Debt Ceiling Crisis

The S&P Debt Downgrade: What It Means

EisenhowerOriginally published by OpEd News.

On Friday, August 5, the credit rating agency, Standard & Poor's, downgraded US debt from AAA to AA+.

Gerald Celente's view that S&P's downgrade of the US Treasury's credit rating reflects a loss of confidence in the political system was confirmed by the rating agency itself. S&P explained the downgrade as the result of heightened political risks, not economic ones. The game of chicken over the debt ceiling increase and the GOP's ability to block tax increases indicate that "America's governance and policymaking is becoming less stable, less effective, and less predictable"

The reduction in the government's credit rating to AA+ from AAA is a cosmetic change. It remains a very high investment grade rating and is unlikely to have any effect on interest rates. It is revealing that despite the downgrade, US bond prices rose. It was stocks that fell. The financial press is blaming the stock market decline on the bond downgrade. However, stocks are falling because the economy is falling. Too many jobs have been moved offshore.

The Decline and Fall of the American Empire

Originally published on OpEdNews

The United States Government and its presstitute media have wasted time and energy creating hysteria over a non-existent debt ceiling crisis. After reading the news in the Ministry of Propaganda and witnessing the stupidity of the US government, the rest of the world is struck dumbfounded by the immaturity of the world's only superpower.
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What kind of superpower is it, the world wonders, that is willing to go to the eleventh hour to convince the world, which holds its banking reserves in US Treasury debt, that the US government will default on the debt?

Every country in the world now worries about the judgment and sanity of the country with the largest nuclear arsenal in the world.

This is the achievement of the Republicans, who took an ordinary commonplace increase in the debt-ceiling limit, an event that has occurred routinely many times over the course of my life, and turned it into a crisis threatening the world financial system.

To be clear, there was never any risk whatsoever of US default, as President Obama has power established by President George W. Bush's Presidential Directive 51 to declare default a National Emergency and to set aside the debt-ceiling limit and Congress' power of the purse, and to continue to issue the debt necessary to fund the US government and its wars.

That the American press ever took this highly-hyped "crisis" seriously merely demonstrates their prostitute status.

Oh Unhappy Day

Originally published on The Agonist

From World War I until Gulf War II – these are the bookmarks that define the American Century. All through this period the United States enjoyed economic, military, and political ascendance, and by the time Germany surrendered in 1945, the United States was the preeminent global power in so many dimensions that it truly “owned” the 20th century. In the realm of finance, American supremacy was symbolized by the AAA rating accorded its government securities, a rating the United States has enjoyed since 1917.

Now the United States has lost its AAA rating, and deservedly so. It has shown itself incapable of dealing with many serious financial and economic problems, One of its two major political parties has deliberately – yes deliberately – attempted to force a default on US Treasury securities, so that it can engineer its vision of a fiscally prudent America, one in which it is forbidden ever to raise taxes on wealthy people. This despite the fact that, other than corporations, wealthy people are the only source of incremental tax revenue for a government desperately in need of cash flow.

Uncle Sam Gets a Visitor

Originally published on The Agonist

Hey, John! John Bull! How you doing? It’s been a while – I don’t get many visitors these days you know. You’re looking great! I gotta say – I loved that wedding. Loved it! I saw all of it from the very beginning to that balcony scene at the end. I saw it live too – at 3:00 a.m. – right here in the hospital room. I was up anyway; I don’t sleep too well these days. I have to say, you guys really do that pageantry stuff better than anybody. The Pope could take some lessons from you, and those guys at the Vatican have a few millennia of practice at that sort of thing. And that Kate and William! What a lovely couple. Do you know they came to visit me right after the honeymoon? Very thoughtful, they were.

Hey, you wouldn’t mind putting on one of those white face masks, would you? These hospitals are just full of germs and you shouldn’t take any chances.

You heard about my illness, didn’t you? Something to do with my debt ceiling. My blood count was too high – reaching the limit – I couldn’t follow it all. They had all these specialists in Washington running around shouting at each other. It was all over the television channels. A real embarrassment, I tell you! Half of them were saying I needed even more blood transfusions, and the other half were saying maybe I should slow down a bit or even reduce my intake. I’m all in favor of that; I’d like to get back to where I was ten years ago, when I wasn’t stuck in a hospital bed.

Saturday Reads Around The Internets - Credit Ratings, Crazies and Crisis

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop. This week the fur is flying over the never ending economic absurdity spewing from our government representatives.


Did the GOP Play Math Hooky?

Scarecrow calls it on how the press doesn't even challenge outrageous economic fiction being spewed by politicians in did the GOP miss third grade math?

Compared to laying siege to government, hurting millions, and putting the economy at risk, it’s only a minor irritant, I suppose, one of the dozens of little misrepresentations that we are so used to hearing from the right wing that we just shrug our shoulders and wait for something new. But the fact the media almost never pushes back suggests that letting it slide is a mistake. And it’s just fractions!

Remember third grade math? Sure you do. It’s when you probably first learned fractions. Numerators! Denominators? Percentages! Pies! Well, it seems many right wingers skipped that year, because they can’t recall that a fraction has both a numerator and a denominator, so the size of the fraction depends on both.

So night after night, apparent third grade dropouts tell news anchors and talk show hosts, none of whom even sighs (sigh), that government spending has exploded under Socialist Obama. Before Obama, it was about 19 percent of GDP or 1/5th. But now its almost 1/4th, or 24 percent of GDP.

Tom Coburn said that on my public tv. Boehner and McConnell and Kyl say that. Every Tea-GOP and rightwinger has it tatooed on their foreheads, and Sarah Palin has is written on her palm. From 19 to 24 percent! Yikes!

The Simple but Horrifying Fallacy at the Core of the Tea Party

Originally published on The Agonist

It’s hard to say if the Tea Party has an acknowledged leader, but someone who professes to be just that has chosen a very opportune moment to trash Speaker John Boehner’s attempts to craft legislation that would allow an increase in the debt ceiling. Judson Phillips, the CEO of Tea Party Nation, is the self-acknowledged head of the Tea Party, and in an editorial this morning in The Washington Post, he attacks Boehner’s legislation for providing “almost non-existent budget cuts.”

Phillips says:

As the founder of Tea Party Nation, I feel confident in saying that the Tea Party understands what so many in Washington seem to have forgotten: We do not have a debt crisis. We have a spending crisis. There is only one way you get to a debt crisis — you spend too much money.

Here is what is fundamentally wrong and dangerous with the core assumption of the Tea Party: There are two ways to get to a debt crisis – you either spend too much money or you don’t take in enough revenue. Anyone who has done a family budget or a business budget understands there are two sides to every discussion of cash flow: cash flow in, and cash flow out. In government terms, this equates to taxes received and expenditures made.