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August 06, 2011

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Jack is Back! (literally)

What do you think your credit score would be if you were as far in debt with no chance of paying off before you died and with only earning half the income for your monthly prolifigate spending? And despite that, you are still able to buy a car, get more new credit cards and take lavish vacations.

Oh, yeah, you own one of them corporate jets.

Sound about right?

Chubby

and ... the marks that you usually depend on to coercively up your income are pushing back ...

Danube of Thought

Not surprisingly, President Downgrade's initial response is to attck the ratings agency.

That oughta work.

Janet

From a FB friend...pretty funny -

‎"5000 years ago, Moses said to Israel, "Pick up your shovels, mount your asses and camels, and I will lead you to the Promised Land." When Welfare was introduced, Roosevelt said, "Lay down your shovels, sit on your asses, and light up a Camel, this is the Promised Land." Today, the government has stolen your shovel, taxed your asses, raised the price of Camels and mortgaged the Promised Land to China."

Melinda Romanoff

Mark Thoma pens more to the like of what I'm thinking. S&P had no choice, lest they become irrelevant.

Ignatz

--What do you think your credit score would be if you were as far in debt with no chance of paying off before you died and with only earning half the income for your monthly prolifigate spending? And despite that, you are still able to buy a car, get more new credit cards and take lavish vacations.--

Not to worry, Jack. The Keynesians and MMT geniuses tell us all is well as long as the pulp wood and green ink hold up.

centralcal

Yep, funny - in a sad sort of way - Janet.

Rick Ballard

Mel,

Have you seen any identification as to where (in time) the "$2 trillion error" occurred? If it's out at 2021, it would be immaterial.

I agree that S&P fears irrelevance but the downgrade is political in nature. S&P's advocacy of tax increases as a solution implies that the US should commit Eurocide in an effort to prolong the agony.

Melinda Romanoff

Still waiting for someone to "show their work", until then I sit with arched eyebrow at this side story.

Go look at Thoma's piece, it's quite poignant, even though he uses Krugman's own words to beat him over the head with them.

Thomas Collins

To illustrate the idiocy of S&P's decision, if one takes seriously the downgrade of the US debt rating, so that now the US has the same debt rating as Texas after its recent upgrade, an investor holding bonds would be just as happy having those bonds secured by an escrow composed of State of Texas securities as US Treasuries. What pure unadulterated BS. In addition, as Rick points out, the supposed cure, raising taxes, would tank our economy even further.

Melinda Romanoff

TC-

It isn't the rating that'll create mayhem, it'll be the repo market and general collateral. (The stuff used for margin accounts between big banks and their customers).

Ignatz

--To illustrate the idiocy of S&P's decision, if one takes seriously the downgrade of the US debt rating, so that now the US has the same debt rating as Texas after its recent upgrade, an investor holding bonds would be just as happy having those bonds secured by an escrow composed of State of Texas securities as US Treasuries. What pure unadulterated BS.--

Why?
Don't they both carry an equal chance of being paid off in inflated US dollars?

Thomas Collins

In one of the comments posted on the article linked by Mel, it is stated that:

"The debacle last week showed that the right is in a far more powerful position in this regard than most suspected and it's willing to let the ship sink if it doesn't get its way. I think that political dynamic deserves a downgrade.

It is beyond delusional to think that those on "the right" (which ironically includes many who are best described as classical liberals) are trying to "sink the ship" by resolutely opposing policies similar to the ones that have sunk Europe, which couldn't make the Social State viable despite the fact that another party, the US, supplied miltary cover.

Chubby

((S&P's advocacy of tax increases as a solution ))

why is Obama badmouthing the ratings agencies? so's he can use them for political cover and say "he" doesn't *want* to raise taxes, he HAS to because of the ratings meanies?

Bush, Tea Party, ratings agencies, will he ever run out of skapegoats?

Extraneus

Any thoughts on what it'll mean to bond funds?

Jim Ryan

Will the USA pull out of its economic malaise before Japan or Argentina pulls out of its?

Thomas Collins

Ignatz, I understand that states can in effect be bailed out by the US printing money and then transferring it to the states to pay their debt, but the safest bet is to have the escrow funded by the entity that can print its own money and is the world's reserve currency (at least at the moment).

Mel, I agree with you that this is going to be an issue with some arrangements. But it's in effect a problem hoked up by S&P.

Neo

This downgrade was the only fair thing to do.

If it is based on a math error, I’m sure that in no time, they can borrow and spend their way there, unless they take it as a warning, a “wakeup call”, but we all know they won’t.

"Eventually, Socialists run out of other peoples' money" -- Margaret Thatcher
"Time has come today" -- The Chambers Brothers

bunkerbuster

No one ever made a penny in the markets betting with S&P sovereign ratings, while many a millionaire has feathered their nest betting against them.

Janet

We need to steal their meme.
The big business that is the problem is the Big Government Business...the ultimate robber barons!

Chubby

((No one ever made a penny in the markets betting with S&P sovereign ratings, while many a millionaire has feathered their nest betting against them. ))

ergo the downgrade on Obama's watch was a very great and good achievement, eh?

Ranger

Obama can blame who ever he wants, but this never would have happened if he had delivered those "net spending cuts" he promised in 2008.

Ignatz

--Ignatz, I understand that states can in effect be bailed out by the US printing money and then transferring it to the states to pay their debt, but the safest bet is to have the escrow funded by the entity that can print its own money and is the world's reserve currency (at least at the moment).--

Was just making a little joke TC about the ongoing effective inflation default that some [Rogoff for instance] are actually advocating as sound policy.

Danube of Thought

Obama owns this, pure and simple. And the electorate knows it.

PD

S&P had no choice, lest they become irrelevant.

Have they yet explained how their Sooper Geniuses arrived at AAA ratings on stacks of garbage mortgages? Why aren't they considered irrelevant already?

PD

It's the Tea Party's fault.

We're being downgraded because of the gov't's failure to control spending, so clearly the blame lies with the very people who more than anyone else are pushing for the gov't to control its spending.

Rick Ballard

WSJ on Downgrade

They identify the error as follows:

S&P officials acknowledged the error Treasury pointed out but didn't believe it was so significant. It was a technical error, though it could have serious implications. It concerned the future ratio of U.S. debt to the size of the economy, with S&P officials projecting a larger share than many experts.

So, it's a fantasy error - the S&P modelers are using a different growth equation than the Treasury modelers. Flip a coin, throw a dart, consult your Magic 8 Ball, apply the CBO fantasy, the Treasury fantasy, the Fed fantasy or the S&P fantasy and the "error" will be $1 to $10 trillion, depending on the angle of the sun at your latitude.The 'error' is out years nonsense - just like the 'cuts' which generated the $2.5 trillion number.

Ignatz

--Obama can blame who ever he wants, but this never would have happened if he had delivered those "net spending cuts" he promised in 2008.--


Excellent post by Peter Ferrera at Forbes noting how baseline budgeting is not only a disaster fiscally and policy wise, but that it makes it impossible for the muddle to even know that after a $2 trillion "cut" the US will have $8 trillion more debt in 10 years.
Or that merely placing a ten year freeze on the budget results in a $10 trillion "cut".

Clarice

Absolutely,Iggie. It's time to force each dept to zero base budgeting. It's the only way to get rid of the many pointless, redundant, too costly programs, agencies, bureaus and operations.

Captain Hate

We're being downgraded because of the gov't's failure to control spending, so clearly the blame lies with the very people who more than anyone else are pushing for the gov't to control its spending.

I hope those asswipes keeps banging that monkey; 2012 will make the 2010 elections look like a mild correction.

Captain Hate

keeps == keep

MayBee

So do you think Obama will still go to the Vineyard for vacation?

Clarice

I'd bank on it, MayBee.

Extraneus

This probably helps Romney quite a bit.

Captain Hate

Yes Maybee; I don't see any way that lowlife endures any type of "sacrifice" for screwing up everything. What would he do anyway? Screw things up more?

I was thinking last night and wondering if there could be a worse choice (a credible choice) for the nation's first black president than this miserable failure. Thanks again 52%.

Ranger

Via Instapundit:

Now that S&P Has Downgraded US Credit, Tim Geithner Should Resign

Under Geithner’s watch, the United States has not had a national budget at all, and that includes two years when the party of his president controlled the White House and both houses of Congress. As Treasury Secretary, it was Geithner’s job to make the case that living without a national budget was reckless. The fact is, Geithner has offered no leadership at all. He should resign.

Ignatz

--I hope those asswipes keeps banging that monkey; 2012 will make the 2010 elections look like a mild correction.--

Seems to me for the first time in my life enough people may actually be afraid enough of the systemic problems we have, and have had for decades, to at least be hopeful a long term solution might be possible. They may not understand the details but they know something big is looming.
The only other possibly comparable time was 1980, but then I think far too many people thought it was Carter's mere personal incompetence that was at the root of the problems, not 15 years of really bad bipartisan policy.
Now, despite Reagan's heroic efforts, we've got thirty more years of bad policy thrown on top and the 45 year Medicare and the 75 year SS timebombs about to go off.
I don't see how progressivism can survive the next twenty years as a potent political force.
Whether they will take the rest of us down with them seems to me the only thing unresolved.

centralcal

I sure hope so, MayBee.

rse

For those arguing over what Megan McCardle adds to an eco discussion, It's hard not to hear The Atlantic pushing the media statist meme when she sees the S P downgrade as largely the fault of the Reps.

Rick-The muddle is going to have to begin to appreciate what a dirigiste economy is and why it is not in their best interest.

On the miltary tragedy last night, am being told they were Seals. So much heartache right now for families wondering.

Ralph L

Do you mean his mid-August vacation or his late-August vacation?

centralcal

I see Mark Steyn has a new book out - After America: Get Ready for Armageddon

Sounds pretty depressing, just like the daily news.

Thomas Collins

I should have realized you were joking, Ignatz. Although if things continue on their current course, I suppose Texas could decide it would be in a better financial position if it declared itself a sovereign nation and issued its own sovereign debt.

Ignatz

--Do you mean his mid-August vacation or his late-August vacation?--

I thought she meant one of the ones in between the two.

Specter

I think it's time to ask Obie to voluntarily ground all his corporate jets...it's costing me too much to keep flying him and his wife/children to all these vacation spots.

Porchlight

Nobody gets between Michelle and a vacation, so she and the girls will be going. Maybe Obama will cancel or only go for part of it. I doubt it.

Thomas Collins

OK, here's an easy money bet. Today is my oldest child's wedding. The Vegas over/under line for the amount of time it is going to take for me to get in my tux and tie the bow tie and vest tie contraptions is 125 minutes. Bet the over.

boris

In Wisconsin the GOP's facing recall should highlight the downgrade in a batch of last minute commercials. Scott Walker is already turning Wisconsin around, they helped, and the groups going after them were dead set opposed to fixing the problems.

Rick Ballard

TC,

Best wishes for a completely enjoyable celebration.

Extraneus

I'm offering a hundred bucks to the first presidential hopeful who comes out with an angry tirade that puts the blame on Obama and his radical leftist allies. This is no time to let them off the hook while their memes take hold. They're the ones holding us hostage.

Porchlight

Congratulations, TC, and felicitations to the bride! I hope it's wonderful for everyone. Take your time with the tux, it'll be a great memory.

Porchlight

Good point, Ext. Get out in front of it, people.

centralcal

How wonderful, TC! Sorry, about the contraptions, but I know you will look very handsome in them.

Captain Hate

The only other possibly comparable time was 1980, but then I think far too many people thought it was Carter's mere personal incompetence that was at the root of the problems, not 15 years of really bad bipartisan policy.

Didn't Carter campaign as a moderate? As a suthun governor he could certainly have gotten away with that dodge. In any case, fat Turdie Kennedy ran to the left of him in the primary (does anybody remember when that bloated POS gave his typically bombastic empty convention speech and then paraded around the dais with Dhimmmi Earl in his wake trying in vain to shake his hand while the alcoholic murderer ignored him? One final insult to the hapless "adultery of the heart") so it's not like the progtards considered him one of theirs.

OldTimer

Geithner promised just last April there would be no downgrade. "No risk", he said.

Who will rid us of this meddlesome crew..

Weasel Zippers video LUN

Captain Hate

Congrats TC and to the happy couple. August is a *great* month in which to get married. If it rains cats and dogs, it's my experience that they'll have at least 36 years of good luck.

centralcal

More from Steyn today:

Did you know there’s a U.S. Bureau of the Public Debt? Hey, why not? There’s a bureaucracy for everything else. I’m sure somewhere or other there’s a CBO graph showing that by 2050 all federal revenues will be going either to the Chinese Politburo or to the lavish pension plans of retired officials of the Bureau of the Public Debt. At any rate, the BPD is headquartered in Parkersburg, West Virginia, and it’s easy to find because it’s the only building in the state other than the Klan lodge not named after Robert C. Byrd. The Bureau uses as its motto the words of Alexander Hamilton: “The United States debt, foreign and domestic, was the price of liberty.”

Mad Debt

Jim Ryan

The muddle intuitively understand that we wouldn't have had to default because we had sufficient cash flow (I can't raise my cradit card limit, therefore I can't pay this month's credit card bill? Huh?) So they know tea party Congs were not terrorists. And the muddle can't help but think that downgrading has something to do with the fact that Dems refused to cut spending. So, they get the gist even if they might be wrong about a detail (maybe S&P wanted tax cuts, not spending cuts - but who could blame the muddle for assuming the S&P should know that raising taxes during a depression is a bad idea?)

The muddle are drawing their own conclusions as to which pols are economic terrorists, too.

MayBee

Yay, TC!!!

Ignatz

--..it's costing me too much to keep flying him and his wife/children to all these vacation spots--

It's a darn sight cheaper than having him in DC within reach of a pen.

Thomas Collins

Thank you all for your kind words. I'll try to get some photos posted here after the wedding (although I may be seeking your assistance doing that).

Janet

Congrats, TC...the good stuff in life!

glasater

The fellow behind the downgrade will be on Foxnews' Cavuto show coming up very shortly.

Melinda Romanoff

TC-

I will not place a bet unless I am confident that staples have been ruled out as an option.

(I would have no idea why I would venture such a thing, except in an emergency, of course.

Melinda Romanoff

For what it's worth, here's Goldman's take.

DebinNC

A friend sent me an email of Dave Ramsey distilling the debt situation:

" "If the US Government was a family, they would be making $58,000 a year,
they spend $75,000 a year,
they are $327,000 in credit card debt,
they are currently proposing BIG spending cuts to reduce their spending to $72,000 a year."

That may be an oversimplification, but imo that's what's needed so average folks like me can have a glimmer of where we find ourselves. If asked, the number of people who know what S&P is and does, would be dwarfed by those who think it's a grocery chain or a brand of steak sauce.

Janet

I will not place a bet unless I am confident that staples have been ruled out as an option.

Good point...or duct tape. Hah!

Thomas Collins

I'll try to stay away from the staples, Mel.

The wedding timing is good, however, in that if I didn't have the wedding activities today, I'd be reading repo agreements and trust indentures trying to figure out the implications of this downgrade on my little corner of the public finance world. With the wedding, I won't have time to obsess about that until early tomorrow morning!

Thomas Collins

Janet, I think Vegas has already incorporated black duct tape time, not for tying, but for patching any rips as I slide into the tux!

PD

they are currently proposing BIG spending cuts to reduce their spending to $72,000 a year.

Is that part of the analogy correct? Did the debt deal reduce total budget outlay? Or just cut a bit off projected rises?

Manuel Transmission

O/T to Janet:

Just learned last night that our next door neighbors have a son in central VA that just threw his young hat into the ring for a state rep slot created by redistricting. He is hardcore conservative (as are his parents, g-d bless 'um). His name is Michael Webert and he is a farmer in what apparently is a strong enclave of repubs in that area, so he is probably a shoe in. He just got married and his new bride pre-approved the move before the wedding.

PD

Side by side: LED, CFL, and incandescent bulbs

Naturally, there's a leftist in the comments calling the LED manufacturer evil for making them in China.

PD

I wonder how many leftist parents took away their kids' Beanie Babies, which are also made in China?

Jim Ryan

S&P wanted tax **increases**

Sorry. Had hobo coffee this morning.

Janet

Wonderful MT. I'll look him up & help out if I can. My little corner of Virginia got redistricted too so there is a tiny bit of a chance for a Republican win here.

Melinda Romanoff

PD-

In cards, it should be called the McConnell finesse. For the rest of us, it would be collection agencies.

Jack is Back!

And if you think the U. S. Bureau of Public Debt is just another bunch of faceless, uncaring bureaucrats, well you be wrong. They have a strategic plan and you're part of it. LUN

narciso

Crikey, Alan, he piddled over your plan, and
you say 'thanks you Sir. may I have another:

Former Sen. Alan Simpson, a Republican who co-chaired President Barack Obama’s fiscal commission, says the president is “a little bit smarter” than some of his critics, who “ought to give it up.”

Simpson, who represented Wyoming from 1979 to 1997, said Obama would have been “savaged” and “torn to bits” had he chosen to publicly support the findings of the commission, which was also chaired by Erskine Bowles, an adviser to the Clinton administration.

“This guy is a little bit smarter than some of the guys who are trying to hammer him,” Simpson said in an excerpt from an interview with the Denver Post posted online Friday. “They ought to give it up.”

Read more: http://www.politico.com/news/stories/0811/60747.html#ixzz1UGTPj5Pw

matt

This helps no one. The G7 economics ministers are meeting next week because they are on the edge of abyss.

I was thinking earlier that the best analogy to what the Dems will be calling for would be the tax collectors of medieval times.

Unfortunately, even with new taxes, it would be hard to put their hands on a few trillion in cash. maybe they can start collecting chickens and sheep and SUV's instead.

They still haven't caught on that the jig is up.

Jack is Back!

If this whole downgrade business hinges on the numerator of growth and revenue scenarios then cutting spending is meaningless to S&P. Evidently, they want to see the government do something more about regulatory reform, tax reform and agency restructuring such as departmental redundancy by extreme prejudice:)

That is the formula for creating more revenue through, what Rubio calls "more taxpayers".

[I know they are Tax Increases Now-men]

Melinda Romanoff

Not to change the subject much, but I gotta go here:

Ignatz

--Is that part of the analogy correct?--

No. To be correct they would project that their spending will increase 8% per year but that next year they're only going to spend 6% more, so they're actually cutting their spending 2%.
To be even more accurate they would have to project that their boss loves them and will give them a raise of 10% per year even though he has only given them one raise in the last 3 years of about one percent.
And because the idiot dad can't do his job and is always taking vacations and lecturing his employers and fellow employees about pulling their weight and drinking Slurpees and shutting up in the back of the bus, HR actually hates him and are about to fire his sorry, jug eared arse.

Ignatz

Geez, I hope that isn't Weiner's latest tweet, Mel.

OldTimer

Interesting--Gasparino on Fox says the word in Congress is the Democrats are "out for blood" They are prepared to start investigations re S&P. Yeah! That will certainly make them look innocent regarding our newly downgraded financial status.

It's time for Captain Hate's unique take on this. :)

Threadkiller

There is always a leftist in the comments, PD.

Chubby

((There is always a leftist in the comments, PD.))

they are like moths, unable to stay away from the light that burns their silly wings

PD

There is always a leftist in the comments, PD.

I've never seen one here.

Manuel Transmission

Speaking of Alan Simpson, my Chinese sidekick just had dinner with him last night. Her completely non-political world view was jolted more than a little. Can't wait to get a full debrief.

MayBee

Over at Patterico, there is a mega (3000+) comment thread about the threats and weirdnesses that have occurred in the aftermath of the Weiner tweet.

Toward the bottom, a commenter Dustin begins talking about Raw Story, Brett Kimberlin, and Larissa Whatever her name, and Jason Leopold.
He says (if I understand him correctly) that Brett Kimberlin, a convicted bomber, met Ukranians mobsters while in prison, and upon release when to the Ukraine to meet their connections. It was through them he met Larissa (and Jason?) and they started up raw story. "Larissa" is not her real name, and Dustin says she did not exist as a "real" person.

Is anyone else brave enough to wade through the comment thread (its toward the bottom) and see if I am reading that right?

Topper, where are you?

Threadkiller

Chubby, I was told LED lights don't attract the flying critters like other lights do. That would be a benefit.

narciso

You are the pinnacle of succintness, Maybee,
right on the mark.

Danube of Thought

For a good peek into how and why the ratings agencies are so clueless, read The Big Short.

MayBee

Isn't that a wow, narciso?

PD

DoT, that's one reason I'm wondering why anyone pays attention to them.

narciso

Right, you couldn't make up that story if you tried.

Think of them, like those teachers in Atlanta, who would host 'correcting parties'
for 10 years, flushing the hopes of a generation down the drain,

MarkO

The Big Short also explains who is not clueless. It does not, however, make in change in the fixed truths that Obama is just not that smart and a liar.

MayBee

Oh, Dear Heavens.

Hot Air is saying a lot of the dead were in Seal Team 6.

narciso

Good, god that makes it feel like Desert One,

Frau Araber Herbst

Will our Vacationer-in-Chief find time to honor our dead appropriately?

Specter

It's a darn sight cheaper than having him in DC within reach of a pen

Well Iggy...I couldn't agree with you more not that you pointed it out that way. But - every time he mentions those evil corporate jet folks I get PO'd about how much he costs us just to ride around in comfort at the drop of a hat...

narciso

Consider this an in kind contribtion from the Hill:


Senior executives for the company that downgraded the nation’s credit rating on Friday night have made political donations to Democrats over the last several years.

Deven Sharma, the president of Standard & Poor’s, contributed to Sen. Kirsten Gillibrand’s (D-N.Y.) campaign in 2009 and 2010. He also gave $2,000 to Rep. Jim Himes (D-Conn.) during the 2010 election cycle and Sen. Mary Landrieu (D-La.) and then-Sen. Christopher Dodd (D-Conn.) in the 2008 cycle.

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