ONCE BITTEN, TWICE SHY

CJ: Which is dimly possible, especially if reactionaries get their way as they’ll do or make happen anything that will bring down Obama.

Again, more victimization. It’s everybody else’s fault but ours?

Who is the economy? You and me and all the others - 318 million of us. “Double Dip”? Only if WE want it.

The consumer is the alpha and the omega of the economy. The Replicants who think a smaller budget will provoke Business Investment haven’t a clue. Consumers don’t spend more because they have less - and that is precisely the way Americans feel. Even if the statistics show otherwise. (We are saving a great deal of money presently and just not spending it.)

Ask any corporation why they expand/retract production of goods/services? Because consumer’s demand them (or not) and their order books are full (or not). (In fact the wily Greenspan looked a freight train usage to understand whether retail goods were moving off the shelves and needed replenishing and thus expanded production - or not.)

So, if you are looking for the culprit that caused the Double Dip ... look in the mirror and not to the “reactionaries”. We decide, not them.

The pity of it all is that we, the sheeple, binged with frenzy on cheap money and caused a major recession. Now, chagrined, we are afraid to spend. (Once bitten, twice shy.)

MY QUESTIONS

Why are we waiting for “someone else” to fix the problem? Start spending, folks. And this terrible economic nightmare will go away.

Cuz that is the Only Solution - since the T-party dorks have decided that there will be NO STIMULUS SPENDING.

So, now it’s up to the rest of us ...

Quickly, Cornell West put it well this morning on DN concerning Obama, “The
President punts on first down.” (Not even the Detroit Lions—fast improving—ever
did that!)

West would have Bernie Sanders run for President. I’d already written Sanders to
ask him if he would. I imagine others have written the same.

All here should do so via his Senate website. He’s as good as McGovern ever was,
indeed better on a number of issues, and while I doubt he ever will run—given his age
among other things—it’s worth asking him. And maybe if enough of us asked him… And he might even be able to challenge Obama in the primary process.

(I think, contra Robert Scheer, that Obama’s on his way out anyway.)

Bernie doesn’t back down—never has, never would.

The only part Krugman gets wrong is: “And please, let’s not have the usual
declarations that both sides are at fault.”

If last week’s debacle of a fake “debt ceiling debate” wasn’t proof of the
contrary, what ever could be?

There’s still no question—especially given the fact that, say, the UK maintains a
AAA rating per S&P’s—the move was political, not based in any economic
problem. As Krugman rightly notes, the U.S. has no problem paying its debts, a
fact that makes China’s latest remarks seem as ignorant as they really are.
China’s become bluster, capitalist bluster of all things. (And still calls itself
communist. One almost longs for Mao, sans the Cultural Revolution one must
qualify.)

Markets reacted not a wit to the downgrade, but did react yesterday to what Wall Street
in the lead fears will be a double-dip. Which is dimly possible, especially if
reactionaries get their way as they’ll do or make happen anything that will bring
down Obama. (To that degree, Krugman’s right about it not being both sides of the
aisle.)

But what is the other side of the aisle doing when it gives in on every point?
And then calls that “compromise”? What was it doing when it extended the Bush
tax cuts? Following the trickle on of Art Laffer is what, I suppose hoping that
thereby Obama might attain to Ronnie “Big Spender” Reagan, bizarrely enough.

It only gets more and more bizarre as American pols—mostly—though along
with high-frequency traders, CEOs, hedge fund managers and finally Chinese
leadership, appear bent on the destruction of capitalist economics. Now THAT’S
BiZARRE! A good thing, of course, were it carried out in orderly fashion, and not
least by all in positions of power the first to step down. As least U.S. pols
should be recalled, perhaps some preschoolers put in their place. (Kids
demonstrate a rationalism long forfeited by adults in general. And kids aren’t
afraid to ask direct questions.)

If I haven’t noted it here before, J.M. Keynes is STILL the smartest person in the
room, no one since in his league. Just because a century has past doesn’t mean
he’s not current, more so now than before. Indeed, butter not guns, but we so
LOVE guns!

Markets also reacted out of sheer panic, far more than out of anything the
incompetent ratings agencies said or might say. (Not yet Moody’s or Fitch)
Above and beyond the dubious belief in the imminent collapse of Europe—they
(around here) only wish, if only to disprove the efficacy of mildest democratic
socialism, which is working pretty damn well in Germany, Europe’s own sort of
Fed of last resort. 

Europe’s in trouble, no doubt, but also thanks to furtherance of capitalist rigor
in place of older forms of democratic socialism, slightly less subject to the
delusional than more rigorous capitalist ideology, which in the end will be the
ruin of the U.S.—belief over reality, self-fulfilling prophecy, call it what you will.

It’s claimed governments can’t do much about financial markets; that’s the
biggest of all lies. Especially in the states. One thing is certain, humanity, pols
in particular, are given to weakness and so is easily bought off. And it’s hard to
see how the U.S. Government will undertake self-reform when doing so would
be so unprofitable.

Not that most all—but for a Bernie Sanders, a few among the Progressive
caucus, et al.—have the slightest idea of what reality is for about six of the
world’s seven billion people.

Poverty is ever on the rise, while pols are playing golf or tennis and spending $200 just for lunch while on yet another of their countless vacations.

I wonder how many would run for office for pay of a living wage of $20 per hour plus some D.C. room and board and occasional air-fare. Nader would, and probably Sanders too. They’re all I can imagine doing so. While the rest demonstrate nothing in the way of “deserving” on the basis of merit. So much for that too.

Krugman tries hard.  Yes, it’s politics, not math; however what is really at the root of this whole stink rotting our government is rotten religion, pedalled by fakirs and ideologues.

But, alas, neither economists nor political scientists nor, especially rotten politicians, are allowed to discuss that in the land of the world’s most famous freedom of speech.

HD: … the right in the United States will certainly take this opportunity to call for the gutting of social welfare programmes in that country, but that’s hardly the fault of S&P

Personne n’a jamais dit que cela n’était pas le cas - au contraire. La Droite Américaine va insister sur ce point. Ce qui est bien, d’ailleurs, car cela va au contresens de la plupart des électeurs droite, gauche et centre tous confondus.

Bienvenu au forum …

Professor Krugman’s analysis in the New York Times - accurately reported here - disappoints : there he rightly castigates S&P’s failures - «... S.& P., along with its sister rating agencies, played a major role in causing that crisis, by giving AAA ratings to mortgage-backed assets that have since turned into toxic waste», but fails to recognise that in downgrading the US government’s credit rating, the agency analysts seem now, at last, to be carrying out the due diligence they should have exercised back in 2008. And while Krugman does make a valid point in that the problem is rather of a political than an economic nature, this hardly disqualifies the S&P analysis, which concurs :

«We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the
growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.

...

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria ...

...

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy.

...

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise
revenues, a position we believe Congress reinforced by passing the act. ...»

In what way does this differ from Professor Krugman’s own analysis of the situation, as expressed in his OpEd articles in the New York Times ? Moreover, as Krugman points out, Japan is still able to borrow freely and cheaply nine years after S&P downgraded the country’s credit rating, so the effect of the downgrading of S&P’s US credit rating can be expected to be minimal - that is, unless creditors agree with the analysis and can find other, in their judgement safer, repositories for their funds, in which case the effect could indeed be quite significant. But since no such repositories exist at present, it seems likely that the Chinese, Japanese, and South Koreans will continue to purchase US Treasury securities at extremely low rates….

Yes, the right in the United States will certainly take this opportunity to call for the gutting of social welfare programmes in that country, but that’s hardly the fault of S&P : «Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.‘s finances on a sustainable footing». What the US left - and Professor Krugman - should be doing in this situation is calling for drastic cuts in the country’s bloated military budget and an end to its interminable wars of aggression abroad, but military spending is not even mentioned in Krugman’s OpEd - indeed, of all his OpEds after the installation of the Obama administration on 20 January 2009,  I can recall only one in which he deigned to name the country’s military expenditure. Rather, Professor Krugman has tended to conveniently blame the US’s economic malaise on those dastardly Chinese, at times also throwing a few punches in the direction of the Republicans. The issue here is not merely one of the credibility of Standard & Poors, but also that of Professor Krugman himself….

Henri

MARKET DISCIPLINE: Dump S&P!

note: not my words, but worth considering…
from http://tinyurl.com/3bzgdz6

“Financial Community, Let’s Boycott Standard and Poors…

First they participated in SCREWING THE Country by rating below subprime
paper pre-2008-2009 financial collapse, then in an effort to keep the
magnifying glass off of them because of that, they have decided to downgrade
the United States.

I say lets Fuck Them. I am exiting all S & P positions in all of my clients
portfolios, I am moving to Russell Indexes, and when using short positions will
no longer use S & P titled ETF’s or funds. They will no longer get a DIME in
residual payments from any financial products I use as I will no longer be using
their products for anything.

S&P has decided they are enemy’s of the the United States, so I say Fuck THEM.
Listed below are several agencies that offer similar services, I highly encourage
everyone to look into getting their services from someone else than these
fuckers….

Sorry for the language, but lets face it, they SUCK…

I encourage anyone buying their services of any kind, cancel it and find a new
source of data and ratings. They are one of 11 approved ratings agencies per
Wikipedia”

ssg: Just because somebody at Treasury blogged about S&P making a mistake does not mean it is true.

Yet another Replicant shill?

It is true, ssg, try reading the news in depth and not just the headlines.

From the Wall Street Journal (of all people):

S&P officials acknowledged the error Treasury pointed out but didn’t believe it was so significant. It was a technical error, though it could have serious implications. It concerned the future ratio of U.S. debt to the size of the economy, with S&P officials projecting a larger share than many experts.

And,

At the same time, the economic impact of past downgrades has tended to be larger when multiple firms move to rate a country’s debt as riskier, as opposed to a single firm acting unilaterally.

S&P set foot where the other two CR-angels, so far, fear to tread.

SIMPLE&POOR; MANAGEMENT

S&P’s ratings competence is deeply in question. Particularly after the Toxic Waste Mess that they helped promote by fraudulent ratings of Toxic Waste. (For an insider’s knowledge of how they work, see here.)

Besides, consider the following analysis of their Sovereign Debt Triple-A ratings:

S&P Triple-A Rated Country - (Sovereign Debt to GDP Ratio)
Austria – (65.8)
Belgium – (96.8)
Canada – (38.1)
Denmark – (39.6)
Finland – (41.7)
France – (67.4)
Germany – (44.4)
Greece – (147.8)
Hong Kong – (18.2)
Ireland – (60.7)
Japan – (183.5)
Netherlands – (51.8)
New Zealand – (30.5)
Norway – (26.1)
Panama – (40.0)
Slovakia – (41.0)
Spain – (51.7)
United Kingdom – (85.5)
United States – (61.3)
(Sources: S&P, OECD)

The US deserves a downgrading? What about Japan? How about France? And the UK?

MY POINT

S&P has shot itself in the foot. Their Triple-A rating makes no sense whatsoever when applied arbitrarily to one country singled-out for a reason that S&P will not apply to other countries.

POST SCRIPTUM

There is little one can do when ideologues capture the minds of a nation’s citizens. Which is why LaLaLand on the Potomac is frozen in gridlock.

And THAT, I submit, is the Real Issue behind the Debt Ceiling debate. We are becoming ungovernable as a nation due to a two-party system, of which one party is led by dogmatic proponents of budget austerity and No Tax Increases.

Which means that us suckers at the bottom are to pay for the tax-revenue rip-off that Reagan engineered for his friends at the top.

If that suits you, lay back and enjoy the carnage. If not, get off your duff and militate for change.

I wonder if Obama is regretting his decision not to prosecute S&P for giving AAA ratings
to toxic waste mortgages?

When you make a deal with a loan shark don’t expect it to end with just one deal. When
you make a deal with the devil, eventually he is going to come for his due.

Until the rule of law is restored on Wall Street, this kind of shit is going to keep
happening.

How much is that in Virginia-class submarines or Global Hawk UAVs?

Just because somebody at Treasury blogged about S&P making a mistake does not mean it is true.  I wonder if Krugman actually read the S&P report or is merely mimicking what he heard on the news.

I wonder if the purported mistake has anything to do with the report’s saying “Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place.”

This isn;t a mistake.  It is a judment call on how lousy a negotiator Obama is.  They judge that he will not be able to keep his promise that the Bush tax cuts will be allowed to expire.  It may also have something to do with the fact that the Obama does not even want the tax cuts for the middle class to expire.

What makes Obama, or anyone else for that matter, think that pandering to the far right will get him any votes?  These are the same people who have given every evidence of irrational resentment of him on the basis of his black ancestry and his “elite higher education.” Ignorant discriminatory attitudes like that are rock-solid, unfortunately, and can’t be “conciliated away.” Nothing short of deliberate, insistent, patient challenge will work, and stepping back an inch in compromise is easily interpreted as weakness.
  That same rock-solid, emotionally-based mind-set is clearly visible when it comes to any idea cherished not because it is based on facts or evidence, but because it is a cherished prejudice to be defended IN SPITE OF evidence to the contrary. That’s why it was stupid to go to the trouble of unearthing birth certificates etc. when a good hearty national laugh could have served the purpose better and sooner.
  Not that the “right wing” can be laughed off.  Far from it.  But neither over-soliticitousness nor rigid counter-reaction serves well. Good humored determination might work better over time.

CJ - You are really getting close to one of those “defining concepts” when you mention how the Media (all of them) harp constantly about what “government” is doing wrong WITH hardly a word being said about the inequities of big business (corporations). Of course this is because the Media has been purchased slowly and systematically by right-wing/conservative masters. All the narratives are designed to convince “the little people” that if they work hard, go into uber-debt and believe in “the American Dream” life will be wonderful. And Americans being the uneducated, over-fed sheep that they are buy into this bull-shit.

30+ years of conservative propaganda is hard to undo and I fear that the hearts and minds of the American people have been co-opted by some cynical and evil people.

Our dysfunctional government has far reaching consequences.

Krugman’s right about ignoring S&P’s downgrading, but that doesn’t mean the
markets are doing so. They’re not, while they’re also panicking over Italy’s and
Spain’s debt problems.

In general, problems are blamed on Euro-“socialism,” which is code for workers
in the Modern era. The markets real problems are those self-created—by their
miserly Feudalist attitudes. For a full account, listen to CNBC for an hour or two.
Government this, government that, government is always to blame and never
big business, most of which are run by morons who have problems with simple
arithmetic, same as S&P’s.

Who will buy the debt—a direct result of corporate bosses instructing their
political lackeys NEVER to seriously propose raising taxes on these greedy
bastards who have no problem dishing it out and serious problems with taking
it. Like up their proverbial you-know-wheres, where they so richly (pun
intended) deserve taking it. (Apple is sitting on more cash than the U.S.—$75
billion, and Apple’s not alone.)

No, they won’t invest when there’s no demand (which leaves the question of
why Apple’s quarterly earnings consistently beat the street and beat it badly.)

CNBC talks gloom and doom, scaring the hell out of people. Okay, markets are
falling dramatically, but not like that’s never happened before. (Listening to
CNBC would be comedy were it not for the tragedy—the fear-mongering, in line
with every other TV operation, also engaged in various forms of terror-
mongering.)

By now, more gold has been purchased than exists. That’s useful!

Krugman’s right about corporate-owned reactionary hacks in government.
There’s no question of collusion. To do what? Insanity is what, in the name of
profits of all things! That’s to be achieved by creating a “double dip.”

Who else is to blame? If not business in collusion with government, and alas not
only reactionary members as so-called “liberal” caucus is co-conspirator, with
Obama forever talking of “compromising” with what he must believe is 50% of
Americans belonging to the tea party nuts. (He needs their votes, and they DO
vote, if never for Obama!)

So while conspirators world-wide are running economies into the ground—in
the name of capitalism—middling investors, whether in 401(k)s or simply in
home-ownership are being reduced to paupers, whom that idiot Orin Hatch
said need also to pay their fair share. (If Hatch isn’t example of whom I’m
talking about, who is? The poor also need to pay? Is the man certifiable?)

Social justice would begin with ceasing to vote for the lackey’s, instead for their
neighbors or themselves—as write-ins if necessary—and then once elected
seeing to reining in these corporate thieves/exploiters, first by taxing profits
(capital gains) at rates around 90-95%, earnings estimated by independent
accountants hired by government in numbers necessary to get the job done.
Any discovered to be cooking books would be arrested and prosecuted. And
then those elected would see to a return to regulations a la the 1930s, not least
Glass-Steagal, or anything more with teeth when compared to the merely cosmetic Dodd Frank.

For once, windfall profits would accrue to the people Hatch claims should be
paying even more, while Hatch himself would be out to pasture where he’s belonged for at least the past several decades, along with Kyl, Cornyn, DeMint, Boehner and
Cantor (and lunatic Ryan) and any of the rest who labor, or rather pimp, for big business.

Or the U.S. could take for its model Argentina or Bolivia—IF, that is, welfare—
meaning a decent life for all—is the real goal, the one these frauds are forever
claiming is the goal while they do all in their power to undermine any chance of
attaining it. Not least because they remain anti-commies stuck—ironically—in the 1950s, not with respect to tax rates but with respect to the Cold War.