[Roy]

Partisan Democrat: I agree with your criticism of the Republicans.

But I do not think you understand that money cannot be borrowed infinitely. That the US government is spending far more than they take in. That can't continue and despite liberal fantasies to the contrary, some people are going to be hurt.

The US should have been downgraded years ago. We can never pay back what we've borrowed and we've been betrayed by BOTH parties who have continually endorsed our insane spending -- seemingly only disagreeing on which pet project got the borrowed money. I

t really started with Reagan and it hasn't stopped since regardless of which wing of the corporatist kleptocracy has controlled the White House and Congress.

Fiscal sanity does not exist in DC.

[sparky]

.
this from S&P global credit portal announcement

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics."

Outch ! that one hurt ,the Tea party were painted as lurid fanatics ..

and as a cherry on top !!

"The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case."

For reference most European countries are rated AAA
counties rated AA are Spain , Slovenia and Belgium

[AdTheNad]

We can never pay back what we've borrowed

I think there are very few countries that can to be honest. Even the German banks have ridiculous exposure to many bad debts from the PIIGS that should probably have some weighting with the rating agencies, and seems to be being overlooked.

According to the earlier wiki link, the uk is still triple A, yet there are countless people with mortgages on vastly overpriced homes with a 25 year plus time span left to run. Anyone who doesn't believe in cold fusion and is on this web site must believe that a huge number of these mortgages can never be repaid. This is repeated throughout the whole world thanks to capital seeking out places to maximise ROI with asset prices rising everywhere to unsustainable levels. Interesting times indeed. There will always be a least worst place to invest money, but that doesn't mean it is AAA.

[Bill Hicks]

S&P will not be changing this rating back to AAA. Does anyone seriously think we will have less debt a year from now?

We are getting to see the downfall of a superpower at a very accelerated rate. Unless you are in your upper 70's you will get to see it all pretty much unwind. Aren't we lucky to be here to see it?

Yep...and I'm THRILLED.

[Bill Hicks]

The libertarians probably stand to lose the most here...poverty tends to value security of food and shelter above political freedoms.

Yep...the truly authoritarian regime is coming. My guess is it will be here by mid-decade.

[eXpat]

And here comes the (first) ugly news
China to US the good old days of borrowing are over

China bluntly criticized the United States on Saturday one day after the superpower’s credit rating was downgraded, saying the “good old days” of borrowing were over.

Standard & Poor’s cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation’s budget deficits and climbing debt burden.

China — the United States’ biggest creditor — said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

“The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s official Xinhua news agency said in a commentary.

After a week which saw $2.5 trillion wiped off global markets, the move deepened investors’ concerns of an impending recession in the United States and over the euro zone crisis.

Finance ministers and central bankers of the Group of Seven major industrialized nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.

and this is the spicy bit:

Xinhua called for the printing of US dollars to be supervised internationally and repeated China’s contention that a new global reserve currency might be needed.

Analysts say neither suggestion is likely to happen. But China – the world’s largest holder of US debt – is clearly worried about its holding and also worried about criticism at home for holding so much of the country’s savings in US investments.

“The spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all,” it said.

It said the US should stop “letting its domestic electoral politics take the global economy hostage”.

http://themoderatevoice.com/118945/china-to-u-s-the-good-old-days-of-borrowing-are-over/

[prajeshbhat]

It is only nice to see when a tax man is coming to tax a pile of worthless shit.
Bye bye big government.
Bye bye welfare.

Why celebrate the end of the government? One must remember, end of big government will be preceded by the end of wealth. As long as you have wealth in your country there will be a big government protecting that wealth.
So the end of big government will not be some land of the free laissez faire capitalist utopia. If that was the case, some African countries should be very rich. They have a new government every week.

The end of welfare would be tragic too. I hope the current young generation of USA makes arrangements made for the old. Could be worthwhile to learn how the Japanese do it.

[Pops]

Xinhua called for the printing of US dollars to be supervised internationally and repeated China’s contention that a new global reserve currency might be needed.

That's a good one, China would like to be the one doing the central planning

I might be way off but I just can't see where else the money goes, especially as the Europeans are flailing and equities have, for whatever reason, finally awoken to the fact that the green shoots of the economic recovery are, on closer inspection, actually mold and decay. Gold is as high as it was in the early '80 (just before crashing) and you can only drive up the price of other commodities to a certain point. And China is due for its first experience at the downside of capitalism any time now.

I don't think the debt is that big of a deal once you take back Bush's giveaway to the 1% and start paying off the wars he elected to start. After that it gets harder, you have the problem of fixing our over-priced and inefficient medical system (the government is already on the hook for half the healthcare tab) and of course learning to live in a no-growth economy due to PO - not that PO enters any of these calculations, at least not publicly.

Really, those 4 things are the deficit, war, tax cuts, healthcare and "recession".

And you know, I just can't get worked up over the opinion of people who gave AAA ratings to real estate tranche trash that didn't even have clear titles - not to mention the 2 trillion dollar addition error.

I do agree with this part though:

The downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenge,

Not that I expect any politician to think that is directed at their inability to compromise.

[Sixstrings]

PIMCO: "U.S. Downgrade Heralds A New Financial Era"

It is hard to imagine that, having downgraded the US, S&P will not follow suit on at least one of the other members of the dwindling club of sovereign AAAs. If this were to materialise and involve a country like France, for example, it could complicate the already fragile efforts by Europe to rescue countries in its periphery.

(snip)

More worryingly, there will now be genuine uncertainties as to wider systemic impact of this change. With America occupying the core of the world’s financial system, Friday’s downgrade will erode over time the standing of the global public goods it supplies - from the dollar as the world’s reserve currency to its financial markets as the best place for other countries to outsource their hard-earned savings. This will weaken the effectiveness of the US as the global anchor, accelerating the unsteady migration to a multi polar system while increasing the risk of economic fragmentation.

(snip)

For the sake of their country and the wider global economy, both parties should resist the urge to begin bickering. Instead they should seize this potential “Sputnik Moment” — a visible shock to the national psyche that can unify Americans around a common vision and a renewed sense of purpose — that of halting gradual secular decline by putting the country back on the path of high growth, job creation and financial soundness.
http://www.zerohedge.com/news/pimco-us-downgrade-heralds-new-financial-era

It's a sputnik moment alright, but I don't see what the US can do to return to growth. The best we can at this point is for our pols to stop bickering. It may help if we look unified while Europe flies apart..

Where will new growth come from? The whole developed world has stalled for years now, it's on the decline, even China seems to be sputtering. Developing countries are still growing cuz there's only one way to go when you're at the bottom.. but the developed world just looks like toast with no way out. (other than low population first world states like Australia, they are growing)

[Pops]

I'm not sure there is going to be growth like we've known for a long time, if ever Six.

Right now there is a huge overhang of housing and commercial space and a huge number of mortgages underwater, not to mention losses in savings and retirement funds. Add in inflation of energy, food & rent along with poor income gains and where is the driver of growth?

Oh, yeah and we're laying off teachers and other gov workers right and left and cutting their pay because they're moochers and there are a whole bunch of Army and Marine moochers mustering out right about now as well. For some reason I don't see a post war boom this time around.

Short term I hope we can just make a soft landing with the current downturn.

[The Practician]

Where will new growth come from? The whole developed world has stalled for years now, it's on the decline, even China seems to be sputtering. Developing countries are still growing cuz there's only one way to go when you're at the bottom.. but the developed world just looks like toast with no way out. (other than low population first world states like Australia, they are growing)

Us low population first world states with large land areas (the one I live in is called Canada) are quite dependent on healthy economies in places like europe, china and the U.S. for trade purposes. We are not going to be coming out of this unscathed, even if we are, in a way, "one step removed" from the problem. One way in particular this is all going to be damaging for Canada is the new free trade deal with the EU the "Harper Government" is hammering through, on top the exisiting NAFTA arrangement. it all adds up to lower prices for our unprocessed natural resources and more outsourcing of manufacturing. We are well on our way down the same path as a certain southern neighbor of ours, which is all the more infuriating when the consequences of following such a path are on full display for all the world to see right now.

[eXpat]

British Minister joins the chorus
Cable says new reserve currency "sensible"

(Reuters) - Business minister Vince Cable on Saturday backed China's call for a new stable global reserve currency in light of the United States losing its AAA long-term credit rating from Standard & Poor's, but said for the moment the U.S. dollar still remained key.

China, the largest foreign holder of U.S. government debt, has called for the creation of a secured global reserve currency amid concern over Washington's rising debt burden. On Saturday it roundly condemned the United States, after S&P's rating downgrade, for its "debt addiction.

"The Chinese have been arguing for a long time that the world monetary system needed reforming and that we need a strong reserve currency, by which I think basically they mean the special drawing rights of the IMF," Cable told BBC TV.

"This argument's been around a long time and it would be a sensible way for the world to move but it's not something we're going to do overnight."

Cable has been a vocal critic of the U.S. Congress's protracted arguments to agree a deficit-cutting deal and had warned that Washington's triple-A sovereign debt rating was at risk.

http://uk.reuters.com/article/2011/08/06/uk-economy-britain-currency-idUKTRE77518W20110806

[EnergyUnlimited]

New global currency...
It will either be gold or other mineral based currency or a final round of a paper scam followed by collapse to new Stone Age.

[Cid_Yama]

China can afford to write off their US debt as a loss if it comes to that. China has been resistant to the Yuan being fully convertible because they did not want their currency vunerable to the dollar reserve based currency system.

Asian markets have been moving towards making the Yuan their reserve currency.

What I see is China assisting neighboring Asian markets to join China in a seperate economic sphere of influence where the Yuan is the reserve currency with the Yuan remaining insular from the dollar markets.

This will result in the same situation that existed during the cold war with the Soviet Union.

China and her satellite Asian markets will go isolationist, as the western world collapses.

[Cid_Yama]

One other thing. The dollar being the reserve currency has been the only thing that has allowed us to consume 25% of the world's resources while being only 5% of it's population. That also is now at an end.

Thank you, Republicans. Hope your dreams can survive on only one fifth of what you're used to.

You've totally fraked us with your nonsense, now we are on the fast track to the third world.

You might as well tear down the border with Mexico, because we are coming down to join them.

Friggin' stupid stupid people.

Want to know what your children's future is? They haven't got one any longer.

Might as well get your child signed up right now with Christian Children's Fund so some Asian family can support them for only 5 Yuan a day.

Or would that be Buddhist Children's Fund now?

[EnergyUnlimited]

China can afford to write off their US debt as a loss if it comes to that. China has been resistant to the Yuan being fully convertible because they did not want their currency vunerable to the dollar reserve based currency system.

Asian markets have been moving towards making the Yuan their reserve currency.

What I see is China assisting neighboring Asian markets to join China in a seperate economic sphere of influence where the Yuan is the reserve currency with the Yuan remaining insular from the dollar markets.

This will result in the same situation that existed during the cold war with the Soviet Union.

China and her satellite Asian markets will go isolationist, as the western world collapses.

You are onto something.

[EnergyUnlimited]

One other thing. The dollar being the reserve currency has been the only thing that has allowed us to consume 25% of the world's resources while being only 5% of it's population. That also is now at an end.

Thank you, Republicans. Hope your dreams can survive on only one fifth of what you're used to.

Ech, well...
So your ecological arguments are a sort of sophistry?

You might as well tear down the border with Mexico, because we are coming down to join them.

...and you are an anti Mexican racist?
Shame for a "progressive"...

[Cid_Yama]

Excuse me, how does my comment about tearing down the border wall, to the Republicans that are all concerned about it, show me as a rascist?

We are coming down to their economic level.

They can start building their maquiladoras on this side of the border now.



The world is coming to an end within the next decade or so due to massive quantities of methane being released from the ESAS.

But our remaining time could have been spent as a first world nation, instead of a failed state.

Damned Morons.

[Sys1]

Cid_Yama : Why blaming republicans on that? We all knew the system would crash, because based on growth. Peak oil and Olduvai theories shifting from paper to reality. This is it.
Moreover, since I often read your ultra doomers interventions on environment threads, you seem so much concerned by exponential global warming that the state of economy should look trivial from your standpoint and would not worth a post.

We are living historic time and arguing about how republicans are bad is useless. We as a whole are bad. We embraced this way of living and still loving it. We as peakoilers can get satisfied to see the system collapsing before our eyes just to appreciate how smart we were to predict the coming mess. But then, I'm sure we can do better -and anyway have better to do- than blaming a specific group of humans beeings.

[Cid_Yama]

We knew how precarious our situation was. Heck, it was a miracle that President Obama was able to pull us back from the brink when he first entered office. The world economy at the time had totally seized up. Ships were sitting Idle or being scrapped.

But, the Republican's saw it as their mission sabotage his Presidency no matter the cost.

Well the cost was too damn high!

They didn't just take down the currrent Administration, they took us all down.

Permanently. There is no recovering from this, EVER.