US Politics...the Reckoning

[Former Lord of Winterfell]

Interesting perspective from an Investment Manager working with the very wealthy: http://sociology.ucsc.edu/whorulesamerica/power/investment_manager.html

I think most Americans would be quite content with making it into the bottom half of the top 1%. If the top half of the top one percent has barriers to entry, well, I'd worry about that if I ever got there.

[Shryke]

I think most Americans would be quite content with making it into the bottom half of the top 1%. If the top half of the top one percent has barriers to entry, well, I'd worry about that if I ever got there.

Uh huh. So you didn't actually read the article in question at all, did you?

[Shryke]

http://www.nytimes.com/2011/08/05/opinion/the-wrong-worries.html?_r=1

In case you had any doubts, Thursday’s more than 500-point plunge in the Dow Jones industrial average and the drop in interest rates to near-record lows confirmed it: The economy isn’t recovering, and Washington has been worrying about the wrong things.

It’s not just that the threat of a double-dip recession has become very real. It’s now impossible to deny the obvious, which is that we are not now and have never been on the road to recovery.

Those plunging interest rates and stock prices say that the markets aren’t worried about either U.S. solvency or inflation. They’re worried about U.S. lack of growth. And they’re right, even if on Wednesday the White House press secretary chose, inexplicably, to declare that there’s no threat of a double-dip recession.

Earlier this week, the word was that the Obama administration would “pivot” to jobs now that the debt ceiling has been raised. But what that pivot would mean, as far as I can tell, was proposing some minor measures that would be more symbolic than substantive. And, at this point, that kind of proposal would just make President Obama look ridiculous.

The point is that it’s now time — long past time — to get serious about the real crisis the economy faces. The Fed needs to stop making excuses, while the president needs to come up with real job-creation proposals. And if Republicans block those proposals, he needs to make a Harry Truman-style campaign against the do-nothing G.O.P.

This might or might not work. But we already know what isn’t working: the economic policy of the past two years — and the millions of Americans who should have jobs, but don’t.

[Former Lord of Winterfell]

Uh huh. So you didn't actually read the article in question at all, did you?

No, I read your excerpt. If that didn't accurately represent the article, that's your fault, not mine.

[TrackerNeil]

What's interesting about this is when Republicans do hold firm to fiscal conservativism in the form of not supporting more deficit spending, they get absolutely blasted for being insane ideologues by the very people -- you guys --who claim they're not fiscal conservatives.

Whoa there...there are many miles between being fiscally conservative and being an insane ideologue. Take Paul Ryan, for example, darling of the conservative set and Serious Deficit Guy. Under George Bush, this dude never saw a deficit-increasing move he didn't vote for: wars, tax cuts, Medicare Part D, etc., and yet now I'm supposed to believe he's serious about deficit reduction? He's no fiscal conservative, and expecting him to reduce debt is like trusting the blood bank to Dracula. He falls under the rubric of "insane ideologue", I think.

Edited to add: This is what's so frustrating about these conversations. No matter how many times the Paul Ryans of the GOP demonstrate that fiscal conservation is only important when a Democrat is in charge, we're supposed to keep an open mind and think this might be the year they actually change. Paul Ryan and his ilk aren't changing their ways; they simply change their talking points to suit the situation. That's not to say there aren't fiscal conservatives in the GOP, but they ain't steering the ship, that's for sure.

[Commodore]

I will happily retract the "primary driver" portion of my post. Was just trying to make a simple point that mandates expand coverage and coverage costs money. If people want to dig up think tank research on the cost impact one way or the other, that's fine, but I'm not that motivated.

Was there a memo about providing footnotes and links for every claim made in the politics thread?

[DanteGabriel]

Was there a memo about providing footnotes and links for every claim made in the politics thread?

No, we're just oppressing you, like all your conservative brethren and your penchant for making bullshit arguments.

[Former Lord of Winterfell]

and yet now I'm supposed to believe he's serious about deficit reduction? He's no fiscal conservative, and expecting him to reduce debt is like trusting the blood bank to Dracula.

It doesn't matter what you think he "really thinks". He's actually proposed a bill and voted for it.

He falls under the rubric of "insane ideologue", I think.

So he doesn't really believe in an ideology, but he's an insane ideologue?

Edited to add: This is what's so frustrating about these conversations. No matter how many times the Paul Ryans of the GOP demonstrate that fiscal conservation is only important when a Democrat is in charge, we're supposed to keep an open mind and think this might be the year they actually change. Paul Ryan and his ilk aren't changing their ways; they simply change their talking points to suit the situation.

There's some validity to that. When your party has the Presidency, members tend to go along with programs that President proposes even when they're not big fans, because they don't want to undercut their own guy. Both parties are guilty of that.

Also, the situation now isn't the same as it was in 2005. The deficits are much higher and the economy is much worse. Different times sometimes call for different solutions.

That's not to say there aren't fiscal conservatives in the GOP, but they ain't steering the ship, that's for sure.

Well, they certainly weren't steering the ship. There were a bunch of conservatives who fought against Medicare Part D, for example, and DeLay kept voting open for three more hours to twist the arms of conservatives who opposed it.A bunch of them still held out, but not enough.

Look, I'm not naive enough to think that all those jokers in D.C. really believe in fiscal conservatism. Then again, I don't think they all believe the way they claim on lots of things, yet they sometimes vote that way because of political pressure, etc. I don't need them all to be born-again fiscal conservatives. I just care if they vote that way when the time comes.

[awesome possum]

As someone who often doesn't know what the hell he's talking about, it's become quite clear that half of the time FLoW doesn't know what the hell he's talking about. Flowery, long-winded posts can only hide a lack of understanding for so long.

[KazigluBey]

Presidential debt as percentage of GDP.

Maybe we can finally bury that tired argument that the GOP is the fiscally conservative party? That might have been true before Reagan, but it's been a bold-faced lie for the last 30 years.

[Smashing Young Man]

Presidential debt as percentage of GDP.

Maybe we can finally bury that tired argument that the GOP is the fiscally conservative party? That might have been true before Reagan, but it's been a bold-faced lie for the last 30 years.

Who really makes that argument any longer? It's now universally accepted that both parties helped get us where we're at today; even the most baaaah! of Republican party loyalists are forced to admit that.

[KazigluBey]

Who really makes that argument any longer? It's now universally accepted that both parties helped get us where we're at today; even the most baaaah! of Republican party loyalists are forced to admit that.

Well, no. Looking at the chart it's pretty clear that before Reagan, we had run up a lot of debt to get out of the great depression, and then as our economy grew afterwards as a result of all that investment our debt to GDP ratio went down. It wasn't until Reagan came along with his tax cuts that our debt blew up, and Clinton actually brought the debt down. So Democrats have a better track record over the last 30 years than the GOP does, despite the GOP claiming otherwise.

[Commodore]

Presidential debt as percentage of GDP.

Maybe we can finally bury that tired argument that the GOP is the fiscally conservative party? That might have been true before Reagan, but it's been a bold-faced lie for the last 30 years.

That chart shows Obama with a higher level of debt than any POTUS since Truman.

Also, congressional control is a factor.

[Jon Sprunk]

That chart shows Obama with a higher level of debt than any POTUS since Truman.

Also, congressional control is a factor.

Remember that chart doesn't show either the Afghan or Iraq wars, which were conveniently kept off the books.

[Commodore]

Remember that chart doesn't show either the Afghan or Iraq wars, which were conveniently kept off the books.

http://en.wikipedia.org/wiki/United_States_federal_budget

Congress may also pass "special" or "emergency" appropriations. Spending that is deemed an "emergency" is exempt from certain Congressional budget enforcement rules. Funds for disaster relief have sometimes come from supplemental appropriations, such as after Hurricane Katrina. In other cases, funds included in emergency supplemental appropriations bills support activities not obviously related to actual emergencies, such as parts of the 2000 Census of Population and Housing. Special appropriations have been used to fund most of the costs of war and occupation in Iraq and Afghanistan so far.

They were kept out of the budget bills and passed as emergency appropriations, but all revenues and spending are included in the deficit calculation.

Otherwise the deficits wouldn't add up to our total debt obligations.

[Jon Sprunk]

http://en.wikipedia.org/wiki/United_States_federal_budget

They were kept out of the budget bills and passed as emergency appropriations, but all revenues and spending are included in the deficit calculation.

Otherwise the deficits wouldn't add up to our total debt obligations.

Ah, I apologize. I saw that almost-flat plateau in the middle of W's two terms when the US was shelling out billions and mistakenly took the chart for just deficit spending. Obviously, when you tie in GDP the chart doesn't have the same curves.

Good call, Commodore.

[Commodore]

unprecedented

The United States lost its top-notch AAA credit rating from Standard & Poor’s on Friday, in a dramatic reversal of fortune for the world’s largest economy.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about growing budget deficits.

U.S. Treasuries, once undisputedly seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany, France or Canada.

[Ser Scot A Ellison]

BBC is reporting Standard & Poor's has downgraded the US credit rating.

Just FYI.

[WrathOfTinyKittens]

Oh shit son!

I can't believe they actually did it, considering that the other two ratings agencies explicitly confirmed the top-notch credit rating of the US.

Honestly though, the rates are what matters, and we still pay an extremely low rate to borrow - more so today than yesterday, even. Unless rates rise dramatically, there shouldn't be a whole lot of risk from one of the three agencies giving a downgrade.

To Shryke - regarding my comment in the last thread. I didn't mean that the economy would be rosy if people were less aware, just that they'd be more optimistic, which would help mitigate the current fears, which are dragging down the economy.

For example - I've read five or six articles essentially claiming that we will have a double-dip recession and one intervie where a money manager claimed we are already in the beginning of the second dip. However, the highest possibility for a double-dip by a credible source that I've seen cited is 35%, and consensus seems to be a chance of around 15-20%. So, in this instance, the news media is actively contributing to the threat of a second recession by trumpeting it as loudly as possible, contributing to public and business fears which, in turn, increase the chances of said double-dip.

Edit - I see now that Fitch has not actually released their report yet; an article I read earlier this afternoon was incorrect, it would seem.

[Alcibiades]

http://blogs.wsj.com/marketbeat/2011/08/05/u-s-debt-rating-in-limbo-as-treasury-finds-math-mistake-by-sp-in-downgrade-warning/

What's 2 trillion amongst friends?

Anyway, I agree with Wrath that the yield rates are what's important. We'll see next week how much this matters.