Naturally, there is a lot of finger pointing over the S+P down grade. Politics and the market dive increase the level of silliness.
My take is as follows:
1. The reason for the down grade is our nation’s long term, unfunded entitlement system liabilities. Our fiscal trajectory is nation-ruining.
This rating change was entirely expected and we are lucky that the other agencies have not yet gone along.
All the rest is politics.
2. Our long term outlook and the S+P rating have nothing to do with the recent sharp market decline.
The market decline comes from a simple fear of slower economic growth, worldwide. There will be more volatility.
3. There is no $2 trillion dollar “error” in the S+P calculations.
Once again, the Administration looks weak and incompetent in trying to claim an error. The Obama Administration thinks we Americans are stupid.
S+P made their position clear. The Treasury argues for a different starting point in calculating spending as a percent of GDP. S+P said, “Have it your way, the result would be no more than 1 ½% of GDP and therefore have no impact on our rating determination.” Think about it; does a sovereign rating agency make mistakes in their arithmetic?
4. America is seriously hurt by the lack of leadership and credibility from every aspect of government.
There is almost no simple factual truth coming from anyone in government.
The public conduct of nearly all national politicians is surreal in the factual vacuousness of their rhetoric.
The President demeans his office by joining in the propaganda war and involves far too many of his Cabinet Departments and advisors who should be far above the fray – think the Treasury Secretary and Chief Economic Advisor.
The caliber of almost all Republican Presidential candidates is a disgrace – and it matters.
The caliber of Party choices for national office is ever declining and ever more radical.
Our Fourth Estate encourages the fringe, focuses on the sensational, fails to debunk even the most egregious lies and gives very little time to sound analysis and expert opinion.
These are the simple facts.
Here is a very enlightening piece on the downgrade and the Monday market decline from the PBS News Hour.
Air Date: Aug. 8, 2011 - 12 minutes
I found these highlights most interesting:
· We need short term government spending that protects jobs and consumer spending with long term entitlement and tax reforms to eliminate the deficits and pay down the debt. The focus of Congress is the exact reverse – they are making things worse.
· The Fed should raise inflation; they should immediately announce QE3 as well QE4, 5 and so on. Europeans should do the same.
· Either the Congress or the Fed or both should buy more bad debt from both banks and consumers – but only via programs that seek bottom rather than those that only shift the timing.
· Congress should extend unemployment benefits and seriously consider paying those dollars to employers who hire workers who are on unemployment.
· Congress should extend the FICA tax holiday and find other ideas to stimulate real employment by real non-government employers.
· Congress must bend the curve of entitlement spending through real reform.
· Congress must raise taxes, the sooner the better, with the major revenue coming from deep tax code reform that broadens the base, eliminates [all] deductions and lowers rates.
· Critical near term spending should be on borrowed money backed by a clear path to reforms that will eliminate the deficits, pay down the debt and make our entitlement programs affordable.
It’s too bad that there was no mention of the current stupidity of the masses – idiots who want their benefits but won’t pay for them. We need media to get the message out until more of the public is demanding both entitlement and tax reform – I’m not holding my breath.
Fellow common sense, silent majority Americans, we are in for a long fight. We have to tirelessly vote the bums out. We must steadfastly refuse to take a side in any of the Parties’ clever fund raising, faux battles – don’t drink the cool-aid. As Charlie Reese said, we’ll have to sift through 300,000,000 Americans until we find 545 who can find their own butt with at least one hand.
I thought you might be interested to see the nations that still enjoy a AAA sovereign rating.
You can go to the link below to see all the ratings and the other two rating agencies – Moody and Fitch.
The second link explains the codes, if you care.
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