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The S &P rating is a joke
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Why do you call it a joke, what choice were they really given. By the time our politicians got done fucking with each other, they really had little choice but to down grade us. Lack of due diligence on their part could have lead to multiple suits.It almost seemed like a double dog dare you by the time our politicians decided to raise the debt ceiling.
What's interesting is that the US Treasury bond yield (interest rate) has begun to drop on the bond market since this move was made. Our debt is still more desirable than just about anywhere on the planet.
The title of this thread made me think of Public Enemy's "911 is a Joke."http://www.youtube.com/watch?v=EcKhsc...
That is all.
Also interesting how Boehner and McConnel claim they got just about everything they wanted in the debt deal -- but that somehow they can claim that it's Obama's lack of leadership that is the cause of the economic woes. McConnel said that this is their new method for strangling the government into relinquishing everything the rich people desire. These men are despicable, and really should be ashamed of themselves for holding the economy hostage in order to get their way (the wishes of corporations, billionaires, and bankers) at the expense of average people.It's so clear that they want to dismantle SS and Medicare and take us back to a time when there were no restraints on big business and no government responsibility for helping the less fortunate.
I really don't see how working people can support this. It makes no sense to me.
Larry wrote: "I really don't see how working people can support this. It makes no sense to me."
It baffles me too Larry, and yet they seem to line up to do so.
Larry wrote: "What's interesting is that the US Treasury bond yield (interest rate) has begun to drop on the bond market since this move was made. Our debt is still more desirable than just about anywhere on the..."That is why it is a joke. They could have rated it a "D" and our debt will still be the most desirable on earth.
Larry wrote: "Also interesting how Boehner and McConnel claim they got just about everything they wanted in the debt deal -- but that somehow they can claim that it's Obama's lack of leadership that is the cause..."They have to cut Medicare and other entitlements. If they don't they will grow to where everyone will see their taxes increased substantially.
Social Security is not an "entitlement," it is an insurance program.By cutting it, you are admitting you can't pay your debts. Why? Because it is fully self-funded. The only reason politicians say it's dragging down the budget is because they have STOLEN THE MONEY FROM IT and replaced it with treasury bonds.
So now you don't want to pay those bonds?
Your "full faith and credit" isn't worth a fucking fart in the wind at that point.
Are we still laughing at the joke as the Dow & NASDAQ both plummet due to the S&P rating?
When you put it that way, Larry, it makes me sick. Actually, it makes me sick anyway you put it but in that format, it makes me sick and mad.The rich get richer, the poor get poorer and the middle class gets fucked.
Larry's chart is why we need one flat tax without deductions allowed. Like I said before the rich avoid paying taxes.
Do you say this stuff just to get a reaction? I know, based on your postings, that you don't care a whit for the nation's elderly, veterans, ill, children, but can't you at least leave the middle class and working poor alone and with enough money to pay their basic necessities?
I care about them all, after all I am a veteran, I have kids and I will get old. However, priority #1 should be to grow the economy. A growing economy can fund all their programs. Economist Art Laffer computed that a 12.1 flat tax without deductions will fund all government services.
We've gone over and over the problems with a completely flat tax, and Arminius doesn't Get rid of the special deals for rich people and corporations and all tax rates can be lower for sure.
What the Republicans refuse to admit is that those special deals are actually welfare for the rich and for corporations. It's spending we can't afford!
You hear that tea party? IT'S SPENDING!!
Joe earns $24,000/year as a line worker in a factory. His wife, Susan, earns $17,000/year as a part-time bookkeeper at the hospital. They have two children, Sarah and Joe, Jr.Taking 12.1% from their combined salaries leaves them $36,039. They also have 8% of their pre-tax pay put aside in a 401(k), leaving them $32,759.
Their monthly expenses are,
mortgage - $1100
utilities - 400
food - 750
health insurance - $185 (the balance is covered by Joe's employer)
child care - $400 (this is heavily discounted because it's for employees of the hospital where Susan works)
transportation - $180 ($70 gas for Joe's old Buick, $60 for Susan's bus pass, $50 auto insurance)
Their total for the year is $36,180. That leaves $-3421 (don't miss that negative sign in front of the numbers) for any other expenses incurred during the year.
Their old (Clinton era) tax rates had them paying about 6% in taxes and they were scraping by.
Do these seem like wasteful people? Is there a lot of wiggle room in the budget? Sure -- if they cancel all payments to the 401(k) and forget about ever retiring before death.
Meanwhile, Joe Fucking Billionaire sees his rate drop from about 17% down to the same 12.1%. He has to cut back to just one new Ferrari each year. Oh, the horror.
Is the flat-tax society one in which I want to live? Hell no!
Hey Barb, you got room up north for a few more citizens?
Joe and Susan have a combined salary of 41,000. They are taxed at the current income tax rate for their income - 15%.Taking 15% from their combined salaries leaves them with $35,700. So a reduction to 12.1% saves them $480.
No. That is incorrect.They currently enjoy deductions for their mortgage, health care and child care expenses. Their effective tax rate is about 6%.
As I understand it, all flat-tax proposals eliminate those deductions.
We've been over all of this in depth before. It never seems to click for Mr. Flat Tax.
I don't think making the working poor's lives any harder is the answer to any economic proposal. I work for a large, urban school district and my heart breaks for the parents that clearly want to be involved in their kids lives but can't because they work two jobs, not to make ends meet - because they never do, just to keep a roof over their heads and food in their bellies. Then you take all those "programs" away from them - early childhood programs, low income housing, afterschool programs, WIC, etc. and all you're doing is digging them a hole they and their children will never get out of. Sorry, this is an issue I am extremely passionate about. :(
Arminius wrote: "I care about them all, after all I am a veteran, I have kids and I will get old. However, priority #1 should be to grow the economy. A growing economy can fund all their programs. Economist Art La..."At the expense of nearly 50 million proud Americans who are living below the poverty line or the 17 million children who live in food insecure homes? I don't understand how anything can take priority over human lives.
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Nice graphic.
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When you rehash the flat tax, over and over and over, I just tune you out and move on to the next post. We've discussed the flat tax and its cons in so many threads.
Blogger emptywheel had a great post about the downgrade. Excerpts:
There are two issues to grapple with: first, with the undeniable evidence that our government has become a clusterfuck, we have become incapable of taking obvious steps–like taking the profit motive out of our health care system or taxing the wealthy that just got a giant government bailout–that we need for the well-being of the country. At this level, S&P’s downgrade makes sense.
But then there’s the question of why we let a thoroughly discredited entity like the S&P be the one to dictate whether we merit our world leadership position or not. That’s not just a question of letting one of the agencies that created the bubble retain any position of authority in the world afterwards (though, again, the fact we left the rating agencies in place after the crash is another sign our governance has failed), but also why a nation-state would let a corrupted entity like S&P do so in the first place.
Therein lies the paradox here: the downgrade is at once a real measure of the collapse of our governance, one of the best symptoms of it, and a key piece of evidence of why our governance is failing. So what’s going on?
She quotes another blogger who is asking what the downgrade says about power:
But even to ask that question — it seems to me — is to invest with legitimacy and explanatory power an underlying premise that I do not accept: that a “Nationally recognized statistical rating organization” having such profound power over our government’s economic policy has or could have anything to do with “deserve,” or that there could be a “right” or “wrong” way for them to use their power. I don’t concern myself with that question, because it would be like a death-penalty abolitionist trying to answer whether a murderer deserved to get the chair: whether or not a particular person committed murder is something completely different than whether a murderer deserves to be executed. An opinion on the facts do not dictate a judgement of the moral imperative, nor should they be confused with each other.
After all, it’s obviously the case that our current government is dysfunctional and useless, divided as it is between those who want to destroy government’s social use and those who will not stand up for it. But as Kathy Gill observes, McGraw-Hill owns S&P, and this is who owns McGraw-Hill:
(graphic featuring a lot of multinational companies and what I'm guessing is McGraw-Hill's board)
And whether or not McGraw-Hill itself has particular ties with the Bush family — or has a particular interest in driving the politics in this direction — are important questions that I can’t answer, and only point us towards a simpler way of addressing the problem: Standard and Poor’s is a self-interested corporate entity and it is acting in accordance with what it perceives its self-interest to be, in precisely the way that self-interested corporate entities will consistently do. To ask whether a privately owned corporate entity is passing the correct judgment on our political process is to obscure that underlying, anti-democratic fact. They have the power to do so because they’ve been given it: a “Nationally Recognized Statistical Rating Organization” must be “nationally recognized” for its ratings to have the force that it has, and the way the system of financial regulation is constituted is what defines that force. If you’re so inclined, you could even argue that this is all a good thing. God speed to you. As for me, to the secular theology of a “just market,” I am somewhere between a practical agnostic and an angry atheist. The finance market is certainly real and powerful, but the only important question is whether we think the self interest of these kinds of entities is the same as that of the American people, how we will regulate their ability to make decisions, and whether we will continue to cede them the power that they presently have and are using to impose their will on the US’s political economy.
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She then quotes a website called MacroBusiness, which is wondering "whether our world will be governed by states, or by corporations."
The idiotic ideological battle in Washington over the debt ceiling was yet more evidence of the failure of governance in Western economies, which is the real crisis. Then, after the stock market carnage of last week, the attention was focussed, reasonably enough, on government’s MANAGEMENT skills — how good they are at being efficient bureaucrats pulling levers in the financial system and in keeping debt levels under control.
But this crisis goes much deeper than that. In a sense the Tea Partiers are right. This is a POLITICAL battle over the state’s right to be a state.
That was the lesson from last week’s debacle in the US Congress. It was argued that if no deal could be struck, then the ratings agencies will reduce the US government’s AAA rating. This then happened, with Standard & Poor’s downgrading America’s debt to AA+.
Who exactly are these ratings agencies? Oh, those corrupted, easily deluded companies who are to sane analysis what a croupier at a roulette table is to an insurance policy. They showed in the lead up to the GFC that they go to the highest bidder and that they have little or no credibility. Suddenly these private companies have authority over the US government?
[snip]
They are nevertheless a symptom of a much deeper, long term issue — the replacement of the nation state with the market state, as historian and professor of law Phillip Bobbitt describes it. The issue is not about big government or small government, although they are certainly issues in a country that is rapidly losing its middle class. The problem is whither government itself? So successful has been the attack of the libertarian market worshippers, there is no government worthy of the name in the Western post-industrial financial system.
It's all in a post titled "The End of the American Empire."
http://www.emptywheel.net/2011/08/07/...
Phil wrote: "No. That is incorrect.They currently enjoy deductions for their mortgage, health care and child care expenses. Their effective tax rate is about 6%.
As I understand it, all flat-tax proposals ..."
I looked up Laffer's deductions; he has one for mortgage and one for charity included.
I have to go back to the book, I think Laffer realized your point and allowed for a $15,000 income deduction for certain incomes. I might have read that elsewhere though.
Back to the point: The S&P rates the credit worthiness of government bonds. That is whether or not the government will pay their bonds when due. They are not economic experts but they decided to downgrade based on the U.S. economy.
Everyone knows it is rotten but most people also know that the government would not default on its bonds.
All the Republicans and Tea Party folks have their undies in a collective knot over raising the debt ceiling. Have they FORGOTTEN that Saint Reagan raised the debt ceiling 19 times?
BunWat wrote: "Arminius wrote: "Back to the point: The S&P rates the credit worthiness of government bonds. That is whether or not the government will pay their bonds when due. They are not economic experts b..."
They may be right but that still has nothing to do on with whether or not the government will pay its bonds.
BunWat wrote: "::Shakes head in a stunned fashion, stumbles off in search of more caffeine:: "That doesn't help Bun, I've tried it.
Jim wrote: "But it trickled down right?"Ha Ha, sure it did. One of those lovely Reagan years we lived on commodity cheese and rice and hubby's low-interest student loans went down the toilet. It was a good thing my second job at the Green Pepper allowed me to bring home a small pizza every time I worked.
You must have been living high on the hog in the Carter years, Cynthia.
I was in High School. I got by, thanks to living with my folks.
Arminius wrote: "BunWat wrote: "Arminius wrote: "Back to the point: The S&P rates the credit worthiness of government bonds. That is whether or not the government will pay their bonds when due. They are not eco..."
There are two things to consider for credit worthiness. The first is the ability to pay. The second is the will to pay.
We have the first and the tea party lacks the second.
Cynthia wrote: "I was in High School. I got by, thanks to living with my folks."Most of us struggle at first when we move out on our own no matter how good or bad the economy is.
Phil wrote: "There are two things to consider for credit worthiness. The first is the ability to pay. The second is the will to pay.We have the first and the tea party lacks the second. "
Yes.
I equate Congress's dithering with a couple going into a meeting with a loan officer in the hopes of securing a home loan and then proceeding to debate loudly in front of the loan officer whether or not they plan to make the payments once they have the home.
S & P watched as Congress debated whether or not the US would make good on their loans. It was ugly and dysfunctional and ridiculously short-sighted.
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"The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default," said Greenspan on NBC's Meet the Press .
Yeah, sure, you could do that. Would the dollar be worth anything after that? I doubt it.
http://www.cbsnews.com/stories/2011/0...AP) WASHINGTON - The Justice Department is investigating whether the Standard & Poor's credit ratings agency improperly rated dozens of mortgage securities in the years leading up to the financial crisis, The New York Times reported Wednesday.
The idiots at S&P are finally being investigated.
janine wrote: "Yeah, sure, you could do that. Would the dollar be worth anything after that? I doubt it."I agree with Mr. Greenspan and you.
Arminius wrote: "S&P still has a triple-A rating on Australia, Austria, Canada, Denmark, Finland, France, Germany, Netherlands, Norway, Singapore, Sweden, Switzerland, and the United Kingdom..."
Australia rocks by the way! I just can't figure how the dim witted politicians we have now manage it!
Australia rocks by the way! I just can't figure how the dim witted politicians we have now manage it!
Arminius wrote: "janine wrote: "Yeah, sure, you could do that. Would the dollar be worth anything after that? I doubt it."I agree with Mr. Greenspan and you."
With both of us? Because I don't agree with him. Sure, you can print as much ink on green paper as you want, stick as many faces on there as you want, but after a certain point a dollar is no longer worth what it used to be.
You can pay off the debt by printing more money and the dollar will lose value as a result. So, the both of you are correct.
Do they think that investors will flock to these countries bonds?
They had rated subprime-backed securities, Enron, Fanny Mae and Freddie Mac as AAA up until they burst.