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S&P Downgrades USA's Credit Outlook

Discussion in 'Sports and News' started by CarltonBanks, Apr 20, 2011.

  1. CarltonBanks

    CarltonBanks New Member

    Ragu, what are your thoughts about increasing the debt limit?
     
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    There was this guy once who had four credit cards and he used up all of us credit buying stuff, and was having more and more trouble making the payments.

    So he called up the credit card companies and asked them if they would raise his credit limits.

    Guess what they told him?
     
  3. TigerVols

    TigerVols Well-Known Member

    Tick tock tick tock.
     
  4. TigerVols

    TigerVols Well-Known Member

    Oh, if international finance was as easy as this. If only.
     
  5. CarltonBanks

    CarltonBanks New Member

    No idea
     
  6. The Big Ragu

    The Big Ragu Moderator Staff Member

    Well, they are pretty analogous. I guess the problem is that the numbers are just way bigger and the ramifications of default are much greater if it is the U.S., as opposed to an individual.

    But what the world is telling us, essentially, is that we haven't reached our credit limit yet. Because they are still buying U.S. debt. It is relatively safe compared to other things you can do with your money. Just not as safe as it was 10 years ago. Honestly, if S&P downgraded us to AA+, let's say, people would still be lined up to buy our debt, and depending on what was going on elsewhere in the world, we might not have to increase yields significantly to induce the money.

    That said, our ability to raise debt shouldn't dictate our doing it. With every dollar more of debt, we are putting ourselves closer to a catastrophe, even if we are not at the tip of it yet. And every dollar of new debt also creates a host of other problems that are bad for our economy; and as my broken record has said, the most insidious thing about it is that we have our legislators to spend without care and our central bank to deflate our currency to extend how long they can get away with it, so we are not only getting a worsening debt situation, we have created an inflation problem that isn't quite smacking us in the face yet (although we are starting to feel it), but should be at some point. Out of control inflation is every bit as bad as slow or nil economic growth.
     
  7. Dick Whitman

    Dick Whitman Well-Known Member

    Debt limitations are pretty useless. All they do is force officials to find creative ways to spend by redefining spending as something other than "debt." Local-level governments do it constantly - for example, by just creating a new, overlapping jurisdiction and - voila! I think that's how the Mariners got Safeco built, in fact, despite debt limits and public votes against the project.
     
  8. novelist_wannabe

    novelist_wannabe Well-Known Member

    Taxes are going to have to be raised. There need to be spending cuts, but I heard a congressman say yesterday that we couldn't cut enough spending to balance the budget, and I believe he's right. It would have to be in combination with raising revenue, both from raising taxes and GDP growth. The problem is already so big that just attacking one side of it isn't going to solve it. All of this, of course, is seriously complicated by the level of political expedience that goes with raising taxes and cutting the spending that really needs cutting -- Social Security, Medicare/Medicaid and defense. Nobody in Washington believes they can get reelected being the Congressperson who cut those programs. They're probably right, but it needs to be done anyway. And I say this as the child of one retired parent and another who's about to be.
     
  9. Bob Cook

    Bob Cook Active Member

    If this poll is to be believed, the only solution to the debt problem that has any sort of unanimity is... soak the rich.

    http://www.washingtonpost.com/politics/poll-shows-americans-oppose-entitlement-cuts-to-deal-with-debt-problem/2011/04/19/AFoiAH9D_story.html?hpid=z1

    That makes sense, considering few people are rich, but many get Medicare benefits.
     
  10. CarltonBanks

    CarltonBanks New Member

    I am not rich by any stretch of the imagination, but I think increasing the tax burden of the wealthy is a big mistake. I have no doubt this will lead to even more job losses. If taxes are going to be raised there should be a small raise across the board.
     
  11. DanOregon

    DanOregon Well-Known Member

    There were a bunch of great editorial cartoons http://editorialcartoonists.com/#top linking the S&P announcement to their previous "help" validating the crap that Wall Street was doing that led to the meltdown that prompted the current fiscal crisis.
     
  12. deskslave

    deskslave Active Member

    Yeah, they were the great enablers of the financial products that fucked us all. And I have a sneaking suspicion that they are now falling in love with their ability to manipulate the world economy just by clearing their throats.
     
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