Here's what Standard and Poor's thinks of our 'great compromise' in the debt ceiling debate. Problem is, we failed to make the cuts necessary to secure ourselves the AAA rating from S&P. Sure, we're still AA+ (reminds me of today's self-esteem-based grading systems) but until we get a hard and fast $4T in debt reductions, they just aren't ready to put their own good, albeit odd, name on the line to say we made enough of a course change to head ourselves away from the deficit spending shoals. And they have little confidence that Washington has the je ne c'est quoi to do the necessary follow on work they left hanging out until after the election. If Bush had made pushing corrective action until after the election a single deal breaker on any legislation, our health care system would have buckled under the epidemic of apoplexy from the left. Yet it received nary a sniffle of attention. Hey, but we got that compromise. Woohooo!!!
S&P is clearly just a bunch of racists looking to embarrass the President.
ReplyDeleteThe Dems are already starting to point to this as justification for tax increases. They won't get them but they certainly will try to lay some blame for this mess on the Republicans (all of the blame if they can).
ReplyDeleteI have to say, this is all eerily similar to the Carter years. Back then, rather than "corporate jet owners" it was "yacht owners". So they taxed hell out of pleasure crafts and a bunch of employees of Hatteras Yacht in New Bern got the pink slip. Of course yacht sales in the Bahamas went up but, hey, it was a nice gesture.
But even Jimmy Carter, with all those redneck sycophantic ass-kissers to the Northeastern liberal establishment, didn't manage to get our bonds downgraded. Just like Carter, Obama's people are invincibly ignorant. Trying to reason with them is like talking to the Azazel goat. They are incapable of thinking outside their leftist ideological construct. The only thing to do is get rid of 'em!
What has happened is the worse scenario and frankly something only the political beast could construct. I read Krugman and he is stating we need more jobs and keynesian growth in an effort to forestall debt deflation (Irving fisher.) However there are a few things that most people cannot rationally or in a bipartisan manner address; first the myth of jobs that are 'shovel ready' the type of jobs needed are similar to the Hoover Dam and the Rural electrification program. Simply handing monies to unemployed that does not grow the base economy, provide a multiplier effect or contribute to growth in GDP in efficiency (not spending) will work. As an example (hypothetical) a bridge across the bering strait results in immediate jobs, increase access to markets, and fuel efficiency for transportation.. creating miles and miles of guard rail along highways was homage to the insurance industry and provided no tangible GDP growth. Building naval vessels, Nasa exploration, all accrued GDP benefits historically, the jobs that were "created or not lost" did not address the rationale for keynesian policy. Right approach but horrible implementation. Smart energy grid, Pathway Project, revitalizing (nationalizing leased lands of railways) all could produce "sticky jobs."
ReplyDeleteWhat has happened is the worse scenario and frankly something only the political beast could construct. I read Krugman and he is stating we need more jobs and keynesian growth in an effort to forestall debt deflation (Irving fisher.) However there are a few things that most people cannot rationally or in a bipartisan manner address; first the myth of jobs that are 'shovel ready' the type of jobs needed are similar to the Hoover Dam and the Rural electrification program. Simply handing monies to unemployed that does not grow the base economy, provide a multiplier effect or contribute to growth in GDP in efficiency (not spending) will work. As an example (hypothetical) a bridge across the bering strait results in immediate jobs, increase access to markets, and fuel efficiency for transportation.. creating miles and miles of guard rail along highways was homage to the insurance industry and provided no tangible GDP growth. Building naval vessels, Nasa exploration, all accrued GDP benefits historically, the jobs that were "created or not lost" did not address the rationale for keynesian policy. Right approach but horrible implementation. Smart energy grid, Pathway Project, revitalizing (nationalizing leased lands of railways) all could produce "sticky jobs."
ReplyDeleteThe second reason why this debacle is upon is that the deficit reduction did not address the deferrable and true cause of the budget structural deficit. If existing cash flow in programs had remained constant and the savings had instead targeted retirement ages (where those under say age 55) are now to become eligible for retirement two years later, the budget in long term debt (refinanced short term) could have made the 4 trillion mark. In affect the only rational thing to do was to actually address the real challenge which was deferrable (similar to refinancing a mortgage,) than to announce a “new austerity” and start discussions and hypothetical’s of how would get paid first, seniors or the military. A deal/discussion about debt reduction without addressing entitlement programs demonstrate an incapability of a credible proposal, in respect to what was proposed and adopted, the S&P rating based on political cowardice was apropos. Tragic, unnecessary, but apropos, not addressing the “end of life costs” of Medicare and the structural deficiency of retirement makes the response to the political mockery an only recourse where you can BS the public but not the professional creditor.
ReplyDeleteTaxation on the “rich” well let me say this: “pick your poison carefully” those who will cheer that their tax loopholes were maintained can offset that celebration with a collapse in market value and the scenario we have where to many debts chase too few dollars. The policy tax of this stupidity to target a few taxes at the higher end, address the real issue of the structural deficit, and have had an ability to “create jobs with supply side spending that creates jobs” is the opening bell on Monday, get prepared.. Overall the result of a known cost was substituted for an uncertainty cost; folks will pay a very high cost for the political stupidity. Ledgers are not Republican or Democrat. There should have been a signal to markets that cuts along with revenue and smart GDP jobs creation investing were all parts of the solution, we as the public received “NONE OF THESE!” We will all pay the price as a society, divided and conquered by avarice and greed.
ReplyDeleteIn closing the S&P response is an over the horizon judgment based not only what happened but again to what is about to transpire. My apologies.. Just that Bryan is a fellow conservative, rationale, educated, and is as probably as irritated as I as to the events as we now have them. I just had to rant.
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