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!


Why is S&P dictating to the United States?

We've been asking ourselves how can credit ratings agencies be more powerful than a nation-state, all through the threat of a downgrade. Now the political blogs are asking the same question.

It’s becoming more and more obvious that Standard and Poor’s has a political agenda riding on the notion that the US is at risk of default on its debt based on some arbitrary limit to the debt-to-GDP ratio. There is no sound basis for that limit, or for S&P’s insistence on at least a $4 trillion down payment on debt reduction, any more than there is for the crackpot notion that a non-crazy US can be forced to default on its debt.

Whatever S&P’s agenda, it has nothing to do with avoiding default risks or putting the US on sound fiscal footing. It appears to be intertwined with their attempts to absolve themselves from responsibility for their role in the 2008 financial crisis, and they are willing to manipulate not only the 2012 election but the world economy to escape the SEC’s attempts to regulate them.


The World Thinks America is Insane

The New York Times does a round up of people and experts calling our government bat shit crazy.

“I never saw anything like this, and I never thought I would see anything like this,” said Laurence H. Meyer, a former Federal Reserve governor who has been fielding calls from worried hedge fund clients to his Washington research firm, Macroeconomic Advisers. “I never appreciated how dysfunctional our political system is.”

Tourists who have come from around the world to see messy American democracy in action are watching far more mess than they ever expected. “You guys are nuts,” said Joseph Eastwood, 44, a Toronto accountant who was waiting in the Capitol Visitor Center for a tour last week. “Instead of building the country, you’re destroying it.”


Even Wall Street Doesn't Realize How Bat Shit Crazy They Are

A piece in The New Republic overviews the special interests and crazy think tanks that are destroying America.

The basic problem here is that Wall Street has massively underestimated the loony determination of the Republican right.

The main problem is that the Republican Party does not actually care very much about the deficit. It cares about, in order: Low taxes for high-income earners; reducing social spending, especially for the poor; protecting the defense budget; and low deficits.


Which is Worser?

Notice how so many things are boiled down to the lowest common denominator these days? It's not the best, but the least worst. Simon Johnson compares European debt to America's:

The debate in Washington DC is fraught not because anyone is grappling with the difficult issue of how to control health care costs. Rather the tea party wing of the Republican party is intent on insisting on near term government spending cuts, as a condition of supporting any increase in the debt ceiling.

It seems increasingly likely that some version of this libertarian tax revolt will carry the day. The resulting fiscal contraction will slow the economy and result in fewer jobs being created. It does nothing directly to address the looming budget issues beyond 2021 – there is no “down payment” on the table, just measures that are tangential to rising health care costs.

In the near term, the Europeans have the big problem – and this will only be compounded by slower growth in the US (we’re about one-quarter of the world economy). Over the longer haul, it remains to be seen when and how US politicians will get to grips with our real budget issues; so far the evidence is not encouraging.


America's Grapes of Wrath, Part II

This is one sequel we never wanted to see. The BBC does some real journalism and discovers the large swath of America's New Underclass. He's a little too open border happy but at least acknowledges the problem is fueled by NAFTA.


10 Signs of a Double-Dip Recession

Most Americans could care less what the NBER determines to be a recessionary cycle, they know they are broke. That said, 24/7 Wall Street argues we might be entering a new one, by the technicals. That said, the real one which assuredly should be weighted more than it is....the jobs crisis, the U.S. middle class.


How China Ate Our Lunch

More people are waking up to the fact China has our economy now and points to the trade deficit as one reason we are where we are.

When it comes to solving our nation’s fiscal crisis, we are now in the “not in my backyard” stage of negotiations. No-one wants to feel the pain that we will all ultimately endure. The old saying that misery loves company is true for American politics. If any of us are called to sacrifice, we demand to see equal sacrifice by others as well. However, in this early stage of “not in my backyard”, we still are desperately hopeful that the evil doers will be caught and that justice will prevail without any of us having to sacrifice what we all had hoped would be our future prosperity.

Unfortunately, the size and scope of America’s travail is too great for any one American faction to accept full responsibility for its cause or to create a solution through their own efforts. We all must understand our small participation in America’s deterioration in order to rise to the calling for the responsible citizenship that will be required if we are to reverse our nation’s course.

If we cannot dispose of personal responsibility in our quest to blame others for our national predicament, neither can we blame fate itself. For those that say nothing can be done to right our ship of state because it was merely happenstance that placed China in the good fortunes of becoming the next great empire and not some nationalistic conspiracy that created China’s opportunity for preeminence, I would ask, did China’s leadership not conspire to achieve world fiscal dominance? Did America not conspire to achieve world military dominance? Did England not conspire to achieve world colonial dominance?


GOP are in an Alternate Universe

Matt Stoller takes to task more political economic fiction:

But there is a big problem. America is simply not set up to handle one political party that bases its political organizing on an alternate reality and the raw power of propaganda. The U.S. government, and our public debates, are organized around the idea that there’s some measure of good faith in both parties, some common basis on which to make decisions.



Paul Mason's journey

The BBC piece is well worth reading.