New York Times - Moody’s Says U.S. Debt Could Test Triple-A Rating - By DAVID JOLLY and CATHERINE RAMPELL - Published: March 15, 2010
We have already lost our Aaa rating, if they are talking about it. Moody's has close ties with our government and has vested interest in propping up this rating. Look how Moody's propped up Enron while the tech bubble imploded in 2000. Also, look how Moody's propped up the rating of Fannie Mae and Freddie Mac, while the implosion of the housing market was already set in stone. How can anyone trust information coming from this credit rating agency?
If the U.S. credit rating falls that means that investor's will look at our Treasury Bills and Agency Securities as riskier investments. Therefore, investors will look towards higher rates of return on their investments. That means that the U.S. will be paying higher interest on any money borrowed, as well as debt that has already been accrued. The days of massive deficits will be coming to an end, one way or another.
At a time when we are suffering from unemployment rates of 10% to 20% on the national level (15% to 25% locally) depending on how one looks at the numbers, under current thought processes and practices we are going to see spending slashed and taxes raised dramatically. We may well soon see in this country what is already taking place in Iceland, Greece, and Portugal, where strikes and citizen protest marches are leading opposition to tough measures of austerity directly related to reduction of spending on entitlement programs.
From the Washington Post article:
Moody's reported, but "growth alone will not resolve an increasingly complicated debt equation. Preserving debt affordability at levels consistent with AAA ratings will invariably require fiscal adjustments of a magnitude that, in some cases, will test social cohesion."The Hound's Take: Personally I don't see a way out of this mess. The key is how long it will persist. I see so many people who really don't understand this crisis. They think we are coming out of this mess and it looks to me like we are entering the second phase. I know so many people who are having a hard time making ends meet and yet there are others who don't appear to be suffering much at all.
I know that my personal income level is where it was 10 years ago and things are a lot more expensive; then I look and see the money that some government officials make and it blows my mind. I was thinking about it today after a few conversations with some friends who are in a similar predicament as myself. I think this is a valid question.
Are government officials not willing to rock the boat and take some chances because of their income? Have we set our nation up for failure, because of the way that we compensate our elected officials and the bureaucracy?
I don't want to get into the validity of the payscale. In a time when so many of our citizens are suffering through unemployment or underemployment, I do believe that the questions asked about public compensation are valid. The private sector wants to feel that the public sector is fighting the fight alongside us.
I think it is also time to reign in the banks and I wonder if our government officials are willing to do this. There was a gentleman that is running for Catawba County Commission who stated in the Hickory Daily Record that Catawba County needs to tax the Wall Street conglomerate banks. I dismissed him because I don't want another tax being passed on to me at a time when I feel the banks are already ripping us off. But, this man's thought was genuine and I do understand what he was getting at.
If, however, our elected officials at all levels of government would be willing to stand together with the citizenry they are supposed to represent, then maybe we could start getting some of our money back from the banksters who fomented this mess. People like Webster Tarpley and others have pushed around the idea of a Tobin tax on financial transactions involving securities and derivatives, such as the infamous "Credit Default Swaps." I have come around to their way of thinking.
The Wall Streeters pushed this "Free for All - No Holds Barred" idea of Global Trade. Look at the end results. They are the rich who are getting richer and they are definitely not looking out for the good of the country. Tarpley calls this Tobin Tax "the Robin Hood Tax." I agree with the statement that the Wall Street bankers (along with their willing governmental accomplices) created this depression and it is time that they pay for it.
In reality, what pain have the people who created the mess, Wall Street bankers and Government Regulators, felt from this debacle, especially when one can see that so much fraud was committed. Yet, the American people have lost jobs, felt the credit squeeze, had banking fees grow drastically, watched in terror as national Debt continues to pile up, and we can go on and on and on. Raise your hand if your home mortgage is under water. Who are the real terrorists? Who causes more fear in our lives?
The money raised from this tax can be used to rebuild our crumbling infrastructure. You would have to be blind not to notice the rot going on in many urban areas within U.S. Cities. This money should be put towards productive purposes that create value. It could go towards broadband initiatives, creating micro-financing capital, working on alternative energy and transportation, facilitating biotech and nanotechnology.
Folks, you can look at what I say here and say it is pessimistic, but if you will take a truly good look at what I expose, then you will see that it is optimistic. The difference is you. If you are willing to take action by spreading the word, becoming involved, calling your governmental representatives, etc. we can effect change that will make our lives better. We are circling the drain and if we don't take some drastic measures to rectify our economic lot in life, then we are sure to create a dark age period that could last for generations or we can say enough is enough and start doing something about it. Whether this country goes bankrupt or not will depend on you!
3 comments:
I agree that gov't pay and perks has gone beyond similar private market compensation and needs to be addressed. But the big ticket items are entitlements. Unless we reign in Social Security, Medicare, Medicaid, we can't control the budget. A little tweaking won't get it either. We need to go to a system of mandatory IRA's and get the gov't out of the retirement business. The third party payer aspect of health care encourages runaway costs. Changes are necessary but it means that people will have to forgo the security blanket and eventually be more responsible for their own choices.
While most people intuitively know this, no one wants to face the sad music, so leaders don't want to be the ones that tell us the party is over. So we are going to be like Obama and just keep spending along until we can't. Maybe a gutsy leader will come along and tell the truth but I don't see it now. Sad and when the bill really comes due there will be some real hardship.
DO you want to know how the government can avoid bankruptcy, buy back our debt from China AND eliminate the drug war: Legalize all drugs and tax the hell out of them.
For me, everyone should contribute in avoiding another bankruptcy crisis in America. If we can handle our personal income properly by buying only the things we need and budgeting our money intelligently, our personal debt will not increase. Thus, bankruptcy won't continue.
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