US AAA credit rating downgraded

[Neil]

It frustrates me that, because the value of our currency is more or less ephemeral, that we even have to have these discussions. If our currency was based on something of finite value, the writing on the wall would be clear as day - we would know exactly how we had to proceed.

It is.  It's based on the faith in and credit of the United States, which is certainly finite.

Rather than raise taxes, I would prefer to see, first, how we look after major military scalebacks overseas and real entitlement reform that's beyond merely shuffling money around and other carnival sideshow tactics.

You'd still look like you need to raise taxes.  You aren't spending as much as you think on the military, and I'm not sure that 'entitlement reform' is anything more than a buzzword.

[Neil]

The gold standard talk is an economics equivalent of a canary in the coal mine of crazy. Whenever you are dealing with a nutcase ignoramus, it is bound to eventually come up. 

And here you are, and there it is.

[Legbiter]

Good job, Rebublicans. 

You could give these assclowns Switzerland and they'd turn it into Somalia in three months.

[alfred russel]

"S&P said it was because the deficit reduction plan passed by Congress on Tuesday did not go far enough."

Does that mean that the Tea Party-aligned members of Congress should have kept pushing for more cutbacks and/or the BBA?

No, it means you need to raise taxes from the lowest level in the last 50 years.

The economy is (arguably) the worst it has been in the last 50 years, so the low tax revenue makes sense. Like very other state with a welfare system and progressive taxation, in difficult times spending goes up and tax revenue goes down.  These are features referred to as automatic stabilizers.

[Razgovory]

The gold standard talk is an economics equivalent of a canary in the coal mine of crazy. Whenever you are dealing with a nutcase ignoramus, it is bound to eventually come up. 

I'm giving her the benefit of the doubt and assuming that's not what she's talking about.  I'd like to think she's talking about basing our money on another commodity like lean hogs.  Though it might make it difficult to buy Saudi Oil using pigs as currency. 


Though technically the US dollar has a finite value and it has never been totally worthless.

[CountDeMoney]

Rather than raise taxes, I would prefer to see, first, how we look after major military scalebacks overseas and real entitlement reform that's beyond merely shuffling money around and other carnival sideshow tactics.

Fuck that shit.  Raising taxes on the rich is much better than scrapping armored vehicles or Medicare.  THEN WE CAN HAVE BOTH!!!

[Neil]

Rather than raise taxes, I would prefer to see, first, how we look after major military scalebacks overseas and real entitlement reform that's beyond merely shuffling money around and other carnival sideshow tactics.

Fuck that shit.  Raising taxes on the rich is much better than scrapping armored vehicles or Medicare.  THEN WE CAN HAVE BOTH!!!

It's even better to raise taxes on the rich, the poor and the middle class.

[derspiess]

Good job, Rebublicans. 

[mongers]

Americans, welcome to the British experience of the last 90-100 years.

[Faeelin]

Good job, Rebublicans. 

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldata&blobtable=MungoBlobs&blobheadervalue2=inline%3B+filename%3DUS_Downgraded_AA%2B.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1243942957443&blobheadervalue3=UTF-8

[Legbiter]

Good job, Rebublicans. 

The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy ... [This] weakens the government's ability to manage public finances ...

http://blogs.wsj.com/marketbeat/2011/08/05/sp-downgrades-u-s-debt-rating-press-release/?mod=WSJ_markets_article_liveupdate

Again, way to go Republicans.

[garbon]

Doesn't it take two to tango?

[Faeelin]

Doesn't it take two to tango?

I have no idea what you mean. In the sense that yes, had the Democrats given into demands that it turns out were greater than Boehner's original demands from the get go, we probably could have avoided the hysterics. Maybe.

[DGuller]

Doesn't it take two to tango?

It does.  There would be no hostage standoffs if police always gave in.

[Razgovory]

Doesn't it take two to tango?

One to obstruct and one to be obstructed?