America: Downgraded & Degraded

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Yet once again, conflicting assessments on what may occur in the short-term were evident on that side of the world as well. “Because the U.S. market remains the most liquid and deepest and as Europe still faces uncertainty, the U.S. market is not likely going to experience a huge sell-off, even with the one-notch downgrade,” wrote Philippine central bank Governor Amando Tetangco in an emailed statement. Thomas Lam, Singapore-based chief economist at OSK-DMG, disagreed. “This is clearly a wake-up call for the U.S. and those who think a downgrade doesn’t matter are in denial,” he said. “Markets will enforce their discipline if the U.S. doesn’t repair its credit rating.”

David Beers, head of S&P’s government debt rating unit, reflected on that possibility. “It’s always possible the rating will come back, but we don’t think it’s coming back anytime soon,” he warned.

The move by S&P made the ratings agency itself a target for criticism as well. “I really find it quite amazing that a credit agency that could rate mortgage backed securities AAA has decided to downgrade the U.S. government,” said Greg Salvaggio, senior V.P. of Tempus Consulting. “I find it to be incredibly troubling from a ratings agency with a very terrible history in the last three years of its ability to quantify risk,” he added. Dean Popplewell, chief currency strategist at Oanda in Toronto, concurred. “No one expected [S&P] to do it,” he said. “They made sure Monday will not be boring!”

As of now, the other two major ratings agencies, Moody’s and Fitch, will maintain a AAA outlook on U.S. credit. But Moody’s has also lowered its outlook on U.S. debt to “negative.”

Senator Mark Kirk (R-IL) called on President Obama to cancel Congress’s August recess and bring lawmakers back into session to specifically address the concerns outlined in the S&P’s analysis. Yet as of early Saturday, there was no statement from the president, who met with Treasury Secretary Geithner on Friday before heading to Camp David for the weekend. Prior to the downgrade on Friday, the president spoke at Washington Navy Yard, where he announced a jobs program for veterans, aka more government spending. “We are going to get through this,” he said. “Things will get better. And we’re going to get there together.”

Perhaps we will. But considering this president never misses an opportunity to engage in rank partisanship, and has never submitted a serious — as in written down — budget proposal of his own, one is left to imagine what form such togetherness might take. As for the political parties themselves, it remains to be seen which worldview will gain the upper hand. And while the devil is in the details, there is no question cuts must be made. There is also no question addition revenue streams must be found.

The best of both worlds? On the cut side, a serious re-evaluation about the size and nature of government itself. Many Americans have lost sight of the reality that government functions best from the local level outward, not the national level inward. The monumental amount of waste that occurs in a process which essentially involves the states sending money to Washington, only to have Washington send it back, can no longer be tolerated.  The monumental immorality of a country in which half its population is tethered to a government underwritten by the other half must also be addressed.

On the revenue side, fundamental tax reform, as opposed to class warfare, must be undertaken. Eliminating loopholes is a no-brainer, both economically and morally, as it will give Americans the sense that everyone is paying their “fair share.”

More importantly, the pie itself must be made larger. There is no viable substitute for putting more Americans back to work. And despite what many Americans might believe, brow-beating the wealth-producers, as opposed to providing them with incentive, is a fool’s errand.

Lastly, every reasonable American must recognize that the way we have conducted our affairs is no longer sustainable. This is one American who would like to live long enough to see a debate about raising the debt ceiling become a moot point, with a government spending no more than it takes in, with all increases in that spending limited to a fixed percentage of GDP. One in which any spending deviation for national emergencies would require a two-thirds vote of approval by Congress.

On Saturday, China’s state-run newspaper, Xinhua News Agencyexplained exactly what our current dilemma necessitates. “To cure its addiction to debts, the United States has to re-establish the common sense principle that one should live within its means,” it said.

Right now the country still has the power to re-establish common sense principles. But Americans should make no mistake: if we continue to kick the fiscal can down the road, common sense principles will be imposed on us, not by us.

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  • Maxie

    The steep drop in the stock market three straight days in advance of the negative S&P ratings announcement is the real news. This tells you the insiders had prior knowledge of the pending announcement and made a ton of money shorting the market. Just to add insult to injury. America is being destroyed and the destroyers are getting rich in the process.
    Have a nice day.

    • Fred Dawes

      See Obama he did this to a free nation and will not stop until all americans are inside the third world, see globalist plan for this nation.

      • Jim_C

        Um, this all started happening before Obama.

        So what do you think he should have done about it?

  • crackerjack

    These so called rating agencys should have been dissmantled straight after the Lehmann disaster. They are the golden egg laying hen of the finance mafia. Put out a law making them liable for their ratings and they will be out of business tomorow.

  • franz von fear

    Rating agencys are becoming a tool to inforce neo-liberal economics on goverments worldwide. Goverments that do not adopt a fiscal policy the rating agencys favour are put on a debt spiral.
    These agencys are a threat to democracy.

  • Fred Dawes

    Most people just don't get what is happening in the USA And why standard & poor's did and why, you can yell all you want but the reason why this is happening is the obama boys now have away to make all Americans into total state slaves its called the SUPER CONGRESS.
    THE BILL WAS PASSED On aug 2 2011 making this nation into a obama DICTATORSHIP YOU MAY Not see it now but you will soon.

    Our money will soon be a world joke and within 10 years the USA Will disappear into some third world hell, by the way say goodbye to your guns your homes and your bank book and your jobs and your 401k's and say goodbye to your life and freedom.

    May God help you all.

  • SHmuelHaLevi

    The pre trade rate fell 5% in Tel Aviv since here it is open on Sunday.
    This not due to internal economics but a result of the US spiral and downgrade.
    Israel has bought about 150 billion dollars to try to stem the dollar collapse and now it is saddled with increasing high risk heading into junk papers.
    "PROTESTS" here: Financed through the NIF and US controlled subversive elements. I believe that the Oslo styled cadre will be finally but very carefully stomped.
    Back to the US. In reality most states overseas cannot fathom how or why is that with an economy? is totall disarray such as the US economy is still rated a AA+.
    The us debt load is now 100% of GDP.
    Israel, albeit a much smaller economy but a very robust one so far is at 44% of GDP. The rating is A1….
    China has rated the US at A level.
    Good US folk should take a very hard look at the "achievements" of the US systems since 2008 and even before that.

  • ze-ev ben jehudah

    If you stack ten soccer field full of $ 100 bills and three stories high that
    will be the depth of the fiscal deficit of America.China has the most of the
    outstanding loans. So like Fred Dawes "above"wrote. The democrates
    made the debt bucket overflow and Barack Hussein Obama, as the most
    responsible,should step down from the oval office.He has got a litle garden
    in the back of his house so let him shufle weeds in his own back yard and
    leave politics to competent man/woman.

  • TheBigFig

    Obozo will not be happy until he destroys this country. With his very liberals beliefs and muslim background, he is going keep implementing certain rules and government power that will bring the US to its knees. Why do liberal Jews vote for this empty suit? Didn’t they learn they’re lesson from germany and the second world war? They can’t wait to fill the coffers of this muslim scumbag. This is the beginning of the end of this great country. G-d bless USA and Israel.

    • johnnywoods

      "GOD bless America and Israel" if HE is willing to do so. I`m not sure HE is.

  • tanstaafl

    Is it possible for Congress and Obama to cut another 2 trillion from our budget? Certainly. But will they?

    It's obvious that changes will need to be made in 2012.

  • jacob

    Other than having everybody and his/her brother driving a 2011 model car, may I ask who did the so highly cackled 'STIMULUS" from the "ANNOITED ONE" benefit ???

    Could it be possible that this narcissist firmly believes he is doing a good job ??

    Did it occurr to him that he is better off resigning ????

    I can understand 98% of African-Americans voting for him but for 80% Jews who
    somehow must have been aware of his political baggage also voting for him
    just because, being generically DEMOCRAPS, they didn't care even if he was a
    NAZI as long as he was their political party's choice, proves that Jews are as
    stupid as the rest of the population and that crap of having accumulated that
    many Nobel Prizes must be purely coincidential…..

  • mrbean

    Blacks ruin every society at every level they exist in from the Presidency of the United States to the ghettos. All over America, Black teen mobs robbing stores, starting riots and robbing and assaulting white people in the streets at the beaches, at state fairs, epidemic of black men raping white women, and in London killing 3 and injuring 50 over some black thug getting shot just like the LA riots. Trillions of dollars in welfare since the great society and still they have an 80% illegitemacy birth rate with absent fathers, Send them all back to Africa – they are a contagion,

    • Jean-Claude

      I can't believe that a human being could write something like this in 2011!
      You're extremely disturbed!

      • mrbean

        Name what wasn't true? Blacks who are starting riots and robbing and assaulting white people in the streets at the beaches, at state fairs, raping white women at epidemic , and killing and injuring over 100 peoplw just because they are white over some black thug getting shot just like the LA riots and in London. That is being disturbed!

        • Ghostwriter

          The attitude you're displaying belongs in 1915,not 2011,mrbean. Your comments are still appalling and disgusting.

      • Supreme_Galooty

        Check your spelling. I thinks it's "human bean."

    • Supreme_Galooty

      Your observations, though accurate enough, are not entirely germane. While there is no doubt that a certain amount of dysfunctionality on the part of Obama is rooted in some sort of racial miasma, the far more dangerous elements spring from his inate hatred of America, his Marxist delusions, and finally from his puppet-masters. God spare us such a specimen of ANY race.

    • Ghostwriter

      Unbelievable!!! mrbean,I feel like I was reading something from a KKK screed. Not every black person is like what you describe and you should be condemned for writing such an ignorant piece of tripe. Not every black person is like President Obama. Your comments are disgusting and vile. You deserve whatever nasty comments come your way.

  • http://mypage.direct.ca/l/lbouchar/ SeaMystic

    The core clause that is creating the Nat’l Debt Crisis around the World including the U.S., is in a clause of the Bank of England since 1694, this has spread around the World, and now has come to roost.

    Check: http://mypage.direct.ca/l/lbouchar/

    Particularly chapter 2 & 3. Titled, “Guardians of Democracy, a Mystical View.”

    The Nat’l Debt was created as a “DEBT in PERPETUITY”, ever expanding through the noted Process of Issuance with Compound Interest, for Government needs, through selected Banks.

    IT’S UNPAYABLE!

    The Sword of Damocles, may be avoided this time, but it is inevitable, unless the enslaving clause is changed.

    Humanities present Enslavement , is not through Chains, but with Compound Interest, WITH INTENT.

  • http://mypage.direct.ca/l/lbouchar/ SeaMystic

    The core clause that is creating the Nat’l Debt Crisis around the World including the U.S., is in a clause of the Bank of England since 1694, this has spread around the World, and now has come to roost.

    Check: http://mypage.direct.ca/l/lbouchar/

    Particularly chapter 2 & 3. Titled, “Guardians of Democracy, a Mystical View.”

    The Nat’l Debt was created as a “DEBT in PERPETUITY”, ever expanding through the noted Process of Issuance with Compound Interest, for Government needs, through selected Banks.

    IT’S UNPAYABLE!

    The Sword of Damocles, may be avoided this time, but it is inevitable, unless the enslaving clause is changed.

    Humanities present Enslavement , is not through Chains, but with Compound Interest, WITH INTENT.

  • aamador1776

    A classical case for smaller government. Entitlements are a real problem and the Left for all their talk of the Tea Party holding government hostage, are the ones holding everyone hostage with entitlements and steadfastly refusing to reform the system. It makes one wonder why? We all know why. Serious Entitlement reform, a flat tax or other serious reform is the answer. The Left who's agenda we all know, would never agree. I guess is up to the voters to deal with the politicians now.

  • alexander

    What NASDAQ? What DOW???
    You minus well may show profit of Chinese or Mexican companies…..
    Goods made in other countries sold in USA…ALL MARKET INDICES ARE FRAUD
    -no connection to real "economy"-

  • Jean-Claude

    It's time that we stop the financial aid to countries like Egypt and Israel. These 2 countries alone cost us 5 bilions+, and I'm not including other countries which we also help.
    It's time that we use that money to help America. Also, we need to slowly bring back our soldiers from Afghanistan and Iraq to cut down spending. I'm pretty sure than sooner than later America will stand up on its feet and will prosper again. Long live USA!

    • muchiboy

      America has been generous to less developed countries.It may be that there will always be strings attached to such aid.By all means continue aid to the Zionist state,but pull the strings till it hurts.The aid to Egypt may have paid off,given the army's actions in their Arab Spring.Investing in Democracy and Human Rights is indeed a good and righteous investment. muchiboy

  • Steve Chavez

    CORRECTION! "OBAMA: DOWNGRADED AND DEGRADED!

    He did get one of his Birthday wishes and more will come till go the way of the Soviet Union, a country Obama, and his "Circle of Communists" were brainwashed to love more than their own country.

    Did you know KGB Putin called to wish a happy birthday? Obama also did a birthday interview with Russian TV but he won't ever go on Fox, his real enemy!

  • Victoria

    Our leaders will most certainly find a way to cut more spending, just like they eventually raised the debt ceiling. Was just a lot of kicking and screaming and low class in-fighting in the process. Problem is, it happened in public. Like a couple of hicks on the Jerry Springer Show, they wre like a divorcing couple fighting in the bank lobby before they make the inevitable payment. Then feel sorry for themselves and wonder why their lenders indicate their displeasure by lowering their credit rating.

    • Supreme_Galooty

      heh heh

  • WilliamJamesWard

    If you spent more money than you had and borrowed more to spend more and
    continued to spend more and more and borrow more and more and depend on
    the lending ability of others to continue, eventually you have spent all of your
    money and are living off of the lenders. It would be a no brainer that eventually
    your credit would be shot shot so full of holes that no one in their right mind
    would lend you anything except for the fact that maybe you can confiscate the
    wealth of your constituents and maybe they are not out of wealth yet but what
    they have is all that is left and that is where we are. Our natural wealth is tied up
    by leftist envionmentalists who are green as they keep us from our green, which
    is not theirs, they only do what they do to make us spend our wealth outside of
    our sphere to bankrupt us, folks we have been played and our political system
    is the culprit. A Nation of 300 million and we can not find 545 honest people
    capable of working ths show, come on we must be able to do it…………..William

  • mrbean

    Ray Stevens has the answer!
    http://www.youtube.com/watch?v=J6TcpfBHlbs

  • Supreme_Galooty

    Standard and Poors has sustained some tarnish on its halo for calling a spade a …. dinkum shovel. AA+ is not accurate. It is too high, too optimistic. As long as Americans vote for Democrats or "compassionate conservatives," the ranking should be in the basement with the junk.

    • johnnywoods

      Well said , Galooty.

  • muchiboy

    The answer is not cut spending or raise taxes,it is a combination of both,and,as has been observed,the devil is in the details.Democrats may favor a balance in favor of taxing,Republicans spending cuts.Those who have a black and white world view,i.e.The Tea Party,need to moderate.
    America is so important to us that the West may need to assist her.However,America does need to put her house,finances and foreign policy in order.God Bless America.muchiboy

    • Ghostwriter

      Amazing,muchiboy! You got through your comments without bashing Jews or Israelis! That's a monumental achievement for you and should be applauded. Now if you can do that for the rest of your comments,you'll be great.

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