Time for the big one or: Quo Vadis, America?

So for the first time in 70 years, S&P has downgraded our debt to AA+ instead of AAA.
 While I don't think this will have much effect one way or another, their reason is interesting: Republican intransigence. The only way to actually end deficit spending and pay down the debt is to raise taxes. Anyone with two brain cells to rub together can figure that out. Obviously, that rules out Teabaggers and numerous Republicans. And I'm tempted to include Obama, since he keeps trying to say this was a "compromise" and will magically create jobs ... when it won't and he knows it.

Edit: And this debt ceiling bullshit was only the beginning. The GOP is going to take every hostage they can until '12. They've already started again with FAA funding. Dozens of thousands of people are out of work because Republicans want to limit their ability to organize.
 
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The U.S. can be given a Junk rating and it would make no difference. When you are one of the largest economies in the world it doesn't matter.

Cutting our over inflated military budget would help quite a bit. We don't need to occupy two countries, nor do we need to bomb poor third world nations for the hell of it. DHS is also a waste of money as it hasn't done much of anything productive. In its defense though it was set-up to fight a non existent threat.

As for the FAA, I'd recommend listening to the current episode of No Agenda. The President has the power to move funds to them now, but has refused to do so in order to push the union issue. The president's spokesman was put under hot water when the press asked him why the president did not move funds a couple days ago.

EDIT:

Here is the spokesman when confronted by the press:
http://dropbox.curry.com/ShowNotesArchive/2011/08/NA-327-2011-08-04/Assets/Crisis%20Season%202/Carney%20prez%20switch%20funds.mp3

This is an Obama political play. FAA workers won't get paid because he wants to play politics.
 
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argatoga said:
The U.S. can be given a Junk rating and it would make no difference. When you are one of the largest economies in the world it doesn't matter.
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The only reason the U.S. economy is considered large, is because the people consume so much stuff. Simply said: The whole economy doesn't rely much on actually producing stuff and selling it to others but on spending borrowed money. Your wealth is being financed by those, who loan you money to buy their goods.

How do you think this will end?

For decades the motto has been: "We are America. We do what we think is right, because what is good for us, is good for the rest of the world, too."

Only today that isn't valid anymore and not many seem to have realized that. The world order is changing. The world is re-orienting itself away from a U.S. dominance. For Germany for example the most important export market (besides the EU) has become China. The USA are still very important but that importance is eroding with every day of that real life comedy show they call government there.

The solution to the U.S. problem is actually fairly easy: Support your country by paying more taxes and spend less money on things you have no money for in the first place. But obviously too many Americans are so stuck up in their "personal freedom" and "the state mustn't interfere with my life" thing, that they have forgotten about the fact, that being part of such a community isn't a matter of course but a privilege.

And that privilege has a price tag. Everyone here in my country agrees on the fact, that taxes are necessary to keep a country running. To get roads built, social systems working, enjoy a working infrastructure, have access to good education, live in safety and get offered a good schooling system, etc. you have to pay taxes. People mustn't take everything they know for granted.

Of course when your idea of freedom is to live free without any boundaries, with everyone just caring for their own business and fuck Washington, sooner or later the community will fall apart and you will get structures like in Somalia, where local warlords are controlling the country.

The death of a country is not so much the govenment but the people quitting their support for it. Many Americans seem to be so proud of their country, that they have totally forgotten, that in order to make it work, sacrifices have to be made. It's just money, folks. Nobody has to sacrifice a limb.
 
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For better or worse America is the top producer of entertainment in the Western world. That David Hasselhoff music comes from somewhere. So too America may not make the most physical goods, but it is still one of the biggest developers of technology in the world.

The massive centralization is what is hurting America. In 1980 the limitations on bank size were removed so banks were allowed to become too big to fail. So the failings of the few hurt the many. A distributed system of smaller banks would be able to recover as there would be plenty of other banks to pick up the slack.

A very centralized system with only one or few leaders is not a good thing. It can easily become a dictatorship of some kind which suffers from the incest of ideas. Eventually killing itself by resisting change (see Soviet Union).

The best system for the U.S. would be to have a small federal government. The individual state would then manage themselves. If a state went bankrupt or needed disaster relief the others would help out via the federal government. If one state continues disaster finical policy the others would force them to change. The key is to keep things distributed and allow many ideas to flourish. A controlled darwinism with a safety net for bad ideas.
 
argatoga said:
The best system for the U.S. would be to have a small federal government. The individual state would then manage themselves. If a state went bankrupt or needed disaster relief the others would help out via the federal government. If one state continues disaster finical policy the others would force them to change. The key is to keep things distributed and allow many ideas to flourish. A controlled darwinism with a safety net for bad ideas.
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Would a Switzerland as large as the US work?
 
lip said:
Would a Switzerland as large as the US work?
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I'm not familiar with Switzerland's government structure, but what I described is pretty much how the U.S. was originally set-up.
 
Oh yes, you are familiar with Switzerland's government structure, because your description is bang on.
 
argatoga said:
The U.S. can be given a Junk rating and it would make no difference. When you are one of the largest economies in the world it doesn't matter.
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actually it does matter, it is written into the Operating guidelines of most Banks and Investment firms that they may only invest in AAA rated bonds and nothing else, so if for example the US was downgraded to junk status then they would all need to rewrite their guidelines and give the US the same interest rate as Greece.

The most ironic thing about this whole Bond speculation bullshit is that S&P rated subprime morgages as AAA o_O
 
What you are referring to are investment grade bonds, which go down to BBB- or Baa3. The US is still far away from junk status and it won't get there anyway. This downgrade will lead to a higher funding cost for US debt, the US is already paying higher yields on their long term debt than Germany and that spread is likely to widen. The US will need to make sure that their deficit is cut and that their debt to GDP ratio stabilises in the short-term and is then reduced in the long-term. This will need to be done through spending cuts or tax increases in the short-term, while GDP growth is needed as well, it is unlikely that the GDP is going to grow faster than the US debt, without making cuts.
US politicians seem to only care about getting reelected at the moment, while playing their power games. Mind you European politicians are not exactly doing a good job either.
 
MacGuffin said:
The solution to the U.S. problem is actually fairly easy: Support your country by paying more taxes and spend less money on things you have no money for in the first place. But obviously too many Americans are so stuck up in their "personal freedom" and "the state mustn't interfere with my life" thing, that they have forgotten about the fact, that being part of such a community isn't a matter of course but a privilege.

And that privilege has a price tag. Everyone here in my country agrees on the fact, that taxes are necessary to keep a country running. To get roads built, social systems working, enjoy a working infrastructure, have access to good education, live in safety and get offered a good schooling system, etc. you have to pay taxes. People mustn't take everything they know for granted.
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While I agree with you on this 100%, there are some issues that go beyond taxes: 1. Is fixing the many fundamental issues within our welfare and unemployment system. 2. Explaining this simple idea to a bunch of stubborn conservative goons.
 
There is hardly a country in the world, that isn't struggling with its social/welfare system and how to finance it. Frankly I don't know much about the issues of the U.S. system but from what I gathered, it cannot actually be that overblown. Otherwise there wouldn't be so much poverty there. I suspect structural problems and cost-effectiveness are the main issues. And it seems to be heavily underfunded for what it is supposed to do. Am I right?

Maybe somebody can explain those issues, so it becomes more transparent for us foreigners.

I don't wanna suggest that our system is better but even though there are some cracks under pressure, it's still holding together fairly well. Mainly because our society is more based on a, well... shall we say "mandatory solidarity" with the needily. A working social system is expensive, very expensive to be honest. But in my eyes it is also the business card of a modern, civilized country. You cannot simply leave everything to voluntariness and compassion to help people in need.
 
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jmsprovan said:
actually it does matter, it is written into the Operating guidelines of most Banks and Investment firms that they may only invest in AAA rated bonds and nothing else, so if for example the US was downgraded to junk status then they would all need to rewrite their guidelines and give the US the same interest rate as Greece.

The most ironic thing about this whole Bond speculation bullshit is that S&P rated subprime morgages as AAA o_O
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Exceptions will be made then. The U.S. is far too big on the world stage.
 
The downgrading wasn't so much about mistrust in the economical power of the USA but the ability of the political leadership to run the country properly.

A view that I share. I'm a great fan of the "stick'em into a room and don't let them out without a decent result" method in such critical times. It's clear to me, that the politicians there severely lack fear of and pressure from the people. Instead they are more afraid of losing support from lobbyists.

And that is a really bad development. S&P simply hit their fist on the table to wake them up. We'll see the effect not before tomorrow, though.
 
This problem could be solved if the taxes were raised to the levels of the 90s and raising corporate taxes via removing all the loopholes and exemptions. By doing that, there would be money to pay the bills. :eek:
 
Ending the occupation of Iraq and Afghanistan would help too.
 
http://pirancafe.com/2011/08/06/sanders-on-sp-downgrade-where-were-they-four-years-ago/
From U.S. Senator Bernie Sanders? FB page on the S&P downgrade:

I find it interesting to see S&P so vigilant today in downgrading the US credit rating. Where were they 4 years ago when they, and other credit rating agencies, helped cause this horrendous recession by providing AAA ratings to worthless sub-prime mortgage securities on behalf of Wall Street investment firms? Where were they last December when Congress and the White House drove up the national debt by $700 billion by extending Bush?s tax breaks for the rich?
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You somehow must admire politicians' ability to redirect guilt and blame to someone else. Must be a professional reflex.
 
It's a valid point, though. Why the fuck do we care what S&P have to say after they proved quite disastrously how inaccurate they were just a couple years ago?
 
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