Downgraded... US loses AAA rating

[Joseph27]

Oh crap - just been announced that S&P downgrades US credit to AA+... this surely makes US debt more expensive and the situation more volatile... We now have a weekend to catch our breath and see what is coming next...

[T2K]

S&P wanted to see US$4 Trillion in cuts over ten years. The US gov't went back and forth over 1.5 Trillion in 15 years. Can't say S&P didn't give fair warning.

[Joseph27]

I can understand the need to make cuts but what the F*CK is it with Republicans being so damn anal about taxes... The Bush era tax cuts should have been stopped in December surely.... this problem was inevitable the moment Obama backed down in those negotiations and as soon as he did, he made the debt ceiling issue bigger than it otherwise should have been... It seems the US far Right is happy to fight multiple wars, f*ck the poor out of every service, kill health care, crawl back on social security, and of course not pay a damn cent in tax. They get to raise copious amounts of money to fund any opportunist or moron (usually see both) who are happy to jump on that bandwagon... then somehow they get the trailer park trucker and his wife listening to Rush Limbaugh cursing that socialist president and voting for said morons who will happily scrap the food stamp program they used to buy last nights dinner of mayo sandwhiches and hamburger helper. What a f*cked up situation this is... this latest compromise deal by President Carter II, oops sorry Obama really shows that he stands for nothing. This deal wont give the US an extra damn job - it will just keep meaning schools have to face cut back after cut back, it will mean prisons remain full and crime stats high.

[Joseph27]

http://www.huffingtonpost.com/2011/08/0 ... 20094.html

[Joseph27]

http://www.huffingtonpost.com/2011/08/0 ... 20152.html

This was hilarious - a good interview

[T2K]

J27 - You're all over the page there mate, but as far as tax increases...there are two points that come to my mind (can't say that I speak for any group or party though):

-If there was a tax increase, do I have any confidence that the US gov't (whether the Tweedle Dee or Tweedle Dum party is in charge) would take the additional revenue and balance the budget and pay down the debt? No, not at all. They would spend it, and we would still be up to our ass in debt.

-The successful (aka "The Rich") already pay the vast majority of US taxes. And yet, they actually have access to less of the entitlements the US gov't provides since many come with income caps (which is rational). I never got a job or a paycheck from a poor person. The populist "tax the rich, give to the poor" BS I hear now is silly, we're not living in Sherwood Forest.

So, I don't want to hear a word about new taxes unless A) there is some ironclad, black and white, can't be amended or changed or screwed around with guarantee that the new revenue goes towards both balancing the budget and paying off the principal of our 14 TRILLION dollar debt and B) everyone pays something, even if only $500 year or something like that, in federal income taxes. We're in too precarious a position to have 47% of our population exempted from being part of the solution.

[T2K]

Found this quote - haven't run the numbers but it looks correct at first glance.

"If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget and debt." - Dave Ramsey

[Lili Von Shtupp]

-If there was a tax increase, do I have any confidence that the US gov't (whether the Tweedle Dee or Tweedle Dum party is in charge) would take the additional revenue and balance the budget and pay down the debt? No, not at all. They would spend it, and we would still be up to our ass in debt.

Show me proof. You can't, because the future hasn't happened yet. This is nothing more than pure speculation based on political bias.

-The successful (aka "The Rich") already pay the vast majority of US taxes. And yet, they actually have access to less of the entitlements the US gov't provides since many come with income caps (which is rational). I never got a job or a paycheck from a poor person. The populist "tax the rich, give to the poor" BS I hear now is silly, we're not living in Sherwood Forest.

The populists are not saying "Tax the rich and give to the poor". They're saying that the ultra rich should pay the same percentage in income tax as the schlemiels who work in their mail rooms. And the "entitlements" you speak of, you mean they don't use the interstate highway system or the port authorities, airports? Or police and fire services? Or a school system to educate the people who will become a key labor input? Or massive public works that supply water, sanitation, power? Telecoms grids? Grants to scientific research that will ensure the United States maintains a leadership position in high-tech, pharma, ... ? They have received not one benefit of any of these things, sure.

And your quote = Analogy fail. It is designed to make people see the huge credit card bill and have an emotional reaction in favor of the conservative agenda. I'd be curious to see how this equation would change each year if we ended the Bush-era tax cuts today.

[Lili Von Shtupp]

Oh, and as long as we're talking about entitlements, lets talk about the biggest Welfare Queens! yeah, you know the ones... Big Oil and Big Ag. I wonder how those subsidies stack up against the proposed Planned Parenthood cuts. I mean, Jesus Christ if the government's going to screw us, you'd think they could at least give us access to birth control.

[Joseph27]

T2K - just having fun with a rant, it doesn't personally affect me too much but just looking at the US the Bush era tax cuts, I dont understand why Obama had to extend them... if they had been crawled back, the funds could have meant that certain services were maintained and this crises would have been averted. This latest bill will do nothing to help create jobs and the current political environment definitely warranted a downgrade... The US govt has demonstrated that it is unable to function properly and your creative analogy is the same crap that tea baggers sell. The situation is certainly not great but with a vast army all across the world, 3 concurrent wars, multiple bases in countries like Germany that no longer require them and a military industrial complex that gobbles up 3/4 of a trillion dollars... its time the US started looking back inwards and leave the afghans, Iraqi's, and Libyans on their own.

Either way nothing we talk about here matters a bit - tweedledee and tweedledum and paid for by the same bosses...

[T2K]

Lili,

Obviously no one can prove the future. But, what reasonable people often do to make the best guess at the future is look at the past.
Looking at the past actions of the US gov't (either party) in regards to revenue, spending and debt...well, here we are. What "proof" do you have that a new tax or other source of revenue would break the precedent of the past 60 years? None, of course. It's reasonable to assume that the same process will yield the same results.

All Americans have access to all the things you mentioned. Some Americans (lower income brackets only) have access to welfare, food stamps, and other programs. So, the people paying the most taxes are the ones who don't have access to all benefits that they are mostly paying for. Fact, but they are villified all the same.

It's true that higher income earners don't pay the same percentage in tax as lower income earners. They pay a higher percentage, obviously! The US tax code is graduated upwards. So, score, you've exceeded your goals on that one.

The quote is an accurate analogy of the present US financial situation. You might not like it because you perceive that it doesn't align with your political feelings, but still, there it is. We're deeply in debt. Any ideas? I've said I'll pay more taxes if the additional revenue will be used properly and if all my fellow Americans would at least make some contribution, even if a nominal one. How about you?

J27 - This crisis wouldn't have been averted by increasing taxes to 2000 levels. We would still have had to borrow a lot and increase our debt ceiling. I'm glad that you agree with the "tea baggers", as you call them, that spending needs to be cut. Our military spending can certainly go down a lot without compromising our defense position. I am pretty sure that Germany and South Korea can take care of themselves, for instance.

[Kooky]

You're quoting a bible-bashing Fox News type, right? Are you sure his numbers stack up?

[T2K]

If you read the whole Wiki page about him <http://en.wikipedia.org/wiki/Dave_Ramsey>...then you will know a lot more about him that I do.

US Federal income is about 2.something Trillion USD and spending is about 3.something Trillion USD, depending on which year. The big cuts that Congress just went back and forth on were around 1.5 Trillion over 15 years. Total debt is around 14 Trillion. So, whoever he is, the ratios seem correct and it's a good analogy of the poor state of America's financial affairs.

[Joseph27]

Damn it's a blood bath with no sign of a savior...

[BoD]

pfft..it's just a knee-jerk reaction. The downgrade means nothing really. Obama just needs to slip S&P a few bucks and they'll be back to AAA in no time.

[skank-la]

From end of the day this side of the water in what has to be the greatest irony I've seen, all day long investors all over the world dumped their equities and corporate bonds in favor of - you guessed it - U.S. Treasury Bonds.

It's a world gone mad.

[skank-la]

So, you have the following:

1) S&P saying that U.S, Treasury Bonds are now suspect from a credit quality point of view

and

2) The investors ACROSS THE GLOBE saying U.S. Treasuries are STILL preferable to just about every other kind of financial asset out there.

From an article in The Economist magazine last week about this whole sorry affair.

An excerpt:

"....Mr. Obama and his party seem a model of fiscal statesmans­­­­­hip compared with their Republican opponents. Once upon a time the American right led the world when it came to rethinking government­­­­­; now it is an intellectu­­­­­al pygmy. The House Republican­­­­­s could not even get their budget sums right, so the vote had to be delayed. A desire to the curb the Leviathan is admirable, but the Tea Party lives in a fantasy world in which the deficit can be reduced without any tax increases; even Mr. Obama's attempts to remove loopholes in the tax code drove the zealots into paroxysms of outrage."

The link

http://www.economist.com/node/21524874

[Joseph27]

The big problem is that the government in the US has demonstrated a major weakness - and though it's self inflicted the lack of vision has startled markets everywhere. Both sides of the US govt share the blame... The teabaggers are a bunch of delusional assholes but Obama should be a leader and set the agenda not bend over and have it dictated by the house

[T2K]

As I've said before, it will have to get worse before it will get better. But it will get better.

[Mr Oz]

In the US at the moment and I swear some people are living in denial or they honestly can't deal with the impact.

Hawke/Keating gave Australia a AA rating in the early 90's when inflation was over 8% interest rates were are high as 18.5% and unemployment was about 11%. The action by the keating/howard government to get Australia back to AAA and pay down the debt and get the economy moving was quite large. They sold Qantas, Commonwealth Bank, most of telstra etc. They increased Taxes including introducing a GST. Looking back the pain was high but the result speaks for itself.

The question is when is the US going to bite the bullet and make those tough decisions rather then blaming each other and shooting the S&P messenger. It ain't going to get fixed the way the situation is at the moment.

[Tas]

Fairly neat bit of peaceful protesting: http://www.smh.com.au/executive-style/b ... 1iljd.html

[Possum]

I like the quote. It puts it in simple language for someone like me who does not understand half of whats going on. I don’t need the actual proportions just the concept.
Cheers T2K

[Fat Bob]

Miss Nobbe? I wonder how you pronounce that?

[baloo]

No Bobby

[Fat Bob]

India 75-4 at lunch, if England win this game then we're top of the world!