S&P Downgrades US!

It appears in retrospect that it may have been a mistake for me to use a family budget as an example. It was an analogy, not an exactly equivalent situation, intended to provide recognizable context within which to understand a default.

On another note, if our congress were to account for all legislation on the budget and follow a pay as you go rule. We would not be where we are today.

I am not sure about Clinton, but Bush ran a great deal of spending off budget or unfunded. Both wars were not accounted for in the budget until Obama took office. The Medicare Part D (prescription drugs) was passed unfunded. That was congress but Bush signed it into law. That was not the worst part of it. Under GOP pressure Part D was prohibited from negotiating drug costs with drug companies. A practice of ALL insurance companies, large HMOs like Kaiser and the VA. Under Part D we, the tax payers, through the Medicare program pay the full listed retail price for a single bottle of a prescription drug. This can be a difference of as much as $600.00 on some prescriptions. (The number here is just representative of an interview maybe six months back with a Pharmacist complaining that the over the counter price he had to charge was hundreds of dollars higher than what it actually cost. The price being set and enforced by the drug company.)

You often hear that Medicare Part D has come in under budget. That is a very misleading statement since there were no revenues added to the budget that was already in deficit. Saying that it came in under budget is like an insurance company claiming a loss on their taxes because they expected a larger profit.

 

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So how would a senior on Social Security go about contacting the appropriate individuals to put an appropriate and yet effective pressure on the... Tea Partiers?

(this was a joke folks)

Everyone has a right to their ideas and opinions. It's just that some should keep them to theirselves.

 

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No, I want the washington crowd to know their little holiday is over and it's time to get down to business. That will never happen without someone making a BIG noise. You got shammed by Barrack Obama. he's the same old self serving loser we've been electing for years. No change, no hope.
See here's where we differ, Joe. You think the road to confidence in the USA is to keep saying "everythings OK, just a little more tweaking". Well people like me disagree. I think the world needs to know that the people here KNOW something in DC is very broken and we're going to do something about it. The masses ARE very uneducated and the teaparty isn't perfect but it shows that people in the US are waking from the slumber and we don't mind throwing a few men to the proverbial lions in order to find out how screwed up things are. No matter how well intentioned the democratic base seems to be you all are getting your asses handed to you regularly. Completely ineffective. But this is for sure, change is coming. Change is always scary, but it's coming, like it or not.

 

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Noticed I did not answer the exact question.

Under some laws certain types of debts go away if unpaid for a certain number of years. Other types of debt never go away.

 

No, you are angered and confused. And just what makes you think I got shammed by President Obama? Obama has done nothing but improve upon the mess he inherited. That is not to say he has not made mistakes. But he is infinately more competent than the regime that preceded him.

Yeah, you are going to show everybody how angry you are by blowing out your neighbors brains - not real smart.

As for non Republicans/Tea Partiers getting their asses handed to them regularly, I think you have been hitting the koolaid a bit too hard. On virtually every issue, the Tea Party cannot defend its ideology. It never stands up to the light of day.

You guys are pissed off because the guys you elected back in 2000 screwed you and the nation. So you and your brother Republicans rather than accepting blame and responsbility invented this mythical creature called a RINO to take the blame for your malfeasance and gulibility. And then you guys created this thing called the Tea Party which is totally immune to little things like reality, evidence and reason - reminds me of a blind man walking through a mine field. The credit agency downgrade was just the first mine. There are many more.

You guys are not inducing change, you guys are blowing up mines and playing into the hands of those that finance you.

 

Evangelizing is a new progressive terminology Joe . Your behind the times of your own party . Sorry they left you out of the loop . Thanks for the C.N.N. report . I like Varny my self when it comes to financial . I think him and his crew call it pretty close . Mind you I am not a tea party person . To many racist for Me . Getting financial houses in order is about the only thing I agree with em about .
I am uneducated . Yeah except for hard knocks . Learning the hard way from owning a business . Tried and true methods of doing business . I also learned from other great business Men . I wish I could be as smart as them when it comes to making the money . Just not cut throat enough .

O.K. I don't think I insulted you in this post . Me is trying a different approach . Friends , No Hard feelings

 

I hated Bush. But it doesn't matter, democrats had a chance and threw it away for the healthcare bill. Hope it was worth it. Time will tell, but I don't see my premiums going down anytime soon.
You know the sad part is that the same people telling us that a lower credit rating is the end of the world are the same people saying loose lending nearly collapsed the world economy...so which is it? Further, how do we put faith in credit agencies that blew it so big in in the credit default swaps? This is beyond party lines. Washington regulars are helping the mega-rich squeeze the middle class dry. I hope the teapartiers are one term..All of these clowns should have term limits. And the corrupt supporting staffs the facilitate this pathetic racket need a serious scope up their asses.

 

How's the teaparty solution working for you so far?

 

I would say, instead of comparing what is going on to waking up, it would be more appropriate to think of it as a nightmare! And hope I wake up soon!

 

As opposed to what? Democrats and Republicans spending wildly without a lick concern for the ramifications..I'm willing to try something different.

And you?

 

Nutcase Republicans wrecking the economy and incompetent at governing - we just had a couple of decades of this. What's different?

 

That's kind of like complaining that yer beer has gone flat and switching to hemlock.

Things are not looking good right now. Best we can hope for is that the markets are in a panic mode and will recover as cooler heads take control.

The US bond market has not been affected but it looks like some of the secondary bonds have. We're not out of the woods yet. The world markets are so interconnected today it may take awhile to settle down and see where things really are.

In the mean time there is nothing good in the recent events that bodes well for the working stiff.

 

OK, some clarification..Being in a rural area near detroit I never bought the recovery nonsense. I don't see it, haven't seen it and don't expect to see it..I'm having to learn how to burn wood, grow my own food and make my own fuel..Half of the people I know are out of work and don't see any relief in sight. All of which came to pass without the teaparty influence. How scared should I be of change?. The teaparty didn't send our jobs over seas. The teaparty didn't force the financial sector to make huge numbers of unbelievably risky home loans. Nor did they spend a trillion some on two unpopular wars.Here we're in a depression and have been for some time. What exactly do I have to fear when someone steps up and calls a spade a spade?
Shaky markets? pfft. That only worries people who have money to lose.

 

LOL Great post.

Exactly why I predict the second U.S civil war will be Urban Vs Rural.

 

Your story is not much different than many others, here where I live in S Ca things are worse than in most places also. I am fortunate in that for completely different reason I consolidated all my debit or rather paid if all off 6 years back.

But to your real question what should you worry about. Actually apart from anarchy it sounds like you are already feeling the worst of it. But consider what things would be like if your situation was the national norm. You would be talking great depression level of economic disfunction.

The fix is much the same, as it was then. Stimulate the economy. Create jobs. The problem is until people like you have money to spend business will not start hiring again. During the depression the government had tom do the dirty work. That is when we started with the Social Programs so many decry the value of today. They are also part of the reason we are not now in a depression of the same magnitude. Not to be making light of the problems folks like yourself and many around here are facing.

The deficit is a big problem. A very big problem. But is nothing compared to no jobs. Jobs should have been the first order of business, instead of budget cuts.

As I have said earlier, for the government to borrow money right now is as cheap as it can get. The only real way to end this without near collapse first, is to pump money into the economy. That is usually most effective as public works projects. Which we need badly anyway. Bridges, roads and levies just to mention a few good areas. Every penny spent on wages and materials for projects like that stimulates the local economies.

People making money spend it, buying groceries and you name it. Each dollar actually does the work of several in local economies. And people who are working pay taxes which increase government revenues to pay for the work and eventually pay down the debit.

Our congress along with a long list of bad decisions in the past both by the GOP and the DEMs have brought us to where we are. The only way-out is jobs and we cannot depend on the wealthy hoarding their cash to do anything about the situation. There is only government spending. Hopefully handled in a constructive way. People need to get back to work. And it is not their fault there is no work.

 

The problem is, Money is going to be revealed to be worthless. That's one big difference between this depression and the "Great" one.

 

Things like that have no meaning at all, when good people don't any to begin with.

People need jobs. They need to able to take care of their families. The value of the dollar means a great deal to someone hoarding dollars. To people like clusteringflux and some of my neighbors it means more than an exchange rate.

We have had enough of the doomsaying going around to last most ofmus a life time. It is time to stop complaining and pointing fingers and get the job done.

When people are back to work, then it will be time to hold our representatives feet to the fire and take care of the longer term problems.

Who cares about the nation's debit issue when you are worried about dinner tonight?

Too many of the people in congress are completely out of touch with what the working class is dealing with these days. They play it lips service but that's about the same as passing gas.

The real issue is jobs. Not how much a dollar, a pound, peso, sole or yen is worth.

 

It was interesting the last two nights while driving in my car I listened to two separate right wing radio shows, each were dercrying how terrible the George II presidency was now as they look back on his reign. During the presidency of George II, they admitted that they were fervent supporters. One host even stated George II was the worst president in American history. Wow, I thought I would never hear that from a right wing radio host. Too bad they were a little late coming to that conclusion. I could have told them that before the guy took office or when his Treasury Secretary resigned because of his frivolous and excessive spending.

Democrats had a chance with heathcare and they took it. It was probably one of the most difficult things to do because of the intense and powerful healthcare lobbies in Washington. But it was way past due and desperately needed.

The quality of American healthcare has been on a steady decline relative to other industrial nations. And the expense of American healthcare has been risiing at twice the rate of growth in American income. Healthcare consumes almost 20 percent of all income in this country, and it continues to grow. It has become unaffordable.

The traditional solution has been to pass the cost of healthcare from the individual who cannot afford it to the government. As a result, most of the projected deficits are because of healthcare expenses. American healthcare is more than twice as expensive as that of the nearest other industrial nation. That is huge. Healthcare needs to be reformed. The Dems put in a down payment. But we really need to move to a single payer system like that found in other industrial nations. Changing healthcare in this country, making it less expensive, will go a long way to reducing this nation's deficit and debt problems.

A lower credit rating is not the end of the world, not paying the nation's bills would be close to the end of the world. Credit rating agencies do have a spotted record I will grant you that. And it does go beyond party lines, I will grant you that also. Democrat president Clinton was not in my view a very middle class friendly president either. I think Clinton was in the hands of special interests too. That is why I was no fan of Hillary when she ran for president. What appealed to me about Obama was he wasn't in the pocket of the special interests, and he got healthcare reform passed. But the man, in my opinion, needs to be bolder and a stronger leader. But even so, the man had the guts to take on the heatlhcare special interests and that counts for something.

And I agree with you, the mega rich are squeezing the American middle class. The rich are getting richer and the middle classes are getting poorer. Poor trade policies, failure to enforce trade policies, and rampant corruption in Washington have been driving this nation into the ground.

Instead of falling for canards (e.g. Balanced Budget Amendment) we need real reform in Washington. We need to change the way we elect our representatives. We need to eliminate the dependencies and the roll special interest plays in our election process. And we need ethics reform, all of which needs to in the form of a Constitutional amendment.

 

In reference to Obama

I have often been a bit concerned with that he has seemed to be too much in the background. Not willing to step up and set a hard line or lay out a real plan of his own. Then I step back myself and in looking at what he has had to deal with, first a minority in the Senate that was willing to essentially stop the government with more filibusters, than ever before seen and over what would have seemed just routine business. And then the current congress and the knowledge that there was really no ground to be gained by setting up a bargaining frame with those who pledged not to bargain.

I am really not sure how he could have managed things differently. Perhaps the fall out from recent events will wake up the GOP leadership to the fact that they need to lead and represent the country, instead of a vocal minority in their own party.

Normally I argue in favor of a two party government but then normally after the elections are over both parties get down a compromise in the way they govern.

I did not vote for Obama in the primaries but I did in the general election. I will again. I just hope that either the GOP is tossed out or comes to their senses. This whole minority rule we have now is not any way to a solution.

 

The Job problem is about competition from cheaper labor. More education does is a short term solution because cheaper cost nations are dramatically increasing their production of highly educated people who do high skill work at a much lower cost.

The problem is that David Ricardo's Law of Comparative Advantage does not work when a currency is overvalued do to investment inflows used to finance consumption rather than to finance the creation of productive capacity. The Dollar, Euro and Yen are too high and this makes workers in the USA, Europe and Japan too expensive compared to workers in other parts of the world. The USA, Europe and Japan should not tolerate China and Saudi Arabia and other nations pushing up the value of the Dollar, Euro and Yen.

But of course people who own vast sums of Dollar, Euro and Yen denominated assets don't want to see these currencies lose values as that would reduce the value of their wealth. Shoppers and investors (shoppers for undervalued assets) want the wealth that they use to shop to have as much purchasing power as possible. America's wealthy and the politicians they fund don't want the dollar to fall and don't want to believe that the dollar needs to fall. The need for the dollar to fall to help American workers is simple basic economics but smart wealthy people believe what other smart wealthy people say rather than try to understand basic economics. If the wealthy don't want to know that the dollar must fall dramatically against emerging market currencies then the politicians also don't want to know what is needed.

Even if the dollar did fall dramatically things would get worse for American workers before they get better because America no longer has the capacity to produce what it consumes and a fall in the dollar would raise the price of all the foreign made products. A full blown economic depression for American workers is unavoidable. The sooner we have our depression and Dollar collapse the sooner we can end the long term fundamental outsourcing problem that will slowly grind the American workers into ever deeper poverty so long as the dollar is extremely overvalued.

You will know when the dollar is not overvalued because that will be when American workers get similar pay doing similar work as foreign workers.

If American workers getting paid similarly foreign workers for doing similar work does not sound good there is another way. Warren Buffett proposed a regulatory method of having the benefits of free trade without having the downside of free trade. Post 10 of http://www.sciforums.com/showthread.php?t=46279 has Warren Buffett's solution from his Squanderville article.