I thought the Grand Poohbah said we are climbing out of the recession at a great pace. With the Dow dropping 513 points today, where are we headed? Who is to blame? Is the real recession coming our way, or will it be a full depression?
I thought the Grand Poohbah said we are climbing out of the recession at a great pace. With the Dow dropping 513 points today, where are we headed? Who is to blame? Is the real recession coming our way, or will it be a full depression?
Discuss!
well we were until this whole debt ceiling mess and this was debated going into this mess, we played chicken and investments came to a halt and we aare starting to see those numbers in reports and it has become obvious just how much of an effect this had, after growth for much of the year once it became apparent the republicans were set on running the economy off the rails businesses moved back into a wait and see mode.
Thank the republicans for killing the ragile recovery we had, if they had raised the debt ceiling as has been done hundreds of times and debated it in an appropriate manner rather then holding a gun to our economies head we wouln't have killed investment, half a year ago no one thought either party would be stupid enough to lt the united states default, sure we have had budgets failed to be made and government shutdowns from that, but the payment of that spending was never in question. Don't forget the republicans threatened to let the U.S. default (despite making huge deficit reductions and raising the debt limit with no issues 7 times under bush) and we are now seeing the repercussions of this political gamble. Yes the tea party republicans won the political battle but america's economy is paying the price for such tactics
Here is the S&P rationale which is about what I would expect with so little a chance for deficit/debt resolution.
Quote:
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria. Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.
I normally would support this decision but with the massive fluxuation in the market yesterday, I believe I would sit back and watch the roller coaster for a few days. Remember, Black Mondays (both of them) occured on Mondays. (boy, does that sound stupid, but I believe you know what I am referring to!)
(I'll never forget that one time in briefing, a fairly intelligent cop once asked, "Why is Cinco De Mayo always on the fifth of May?)
Standard & Poor's is strongly defending its first-ever lowering of the U.S.' credit rating to AA+, citing how ?the debacle over the debt ceiling continued until almost the midnight hour.? On Saturday senior S&P officials maintained they did not go too far by focusing equally on Washington?s political paralysis and fiscal policy as they set the new rating, The New York Times reported. On Friday the agency blamed D.C. dysfunction for its move, saying the just-passed compromise debt plan "falls short" of what?s needed to lower the country's $14.3 trillion deficit. Treasury reps said a ?$2 trillion error? was committed because the agency did not crunch its numbers with the new spending limits taken into account. But on Saturday a S&P official dismissed the significance of that large difference, and said it doesn?t change the reality that the U.S.? debt burden will keep rising. The U.S. still holds a AAA from Fitch and Moody?s, but S&P will likely soon downgrade Fannie Mae and Freddie Mac, CNNMoney said.
Yup! Mind you, I'm only playing around, seeing what I can do with the money I hadn't already budgeted to other purposes. But I'm up over 8% on the money I threw in since S&P released their downgrade.
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We work together every damn day. --Jon Stewart
Five things the media didn’t mention from the S&P downgrade report
Tuesday, Aug 9, 2011 at 11:53 AM EDT
Yes, people like John Kerry were quick to blame the Tea Party and claim that the S&P downgrade was solely due to a lack of tax increases, but that’s not what S&P said. Still, that’s probably all you heard. So, here are five things the media made sure you missed:
1) The left says the S&P downgrade had to do with the Tea Party not wanting to raise taxes. They hope you don’t read this:
Standard & Poor’s takes no position on the mix of spending and revenue
measures that Congress and the Administration might conclude is appropriate
for putting the U.S.’s finances on a sustainable footing.
2) It’s not all about taxes. S&P prominently criticizes the political impossibilities of containing growth in public spending and reforming entitlements. Is that the tea party’s fault too?
We lowered our long-term rating on the U.S. because we believe that the
prolonged controversy over raising the statutory debt ceiling and the related
fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an
agreement on raising revenues is less likely than we previously assumed and
will remain a contentious and fitful process.
3) They note that the debt ceiling deal didn’t go far enough. You might recognize that as the Tea Party position.
We also believe that the fiscal consolidation plan that Congress and the
Administration agreed to this week falls short of the amount that we believe is
necessary to stabilize the general government debt burden by the middle of the
decade.
4) Along with the deepness of the recession, the sluggishly terrible Obama “recovery” was another reason for their negative position. Is the Tea Party responsible for the Obama’s failed economic policies too?
First, the revisions show that the recent recession was
deeper than previously assumed, so the GDP this year is lower than previously
thought in both nominal and real terms. Consequently, the debt burden is
slightly higher. Second, the revised data highlight the sub-par path of the
current economic recovery when compared with rebounds following
previous post-war recessions. We believe the sluggish pace of the current
economic recovery could be consistent with the experiences of countries that
have had financial crises in which the slow process of debt deleveraging in the private
sector leads to a persistent drag on demand. As a result, our downside case
scenario assumes relatively modest real trend GDP growth of 2.5% and inflation
of near 1.5% annually going forward.
5) They might downgrade us again if they see “less reduction in spending” than was agreed to. Is the Tea Party also responsible for not cutting spending enough?
The outlook on the long-term rating is negative. We could lower the
long-term rating to ‘AA’ within the next two years if we see that less
reduction in spending than agreed to, higher interest rates, or new
fiscal pressures during the period result in a higher general government
debt trajectory than we currently assume in our base case.
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