Thread in which the world laughs at America

[KrazyHorse]

Medium-term is 18 months?

I hope that this downgrade is a wake-up call and that we will get our house in order. It is distressing to me to see the financial position of the country and to see the political class thinking in small terms.

What's distressing for me is the fact that S&P obviously views it as their mission to affect domestic policy of the US rather than realistically assessing credit risk.

[DanS]

I don't think it's so obvious. I think their analysis is good, but it has obvious political consequences. Our deficits are blowing out and the debt is blowing up. And you have a political class that thinks it orders the markets around.

[Hauldren Collider]

What's distressing for me is the fact that S&P obviously views it as their mission to affect domestic policy of the US rather than realistically assessing credit risk.

That's the impression I got, too, though obviously your guess is better than mine.

[KrazyHorse]

I don't think it's so obvious. I think their analysis is good, but it has obvious political consequences. Our deficits are blowing out and the debt is blowing up. And you have a political class that thinks it orders the markets around.

Politicians can think what they want. Ratings agencies can say what they like.

Only the market consists of people who are paid to make guesses about the future, and who are paid depending on how accurate they are.

Nobody else's opinion counts for **** in my mind.

[KrazyHorse]

Fun fact: I have heard the phrase "who gives a **** what the ratings agencies think?" (or a variant thereof) at least once a week for the last 18 months.

[Riesstiu IV]

Isn't this the same ratings agency that gave mortgage backed securities AAA status?

[Dinner]

Yep.

[OneFootInTheGrave]

well the red Chinese were waiting for this

http://www.forbes.com/feeds/ap/2011/08/06/business-as-china-us-debt_8605996.html

"China, the largest creditor of the world's sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China's dollar assets," it said.

Xinhua said the U.S. must slash its "gigantic military expenditure and bloated social welfare costs" and accept international supervision over U.S. dollar issues.

It also suggested a new global reserve currency might be necessary to replace the dollar, a position China has frequently advocated.

"Mounting debts and ridiculous political wrestling in Washington have damaged America's image abroad," Xinhua said. "To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means."

[Zevico]

Common sense dictates that governments go into a deficit with a plan to get themselves out of debt according to some set of conditions or circumstances.

In the United States, a plan to increase the federal debt by $7 trillion over a decade is touted as a compromise. What is the spending limit here? How much does everyone want to spend, how much don't they want to spend, and what do they want to do about the economic crisis faced by the United States? Is borrowing $1 trillion a year a sensible policy solution to a debt crisis?

What is this all meant to achieve? If the people of the United States can't plan out what they want their government to do with their money and hold their government to that plan then what? I hope I'm just being pessimistic but I doubt it.

[Jon Miller]

We are getting loaned money at a near 0% interest rate.

I don't think the US has a debt crisis.

I wish I could get some near 0% interest rate loans. Maybe I would start a company.

JM

[Dinner]

Some where around here I posted a link to Republican front groups deliberately trying to prevent Democrats from voting in Wisconsin's recall election (by using the usual voter suppression techniques) and Zevico stupidly came up with several excuses in an attempt to justify those criminal acts. Well, Colbert reported on this yesterday including how the fake absentee ballots (made up and paid for by the right wing Koch brother's front group "Citizens for Prosperity") 1) the fake ballots were only mailed to democratic districts 2) that the address people were directed to mail the fake ballots was entirely fictitious and 3) the date of the election was deliberately changed so that even if people mailed them to the right address, instead of the one provided by the Republican operatives, their vote wouldn't be counted because the election would have been officially over. Check out the report:

[notyoueither]

We are getting loaned money at a near 0% interest rate.

I don't think the US has a debt crisis.

I wish I could get some near 0% interest rate loans. Maybe I would start a company.

JM

I can tell you've never seen 20% mortages.

Servicing that debt becomes very problematic when interest rates go up.

[Jon Miller]

Then you sell assets.

JM

[Zevico]

Some where around here I posted a link to Republican front groups deliberately trying to prevent Democrats from voting in Wisconsin's recall election (by using the usual voter suppression techniques) and Zevico stupidly came up with several excuses in an attempt to justify those criminal acts. Well, Colbert reported on this yesterday including how the fake absentee ballots (made up and paid for by the right wing Koch brother's front group "Citizens for Prosperity") 1) the fake ballots were only mailed to democratic districts 2) that the address people were directed to mail the fake ballots was entirely fictitious and 3) the date of the election was deliberately changed so that even if people mailed them to the right address, instead of the one provided by the Republican operatives, their vote wouldn't be counted because the election would have been officially over.

First, the fact that the ballots are being sent to some PAC or another is irrelevant if the PAC intends to forward the ballots on to their proper address. Who knows? Maybe they want to collect voter information. I do recall my local political parties doing this (they didn't get their dates wrong though).

They can even do that to the ballots they receive on election day assuming they run an efficient operation. If their operation is too inefficient to permit them to do so, then they assuredly deserve criticism for that, but not for fraudulent behaviour (proof of which has not been offered).

Second, if on-forwarding is the intention or practice of the PAC, the fact that the wrong date is given, still remains little more than a typographical error.

For the record, I do think that the deliberate falsification of simple, easy to prove matters such as election dates (when they have been fixed), or dates by which absentee ballots should be submitted, should be criminalised.

I understand that a lawsuit is in the works at the moment. I do not know if that is the misconduct alleged, but if so then I expect the court will be more fully informed of the facts than either of us and trust it to make its judgement.

Third, the PAC in question is sponsored by two people (the "Koch" brothers), and it is foolish to equate them with the Republican party as a whole, particularly as they are not elected representatives. This is not to say that I have read of any allegation that they have engaged in any kind of misconduct, or that they aware of this incident.

I say this not because of some sympathy for or against this group. I say this as a person looking for proof of what is at least a serious moral (at most a criminal) wrong, which is a matter that crosses and is more important than any political disagreements. One should be careful about concluding, conclusively, that a whole party, or people, or interest groups for that matter, are guilty of such conduct.

[KrazyHorse]

We are getting loaned money at a near 0% interest rate.

I don't think the US has a debt crisis.

I wish I could get some near 0% interest rate loans. Maybe I would start a company.

JM

Jon, only short and medium-term loans are extremely low. IIRC, the duration of the US debt profile is on the order of 7 years. Things can change quite quickly.

You are being far too sanguine. The market believes that the US is not particularly credit-risky; it does not believe that nothing has to change.