On Friday afternoon, August 5, the coveted AAA credit rating the U.S. has enjoyed since 1917 was downgraded by Standard and Poor’s to AA+. This one seems to have the trickster’s footprints all over it. It’s like Smeagol on hallucinogenics or Wiley coyote on steroids.
During the weeks of political theater in Washington over raising the debt ceiling, the U.S. Congress was reduced to caricature. The Republicans were adamant that taxes wouldn’t be increased – even on millionaires, billionaires, and corporations, some of which don’t pay any taxes at all. The Democrats were adamant that programs in the social safety net – Social Security, Medicare and Medicaid – wouldn’t be cut and that the debt ceiling agreement would extend until 2013. In other words, that it wouldn’t be revisited during the 2012 election.
The Repugs insist that taxes shouldn’t be raised on the “job creators” – their catch term for the super wealthy. But the fact is that these so-called job creators aren’t creating any jobs. They aren’t hiring. They’re sitting on their wealth and it’s been growing in quantum leaps since Bush initiated these tax cuts early in his administration. Earlier this year, Obama extended the Bush tax cuts until 2013, and probably lost a major share of his progressive base. The man whose campaign was predicated on change was beginning to look like a moderate Republican.
At any rate, the day after Congress’ warring factions reached an agreement that doesn’t benefit the average Joe and Joanne, the stock market dropped more than 500 points, the largest plunge since the financial meltdown in 2008. It rebounded some today, August 5, but Monday should be a wild ride because of the downgrade of the U.S. credit rating by Standard and Poor’s.
At first, I thought, Wow, S&P gets it. They understand that the posturing and political theater demanded a downgrade because raising taxes must be part of the debt solution. Then I read Paul Krugman’s blog. Krugman is a Nobel prize winner in economics. His bio is here. (Be prepared to start believing you’re an underachiever!)
From the beginning of the stimulus package passage in 2008 to prevent economic Armageddon, he contended the stimulus package wasn’t large enough, that the government needed to spend more to prevent a long-term recession. Turns out he was right and he is undoubtedly right now:
“…it’s hard to think of anyone less qualified to pass judgment on America than the rating agencies,” Krugman writes. “The people who rated subprime-backed securities are now declaring that they are the judges of fiscal policy? Really? Just to make it perfect, it turns out that S&P got the math wrong by $2 trillion, and after much discussion conceded the point — then went ahead with the downgrade.”
It’s as if the trickster is mocking everyone. See? See? You guys had to muck up the works by attaching conditions and caveats to what should have been a simple raising of the debt ceiling. You avoided default at the 11th hour, but it didn’t matter. S&P downgraded your credit rating anyway and Moody and Fitch may do the same.
The larger question, of course, is what’s the message here? With Mercury, the trickster planet, retrograde until August 25, there are apt to be more rippling shocks like this one. The conspirator part of my personality wonders if S&P is in cahoots with the Repugs, who seem to want the country to slide into a double dip recession so that Obama will lose the 2012 election.
For reference, here’s more info from Bloomberg.
If Obama doesn’t win, Mitt Romney or Jon Huntsman are the only two moderate, reasonable Republicans in the race. The question becomes…would an extremist like Rick Perry or Michelle Bachmann or Sarah Palin be “good” for America? By “good”, I mean that it might take a truly destructive ideologue to finish the job of destroying America that Bush failed to do. What will it take for people to realize just how destructive the Republican Party has been to our country? Obviously, we’re not there yet if a sizeable portion of the population is still siding with the Republicans and the corporate capitalists.
A part of me won’t mind if Obama loses to Mitt Romney. Perhaps our first Mormon president will be good for the debate about what Christianity really means, since so many evangelicals still view the LDS Church as a “cult.”
No thanks on Romney. Of course, he would be far preferable that one of the wingnuts!
Sorry if this offends, but I think Obama has been bought and sold. I don’t want him re-elected. Who would I want in the Oval Office? Lordy, I have no clue. But Not another four years with the Great Orator playboy and promiser of great change who sits on the fence fearing he might hit a nerve in someone. Yep, we’ve had change. Whoever is elected next year absolutely MUST have inner strength and power and the guts to man up and be a leader and Commander-in-Chief, which (in my opinion) Obama has not done. Again, just my opinion, and I will not argue this with anyone because my mind won’t change. I’m aware of what he’s done, and what he hasn’t done, and the scales don’t balance.
There is more than meets the eye here. I go back to my theory that the people pulling the strings want the US out of the way because it stands between them and a New World Order. I know that sounds conspiracy-like, but that’s what I’m thinking.
I also agree with Mike and Krugman – the rating agencies are very much a culprit in the financial debacle – they also gave Maddoff a great rating while he was systematically raping and pillaging. The lawyers and accountants still have no idea where most of that money went.
All part of the same system, same people, same agenda.
I’d forgotten about Madoff. Good points. Nothing wrong with conspiracy-like thinking. It’s probably closer to the real truth.
right there with you, nancy –
i’m calling in JESSE!!! DARN IT – WHERE IS HE?????
It was the republicans and tea party who kept denying that anything would happen if the debt ceiling wasn’t raised. They also didn’t believe there would be consequences if they held up the budget process.
A good expose’ needs to be done about the roots of the T-party, among other things. They are destructive, obstructive, disruptive, and by appearances, uneducated.
And who are they that the Dems and Repubs won’t stand up to them????
yuck. just. yuck.
Totally agree.
this whole thing is not only depressing – but disgusting – i mean, for those of us who can do little to change the grand scheme of things in this country – bottom line for me is that bottom line of your post – and that’s not necessarily a co-conspirator response – perhaps more a reality perspective than from the land of de-nial –
These rating agencies may have an ulterior motive with their ratings – they are, after all, commercial organisations. Ratings perhaps should be by an independent organisation with no financial interests.
I don’t agree with Raine, above comment. There are charity / thrift shops all over English towns and small independent shops are struggling, look at the number of empty shops. Burnham-on-Sea must be very sheltered from reality. The recession has hit hard for many businesses. I think though that the tough, unpopular measures by the government are right and must continue. It sadly emphasises what a load of clowns the Labour party, who oppose this, are at the present time.
Mike, are they cutting back on national health care benefits or government pensions? Does the monarchy pay its fair share or is nobility exempt?
National Health and State Pensions are protected, at least in theory. Hospital staff may well disagree with this though. We still have 100% free medical care (though we have to contribute towards this [in another form of tax] while/if working). Retirement age, and therefore when a state pension is due, is gradually altering from 65 to 67.
What the government are trying to clamp down, in the public sector, are the unemployment and disabled cheats (disabled get more money than unemployed). One survey suggested that only 1 in 14 registered as disabled is actually genuine. This may, of course, be the media backing the government’s word. It’s sometimes hard to distinguish what is actually true. A while back the government of the day almost encouraged people to be on disabled benefits. This manipulated the unemployment figures, as disabled are not considered unemployed.
Regarding people claiming unemployment benefits: there are many who have claimed for more than 10 years and their children therefore accept that this is an acceptable lifestyle when that are of work age. It’s a difficult problem as jobs aren’t easy to find for many people, especially those without qualifications, often in poorer areas – so it’s hard not to sympathise with the long term unemployed.
As for the monarchy, they do now pay tax – or at least go through the motions of doing so. For hundreds of years they never paid any, so must be much, much wealthier than figures generally estimated.
I gather that we pay far more taxes than you do in the US: earn over £40,000 and it’s 50% – plus for everyone there is 20% VAT (a form of purchase tax) on all goods we buy (food & kids clothes exempt).
The welfare system is a bit of a monster. Any society should look after those in trouble, whether in sickness or through job loss, but it costs a heck of a lot of money … but meanwhile the serious rich have accountants to help them minimise and often avoid tax. It’s odd how the government want to get tough with long term unemployed but allow tax loopholes for the wealthy. Oh, forgot, the Prime Minister and many in his cabinet are rich, and are career politicians …
It sounds as complicated as things here. It does seem as if you pay more taxes than we do. But we have hidden taxes – states have state taxes, many cities have city taxes, and some counties, like ours, also have a gas tax. Then there are tourists taxes for hotels etc.
Food in Florida is exempt form sales tax. Then we have social security tax – fica, that amounts to about 13% up to around $106,000 income. This means that someone who earns, say $100,000 a year, has to pay the full 13% if self-employed. Someone who earns a million a year only pays this ica tax on ten % of his/her income. Our taxes seem to go mostly to wars.
I used to think “De Nile” was in Egypt……
“The Repugs insist that taxes shouldn’t be raised on the “job creators” – their catch term for the super wealthy. But the fact is that these so-called job creators aren’t creating any jobs.”
Well said. Walking in the streets of many small and not so small English communities, I’ve been struck by something I see so rarely in comparable American towns – no “big box” stores dominating the outskirts of town, with a sad, dying downtown full of thriftshops, boarded up stores, and tatoo parlors. I’ve seen the same sight crossing the country, whether in Herkimer New York, or Beatrice, Nebraska, or Tucson, Arizona. Instead, even in small villages, I see little bakeshops, pubs, dress stores, pharmacies, etc., all locally owned and unique (ok, they do have Starbucks). Maybe things are not what they would like, but from where I sit in southern England (Burnham-on-Sea currently) they look lively and abundant.
What the wealthy have done in the U.S. is sent the jobs elsewhere……many don’t know, for example, that Ford’s biggest plant is in Brazil. And they’ll continue to go for cheap, exploitative labor because that’s how corporate profit works (existing without any relationship to a local community economy)……until the people buying the “cheap stuff” can no longer afford to buy it, and become the new cheap labor serfs.
sorry to go on! Best wishes to you from lovely GB,
It would be great if the U.S. had no great big box stores. .. Costa Rica was like that. I’ve been traveling vicariously through your blog and really enjoying the entries!