more obama shenanigans

[rdrdrdrd]

So after reading this article, I find myself at a loss for words to describe just how damn corrupt the government is. With a finance sheet that would have forced any business into bankruptcy long long ago, when the government finally gets downgraded from an AAA rating, after ~$14,000,000,000 of debt and they are claiming the ratings agency isn't doing it right! Then they use their DOJ lackeys to muscle a company (not to mention suing states that try to protect their borders) that is doing what it should have done long ago. If they are going to investigate anyone it should be the other agencies that reaffirmed the AAA rating! Check them out for the bribes of some sort they are surely getting! Such stupidity!

[/rant]

[Steve D'Ippolito]

I hate to tell you this but you left out three zeros. It's 14,000,000,000,000 dollars of debt on the books (plus about 90-100 terabucks more in liabilities they expect to take on without being able to pay them, in the future).

[rdrdrdrd]

Damn I did, it just goes to show that the number is too big to be an AAA rating

Edited August 19, 2011 by rdrdrdrd

[TheEgoist]

I swear to God I'm gonna pistol whip the next guy that says shenanigans.

[aequalsa]

Shenanigans.

[Steve D'Ippolito]

Shenanigans.

I saw that coming a post or two away.

rdrdrdrdrd I couldn't resist the irony of you understating the problem you were griping about.

It's hideous. We'd have to can most of our entitlements and make $2 trillion a year (not over ten years like the BS they propose in Congress) budget cuts to get out from under this. Or possibly the problem could be reduced at least in the short term by figuring out how to get the economy to recover. Tax rates aren't so hideously bad an economy cannot grow under them (they haven't changed all that much thanks to a stubborn group of Tea Partiers), but its the excess of regulation--and the fear of what the next regulation will be--that is killing recovery now. Cutting regulations would save the government the cost of enforcing them and allow for economic growth which would increase tax revenue--a double win. Yet no one from either party seems to be pushing for that.

[rdrdrdrd]

I'm not understanding the irony comment? Are you saying its odd I understand the issues I am mad about?

But yes, I am disgusted by the spending and irresponsibility, to solve the problems three things should be done. Preferably in this order: institute one term limits to get rid of the hesitance by many conservative members to do anything controversial, then massively deregulate through both bills and the declaring of most of the federal government's programs unconstitutional, then rule all entitlement programs unconstitutional and set up a plan to pay people back but not admit anyone new to the system. Tax rates could stay the same, but instituting a flat tax, or even better a poll tax would be a bonus.

[WilliamColton]

I'm not understanding the irony comment? Are you saying its odd I understand the issues I am mad about?

But yes, I am disgusted by the spending and irresponsibility, to solve the problems three things should be done. Preferably in this order: institute one term limits to get rid of the hesitance by many conservative members to do anything controversial, then massively deregulate through both bills and the declaring of most of the federal government's programs unconstitutional, then rule all entitlement programs unconstitutional and set up a plan to pay people back but not admit anyone new to the system. Tax rates could stay the same, but instituting a flat tax, or even better a poll tax would be a bonus.

I think it was more at the lack of zeros. People throw this word 'trillion' out there like it's just some number that's more than billion, which is just some number than million (and there are plenty of people that have that kind of wealth, after all!).

But few grasp exactly how much one trillion actually is.

Here's a nice illustration:

http://www.pagetutor.com/trillion/index.html

A million seconds is 12 days.

A billion seconds is 31 years.

A trillion seconds is 31,688 years.

I know this isn't rocket science, but even I lose sight of the shear magnitude of 14 trillion dollars. FOURTEEN TRILLION DOLLARS.

FOURTEEN TRILLION DOLLARS

[TheEgoist]

Shenanigans.

Farva!

[OptimizedPrime]

Say what you want about the timing of this move, but the US government should have gone after the ratings agencies a long time ago. If you understand the sub-prime mess deeply, you'll see that systemic fraud by the ratings agencies was right in the middle of it.

Also note that the market has proven S&P so absurdly wrong on the downgrade that it goes beyond farcical and smacks of a purely political move by the agency. If this is the case, you can't hardly find any sympathy for S&P--it's just politics on both sides. If THAT is the case, then the failure is on BOTH sides since neither should be motivated by politics and this represents a rather disturbing breakdown.

By the way, a more intelligent way to talk about our debt is to use the only number that matters, which is that it's 100% of GDP. Everything else gets you caught up in numbers that most people do not or cannot understand, and frankly don't really matter.

OP

[rdrdrdrd]

Say what you want about the timing of this move, but the US government should have gone after the ratings agencies a long time ago. If you understand the sub-prime mess deeply, you'll see that systemic fraud by the ratings agencies was right in the middle of it.

Also note that the market has proven S&P so absurdly wrong on the downgrade that it goes beyond farcical and smacks of a purely political move by the agency. If this is the case, you can't hardly find any sympathy for S&P--it's just politics on both sides. If THAT is the case, then the failure is on BOTH sides since neither should be motivated by politics and this represents a rather disturbing breakdown.

By the way, a more intelligent way to talk about our debt is to use the only number that matters, which is that it's 100% of GDP. Everything else gets you caught up in numbers that most people do not or cannot understand, and frankly don't really matter.

OP

While I have no illusions about the ratings agencies you cant say that they had it coming when the only one being investigated is the one speaking against the current administration. I fail to see how they can be absurdly wrong about the downgrade when the debt is this high. And all the numbers do matter, specifically the numbers showing that it will take not years, but generations to pay off the debt.

[OptimizedPrime]

While I have no illusions about the ratings agencies you cant say that they had it coming when the only one being investigated is the one speaking against the current administration. I fail to see how they can be absurdly wrong about the downgrade when the debt is this high. And all the numbers do matter, specifically the numbers showing that it will take not years, but generations to pay off the debt.

1. I meant they ALL had it coming. It's actually quite sad for me, as I know a lot of the background in this area, that the only one apparently* being investigated is the one that made a move against the president and the democrats. (*I've recently learned that the other agencies might be under investigation as well and it's just not public yet, so all of this discussion may be for naught).

2. I love reading and discussing political commentary, but I think it's fraud when an agency normally dedicated to financial judgements veers off and makes a political statement under the same guise.

3. After the S&P announcement, t-bill yields dropped even lower than the almost-nothing that they were before, to their lowest level in history. The markets basically ignored the S&P assessment and turned instead to the problem of the forth-coming double-dip recession wherein demand for everything will drop and we'll ooze into deflation. Nobody seriously thinks there's an actual possibility that the USA will NOT PAY. Yes, I know a few people here might be convinced of that, but I'm willing to bet my left toe that the S&P people DO NOT agree with your world-view and that this move was just a crass political move to curry favor with the up-and-coming ruling party.

4. Numbers that use percentages of GDP, years to pay off, debt-per-citizen, etc. are totally fine with me. Saying, "a trillion is a really big number" doesn't really say anything about anything.

5. I'm not sure how a debt at 100% of GDP and a debt service cost at about 2% of that is going to take "generations" to pay off. Raise taxes and lower entitlements, and stop policing the whole world, and you can pay this off in a decade or two--and that's assuming no GDP growth. And that all is assuming you even care, since we're only paying 2% interest on this money. This is why you look at these numbers in context, as opposed to out-of-context.

***

I'm all for a completely rational, IR-based society, but making up problems that don't exist and adopting scare tactics that have no basis in reality will NOT help the cause--quite the contrary.

OP

Edited August 21, 2011 by OptimizedPrime

[rdrdrdrd]

1. I meant they ALL had it coming. It's actually quite sad for me, as I know a lot of the background in this area, that the only one apparently* being investigated is the one that made a move against the president and the democrats. (*I've recently learned that the other agencies might be under investigation as well and it's just not public yet, so all of this discussion may be for naught).

Agreed

2. I love reading and discussing political commentary, but I think it's fraud when an agency normally dedicated to financial judgments veers off and makes a political statement under the same guise.

I honestly don't care about their intentions as long as the results are favorable and they were achieved without any gross moral infractions.

3. After the S&P announcement, t-bill yields dropped even lower than the almost-nothing that they were before, to their lowest level in history. The markets basically ignored the S&P assessment and turned instead to the problem of the forth-coming double-dip recession wherein demand for everything will drop and we'll ooze into deflation. Nobody seriously thinks there's an actual possibility that the USA will NOT PAY. Yes, I know a few people here might be convinced of that, but I'm willing to bet my left toe that the S&P people DO NOT agree with your world-view and that this move was just a crass political move to curry favor with the up-and-coming ruling party.

While I agree there motives were most likely not pure, as I said before a result is a result, actions are actions, intent does not matter.

4. Numbers that use percentages of GDP, years to pay off, debt-per-citizen, etc. are totally fine with me. Saying, "a trillion is a really big number" doesn't really say anything about anything.

Besides informing people of the gravity of the situation.

5. I'm not sure how a debt at 100% of GDP and a debt service cost at about 2% of that is going to take "generations" to pay off. Raise taxes and lower entitlements, and stop policing the whole world, and you can pay this off in a decade or two--and that's assuming no GDP growth. And that all is assuming you even care, since we're only paying 2% interest on this money. This is why you look at these numbers in context, as opposed to out-of-context.

If we can cut entitlements to zero and eliminate %90 of our budget, we also have a moral imperative to reform and lower taxes, not raise them. Taxes are amoral, raising them with even the best intent is still amoral. Assuming we can cut the budget by %90, we can thus cut taxes to have a %5 surplus to pay for the debt. (These values are all for argument's sake, do not debate me on them as they are %100 arbitrary)

***

I'm all for a completely rational, IR-based society, but making up problems that don't exist and adopting scare tactics that have no basis in reality will NOT help the cause--quite the contrary.

I'm not sure if this is a rhetorical statement in general or aimed at me personally, but if it is named at me: A massive debt is a problem, you can not deny the gravity of the debt and the fact that it is of great importance. Informing others of this problem is not using scare tactics.

[OptimizedPrime]

I'm not sure if this is a rhetorical statement in general or aimed at me personally, but if it is named at me: A massive debt is a problem, you can not deny the gravity of the debt and the fact that it is of great importance. Informing others of this problem is not using scare tactics.

I personally went into debt recently. Massive debt. I bought a $5m house. So out of context, just looking at the NUMBERS as you like to do, is this insurmountable? Am I screwed for life? Will I pass this debt down to my great grand children?

Having trouble answering? Missing some important context?

***

I deny the gravity of the debt. I deny it's great importance in today's context. I think all of the rhetoric around it therefore--as an easy crutch to convince morons to be afraid enough accept a system of individual rights--is self-defeating. It will put the proponents of the opposite of what we want in the position of being right and accordance with reality. You are giving Krugman a chance to be reasonable, correct and true--and making him look like some kind of seer when he makes economic predictions that actually make people a lot of money because they correspond with reality.

Meanwhile, Fox News is waging an all-out nuclear war on reality every day (attacking Obama on his "one million dollar bus" is the most recent example of absolutely cynical populism). Adopting thier tactics will not end well. Divorcing people from reality is not consistent with freedom. It always leads to the opposite.

OP

Edited August 21, 2011 by OptimizedPrime

[rdrdrdrd]

Assuming I look only at the size and not the other numbers is wrong. Your example of buying a five million dollar house is not valid as people cannont research your personal finances as they can the national debt.

I am not denying that fox, and all media companies in general, are spoonfeeding crap to the masses, but having a debt that is quickly approaching %100 of gdp is deffinatly a problem.

[OptimizedPrime]

Assuming I look only at the size and not the other numbers is wrong. Your example of buying a five million dollar house is not valid as people cannont research your personal finances as they can the national debt.

I am not denying that fox, and all media companies in general, are spoonfeeding crap to the masses, but having a debt that is quickly approaching %100 of gdp is deffinatly a problem.

That my example wasn't valid WAS the point. However I think you got it. I think.

With that, I am heartened that you used the correct sort of notation of the debt, which is in terms of % of GDP and not, "a billion trillion gazillion" or whatever. Now just combine this with an extremely low debt service, and you'll see why the people crying "runaway inflation" (as they have for the last three years) are starting to look like crackpots. The sinking feeling I have is that some people use this scare tactic as a shortcut to frighten people into believing in freedom.

To put it another way, when we DO find ourselves in a deflation spiral as all of the Keynesians warned about (and you can argue we're already in it) instead of "runaway inflation", then the Keynsians will be proven RIGHT--and the advocates for freedom will be proven WRONG and discredited.

Fiscal austerity is just going to make our deleveraging-induced deflation much WORSE, not create some kind of miraculous overnight recovery. We're in for a long, painful slog to make up for from decades of deficit spending (mostly in the form of credit expansion aka the housing bubble). We need to come off of this drug. Telling an addict suffering from severe withdrawal symptoms, "get clean or God will punish you next week" is destined to fail and will give an addict a brilliant rationalization to keep using after God doesn't in fact show up next week to punish them.

OP

[rdrdrdrd]

The only way I see hyper inflation coming about is if for some reason we cant get the debt under control and we begin to print money. I think this is highly unlikely and that the currency will deflate naturally. Which IMO isn't a real problem, while people will be less likely to spend and more likely to save and the economy will 'depress' people who were rational and saved money will be rewarded and the irresponsible ones will be punished, hopefully teaching people a lesson about responsibility. I feel we should also go back to a commodity backed currency and eliminate the fed and all government insurance of loans after the economy stabilizes.