America’s Spiraling Stock


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Will conservatives be able to use the Standard & Poors warning to leverage some meaningful budget cuts out of the administration, like those contained in the Ryan budget? Maybe, but it’s probably a long shot at best. The deficit debate boils down to whether we use tax hikes and modest budget cuts to start closing the gaps, as the president has proposed, or whether we start making some really meaningful spending reductions like the Ryan plan lays out. As a credit rating agency, Standard & Poors  doesn’t care how a government closes the gap between spending and revenue, so long as the gap closes. Over at City Journal, Nicole Gelinas cited the United Kingdom’s experience with Standard & Poors as an example of how the agency’s warnings can be used to send exactly the wrong message. Standard & Poors had downgraded the UK’s future creditworthiness outlook to “negative” under Gordon Brown’s regime, but the agency changed its mind after David Cameron’s government applied some leftist solutions to “fix” the problem:

The Conservative-led coalition government increased taxes on VAT earlier this year, from 17.5 to 20 percent, dampening retail sales. It also went ahead last year with former prime minister Gordon Brown’s plan to hike the top personal-income tax rate to 51 percent (compared with America’s top rate of 35 percent). Though Britain has promised spending cuts, those cuts remain mostly in the future. Yet the Conservatives have reaped a political reward. S&P last year returned their nation’s outlook to “stable.”

The left would very much like to see the same kind of “solution” applied here. A tax hike could possibly make a dent in the deficit, but no conceivable tax hike could do anything but delay the onset of the entitlement crisis for a few more years. The only real solution is for the government to make the kind of meaningful, painful spending reductions that will restore some kind of balance between what we spend and what we have to spend. That’s the point that lawmakers ought to take away from Standard & Poors warning, but history tells us that lawmakers rarely hear the messages that really matter.

 

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  • geez

    Let's get the ManChild out of the White House before he taxes and spends us into slavery. 2012 is the time for this loser to go back home to Kenya where he can continue his fathers dreams, we can't afford them anymore. Obama/Carter for Kenya's might be in the cards. $10 says Obama builds a golf course in Kenya.

    • Fred Dawes

      now that is a great idea.

    • Dennis X

      Under your boy bush I loss ax. 40% of my 401k that was invested in the market, under my President I've gotten it all back and then some!!! Markets up 169 points today.

  • Goodgov

    I can hear them now " This is a White conspiracy because the president is black"

    • Fred Dawes

      not because he is black its because he is owned by the system bankers, but it is a good conspiracy and don't play the race card that is so old.

  • Amused

    Oh yea , lets hang on every word from S&P , and Moodys , bond raters extraordinaire !More facts down the memory hole , in cognizant dissonance , which seems to be a trademark of Rich . Perhaps Rich forgets , that S& P and Moodys were PRIME PLAYERS in the Economic collapse . How ? By giving F -rated bonds , A -ratings . The Banks could have NEVER done what they did , nor the Bond Traders gone hog wild , had not these two corrupt organizations not LIED . Of course credit is in the negative , GEE ! We needed S&P to tell us that ? No one knew that before S&P;s …revelation ? Of course stocks will spiral at that announcement , and they'll be back up in two days , already recovering partially that same day . Thanks for your partisan spin Rich .You've gone from Chemical Engineer to Bond-Rater/ Credit Expert , huh Rich ?

    • nightspore

      It's amusing how you will even try to spin something like this. Who are you kidding other than yourself?

  • Amused

    As for Mr.geez ' remark ? Brilliant man ! Oh the relevance is blinding , what a display of racist ignorance , but I'm sure you'll find a audiewnce here that such stupidity will play to .
    Carry on Mr.geez . You are proof that …you just can't fix stupid .

    • geez

      Thanks, I appreciate your opinion… Mr. moron. You need to vote for more hope and change. Maybe instead of halfwit hair plug Biden the Messiah could get Carter to complete the socialist ticket for 2012. I'm sure they'd get your vote… lemming.

  • Amused

    Consider what Nobel Laurelate Joseph Stiglitz, economics professor at Columbia University in New York observed:
    “I view the ratings agencies as one of the key culprits. They were the party that performed that alchemy that converted the securities from F-rated to A-rated. The banks could not have done what they did without the complicity of the ratings agencies.”
    Hence, the “negative outlook” of US debt has come about because the inability of Standard & Poor’s to have performed their jobs rating mortgage backed securities. Ultimately, this enabled the entire crisis, financial collapse, enormous budget deficit and now political over the debt ceiling.Of course there is a negative future outlook. Its in large part the work product of S&P and Moody’s.Why we even have Nationally Recognized Statistical Rating Organization (NRSRO) any longer following their payola =driven corruption, their gross incompetency and their inability to discharge their basic duties is beyond my understanding.

    • dirtybird

      Yes, the ratings agencies were enablers of the mortgage meltdown in 2008/09, however they were unwitting enablers, not conspirators. If any agencies deserve credit for being the principal cause, we'd have to look to Freddie/Fannie and the fed govt's irresponsible policies that strong-armed banks to lend to the uncreditworthy under the guise of "social justice". Of course, you conveniently left that part out, but that's ancient history, so we won't belabor that. What you fail to conclude is that Moodys, S&P and other agencies were late to wake up to the crisis then, even as they are late today. S&P is only saying what everyone already knows…. the US govt is acting insanely irresponsible on its present course. Like Paul Ryan said, this is the most predictable disaster we've ever witnessed. We can see the ship careening toward the iceberg, but the present democrat Administration and Senate refuse to do anything serious to steer away. Rather, they continue pandering to their parasitic constituents. How pathetic!

      • Jim_C

        I presume you refer to the CRA, which worked fine for years until…what happened?

        Why are Freddie/Fannie the "principal cause?" Why single them out, except to play some silly "government vs. private sector" game?

        • dirtybird

          Again, this is ancient history. In answer to your question, the CRA worked fine until the Clinton Administration expanded it radically. Groups like ACORN aided and abetted this process by adding their threats and intimidation to the feds' extorting favorable lending to the uncreditworthy in exchange for bank charters. I am not suggesting that the public sector is solely responsible for the mess in 08/09; rather, I am suggesting conversely that the private sector is not.

    • Fred Dawes

      all you see was long ago planned by our enemies and its working within 3 years this country will be a third world monkey house.

  • Amused

    Do your Homework Rich .
    The Financial collapse occured under WHOSE Administration ? The symptoms UNADDRESSED during 8 years of WHOSE Admin .? S&P and Moody's fraudulent and phony ratings occurring under the noses of WHOSE S.E.C. appointees , who turned their heads the other way . Their MALFEASANCE committed with impunity . And under WHOSE ADMIN. were the bailouts of the "too big to fail " companies initiated ?

    Ahh, facts go down the memory hole , and it grows deeper everyday huh ?

    • nightspore

      What has this got to do with the fiscal madness going on right now? By what logic does pointing out the ineptness and/or duplicity of previous administrations and congresses serve to refute the present article?

      You're operating solely at the level of attitude, while dressing it up in argument forms.

  • ydroustan

    Obama's intellectually deceiving 'economical proposal' does not address medium- and long-term budgetary challenges and instead of taking seriously Paul Ryan, the chairman of the House of Representatives budget committee, aggressive plan that involves real deep cuts in non-defense spending is a convoluted narcissistic election campaign speech that fails to prioritize deficit reduction while continuing expansionary-entitlement centered fiscal and paper money policy.

    Obama intentionally and dishonestly renders the US weaker in an underhanded and traitorous way in the Saul Alinsky tradition with Alinsky’s forked tongue attacking free enterprise. His 'alleged' deficit speech is nothing but an exercise in ideological Marxism masquerading as moderation, as is his entire career.

  • oldwolves

    @ Amused,
    Under WHO'S administration are we currently under? Under WHO'S administration were we promised that budgetary challenges would be met and solved? Under WHO"s administration were the White House, Senate and Congress under complete control, capable of passing any law, repealing any bill and fixing any problem?
    Sorry Amused. Grow up. You can't keep blaming mommy and daddy for your problems. Bush is gone. You and your ilk elected this failure. He's your's.

    • Jim_C

      Wow, you tell Amused to "grow up" and yet you expect problems this large in nature to be "fixed" in two years thanks to the magical powers of the president and Congress? You must be an easy mark.

      Right or wrong, I just don't see how Republicans sell their message next election. Y'all best get cozy with your Kenyan Marxist Muslim Dictator–he's yours until 2016!

  • Cuban Refugee

    Frances Fox Piven, and the other sixties radicals and Alinsky disciples — some of whom are occupying positions in the highest echelons of our government, including the Oval Office — who work for the destruction of our republic, are laughing up their malodorous sleeves … when it all hits the economic fan, where will they find enough paper to wipe up the mess? What is their plan for reconstruction? A pie-in-the-sky, universal, socialist government? Never gonna happen — as has been proved time and time again, communism works only in theory, and in the twisted brains of its adherents — not when put into practice, as even Fidel Castro recently admitted in a rare moment of honesty.

  • BLJ

    The biggest problem that I see is that we have way too many people in this country doing exactly what the government is doing. Living beyond their means.

    There is enough blame to be passed around to both political parties. I agree that Bush was no fiscal conservative, but Obama has taken it to anothe level. It seems that his goal is to create some sort of statist system in this country.

    The worst thing to ever happen to America was the Great Society under LBJ. It created a Frankenstein entitlement spend, spend, spend mentality that permeates all levels of society today.

    • Amused

      Dirtybird sya the Bond Raters , Moody's and S&P were WHAT !!!! UNWITTING ENABLERS ???? WHO are you kidding man ? YOURSELF ? They all knew exactly what was going on , and wouldn't be left out . What Naievity on your part dirtybird …or just plain IGNORANCE .

      And besides THAT , if they were so " unwitting " why in the hell is anyone paying attention to what they say now ? Unwitting is another word for INCOMPETENT . ….so why take their word for anything after they failed so miserably for so long ?
      You Repo-Cons simply can't face the truth about ANYTHING . More FACTS ….right down the memory hole ….AGAIN >….pathetic man , pathetic .

      • dirtybird

        Read the book, The Big Short, by Michael Lewis, then get back to me when you're fully informed. Then we can have an intelligent debate.

        • Amused

          Oooops , looks like Admin , don't like my reply . Well try this , keep your book and come back when you've shaken off your delusions . THEN , maybe an intelligent argument can be raised on your part .

          • Amused

            Not only were S&P and Moodys in on the feeding frenzy like pigs at a troff , Arthur Anderson was not one to be excluded , they provided the phony accounting that made everything look good .

          • Amused

            So go sell your book to the suckers who believe Acorn caused all of this .

  • Amused

    oldwolves , you have no idea who I voted for .Not to mention , that 's IRRELEVANT .You dont have to be a Dem or Repo-Con , not to see what and who caused this , you have to be stupid , so if the shoe fits , wear it pal . And dont expect Obama or anyone else for that matter to straighten out what it took 8 years of REPCON & DEM. pandering to Wall Street , mismanagement , A Bush appointed bunch of " S.E.C. watchdogs " to screw up . Add to that the REPCON singleminded party obsession , which has stated quite openly sinjce Jan.21, 2008 that their mission is to see Obama Fail . / Well the Markets back up in the 12's the unemployment rate has dropped a bit , and you guys are still sniffing around for a birth certificate ….oh what great Americans !

  • Amused

    YOU AND YOUR " ILK " keep on going the way you're going " oldwolves " , and you will in fact be whining for another 4 years after 2012 . It is IN FACT all you blowhards who have been blaming soeone else foir the mess you put this country in , and you wont be selling that played out story too much longer , as your Republican Governors are waisting no time giving tax breaks to the upper income groups , and being subsidsized by the middle to lower income groups . How long do you think you can bullsheet the people before they catch on to your game ? lol….there are ALREADY calls for recall coming from Florida , Wisconsin and Michigan . Is that because your lackeys are doing such a good job ? No , I dont think so , it's because their agendas are being found out …the hard way .

  • MBA NJ

    Times have changed so drastically when accountability is used as a term to only entertain folks. What this last FAA bad event revealed concerning the bored employee watching a DVD movie during his shift was two-fold, but folks will not think at all about the VERY BIG PROBLEM THAT THE DUMB MICROPHONE TO THE PLANES WAS BROKEN AND EVEN IF HE WAS AWAKE that urgent piece of equipment was not maintained. So, here we have a Keystone Cops concept where they pretend to manage a process that is not being managed but will make a lot of dust and noise about exceptions–the process is broken, not some weak humans who admittedly are wrong. So, like the budget crunch, folks are distracted by inappropriate tidbits. Impeach the Usurper NOW.

  • Amused

    Ooooops Rich , look slike the market closed ….UP today , and in mostly all sectors . What did youy say Rich ? Spiraling down ? Was that a knee jerk editorial to S&P's announcement yesterday ? Or just more trademark " Fear Politiks ".

  • Amused

    MBA NJ …you sure of that title ? I guess everyone forgets when Ronald Raygun busted the Air Traffic controllers Union , what the main beef was . Not enough controllers , double shifts , faulty equipment and antiquated equiptment . Nothings changed , e xcept there aint no union , and thus no recourse for complaints , until of course we have an accident . So here comes a w hat ? an MBA ? from NJ ? Man I'm impressed . So let's impeach who ? Obama ? Brilliant man , where did you get your " MBA " ? LOL …or does that mean MASTER BULLSHEET ARTIST ?

  • ydroustan

    The darkening economic cloud has sent President Barack Obama’s job performance ratings plummeting to just 47 percent — just 1 point higher than his lowest ever mark — according to a new Washington Post-ABC News poll.

    That is a Fact, Jack!

    Today’s poll shows that Americans agree with the S & P verdict. In a tie with his overall worst economic approval rating, 57 percent said they disapprove of how Obama is handling the economy, with 46 percent saying they strongly disapprove. Only 23 percent strongly approved.

    • Amused

      Americans TRUSTED S&P right until the bubble burst and the floor fell out from under them . And it seems today ,that even Wall Street ,aint putting too much credibility on what S&P had to say – The Market was UP . And afterall , did anyone really need S&P to state the obvious ? Wanna cite polls ? next month they may be reversed , maybe not . That 's just like asking , will the market go up or down , answer – Yes . And dont forget , that "dark economic cloud " originated with Bush . So far all Obama has done was to extend the Bush policy from the fall of 2008 . Nor did he run up a 13 trillion dollar deficit in the 2yrs ,he's been in office . THAT'S A FACT , and one no REPO-CON is want to admit .

  • Fred Dawes

    the system will soon fall apart

  • Amused

    Yea and the world will end according to Glen Beck …..yawn .