Tuesday, August 09, 2011

The S&P downgrade, so what

My friends on the right seem to cheering the S&P downgrade of US debt to AA saying it's the death knell of the Obama presidency. They ignore the reports assertion that

"Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act."
The Lu Lac Political Letter

So they dropped the credit rating of the United States Government because Republicans won't agree to raise taxes to cut the deficit and Republicans cheer. Why do these people hate America?

The S&P has some credibility problems that the Treasury pointed out.

Just the Facts: S&P's $2 Trillion Mistake

The reaction of the markets was to buy more US Treasury bonds and sell off stocks, go figure that out teabaggers. I wish someone would lend me money at 2.3% for 10 years.

The deficit is a long term problem but the immediate problem in that people don't have jobs.

Apostate Bush underling explains

The Downgrade Rally

The bond market has reacted to the S&P downgrade of US debt with a big rally in US Treasuries. As I write, the US government can borrow money for 10 years at about 2.3% and for 2 years at under one quarter of a point. The market wants to buy, buy, buy US debt.

What the market wants to sell are stocks: ie, claims on the future earnings of private-sector companies.

In other words, the market is saying: We fear recession and deflation. The Washington consensus is that we need to fight debt and inflation. It’s utterly upside down, utterly perverse.

I don't agree with David Frum and Andrew Sullivan about everything but respect that they are open minded. A quality sorely missing in American politics today.

A side note: I put in buy orders for 2 stocks that I like if the price falls far enough. I'm an optimist who believes in American Exceptialism and believes the stocks I buy today will be worth more 10 years from now.

Local reaction has been a bit over the top:

See you at the thrift store

The Lu Lac Political Letter



Pope George Ringo said...

Considering that unemployment in all likelihood will remain at or near 9% by Nov. 2012 (if not higher), conventional wisdom says Obama will be defeated.
Obama spent nearly three years playing the part of the non partisan. HE was always willing to deal with the Republicans; problem is, they never were.
Like him or not (and I do like him) he lacks the qualities of a leader adn has failed us.
The Republicans practiced a historical scorched Earth policy from the time Obama took the oath and he played "nice".
In all likelihood this Republican gamble will pay off.
I made a mistake supporting Obama in the Primaries....should have gone for Clinton...she never would have allowed the GOP jackals to play games as Barack did.
Good Luck America!
God Bless You All.

Anonymous said...

I would support Hillary or Russ Fingold in the presidential primary and I think wither could beat Obama. I also like him but he has the ballz of a two year old and apparently doesn't have the self confidence to run this country.

Stephen Albert said...

"...she never would have allowed the GOP jackals to play games as Barack did."

It's hard to argue that point.

The President has proven that if you don't stand for something, you end up having nothing. At this stage I'm not quite sure what to think that the President actually does stand for...is it for killing the Bush Tax cuts? Raising marginal tax rates? Funny, but he extended the tax cuts and talked about "corporate jets" and crap like that, not raising rates.

By the way, I'm not advocating for raising tax rates. If anything, I think the whole damn tax code needs to be chucked in the trash. The systems is so over-engineered at this stage that NOTHING can fix it...and any changes that are made will simply make the Code all the more complex.

Mean Old Man said...

This country needs the services of that fine young man our sainted Sen. Rick Santorum to put things right!!
And I don't appreciate the fact that the subversive who runs this site is making fun of this fine man by posting doctored pictures!!!
I just want the government out of my damned life and Mr. Santorum will make sure that the Obama health care plan is repealed and my Social Security and Medicare will not be plundered by the do nothing Democrats!!!
Mr. President, don't be telling old folks like me to "eat my peas!!!"
Keep your hands off my SOcial Security and Medicare and keep governemnt off my back.
All of you can go to Hell!!!!