Their nation's debt is approaching 100% of GDP!!!
Sound familiar?
The absolute numbers don't mean a good fart. What matters for any nation (but more so for the world's reserve currency) is the percentage that the debt represents of GDP. S & P is not going to be accused of fudging on government debt like it did on mortgage debt, but it wants to give the U.S. a heads up.
You see, debt has an interest cost. Once the cost of interest exceeds the growth of GDP, currency devaluation is assured. How much? That depends on how much the government involved is willing to cut, and how much of that government fat the private sector can absorb. From Marketwatch:
Standard & Poor's affirmed the U.K.'s credit rating at AAA but lowered its outlook to negative from stable, citing the potential that government debt may equal the country's output. The worse a country's credit rating, the more expensive it is to borrow.It is a foregone conclusion that the U.S. debt is greater than 100%, and growing with no end in sight.
The Left is quick to blame this issue on the U.S.'s absurdly high military budget - and they are 25% or so correct. 75% of the problem is the U.S. overpriced and under-worthy social programs - all courtesy of the Left. The Left prides itself on its better understanding and acceptance of Math and Science yet they suddenly go deaf, dumb, and blind when it comes to their ideological favorites. They can see clearly that the U.S. is "addicted" to Oil, but not that we have addicted our populations to the very social programs that are going to bury the American people alive, AND addicted us to Oil in the FIRST PLACE! They can see clearly that there is no free energy source, but there IS a free lunch in the form of free healthcare, free food, and free housing. I could beat the snot out of the Right, too, but last time I check, they were not in power.
Instead of addicting the poor to unsustainable social programs, the Left should have been teaching them how to garden, and fighting local zoning boards to allow small livestock and community garden space in their neighborhoods. Instead of fighting to increase the budget's of these unsustainable social programs, honest and passionate Lefties should have been agitating for larger budgets for state Agricultural Extension Offices to provide, tools, seeds, canning jars, food preservation and know how - instead of food stamps.
There are some incredibly admirable people on the Left doing these things RIGHT NOW. Here is a link to Sharon Astyk's excellent blog on how and what to do to provide for oneself on a budget (you will find many worthwhile links on her blog). Too often we toss around the word "brilliant" to describe some intellectually challenged Pop "Artist", but here is a lady who clearly deserves the title and is willing to share it with you for free (and I will bet Ms. Astyk and I have never voted for the same presidential candidate - but does that mean that I cannot recognize her obvious and copious talents?).
Hypocrisy knows no political boundaries. The Left lambasted GWB, Ronald Reagan , etc... OK. Now the Left has the keys to the Train Set. Show us how its done.
But we already know the answer to that, don't we? Every administration's excuse is that they inherited this, that, and the other "Problem". All of those promises were BS promises just to get elected. I used to work on campaigns when I was young - even held elective office once. Both sides are as guilty as sin and too busy spending other people's money to pay off their supporters to do the Right Thing. But we have reached a Cusp, if you Grok (if you are a Lefty that doesn't Grok Grok... hell, I am a Righty that Grok's Grok). The social programs ARE going to fail. Maybe not tomorrow, but not that far off in the future either. The time in between is what we have to help the folks that we addicted to these unsustainable social programs to get off that drug and get accustomed to a new way of life. If we fail, there won't be enough prison space or bullets - though the Right will be only too happy to try to provide them.
Mentatt (at) yahoo
15 comments:
How important is that membership in the credit rating cartel to S&P’s bottom line? I figure they would list us as (super duper illustrious sextuplet A, better buy now or risk losing it all on that lesser AAA, etc.) until at least half an hour after a default was announced.
P.S. a dozen stations in Chicago are at $2.99 gasoline pump price ...
Now, on to today's piece ...
S&P got burned rating all that mortgage garbage AAA, so you can bet they will be ahead of the curve with a U.S. Treasury downgrade. However, this is an hugely political grading process. Telling the U.S. that our debt is shit is not something to be done lightly. If the U.S. gets downgraded from AAA, when we have the military to blow away country we want, several times, downgrading makes S&P look foolish. Downgrading the Brits ... well, that's a lot easier to do since the Brits gave up world domination in 1945. :)
As to all these government programs you find objectionable -- it ain't the liberals or conservatives. It is the same mentality that has gotten us into this oil dependency in the first place. All government programs are just fine if they don't OVERPROMISE. I am 42. The Federal government is scheduled to give me about 1/3rd of my pay as a pension in 2024 when I retire ... at 57. That's 40 years ahead of inflation-adjusted benefits. Ridiculous. While I intend to take full advatnge of such a benefit, that benefit is stupid. It wayyy overpromises, to tens of thousands of people like me. Just like Social Security. Yes, people start to break down in their 60s (smokers especially), but there is no reason today not to greatly increase the age before you get benefits ... 70 at least! Problem solved.
Nobody wants to pay taxes and everybody wants benefits, and borrowing doesn't seem to bother people in the least. We know no one is going to stop us Americans from enjoying our pig trough, so the Japanese, Chinese and our own Fed are going to have to do it for us. Nobody can solve the world's problems, so I'm damn sure gonna profit from them instead. Burn, oil and gas, burn! BPT and EVEP!!!
B:
We know how we got here. I am merely pointing out the party is over, and any one that really wants to help folks can do so - just not by taking it from other folks who won't have it to give. We are all going to have to work this out on our own, and we are going to need to help the folks we made helpless become capable again.
Oh come on now. As a highly-paid investment professional (at least in the old days on Wall Street, you were :) ), you know who pays the taxes in this country. I don't work for the poor, or even the middle class. My Federal employment is 90% paid for by the rich. They pay the majority of the Federal taxes. You don't have to worry about robbing from the poor to give to the poorer. The rich pay almost all the tax in America, and no one has to worry about them going broke.
bureaucrat said...
"Nobody wants to pay taxes and everybody wants benefits."
Don't include me in that! I don't want anything that I haven't earned. That the government should steal from A and give to B is disgusting on many levels. It is a terribly destructive social force.
As Greg said, we have a huge population that is helplessly dependent on the dole. They have been severely harmed. It will be a rough time for many to learn the skills necessary to survive when the benefits end or become too small to make a difference.
50 years ago most of the poor were working poor who scraped by by working long hours at crappy jobs for next to no pay. They would be well prepared for what's ahead. There are still quite a few of them around. Today's welfare poor ... not so much.
Regards,
Coal Guy
Let's tax the rich into poverty, and see whether we're are better off or not. It's been tried. The unintended consequences are pretty horrific.
A good post and on point about what needs to be done. The myopia of the left is evident. However, Obama is not left, nor are his policies. But you point stands about the left's refusal to come to terms with the limits to growth, Many leftists I know are deeply suspicious about peak oil, and act as if it's a conspiracy. And they do think the current healthcare system can be extended to everyone.
As you pointed out in some ways, this problem is too big for anyone to solve. No Doomer.
With all the weight of their respective backers, no leader in this system has a chance.
I was pleased to see your reference to Sharon's blog. We have reached a critical point in this mess. We can not afford to let ideology get in the way of reality. More people will need to grow food near where they live. We will need to conserve precious resources. You can not have infinite growth on a finite planet. Who you vote for may not matter but how you live will.
Kathy!
As always, salient points all. Ideology was driven by circumstances, and circumstances change.
I am a big fan of Sharon's.
Wow, I'm just incredibly flattered by your kind words - I'm an admirer of your writing as well. And while we may never have voted for the same presidential candidates, I'm going to guess at least that there was a common degree of nausea at least some of the time at the people we did vote for ;-).
Cheers,
Sharon Astyk
@ bureaucrat
Guess I have nothing better to do than enjoy the national government’s harassment services.
Please list the harassment you receive from the Federal government. Only people we harass are people who cheat on their taxes, and true-believers who want to run other peoples' lives. We tend to leave everyone else alone. But maybe you have a brief, true story about relentless Federal harassment ...
Sharon:
Thrilled to see your comments here.
I have been following your blog for sometime and meant it sincerely when said that you are "brilliant".
And yes, I think that I have spent the vast majority of my time disgusted by the activities of some of the people I have voted for.
Still, keep it coming - people like you should be the Leaders of the Left, a group that has sorely lost its way.
thanks for sharing.......
___________________
Sharon
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