the us credit is reevaluated from AAA to AA+

Doug wrote:

Everyone now gets to make of it what they will. Democrats get to blame Republicans for not accepting tax increases, Republicans get to say "we told you so" and argue to cut more and there'll be additional pressure to do either or both because borrowing costs will increase.

The truth is that, given the mountain of debt that has been accumulated, along with the colossal entitlement commitments that have been made,  there must be both massive spending cuts and tax increases.

epaulo13 wrote:

..global financial collapse can't be far away. things are out control and can't be stopped..even if there was a will to do so. we need to organize  ourselves to prevent any attempts at austerity that can only lead to some apocalyptic scenario where corporations control everything. 

It depends on what the austerity measures are.  If they are cutting vital services to the truly poor, that must be avoided.  But, when it comes to, say, Medicare here in the USA, for example, the elderly as a group are the wealthiest demographic group in the country.  There is no reason that entitlement shouldn't be means tested.

Been watching the discussion on CNN. It's the first time in history that the USA has gone from AAA to AA - but this is only one of three rating agencies. One commentator is making a big deal out of the fact that this historic downgrade happened under Obama. The WH is saying S&P made a $2trillion mistake somewhere.

epaulo13 wrote:

sven

..we can no longer support the capitalist system. it will drag us down along with it. there is no reforming it.

Putting aside the evironmental damage, neo-capitalism has turned China around (will be the biggest economy in the world by 2020).  It was essentially a third world country 30 years ago -- until capitalist reforms allowed people to earn (and KEEP) money for their efforts.

epaulo13 wrote:

...even social democracy is dead...

In an idea world, what would you like to see social democracy replaced with?

epaulo13 wrote:

..direct democracy. in this world not an ideal one.

Well, in a direct democracy, one cannot be certain of what economic system the voters would want.  Perhaps they'd want social democracy?

eta: sven

..i can only speak for myself and hope that we would do something healthy for our children. i'm willing to go in this direction because i see no better alternative. do you?

Northern Shoveler wrote:

The bond ratings are merely part of the shell game that Wall Street is playing.  Now the rich elite who hold the vast majority of the debt get an even better return on their investment.  there is an inherent conflict of interest in a private sector investment company setting these ratings.  Just all part of the big con.

Is that why S&P was saying that tax increases are necessary and the fact that Congress failed to pass any tax increases was one of the key reasons for the downgrade in the rating?  That sounds like quite the "con" to me...

Also, the effect of this will mean more expensive borrowing for businesses, not just the government.  Again, that's quite the "con"...

Sven wrote:

Also, the effect of this will mean more expensive borrowing for businesses, not just the government.  Again, that's quite the "con"...

How does that work? S&P rates businesses separately. Unless it downgrades its rating on businesses as well as the government, the rates shouldn't change.

Maybe you missed the part about who Standard and Poor's is.  It is not like it is an independent agency. It is an integral part of the Wall Street con game.  McGraw-Hil is hardly in an arms length relationship and it makes it money by predicting things like what he S & P ratings will be.  You may believe they are not a con job but I certainly think that after the all the bubbles bursting in the last decade it is obvious there are no walls separating various arms of the Wall Street oligarchies businesses.  

Quote:

McGraw-Hill Financial, a part of The McGraw-Hill Companies (NYSE:MHP), is a leading provider of research and analytical tools for investment advisors, wealth managers and institutional investors. It deploys the latest innovative technology strategies to deliver to customers a portfolio of cross-asset analytics, integrated desktop services, valuation and index benchmarks and investment recommendations in the rapidly growing $16 billion financial information, data and analytics market.

S&P Indices
S&P Indices is known for its world-famous benchmark portfolio indices -- the S&P 500 in the United States and, globally, the S&P 1200. More than $1 trillion in assets around the world are directly tied to S&P indices, and more than $3.5 trillion in assets are benchmarked to them.

S&P Indices has forged relationships with leading stock exchanges around the world -- including the Australian Securities Exchange, the National Stock Exchange of India, the Toronto Stock Exchange, and the RTS Exchange in Moscow -- to calculate and manage local stock indices.

This has been coming a long time, since the first big stumble in 2008 that collapsed Lehman et al and led to the first round of bank bailouts. Since then we've been living in an extended Wile E. Coyote moment, frozen in mid-air above a deep canyon. There are some other nasty surprises waiting to explode, i think credit card debt is one of those. There is a very long way to fall. Strap in.

abnormal wrote:

According to Reuters, the Obama Administration met with S&P a couple of weeks back and tried to influence them.  Influence them to threaten a downgrade.  Fearmongering at it's best.  After all, this was the same point in time that Obama was claiming that the Fed wouldn't be able to send out Social Security checks (a decision that rested with Treasury, aka the Administration).

Gotta link?

US stripped of AAA credit rating by S&P over political weakness

The US government's credit rating has been lowered to AA+, the first downgrade in modern US history, despite furious lobbying...

http://www.guardian.co.uk/world/richard-adams-blog/2011/aug/06/us-credit-rating-downgrade-debt

Global markets on the brink of crisis

World's financial markets closed for business nursing losses of more than $2.5 trillion (£1.53tn) after a week of selling..

eta: Louise Cooper, an analyst at BGC Partners, said City traders were starting to "feel the fear. The banking industry is yet again facing a crisis – we are not yet at the post-Lehman days, but the system is creaking loudly. The horrible reality is that those leaders in charge of our economy have no answers."...

http://www.guardian.co.uk/business/2011/aug/05/global-financial-system-b...

"I find it interesting to see S&P so vigilant now in downgrading the U.S. credit rating. Where were they four 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?" U.S. Senator Bernie Sanders.

How this could play out:

http://pragcap.com/why-the-usas-credit-rating-downgrade-could-matter

“I suspect you are all missing the bigger picture. The downgrade of US sovereign is NOT irrelevant because it will force S&P to (a) downgrade JP Morgan (as the sovereign stands behind the banking system, you cannot have a bank rated higher than the sovereign), and (b) downgrade several European sovereigns, most notably France. Once France get downgraded, several French banks will get downgraded. It will then spread to other countries, and we have the potential for another crisis, so don’t underestimate the significance of this.”

I think the real danger is in people thinking Standard and Poor's and other agencies are just looking at economics.  Of course it is all political, and in the end they are just seeking, as are other financial institutions to destroy democracy and give themselves absolute power.

Tommy_Paine wrote:

I think the real danger is in people thinking Standard and Poor's and other agencies are just looking at economics.  Of course it is all political, and in the end they are just seeking, as are other financial institutions to destroy democracy and give themselves absolute power.

Well said.  

Sven wrote:

 

It depends on what the austerity measures are.  If they are cutting vital services to the truly poor, that must be avoided.  But, when it comes to, say, Medicare here in the USA, for example, the elderly as a group are the wealthiest demographic group in the country.  There is no reason that entitlement shouldn't be means tested.

[/quote]

Except that it would defeat its whole purpose.  Which is universality.  So that it can't be tarred and cut as a welfare program.  As Medicaid has been.

There's no reason the 1.45% payroll tax shouldn't be hiked.  Except for taxaphobia.

Not a detail, but a lie.

Social security is currently running enormous surpluses.  In 25 to 30 years it may need a cash infusion to get over the baby boom hump.  But that can be taken care off by lifting the payroll tax cap, even on a temporary basis.

Medicare will have a funding problem, but again that can be taken care of to a large extent by raising the Medicare tax and using money now being wasted in sinkholes like Iraq and Afghanistan.

josh wrote:

Not a detail, but a lie.

If only it were a lie.  Social Security is going to hit a wall in the relatively near term (at least as pensions go).

Quote:

Social security is currently running enormous surpluses.  In 25 to 30 years it may need a cash infusion to get over the baby boom hump.  But that can be taken care off by lifting the payroll tax cap, even on a temporary basis.

In 1940, there were 42 workers per retiree. In 1950, the ratio was 16-to-1. Today, there are 3.3 workers per retiree, and within 40 years, it's projected that there will be just two workers per retiree.

Quote:

Medicare will have a funding problem, but again that can be taken care of to a large extent by raising the Medicare tax and using money now being wasted in sinkholes like Iraq and Afghanistan.

Medicare will have a lot more than a "funding problem". The shortfall there is a multiple of that of Social Security and Medicare is due to hit the wall far sooner. On that topic, the Medicare Trustees' Report makes interesting reading, especially the Chief Actuary's comments:

http://online.wsj.com/article/SB1000142405274870330970457541326334449101... od=djemEditorialPage_t

Quote:

But then comes the report's final appendix, where Mr. Foster disowns the previous 280-odd pages. Mr. Foster has been Medicare's chief actuary for 15 years, and as such he is required to evaluate the law as written. But as he notes in his appendix, the law as written bears little if any relation to the real world-and thus, he says, the trustee estimates "do not represent a reasonable expectation for actual program operations in either the short range . . . or the long range." In an unprecedented move, he directs readers to a separate "alternative scenario" that his office drew up using more realistic assumptions.

Quote:

According to Kent Smetters, a Wharton insurance and risk management professor, shortfalls in Medicare and Social Security total between $80 trillion and $120 trillion, and are rising at a rate of $2 trillion annually. By comparison, he says, the value of all tangible property in the U.S. -- homes, buildings, land, autos and personal property -- is $50 trillion

Tommy_Paine wrote:

 

I think the real danger is in people thinking Standard and Poor's and other agencies are just looking at economics.  Of course it is all political, and in the end they are just seeking, as are other financial institutions to destroy President Obama and give the Republicans back thier power.

There, I fixed that for you (hope you don't mind)

abnormal wrote:

In 1940, there were 42 workers per retiree. In 1950, the ratio was 16-to-1. Today, there are 3.3 workers per retiree, and within 40 years, it's projected that there will be just two workers per retiree.

And in 1965, it was almost 1 to 1.  There was no crisis.

As for Medicare, I've mentioned some steps that can be taken.  None of them included relying on an article in the Wall Street Murdoch Journal.