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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."
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.
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?
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.
After all, if the ratings agencies had done their jobs a few years ago, we wouldn't be in a lot of this mess.
Because Obama was the one who took the debt ceiling hostage in order to force people to accede to his nearly religious-cult-obsession with never raising taxes to pay for anything, ever.
If you're going to thank him sarcastically for something, it should be for teaching the Republicans that hostage-taking works. Enjoy this bullshiat happening again in 6 months. Yes, McConnell outright said that: The debt ceiling is "a hostage worth ransoming."
If today's Republican party were described to someone even 5 years ago, they'd assume you were talking about a cartoon villain, with a tophat and monocle, twirling his moustache as he cackles about the latest despicable thing he did just because he could.
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...
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.
Because lifting the debt ceiling isn't about spending, it's about paying for money that's already been spent. Which is why you hear folks making those sorts of claims. A good analogy would be back in the 80s when it was common for credit card transactions to be done manually with that device and carbon paper. You'd go in hand the card over and they'd zip zip the machine and you'd be on your way.
What happened with the debt ceiling would be more or less equivalent to your credit card company telling the merchant a bit later that you were actually over your limit and that they'd have to raise it or you'd have to pay off some of your debt or they wouldn't give the merchant the money.
Which is why the folks that were holding the debt ceiling hostage as a preventative measure against spending were so stupid. They could have gotten $4,000bn in cuts had they accepted $100bn in loophole closures, instead the final deal was cuts only and ended up being a little over half what the cuts would otherwise have been.
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...
You're ignoring the fact of the economic momentum built up by the previous administrations serious mismanagement.
I like to use this analogy:
If you've got a hole in your roof and your solution is to buy a bucket to catch the rain water. That bucket fills up and then you have to buy another one... and another one... When you're whole house is filled with buckets, that's not the time to say that you're not going to spend money to buy buckets anymore. It's time to say, "it's going to cost a lot to fix the roof but it's something that must be done."
The problem is that Obama tried to get a roofer in but caved into pressure to not pay him enough to fix the problem. So now we've got a huge hole in our roof, no more spending on buckets and water damage being done everywhere.
Yes, it's all Obama's fault, the economy was perfect when he took over.
http://en.wikipedia.org/wiki/File:US_Federal_Debt_as_Percent_of_GDP_by_President.jpg
Democrats have been so bad for the US debt! Or maybe the last two years are first time it has risen as a percentage of US GDP under a Democrat since 1975. Still Obama's fault, since he started 2 useless wars... oh, wait, that inflection point seems to be set squarely in his predecessor's term. Personally I'll wait until the end of this term to see how much of Bush's damage he can undo.
Or should I just say "you're so right-of-center you don't need facts and statistics, they just get in the way..."
Are you sure it was Obama who indebted us?
Are you sure it wasn't Reagan's Star Wars?
Are you sure it wasn't Bush's decision to slash taxes when we were running a surplus for the first time in modern history and on course to pay down the deficit?
Or his decision to not only not impose a war tax to pay for his overseas adventures, but for the first time ever cut taxes during a war?
We are buried in debt that was created almost entirely by Republican administrations, due to Republican policies. Federal taxes are at their lowest point in living memory, federal revenue as a fraction of GDP is 20% below where it was in 1980, and we are facing a deficit that will never be closed unless that circumstance is changed. Taxes go up or our deficit continues to accumulate - your choice.
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.
Link to the S&P report which contains their rationale for downgrading, future outlook, etc.
I'd be more careful about this "we" you are throwing around so freely.
"We" the people have for many years supported the existence of social security, medicare, public schooling, and other such programs which provide a pale imitation of the social net found in other developed nations.
And what else can it be called but a religious article when you have people like Grover Norquist, famous for saying he wanted to shrink government with the objective of "drowning it in the bathtub," getting congressional Republicans signing pledges that they will never, ever allow any form of revenue increase ever? When Boehner walked out of negotiations because Obama refused to offer a deal consisting of nothing but spending cuts?
What we are seeing here is the long-term Republican strategy of destroying the New Deal and everything that's come since by forcing the US into insolvency.
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.
Last I checked, congress holds the purse-strings. If the president is LITERALLY spending money without congress' permission, he needs to be impeached. Today.
But that's not what's happening, is it?
"Prediction: within 10 years, Windows will be a Linux distribution." Me, 7-6-2016
That inflection point just so happens to be when the Democrats took both houses of Congress and stopped producing an annual budget.
The game.
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?
last 10 years
25-30 years of "hey, doing stuff is for poor people!". 60 if you count the whole post-WWII "let's just print shitloads of money because foreigners use them". 90 if you count financial industry pretending to be the economy. And I can't say that things before that were in any way healthy, either.
Contrary to the popular belief, there indeed is no God.
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.
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.
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.
We needed Obama to be a tough negotiator and instead he consistently gave the republicans everything they wanted. So yeah, thanks a lot Obama.
If you mod me down the terrorists will have won
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).
Thank you Tea Party... and GOP ... this is 100% your fault.
YOU guys manufactured the fake crisis, and then insisted on no revenue. S & P specifically stated that it was because of the lack of new revenues that they did the downgrade.
We need to vote ALL the Tea Party morons out of office. And most Republicans. How Eric Cantor or Mitch McConnel live with themselves, I don't know. We know Boehner just drinks a lot.
Ugh. Stupid right-wing nut jobs.
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.
At very least the Reps and Tea Party should split into two parties so people can choose which one they vote for. Of course that's not going to happen, the TP wants to piggyback on the strength of the Reps in the two party system.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
Anything which reduces spending or even just slows the growth of government, with the possible exception of defense, annoys those on the left because it weakens the bonds of the average person's dependency on the state and by extension their (i.e. the politicos) power over them.
Pithy, but not particularly insightful.
I find that I agree with many of the principles espoused by the republicans, even some of the extremists. Unfortunately, whenever it comes down to the nitty-gritty, it's pretty much universal that they are all for volunteering those least capable of coping with such changes to go first, usually all out of proportion to effecting any real systemic change anyway.
Let's cut government spending ... and start with planned parenthood and after school programs. Let's get government out of our private lives ... and start by denying marriage contracts to gays.
It seems like, more often than not republican plans just happen to affect the weakest and most vulnerable. It's kind of like that saying by Anatole France, "The law, in its majestic equality, forbids the rich and the poor alike to sleep under bridges, to beg in the streets, and to steal bread."
When information is power, privacy is freedom.
The lose is due to a lack of new revenue so you can thank the tea party republicans
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.
I'm feeling pessimistic tonight: It never will.
Then again, that may be the part of me talking that just spent 15 minutes reading through all the comments above yours. Given the average Slashdotter's propensity to spout off everything mainstream media tells them to, I have absolutely no faith.
He who has no
Yeah, because he had so many other choices that it must be his pure evilness that he picked exactly this one after taking over a flaming train heading to a wall with the breaks being removed.
Seriously, if anything this reaffirms my suspicion that the Reps sent the McCain/Palin team into the prez race of 2008 to make sure they can't win and be blamed for the crashing and burning waiting to happen. It was by some margin the most ingenious planned defeat ever. Now the Democrats will be the ones being blamed for the recession that was obvious and to be expected by no later than 2007. If it looks like we'll be out of this mess by 2016, they'll send a winning team into the prez battle next year and emerge as the shining heroes that put the country back on track after the Democrats ran it into the ground. If it doesn't look like the US are out of the shit by 2016, they'll send two more duds into the battle.
And help us God if the Dems catch on and do the same.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
China is busy downgrading its rating for the US, I don't think they'll be willing to throw money at the US forever. Especially if at some point another country becomes the cheaper option for outsourcing.
Justice is the sheep getting arrested while an impartial judge declares the vote void.
I have another analogy. IMO it characterizes the problem even a bit better.
It's like a train, going full speed, but the first class passengers want it to go faster. The engineer sees that the engine gets way too hot and starts pulling the breaks, and the reaction is to demand the breaks removed. The engineer, now without the ability to break the train, points to the pressure gauge and tells them that it is highly dangerous to keep shoveling coals into the furnace. So the gauge gets removed. When the engineer doesn't stop warning and complaining, he gets told there's nothing he can do and nothing indicates that he could be correct, so he is fired and replaced with another coal shoveler.
And when the engine starts to creak and leak, the machinist gets replaced with one from the rival company, so they have to take the blame for the impending explosion.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
I'd like to thank the TEA Party and the Republicans for this 10% tax on my ( and everyone else's ) 401K.
Just spending cuts? No problem. Cut military spending and economy subsidiaries and the budget is on track.
Satisfied?
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
At the threat of being modded redundant, I still say military and subsidiaries are a big position where slashing can really save a few billions. Easily.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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.
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.
Allow me to elaborate on that. Just in case any teabaggers are reading and not realizing what "cutting tax" really means. And please don't take that 'you' used below personally, English just lacks an impersonal pronoun.
Because for most Americans, cutting taxes means less money in their pockets. Not more.
Tax money is the government's income. It might surprise you, but the feds don't just eat those dollars. They spend it. On YOU, no less. Cutting incomes means for the government the same an income reduction means for you: They can't spend as much. Since they spend it on you, that means less money gets spent on you.
Now, of course, one might argue "hey, who cares? The money I don't have to give them I can spend myself!" True. Very true. And if you earn in the six digits (and not the lower ones), it actually means you gain a lot with every percent tax you pay less. Else, it means that you now have to buy something or pay for something the feds paid for earlier. Because, as it is in our world, TANSTAAFL. Someone has to foot the bill. And if the feds can't, you have to.
Again, who cares? So I pay for it with the money I save on taxes!
No, you do not. You can not. Unless of course you're one of the 6 digit earners. If you're not, you will not be able to afford it. For the simple reason that those that earn more, and hence pay more tax, paid that for you while taxes were high. Allow me to give you a simple example:
Let's assume a flat tax of 10%. Yes, I know progressive tax, but progressive tax complicates the example and it's already evident with a flat tax system. A progressive tax system only aggravates it and makes it more blatantly obvious, but the flat tax already shows it nicely.
Let's also assume that I earn 100k a year, you earn 10k a year. Yes, 10k. There's a lot of people who have to get by on that. At 10% Tax, I pay 10k a year and you pay 1k. Let's furthermore assume that school for a child costs 5k a year. Yes, in my example educating our kids takes up almost all tax. Bear with me, ok? So you have a child and so do I. In a 10% tax system, both can send our kids to school. For "free". Of course, it's not free because it's paid for with tax. But the government just had an income of 11k bucks, so paying 2x5k is quite possible for them.
Now let's slash taxes. From now on, we only pay 8% tax. Huzzah! You just saved 200 bucks in taxes! I saved 2000, but hey, who cares, you have 200 bucks more to spend now.
True. But unfortunately the government now only has 8800 bucks and thus paying for school is no longer possible. Cough up those 5k a year if you want your kid to continue enjoying an education.
It's a constructed example. Granted. But it should illustrate what "cutting tax" really means for the lower income brackets. It means having to spend more on what used to be "free" because the high income brackets paid for it with their taxes.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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.
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.
Deleted
The problem is that Obama tried to get a roofer in but caved into pressure to not pay him enough to fix the problem. So now we've got a huge hole in our roof, no more spending on buckets and water damage being done everywhere.
Arguably, US politics didn't give him much of a choice.
If the Republicans had caved first, they'd have campaigned on a platform of "Look who raised taxes!". Had neither party caved and the US defaulted, they'd have used a campaign platform of "Look who was in power when we defaulted on our debts!".
As it stands, I don't really blame S&P for reducing the US's credit rating - the last couple of months have sent a powerful message to the world: "If you lend money to the US, there's a good chance the US politics will lead to them bickering internally over whether or not they're going to pay you back".
You know what this means, of course? Next year's Republican platform will be "Look who was in power when our credit rating was reduced!"
I've got another analogy.
If you have an economy over, say, 50 years and induce a cycle where you borrow and borrow then waste it on stuff like wars and military then you play games with your own credit rating by not unraveling the debt cycle and failing to take corrective measures over that same time, you devalue your own economy.
I mean seriously people it's not that complicated and you don't need analogies to understand what is plain to see, just decide you are going to understand it and keep educating yourself until you do.
My ism, it's full of beliefs.
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
Certainly.
You rev your car like crazy and don't care about redlining because, hey, it still works. It squeaks and clanks, but it runs ok. At least while it's new. By and by the emergency lights go on, your solution is not to have your engine serviced or at least take the foot from the pedal but instead you simply remove the light. No light, no problem.
Later, you hand that car to a buddy of yours and after only a few miles the engine pops. And now you're angry with your friend for killing the engine that ran for you so long.
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
Riiiiiight. So starting not ONE but TWO wars while, for the first time EVER in our nation's history, instead of raising taxes on the wealthy like in every. other. war. having a president go "Hey ya know what, teh rich are only up to 85% of teh wealth! That ain't right, lets give em more MONIES nom nom nom" didn't do anything because.....what? The magic Texas fairies pulled magic money out their teeny tiny asses?
Sadly what is wrong with this country can be described in a single sentence..."Give teh rich more MONIES! Nom nom nom". After all lets take a look at what that policy has gotten us so far. We had Trickle Upon (80-88), Voodoo economics (88-92), Hey lets set up trade deals with countries with NO environmental nor worker laws (92-00), the above "Lets start two wars while LOWERING taxes on teh rich LOL!" (00-08) and finally "Bailout teh rich baby, bailout teh rich!" (08-Present).
The truly sad part, and why the poster above you with their description of republicans as cartoon villains is entirely apropos, is that if they cared about the country instead of their kickbacks and enriching themselves they would see what both the data and common sense tells us, namely that higher taxes on the wealthy increases economic growth and creates more jobs and anyone with the slightest bit of common sense would understand that if they get taxed if they hoard it the rich will instead INVEST it in new businesses, duh. The rich hoard, the poor spend. Is this REALLY so hard to understand?
Apparently it is, because to those on the right there is only ONE answer, the one that they cling to like a greedy child clinging to the candy jar..."Give teh rich more MONIES! Nom nom nom". No jobs, high unemployment? Why "Give teh rich more MONIES! Nom nom nom".A single illness wipes out your family, companies like GE get tax breaks and bailouts and then send the factory to India? "Give teh rich more MONIES! Nom nom nom". illegal immigration, rampant crime, children going to bed hungry in America? "Give teh rich more MONIES! Nom nom nom"..
A truly wise man once said "The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants" and if things continue along this path, with ever swelling masses of the poor while the top 1% hold more than 90% of the country's wealth at last count? Well I predict they'll be some watering in our future. There have been plenty of examples in history to what happens when wealth becomes to concentrated, too many poor. The French Revolution and Pol Pot come to mind, neither outcome was very pretty for the wealthy.
ACs don't waste your time replying, your posts are never seen by me.
Actually, you need to go back to Eisenhower; he was the last one to actually reduce the national debt, in 1956 and 1957. Every year since then the US has piled up more and more debt.
Browsing at +1 - no ACs, I ignore their posts. So refreshing!
No, downgrading doesn't matter. Because investors already know everything that's reflected in that rating, whether the rating happens to say it or not. Idiot leftists who think that spending more than we make is a virtue, or who don't realize that the rich people they hate could have all of their income confiscated entirely every year and it wouldn't even come close to closing the deficit - those are the people to talk about. The S&P downgrade is a mere formality - and as usual everyone with something to invest has long since recognized the weakness that it assigns a score to.
There is a cloud hanging over the US economy, and it won't bustle, thrive, and grow again until blows over. The debt is part of that, but that would vanish quickly in the face of actual economic activity, which generates jobs and huge tax revenue. So, remove the restraints, blocks, punishments and deliberate sabotage being applied to the economy, and allow it to work. Then you won't feel so obliged to use juvenile slurs when talking about the people who have it exactly right on this topic.
Don't disappoint your bird dog. Go to the range.
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.
Bullshit.
Don't think of it as a flame---it's more like an argument that does 3d6 fire damage
Except that there have been only two times since 1970 that the budget did not result in a deficit. Both occured under Democrats.
The deficit's growth has been interrupted once since Reagan started it... by Clinton. The Republicans actively took it upon themselves to destroy this rather than end the debt which is so horrible and will be the destruction of america^w^w^w^w^w^w^w^w^w^w^w because Reagan proved deficits don't matter.
Without causing mass suffering due to major withdrawl of services during bad times, there is one thing that will reduce or even meaningfully dent the deficit today (other than passively waiting for recovery and the restoration of normal incomes and associated tax revenue): Raising tax rates. And the Republicans fanatically oppose it, while screaming like banshees about the deficit.
can we please have the <strike> tag so I don't have to count ctrl-w's?
Party politics aside the US government is borrowing too much money.
It has little chance of ever paying the national debt back without truly drastic measures.
The rich should not pay more in the proportional sense. What gives you the right to profit by someone eases labor? Similarly the banks and the wealthy people who own them should not have been given bailouts they have no right to your labor. The PROBLEM with this country is this business of redistribution where everyone rich and poor a like feels entitled, and charity is done at gun point. The direction of the flow being determined by the political whim of the moment.
Oh and the fact that we go on these ridiculous military adventures for "humanitarian" reasons while we selectively ignore suffering elsewhere because they have oil, or it might irritate China, or Russia. What this nation needs is a heavy dose of 19th Century political thinking. 20th Century politics are FAIL, let us not wast the 21st with it.
Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/right-to-read.html
Your post represents perfectly the causes of the problems the US has right now: partisanship. You want to fix the blame on the other side instead of fixing the problem.
Regardless of what Bush II did, the spending under Obama stuck up in that level. If it were really Bush's fault Obama could have simply got the spending to the levels they were when Clinton left office. The reason why he didn't do that is because his Administration seems to have an unlimited belief in keynesianism. Obama's policy seems to be to spend his way out of debt.
It's not quite fair to say that it was Republicans who held the government hostage, because it was Obama who insisted on standing right on the ledge. If you do not stand too close to the precipice no one will be able to tell you "do it my way or I will push you over".
It would be good for America to remember what happened when Germany had a debt, imposed by others on them, that they felt they could never pay.
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:
When I lived in the U.S., for a while I had to go from Saint Louis to KC for one week a month for a while for work so listened to a lot of talk radio on the way.
I remember about 7 or 8 years ago listening to Bill O'Rielly on the radio talking about "socialist" Canada, and how rotten the place is, and wondering why anyone would talk nicely of it considering especially how it was always in debt and had spending out of control to finance its socialist agenda. All pure bullshit of course. I can think back on that now and smile.
Since O'Rielly is a darling of Fox, I just to look and see what Fox News' slant was on this was and how they were going to misinform their viewers/readers on the subject. And here it is... not even all that subtle: The three main credit agencies, which also include Moody's Investor Service and Fitch, had warned during the budget fight that if Congress did not cut spending far enough, the country faced a downgrade.. Completely misleading and feeding the Tea Bagger bullshit machine. Ah yeas, the Murdoch slime machine at work.
The downgrade wasn't because the U.S. didn't cut spending. It was because they decided to keep deficit spending (increasing the debt ceiling) instead of addressing the "money in less than money out" issue. Tax increases and the lack of them also figured into the rating change, considering the U.S. has about the lowest tax rate of the G7 countries, but near the highest per capita debt. But hey, if they really wanted to cut spending how about looking at the notion that the U.S. spends more on its military than all the rest of the world does combined... sorry, forgot about the ego and paranoia problem. And a tax increase isn't really a good way to put some of what they could have done to increase revenue. For example, it could have started with getting rid of the Bush error (oops I mean era) tax cuts on the wealthy that was supposed to be temporary to begin with. Alas, the Tea Baggers were rabidly against doing that to their financial backers.
Fox wants to propagandize this to pander to its misinformed viewers to make it seem like the fact that the Tea Baggers prevented tax increases for the most wealthy had nothing to do with it. The most wealthy have the lowest tax rates they have ever had. They omit saying that during some of the most productive and economically booming times in the past century the tax rates on the upper income groups was much, much higher. e.g. In the 50's under Republican president Eisenhower, and during the 90's under Democratic president Clinton. Not increasing revenue by returning taxes to prior levels definitely figures into the credit downgrade.
FWIW, Canada balanced its budget and began paying down the debt starting in the early 90s through to 2008; the only member of the G7 IIRC that was doing so (and why Canada was one of the least affected countries from the current recession). The balanced budget went out the window around 2008 with this recession when the current conservative government went way overboard on stimulus spending.
-- I ignore anonymous replies to my comments and postings.
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.
A quick check of Wikipedia says different: http://en.wikipedia.org/wiki/United_States_public_debt
In straight dollar terms, the national debt started dropping after WWII (Truman) and kept decreasing until about 1975. As a percentage of GDP, it decreased year on year until it went up slightly under Ford. After decreasing during Carter's term, it began to climb after Reagan was elected and continued to climb under GHW Bush. During Clinton's term, the curve was reversed and the debt began decreasing again. Since 2000 it has been back on an upward climb.
Standard and poor is evidently also "so left-of-center", since their own spokesman cited not swiftly raising the debt ceiling before addressing the rest of the cuts that needed to be made as the very first reason they reduced the rating. It would appear even a bunch of wall street bankers are too hippy-commie-liberal from your POV, which is why America is swiftly going to hell.
Who is John Cabal?
The function of rating agencies is not to be 'trustworthy', their function is to outsource blame.
If you are ever called on to make an multi-million dollar investment decision on behalf of other people, you don't want the buck to stop with you. Ratings agencies exist so you can outsource it. They make guesses for you, so you can say to angry investors 'not my fault, I did my due dilligence and took the best advice available'.
They are not required to guess correctly, they are simply required to be the best available professional financial guessers. The problem comes with the word 'available'. If you are good at financial guessing (or even just able to scrape 50.1% accuracy) you have a huge incentive to go off and be a fund manager who gets a cut of theoretically unlimited profits, as opposed to being a flat rate financial guesser who would be guilty insider dealing if he actually bet on his own guesses.
A pizza of radius z and thickness a has a volume of pi z z a
It rubs the lotion on its skin, or else it gets the hose again.
You are welcome on my lawn.
Except, GDP hasn't been increasing for a long time. Your type of rationalization is exactly what caused this problem. Politicians expect perpetual growth in order to justify deficit spending. The theory states that if you leave taxes and all other things at the same level, growth will increase your income over time and make deficits disappear. Except all other things have NOT been equal. Fuel costs have increased. Commodity costs have increased. The cost of doing business has increased. The cost of labor has increased. Capital costs have increased. All of this has taken away from growth. And on the other hand, debt has not remained the same, but increased (rather sharply).
So now we're at the point where almost no amount of growth will cover the debt. Increasing taxes will only destroy growth. Issuing more debt will destroy the currency and the country's credit rating. This is the proverbial rock and hard place. What the government is going to do is inflate away the debt (there's talk of QE 3)- which solves the paper problem of the debt. However it wipes out the wealth and savings of everyone who has US dollars across the globe in the process. Not to mention that the US dollar will be dropped as a reserve (it looks like the Swiss Franc is the new contender for now) which means that America will finally have to pay for its imports in real goods and services, instead of by running the dollar printing press. It's going to shock Americans when they find out exactly how expensive and hard life is for the rest of us. Truly we live in interesting times.
Seven puppies were harmed during the making of this post.
The gold standard served to keep a lid on the GDP to debt ratios though ... which is why Nixon got off it (the oil based trade deficit necessitated an ever increasing debt to GDP ratio to maintain economic growth in the non oil producing countries).
That said, I fail to see a reasonable alternative ... if the world is ready to give you oil for IOUs for decades at a time allowing you to maintain a much higher standard of living than otherwise possible, why not take the deal? You can always default on IOUs ... of course you do need to have contingencies plans for the inevitable default.
If we had started building trillions worth of nuclear and solar-thermal plants instead of fighting 2 completely fucking useless wars we could have weaned ourselves off our oil dependency ... now we're quite simply fucked, there is no solution. Just a great decline (not a depression, a depression suggests a dip ... while we are going to experience a great reset, with no accelerated growth at the end).
You need to learn how to read the very charts you're linking to. The Clinton administration absolutely did have a surplus, and you can see it in the taxpolicycenter.org spreadsheet which you linked to, specifically in 1998, 1999, and 2000, including the first year of Bush's term, 2001.
This is also where you learn that surplus refers to a budget surplus, as in the difference between revenue and spending. It does not refer to outstanding debts in any way, which is what your treasurydirect.gov link refers to.
I recommend you take a look at their faq here, specifically the second question, which explains your misunderstanding of debt and deficit: http://www.treasurydirect.gov/govt/resources/faq/faq_publicdebt.htm
Thanks in advance for not spreading misinformation in the future under the pretense of stopping the spread of misinformation with your newfound experience with statistics and FAQs.
Filthy liberal lies ... everyone knows all the Founding Fathers were pure free market capitalist Christians believing in the literal truth of the bible.
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.
Sweden is doing just fine, with good governance a wellfare society can be maintained ... not to many modern examples of a maintainable anarcho capitalist/social darwinist society though, but good luck if that's what you want to try ... you will need it. Have fun with rioting on the streets in a country with more guns than people, you don't have the same type of population as in the 30s any more.
America's debt is a combination of foreign oil dependency and simply being backwards hicks who don't want to pay taxes.
They have a plan. Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years
Down here in the south, we solved that with "y'all". And its plural "all y'all".
If I have been able to see further than others, it is because I bought a pair of binoculars.
Point 1 seems to come from a Rothbard type argument. Could you explain to me again how land ownership in the USA is not mostly illegal? On one page Rothbard says the Indians didn't use the land enough to be able to claim it as natural rights property, on another he says any first human use at all is enough to make it property ... so which is it?
It seems to me that the US is built on theft from a natural rights perspective, seems to be a bit miserly to complain about taxes with claims to it's history given that ...
Tax can only be a disincentive when there is an alternative ... so income tax might be a disincentive when you're rich enough to be able to retire, but that's not a meaningful part of the working population ... there aren't a couple of thousand Randian uber-beings keeping society together ... the people at the top are important, but if they said "fuck it, I'm just going to retire" there will be plenty of competent people to take their place ... and it will take a while before their income from investment to become large enough for them to do without income, so no harm done.
Those figures appear to be "actual dollars" uncorrected for inflation. So you're technically correct, but if you want to compare years, the Wikipedia graph is a more accurate way to look at it. And it's not just Wikipedia. Other sources which have corrected for inflation look the same.
http://www.usatoday.com/money/economy/story/Government-Debt-Graphic/39255812/1
http://www.supportingevidence.com/Government/fed_debt_over_time.html
This site looks at the debt in a lot of different ways: http://www.marktaw.com/culture_and_media/TheNationalDebt.html
Spending during difficult economic times should be higher than tax revenues. It's not unreasonable that the US government be borrowing heavily right now. The problem is that politicians never prepare properly for the next recession by stabilizing their budgets and then paying down debt. Then recession-time governments have room to respond....except, of course, politicians would always prefer to spend their successors' tax revenues to buy popularity rather than do the right thing. GWB was borrowing heavily at a time when he should have been paying back debt; so was Gordon Brown in the UK; so were many of their predecessors. Even when debt was paid back its always been half-heartedly. Greek and Italian politicians have spent years dodging fundamental problems partly by borrowing because its politically easier (deal with corruption in the tax departments and break down entry-barriers to industries that let insiders do a cushy job badly at everyone else's expense [gasp], no way!). And its US government debt which has helped China keep its currency artificially low and allowed the US to import from China without needing an export industry.
What really is shocking to an outsider is the ludicrous, fantasist faction of US politics that treats tax rises of any kind as the ultimate governmental evil. Even if the budget were balanced right now there are still huge quantities of government services provided years and decades ago that haven't been paid for. The US population needs to accept it must start paying for those soon, and hopefully learn that it needs to keep its politicans spending under control even when things are good and there's a republican in charge. And, personally, I think a good way to do that would be to impose an income tax separate to the normal budget of something like 1/20th of the national debt as a percentage of GDP, adjusted anually. Having taxes go up whenever the debt goes up should at least get people's attention.
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
So a "Party" that has been in Congress for 7 months is responsible for 30 years of reckless spending? Fucking please.
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.
Bullshit. I listened to this argument 15 years ago at the start of 15 years of trickle-down failure. It has now been proven and proven and _proven_ that trickle-down doesn't work. when we were "causing rich people to go away due to high taxes" we were in a hell of a lot better shape.
If video games influenced behavior the Pac Man generation would be eating pills and running away from their problems.
> OTOH, how do you export the services of a hairdresser?
It might not be possible to export hairdressing services, but it's most certainly possible to export services like "answer the telephone and do customer service for the customers of some company living in a country 6,000 miles away on the other side of the planet and (in theory) speak the same language you learned in high school" (ie, Indian call centers).
Ditto, for things like database administration. There's absolutely *nothing* to stop a company from Florida from leasing servers and rackspace in London that are 99.999% administered off-site by DBAs in Bangalore. It is, however, significantly cheaper to locate the servers themselves in the US or Europe. Why? The one thing that saves US & European competitiveness in data centers is the fact that it's fairly cheap and easy to get multiple levels of redundant communications and power infrastructure in place. And this partly goes to show why having good infrastructure is so important, even if it's built with deficit spending. It also illustrates why I've grudgingly come to see why allowing profit-maximization in things like power generation isn't necessarily a great idea. It might be cost-effective to bleat about "smart grids" and accepting a few hours of rolling blackouts per year in exchange for 3% higher quarterly profits by eliminating excess peak capacity, but those same decisions can disqualify entire regions from consideration by companies looking for reliable power. Rolling blackouts are something that happens in fucking second-rate countries, and the fact that there are people who'd willingly allow them to happen by design in the US as a matter of cost-efficiency should have elected officials getting hung out to dry on election day.
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
You do realize Obama was left with a clusterfuck from Bush and did massive spending because most of his economic advisers said that was the only way to head off a major depression don't you?
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."
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
Did he try and help out pathetic auto manufacturers who were duped in the 50s and 60s into floating the stock market with a ponzi scheme inflicted on their own employees? Did he help inject a much more stimulus spending into the U.S. economy, all because others had created a recession that saw people take on absurd debt...? Oh, and was that stimulus spending meant to increase consumer confidence so they could take on more debt?
I'm not sure, but I think the Presidents responsible all had a B in their names, and not always the second letter.
I do love watching political revisionism at work. Down south it's all about finger pointing and blame and the last to get blamed gets to lose the next election. The U.S. is run by a bunch of short-sighted narcissists. Bush and other before him made decisions not based on long-term good, but short-term gain secure that they themselves and their friends would never be poor. 2 terms and so long suckers!
Isn't that a big part of how the "rich" get rich in the first place?
The rich should not pay more in the proportional sense. What gives you the right to profit by someone eases labor?
Let me explain how a sustainable civilization works. In a sustainable civilization, people not only work for their own benefit but also work for the benefit of society in general. If someone is exceptionally prosperous, then they should give back to the society that allowed them to become so. That's not communist or socialist, it's common sense. Your civilization won't last long with a bunch of greedy self-serving leeches sitting on top sucking everyone else dry, which is pretty much what we have today.
The top 20% control almost all of the wealth, and keep getting richer while the poor and middle class keep getting poorer. We're the richest country on Earth, and yet we have a large and growing poverty population. Our healthcare is a joke. Our infrastructure is falling apart. And our education system lags behind most of the developed world.
The only thing sustainable in this country IS the rich. The only ones prospering ARE the rich. Everyone else is getting fucked. And now the cracks are starting to show up. This is not sustainable for much longer.
~X~
The war in Afghanistan is hadly "completely fucking useless". Osama Bin Laden killed thousands of civilian US citizens. The Taleban were being financially propped up by OBL, and they had given him free rein to do as he wished. Then when we sent our diplomats to talk to the Taleban about this, they stonewalled us and gave him shelter.
By almost any standard I have ever heard of, this is an act of war (on the part of the Afghan government). It's so clearly an act of war that if you were to take a course in the causes of war, 9/11 would be in the textbook.
I'm not at all saying that there weren't problems with that war. There were. It's going badly for us now because of these problems. But it furthered the national security interests of the United States to defeat the Taleban and get Bin Laden, dead or alive.
A sad fact of international politics is that you can't seem to be weak. If other nations think you're an easy mark, they'll try to get in on the action. Ask China how that worked out for them a hundred years ago, when every major European power repeatedly embarrassed them and demanded all kinds of humiliating special treatment afterwards. The US absolutely cannot be seen to do nothing in the face of something like 9/11.
Furthermore, your post implies a choice between invading Afghanistan, and investing in nuclear. But the US government is more than willing to spend money it doesn't have. There is no real either-or choice here. If the government were united behind alternative power, then it would happen, budget be damned. They simply aren't.
A sad fact of international politics is that you can't seem to be weak. If other nations think you're an easy mark, they'll try to get in on the action. Ask China how that worked out for them a hundred years ago, when every major European power repeatedly embarrassed them and demanded all kinds of humiliating special treatment afterwards.
Having studied the Opium Wars in some depth, China's government was certainly decadent and corrupt at the time. However, what caused their continued defeats and humiliations was their serial welching on every treaty they signed. The mandarins were so racist they kept convincing themselves that treaties with white guys weren't binding, and they were so stupid that they kept repeating the experiment until the Summer Palace was burned to the ground.
Naturally (and especially in China) there has been much revisionist history written about this period. But if you go and look at the primary materials, you can get a pretty good idea of what actually happened.
That's not to say the the Western powers (and their trading companies) were pure by any means. But China's problem was vastly magnified by their own actions.