[luke warm]

 PassedOut, on 2011-August-04, 09:35, said:

My voting residence is in Michigan, for example, and it is a given that anyone sent to Washington from Michigan, regardless of party, protects the auto industry at all costs.

that's gonna be tough when the u.s. starts its own auto company and comes out with a 250+ mpg vehicle (probably released just prior to election day)

[kenberg]

Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.”

I can see how they might come to that conclusion.

[Winstonm]

 kenberg, on 2011-August-05, 20:04, said:

Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.”

I can see how they might come to that conclusion.

In a related story, the U.S. government lowered S&P to junk status for their part in rating subprime MBS crap as AAA because banks paid them to do so.

[kenberg]

 Winstonm, on 2011-August-05, 20:19, said:

In a related story, the U.S. government lowered S&P to junk status for their part in rating subprime MBS crap as AAA because banks paid them to do so.

Yes, you have a point.

[PassedOut]

 Winstonm, on 2011-August-05, 20:19, said:

In a related story, the U.S. government lowered S&P to junk status for their part in rating subprime MBS crap as AAA because banks paid them to do so.

With the budget crunch, the US could no longer afford to pay for S&P's AAA rating.

[Winstonm]

From the FWIW Department, here is what S&P said concerning the downgrade:

Quote

“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy … [This] weakens the government’s ability to manage public finances”

We would like to thank the Tea Party once again for this revolutionary downgrade of U.S. credit rating.

[luke warm]

 Winstonm, on 2011-August-06, 10:25, said:

From the FWIW Department, here is what S&P said concerning the downgrade:

We would like to thank the Tea Party once again for this revolutionary downgrade of U.S. credit rating.

you are an incredibly naive man... if the bill was disagreeable, don't sign it... this bill (according to the DNC) does all these marvelous things:

• Removes economic uncertainty surrounding the debt limit at a critical time and prevents either party from using a failure to meet our obligations for political gain.
  
• Makes a significant down payment to reduce the deficit -- finding savings in defense and domestic spending while protecting critical investments in education and job creation.
  
• Creates a bipartisan commission to find a balanced approach to continue this progress on deficit reduction.
  
• Establishes an incentive for both sides to compromise on historic deficit reduction while protecting Social Security, Medicare beneficiaries, and programs that help low-income families.
  
• Follows through on President Obama's commitment to shared sacrifice by making sure that the middle class, seniors, and those who are most vulnerable do not shoulder the burden of reducing the deficit. As the process moves forward, the President will continue to insist that the wealthiest Americans share the burden.

not only that, the DNC also believes obama won the negotiations... not sure how you can blame the tea party when it "lost"... it seems a tad disingenuous for one party to take credit for something and then turn around and blame another for supposed shortfalls

[PassedOut]

 luke warm, on 2011-August-07, 06:48, said:

not only that, the DNC also believes obama won the negotiations... not sure how you can blame the tea party when it "lost"... it seems a tad disingenuous for one party to take credit for something and then turn around and blame another for supposed shortfalls

Seems to me that Winston was reacting to S&P's downgrade of the US credit rating rather than to the bill that was signed on August 2, which all sides inevitably try to spin their way.

S&P's statement that Winston quoted blamed the "political brinksmanship" whereby a group of politicians (the tea party group, as we all know) threatened to prevent the US from paying its legitimate debts. According to Winston's quote, that irresponsibility created a degree of uncertainty that resulted in the downgrade.

[Winstonm]

Let's analyze the S&P comment a little further.

Quote

“The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed."

I certainly don't know everything, and admit even to not knowing a lot, but I am aware that it was the Tea Party Republicans who held the country hostage over the debt ceiling and created the scenario where "policymaking becoming less stable, less effective".

Quote

The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy … [This] weakens the government’s ability to manage public finances”

I am also aware that this is the first time in history there was any threat of default over what is normally an automatic process to authorize payment of what has already been spent, and it was the influence of the Tea Party Republicans in the House of Representatives that created the impasse.

Quote

you are an incredibly naive man...

Naive means believing Ayn Rand had "the answers" but John Keynes was clueless.

A President Hoover deja vu in 2011 while trying to escape the affects of Depression Light will do nothing other than recreate the decade of the 1930s.

16% of American seeking employment are either unemployed or underemployed.

50,000,000 Americans are on food stamps.

And we want to go on austerity measures to protect the Bush tax cuts?

[kenberg]

The answer to the question "How can I blame the Tea Party when the DNC says Obama won" is simple. The DNC is whistling in the dark. S&P seems to agree with this assessment, and so do the markets.

Admittedly, there are many things that go into stock market swings and ratings. But there is a fundamental unavoidable fact: Until the last few months, no one expected that a significant group of politicians would announce that everything had to be done their way or they would throw the country into default. That would be unthinkably stupid, or so it was believed. It is no longer unthinkably stupid, it is now thinkably stupid.

Of course the Tea Party folks say it is thinkably brilliant rather than thinkably stupid. They are entitled to explain why they think this, they are not entitled to claim the idea was not theirs. They embraced it, they shouted it to the rooftops. For better or for worse, they own this idea.

[luke warm]

 Winstonm, on 2011-August-07, 09:34, said:

I am also aware that this is the first time in history there was any threat of default over what is normally an automatic process to authorize payment of what has already been spent, and it was the influence of the Tea Party Republicans in the House of Representatives that created the impasse.

i kinda agree that it makes little or no sense to give congress the right to appropriate the same funds twice (as it were), but let's not forget that this problem could have been forestalled 2 or 3 years ago... let's also not forget that there were other groups in congress, and in the white house, that can share in that very same impasse

 kenberg, on 2011-August-07, 10:49, said:

The answer to the question "How can I blame the Tea Party when the DNC says Obama won" is simple. The DNC is whistling in the dark. S&P seems to agree with this assessment, and so do the markets.

do you believe a default is looming in any event? i personally don't know, but it would not much surprise me if it happened... i don't see how one can borrow oneself into prosperity... but the fact remains that the dnc, by claiming some sort of victory, is eying the political future (as are, admittedly, others)

[blackshoe]

Some are saying the Republicans are at fault. Some are saying the Democrats are at fault. Some blame the Tea Party. Some blame Obama.

I say they're all at fault.

[kenberg]

Blame it on the Rolling Stones

[y66]

S&P is OTL according to PK

Quote

Treasury has a fact sheet explaining that $2 trillion error by S&P; it may sound technical, but to anyone who follows budget issues, it’s a doozy.

When the Congressional Budget Office “scores” policies, it does so relative to a “baseline” — a set of assumptions about what would happen in the absence of that policy. The normal CBO baseline — mandated by Congress — assumes that discretionary spending will rise with inflation, but no more. This isn’t realistic most of the time, since the demands for government services rise both with growing population and in many cases with rising economic activity; that’s one reason CBO always provides an “alternative fiscal scenario” that’s supposed to be more realistic. Under current conditions, however, with Obama already committed, even before the debt deal, to fairly harsh austerity, the zero-real-growth baseline is more realistic — and it’s how the debt deal was scored.

But S&P initially assumed that the debt deal was subtracting off a quite different baseline.

The point here is not so much the $2 trillion, which makes very little difference to real US fiscal prospects; it’s the fact that S&P stands revealed as not understanding basic analysis of budget estimates. I mean, I don’t think I would have made that mistake; real budget experts, like the people at the Center on Budget and Policy Priorities, certainly wouldn’t have.

So what we just saw was amateur hour. And these people are pronouncing on US credit-worthiness?

Quote

When assessing the downgrade, the question of track record comes up. As I understand it, countries that defaulted in the past were almost always downgraded well before the default happened; but in all such cases, the markets were already signalling big trouble before the rating agencies moved.

The question should be, in cases when the markets aren’t signalling worry but the agencies downgrade anyway, how often are they right?

The answer, I believe, is never — not for Japan 2002, not for various European countries in the late 1990s, not for Canada 1994. But I don’t have time to do this carefully; I hope someone will.

The amateur hour? Decade seems more like it.

[luke warm]

 blackshoe, on 2011-August-07, 19:31, said:

Some are saying the Republicans are at fault. Some are saying the Democrats are at fault. Some blame the Tea Party. Some blame Obama.

I say they're all at fault.

but remember, everyone was told beforehand that at least $4T in cuts had to be made or we'd lose our AAA status... didn't the ryan plan come pretty close to this? so it's not as if they didn't have a chance

[hrothgar]

 luke warm, on 2011-August-08, 05:50, said:

but remember, everyone was told beforehand that at least $4T in cuts had to be made or we'd lose our AAA status... didn't the ryan plan come pretty close to this? so it's not as if they didn't have a chance

It's almost pathetic to watch you try to spin this so the Democrats share the blame.

[kenberg]

I don't have a substantial understanding of finance and that will not be changing. The fact is that if national survival depends on having a large portion of the electorate become highly savvy about bond markets and such, then we are SOL.

I approach this with the general outlook that debts have to be paid and we should go easy on expecting something for nothing. But I also regard myself as very lucky to have lived my seventy-two years in the USA, and I have trouble seeing the government as the evil monster as presented by those on the right. "You say you want a revolution...". Well, I'll try not to rely too heavily on the wisdom of the Beatles.

I fault the right for totally reckless rhetoric, and more than rhetoric. From E.J. Dionne's morning column, quoting one of them:

“We weren’t kidding around, either,” Rep. Jason Chaffetz, R-Utah, told The Post. “We would have taken it down.” He said it with pride, yet the “it” involved the American economy and America’s standing around the globe. This is patriotism?

Patriotism or not, it's the old "I'm nuts, you aren't, so you will have to give in to my demands" trick.

But I also fault Obama. If he actually has a vision for our economic future, a vision that remains the same for two or three days in a row, I am not sure what it is. Sample question: Does he think that the debt can be dealt with without raising any of my taxes (meaning from my current Bush reduced rates) or cutting any of my benefits? Myself, I doubt that it can be done. I repeat that I am no expert, but still, I doubt it. Note: I am asking about my taxes, and I do not make a quarter mil a year. One way or another, through decreased benefits or increased taxes, I expect I will be making a contribution. I don't expect the rich to do it by themselves, but I think it would be nice if they did not totally evade any responsibility at all.

In the short run, bills that come due have to be paid on time. In the long run, we have to deal effectively with the debt. We all have a stake in this country and we can all share in solving our problems. Perhaps the are some Democrats and some Republicans who share this view. Wouldn't it be pretty to think so. (A line stolen from "The Sun Also Rises")

[PassedOut]

 luke warm, on 2011-August-08, 05:50, said:

but remember, everyone was told beforehand that at least $4T in cuts had to be made or we'd lose our AAA status... didn't the ryan plan come pretty close to this? so it's not as if they didn't have a chance

What are you talking about?

The Ryan plan only claims to cut $1.5 trillion from the deficit over 10 years, of which $1.3 trillion consists of savings from Obama's planned drawdown of troops in Iraq and Afghanistan. The amount of deficit reduction due to Ryan's own proposals is only $400 billion over 10 years.

Ryan does propose large spending cuts, but those are mostly offset by large tax cuts.

[hrothgar]

 kenberg, on 2011-August-08, 06:48, said:

In the short run, bills that come due have to be paid on time. In the long run, we have to deal effectively with the debt. We all have a stake in this country and we can all share in solving our problems. Perhaps the are some Democrats and some Republicans who share this view. Wouldn't it be pretty to think so. (A line stolen from "The Sun Also Rises")

Here's one amusing possibility:

The US has about 400 billion in gold in Fort Knox.
We could sell this off and use it for short term stimulus programs without impacting the long term debt....

[y66]

From Ecclesiastes:

Quote

What profit hath a man of all his labour which he taketh under the sun? One generation passeth away, and another generation cometh: but the earth abideth for ever. The sun also ariseth, and the sun goeth down, and hasteth to his place where he arose.

From Wikipedia:

Quote

Hemingway told his editor Max Perkins that the book was not so much about a generation being lost, but that "the earth abideth forever". He thought the characters in The Sun Also Rises may have been "battered" but were not lost.

Battered but not lost? I love that. Spam fritter anyone?