because the people are like that. They want all these services, yet do not believe somehow that they need to pay for them, hence a huge deficit. As soon as at least a large group of the population accepts the fact that "shit ain't free", then politicians can start raising taxes, and cutting services, which is basically what is required to eliminate the deficit. You can't just reduce it, you need surpluses to start paying down debt. This isn't rocket science people.
There many things. One of them is the theory of economy where certain debt levels are considered safe. This is just a guess and a bet really but historically it worked this way. It also makes sense to invest in a country with such a big financial market and relatively clear and transparent legal system this offset some of the risks associated with economy that is lame. At some point comes realization that not only the levels of debt and deficit are too high but also that there is no political way to get them in balance. The american political system is corrupt to the bone but was able to handle the situation till now. it becomes apparent also for eonomists (who are just bean counters not real scientitsts not even engineers) that situation is not sustainable. There is a lot to say about how to get out of the mess but fixing deficits of your country and your state apparatus is a must. This can be done. We will see at what level of pain the fixing will start.