The decline of ascent.
The shot across the bow in the Great American Decline came at the usual time: just before the weekend after the market closed on a Friday.
This time-honored tradition of announcing horrid things just as one tucks into Friday night was invented by flaks who believed — rightly — that nobody notices anything going on between 4:30 pm on a Friday and 9 a.m. on a Monday.
This hat trick does not always work. When Standard & Poor’s downgraded the U.S. credit rating from ‘AAA,’ the highest rating possible, to ‘AA+’ this past Friday I was traveling through New York and working in offices on Park Avenue. In the streets, it was absolute bedlam.
Later, having dinner on Wall Street with friends it was the same.
This effectively strips the U.S. of its golden credit for the first time in history.
We have lost our standing in the world.
As if this is news–what planet are those people living on? On the shop floors weve known it for a long time. They drive a good thing into the ground. A successful parasite does not kill the host. Wall Street has simultaneously rolled both the EU and $$$—-next up China will slow and complete the kill with those 20% cap requirements.
Now plan is fed reserve buy treasuries and fees on insured deposit sweeps force purchase of treasuries by individual investors whose money is trapped in the hands of Wall Street?
No money for equities except hedge funds which are short term investors that wack up the coprporations they control. Corp world will come apart too—back to smalls?
But ok the new US govt–after this de facto coup de-etat—all decisions in hands of 8 politicians –no risk there.—–or something that smells alot like buying time——-us prints for now QIII—but only works if EU prints too–or things can look ugly. But will Germany allow its GDP to be downgraded to account for what WALL Strreet and London did to Greece. Overloading it in expectation of this “test” of the system. So if Germany says no dice—-eu splits N/S?
Now then the US banks that arbitraged the rate diofferentials between US and Greek debt———–now they are once again in trouble.
And this is the significance of the downgrade–these US speculators expected even if the Germans threw their rider—that they could make the US TP pick up the tab. Now everybody seems to be jumping up from the feast without wanting to pick up the tab? Embarressing not?
Now when the gang of 8 does whatever —-heavy lifting for those staffers—spread across committees——–but now only things that count in 100 billions on table—no time on the corners—loopholes gape and pull like black holes. Will the people of the US swallow it?
They must–they have no choices. EU can break up but US cant. The people can be made to pay. No matter what. Everybody knows that. Yes the Joe Six packs will pay when told to—-all that is needed to scare them into the vital importance of stable govt is to cutback gasoline for their pickups that cost as much as houses. So long as they have jobs——-so we will beef up the highway work.
we will add a 5th guy to the group watching the 1 guy work.
But the downgrade would not have been issued if the raters agreed 100% here. I do not see how you can interpret it–the US gang of 8 for sure is going to agree to pay the debt—just like the EU high-ups——except Merkle. So if the leaders agree to pay—how can there be risk of non-payment. This is not a vote by the ratewrs on the US economy–but on the US government’s survival as is.
Maybe like Berlesconi, Obama should promise to modify the Constitution in some way that gains a majority of adherents? seems to be something wrong here–some correction needed. Personally I think its the 2 party system thats broken the Constitution–the checks and balances has broken down–The system was not supposed to depend upon the R’s checking the D’s etc———it was senate checking house–and both checking the administration——–the drafters would have wretched if they ever heard the term “government ruled by a party” ——–
If we are to have such rule then attendant opportunities for balance need to be added–such as multi-party coaltions—–for decades I have heard it said ” The US government may not be perfect but its the Best that ………” I’m getting a little vague on the rest.
Im also wonderng if that would pass a majority vote today.However the rest is supposed to go. But what do I know—they just took away my vote–they took away my Congressman’s district because he did not want to run the presses. So my vote went with his—and the rating has been downgraded. I think they are a bit optimistic, maybe another couple notches down–but I’m from a district that just lost the right to vote—so Im probably biased.
“This effectively strips the U.S. of its golden credit for the first time in history.
We have lost our standing in the world.”
It’s about time. I was beginning to think that everyone in the world was crazy.
Our “golden” credit was much akin to the emperor’s new clothes. See through, yet everyone has been afraid to say so.
Rob Bourassa
“People will be pulling money out of equity markets, out of commodity markets, and putting it into cash — essentially, stuffing money in your mattress,” said Andrew Lo, a professor of finance at the MIT Sloan School of Management, in an interview Saturday. “This is the worst thing to have happened, given the weak economy we already have.”
S&P laid blame for its decision to assign the AA+ rating directly on the political process in Washington. Even though lawmakers reached a decision on Aug. 2 to raise the government’s debt ceiling and avoid a potentially disastrous default, the deficit-reduction package that accompanied the deal won’t sufficiently improve the government’s fiscal health in the coming years, S&P said in a release Friday. A factor in that projection, S&P said, is that Republicans seem unwilling to allow the Bush-era tax cuts to expire
http://www.huffingtonpost.com/2011/08/06/us-downgrade-standard-poors-credit-rating-economy_n_920228.html
We can add—-we know it does not add up. I was chatting with my 21 yr old son after he got home from his summer job at Parks dept for minimum wage about our poor young friend Greg –now in Afghanistan. hoping he did not go down with that piece of junk helicopter. So big that a guy could knock it down with a 30-06. And a poor shot–but its like shooting at barns or big companies– too big to miss.
Greg had to leave college and join to “see the world” and learn “special skills”———-I guess riot control?
my son has another friend who is doing somewhat better. . She is a geology major. I asked her along to visit with some folks that produce O&G in Marcellus—-hoping my sons might be able to step up from park service to roustabout next year–and maybe a job upon graduation with BS. The very pleasant individual with whom we spoke clearly described his company’s program for interns and scholarships. I thought it was great—–I used to work in the summers too mant decades ago.
“WE assume undergrads are trainable and we train em if we hire em–start at end of soph year in field and learn ground up—-except geoligists that rarely leave the office.”
Better yet—-“We are hiring–we have internships to fill” No fix in here—we just kept asking companies until one called back.
My kids were ecstatic–real jobs—when he gave starting salaraies for BSs that go thru the program, my youngest was dumbfounded–$85 k! To a 18 yr old farmboy getting min wage part time thats like being selected as King for a Day—– a dream come true. And no afghanistan.
on the way back I asked the geology girlt why she asked no questions–why she did not take up his offer to hook her up with their geology group. She said with a touch of disdain in her voice–a BS these days is not worth having–everybody must have Masters
While I acknowledge her point and would hope that if my sons were lucky enough to get a job after interning–that they would take the company up on its offer to pay for grad school–if it looked like it fit–ie no masters in italian literature.
She did not drop out because she receives social security due to a deceased parent–which I think is good insurance—bought and paid for.
Together with her SS, she used her summer-time PELL GRANT to travel to Italy to “study ” Italian. Well I guess if she is going to be a UN interpreter? Not–just because colleges require some foreign language to round out the successful grads. So has the PELL GRANT BEEN WISELY USED?
This young lady despite a near guaranteed job as 1st in line with a good GPA—was indifferent to mere $$$$. She expected the govt $$$ to keep flowing freely all the way to a PHD—-so she would NEVER HAVE TO WORK. You do not have to look far to find waste which was what my ex Congressman Jordan wanted to try–before they took away his district.
So instead this girl will doubtless be unemployed–because I know this particular industry hiring model–they pick talent early and grow it–they dont want ivory tower snots with a string of letters after their names. We actually do work here in the midwest—-call it “primary industry’ —–grow stuff—extract stuff—we used to do secondary industry –make stuff. But the globalism caused our companies to build all the one-story factories in Japan and Germany and S Korea. nation-building about everywhere in the world but here. Here in Dayton Ohio for example—–in the 70’s the south main street was lined with miles of multi-floor auto-parts production. complex conveyers—-these were all torn down in the Raygun years. The only thing worth making inthe US midwest was guns and soldiers. Like Greg.
So what will Greg do when he is done nation building in Afghanistan? Crowd control—-if they tell him to fire on his classmates as the soviets did–as the natl guard did here in Ohio in 1970 will he? He knows this geologist—where his college $$$ went.
There are many many Gregs ———-the mood here in Boehner-land is black. I chat with people and ask if the govt shutdown would be good or bad—-nobody wants to stop a shutdown. Now admittedly, they might not take into account all the attendant interwoven implications on international high finance—-CDS, capital requirements etc–but they can add—they know the tax rate is really 50% not 30%——and that there is inflation–lots of it.
They know that mostly the govt wants us to continue to produce food that it can use to influence countries to buy military equipment.
That it wants us to produce red meat for the military grinder. And remit taxes. The people I talked to generally ask–if the federal govt shuts down–does the Federal tax get sent to the states instead?
That is an interesting question. But again the people I talk to recently lost their federal vote along with our district and our representative–because he voted his constituent interest instead of supporting the status quo. So my polling is skewed–all i can see is rage at the federal govt–all parts of it. Yes the raters are right—there is political unrest.