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ikkyu2 (99.52)

These morons are actually going to do it

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July 30, 2011 – Comments (18)

It's starting to look like these Tea Party Republicans are actually going to force the US into default and ruin the US' credit rating.

When a family does this, they get foreclosed upon and evicted from their house. 

When a nation does it, the nation often goes on operating - it just pays the penalty, in the form of higher costs to access capital.

What's that going to do to us, then: these changes that will effectively raise the world's risk-free rate?  It's going to prolong the recession, cost us jobs, contribute to even more inflation - especially in non-core things like food and energy, things poor people and other people pay for.

Thanks, Tea Party!  Ruining the country to save it - that's a new plan that no one has ever tried before.  Along with the wasted trillions it costs the US taxpayer, I hope it costs you seats in 2012! 

18 Comments – Post Your Own

#1) On July 30, 2011 at 3:20 PM, motleyanimal (97.58) wrote:

I seem to remember it being called "creative destruction."

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#2) On July 30, 2011 at 3:40 PM, wolfman225 (76.77) wrote:

The Tea Party isn't "forcing" anything.  They lobbied for their position, as does everyone else who has an interest in legislation.  The Republican-led House has presented (and passed) a budget, the Democrat-led Senate hasn't passed a budget in over 2 years; the House has also debated (and passed) 2 specific plans to deal with the debt ceiling and the annual budget deficits, the Democrat-led Senate refused to even bring them up for a debate on the merits, much less a vote, prefering instead to table them without discussion, effectively killing any chance for passage.

It seems to me that rather than the Tea Party, it's the Senate Democrats who are the obstructionists in this little drama.

Also, as far as the downgrade of our credit rating is concerned, both Moody's and S&P has said that the downgrade will happen if the deficits aren't cut by at least $4T.  None of the proposals, other than the Paul Ryan budget and Cut,Cap&Balance, even comes close to that number.

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#3) On July 30, 2011 at 4:45 PM, devoish (98.76) wrote:

It is a team effort, no doubt. But I hope the senate dems don't cave to cuts when they should be demanding spending increases.

I had hoped that Congress would have had the courage to raise taxes and collect the money to pay our bills rather than to continue to borrow and pay interest.

Neither party of cuts will get my vote in the future.

Best wishes,

Steven

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#4) On July 30, 2011 at 4:48 PM, turdburglar (41.49) wrote:

Any time you hear someone blame just one party or the other for this whole debt debacle you know they don't have a clue.

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#5) On July 30, 2011 at 5:22 PM, leohaas (92.08) wrote:

It ain't over till the Fat Lady sings. There will be plenty of time to assign blame after the default, if it ever happens!

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#6) On July 30, 2011 at 5:36 PM, whereaminow (61.66) wrote:

I'm confused by the attitude in the post, which I see often in threads.

Boehner's plan can in no way be construed as some kind of austerity.  It backloads the cuts into never never land.  It does not actually enforce a Balanced Budget.  It "requires" one.  Again, sometime down the road.  And even that shallow promise can be overrode by an "emergency."  And every person with any political sensibility understands that everything is an emergency to the politicos.  There will be no BBA.  There will never be a vote. 

So this supposed fiscal conservatism is nothing of the sort.  It's a lie and a sham, as was universally predicted by libertarians.

Let's put this Boehner plan in perspective.  The last version I read had something like $4 billion in cuts in 2012, with that amount increasing up to a little over $130 billion in 2021, in exchange with a raise of the debt ceiling in 2011 of $2.5 trillion on top of a current deficit of $14 trillion.

Ok, so let's round down the numbers to something we can relate to, put keep the proportions the same.

You come to me asking for a $25,000 line of credit.  So I look over your books and see that you have $140,000 in debt already and no plan to cut any spending.  So, and I think this is eminently reasonable, I ask you to cut some things out of your budget and get back to me.

You call me up excited. You proclaim that the misses (being the shoe-shop-a-holic that she is) wouldn't cut any spending, BUT you have found a way to cut out $40 next year!

Well, slap me silly, here's your check.

The reality is that we will get a compromise between $40 of this or $40 of that, but with no real restraint on future spending and no real enactment of a Balanced Budget.

So why is the Tea Party getting blamed?  Well, somebody needs to the be the scapegoat for this sinking ship.  More importantly, the Establishment of both parties is terrified of this Tea Party thing and they need to make them out to be unsophisticated boobs that shouldn't be taken seriously.

Despite all this, no one can ever answer the simple, yet fundamental question I propose to all bickering Republocrats and Demicans:

How does an institution with a comparative advantage in violence and its very own printing press have so much trouble paying its bills?

David in Qatar

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#7) On July 30, 2011 at 5:37 PM, whereaminow (61.66) wrote:

To Warren Mosler:

Those who think they can manage the state, end up being managed by the state.

David in Qatar

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#8) On July 30, 2011 at 5:57 PM, mm5525 (< 20) wrote:

So tell me, mr. author.... what are the Democrats advocating? Or, in your words "forcing?"

If not for the Tea Party, the debt ceiling would have been raised with absolutely no fanfare. Had the Dems not passed Obamacare on Xmas eve, Dodd-Frank, etc with no GOP votes AT ALL, yet now we find the Dems are complaining of a lack of bi-partisianship. Go figure. It's your economy now, boys and girls.

 And spare the Tea Party the name-calling. They are at least trying to stand for something, and, ummm. try to change the debate from the status quo. They have accomplished both missions.

What do the Democrats have to offer? Where's your plan?

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#9) On July 30, 2011 at 6:32 PM, LouieJunior (20.82) wrote:

You are a real FOOL if you believe there are any real cuts being proposed -- anywhere! The Rebublican draconian proposals only reduce the growth of government through smaller increases. And this is after 30% increase in discresionery spending over 3 years. We need to get serious and do what the author fears.

Real, significant cuts in spending must happen soon -- eliminating entire agencies and not just a few duplicative programs here ant there. How about HUD, Energy, EPA, TSA, and Education to get Started. None of these were around prior to the 1970's. Have any of these agencies accomplished anything outher than handling transfer payments? We seemed to get along better without them. Commerce and Agriculture are a few others that do little but waste tax dollars.

Getting the democrats to cut spending is going to be like asking Colonel Sanders to stop killing chickens. It'll never happen.

All of the politicos say the democrats will never "agree" to a balanced budget amendment. Maybe so. Then the only way to control government spending will be to starve the government of funds. The current debt ceiling will prevent future borrowing and, hence, balance our budgets in the future.

I think we'll be much better off with a little austerity now, rather than a complete bankrupcy later on. 

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#10) On July 30, 2011 at 6:47 PM, mm5525 (< 20) wrote:

Leftists wasting time on health care and other measures, rather than focusing on jobs, is a large chunk of why we're where we are, even after $800 BILLION in "stimulus" spending. Yet those on the Left are somehow unable, or unwilling, to understand the relationship between the smoking gun in their hands and that gaping hole in their feet. Massive increased regulation, ObamaCare, Fin-Reg, demonizing business, threatening to raise taxes, ripping off bondholders in favor of unions, yet they want businesses to hire? Yet, amazingly, even after years of manging our economy, they want to cast blame anywhere but at them.

Solution: Call the Tea Party and anyone else standing in their way of more of the status quo "morons" and hope it sticks. Sadly, it might very well stick.

Politicians, in general, count on the public being certifiable morons, and they're probably right.  

Face it, people, there's no way to cut spending in this country. No one is going to take a serious effort to do it. It's political suicide to do so. The Tea Party will never win, but they are at least trying to change the debate. Look at where that got them. With all the Baby Boomers soon to enter Medicare, the entitlements will increase. The money-printing will increase. We can't handle higher interest rates. It will doom the housing market. Print money non-stop. That's the solution in their eyes. Someone will really have to knock this government utterly "senseless" with a massive body-blow to try to put some sense in this country. I don't see it happening.

Buy gold. Buy PM. At least profit off the massive decline of the U.S. Peso...  

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#11) On July 30, 2011 at 6:53 PM, ajm101 (33.76) wrote:

Tea Partiers want to reduce the size of government - defaulting and increasing the cost of capital works _perfectly_ towards this goal.  If the US can't borrow money as readily, spending has to decrease.  One almost wonders if this was the goal (and with the side benefit that if Obama goes around with the '14th amendment' option, they will try to impeach him).

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#12) On July 30, 2011 at 6:53 PM, NOTvuffett (< 20) wrote:

The last Boehner plan I saw had cost savings of about $1 trillion over 10 years, and Reid and Obama says it is DOA. Even if it were passed David is correct we would never see them materialize. The DEFICIT this year is about $1.6 trillion, and the projections for the next several years are expected to be about $1 trillion per year.  It doesn't take a rocket scientist to figure that one out.  It is business as usual in Washington D.C.

A credit downgrade is almost sure at this point, and it won't be because the tea party didn't let the government borrow more money than they can pay.

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#13) On July 30, 2011 at 9:42 PM, dwot (99.48) wrote:

http://www.ritholtz.com/blog/2011/07/an-economy-at-stall-speed/

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#14) On July 30, 2011 at 9:44 PM, dwot (99.48) wrote:

3/4rds down in the link he talks about his discussion with senators.

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#15) On July 31, 2011 at 12:18 AM, 4thDensity (99.69) wrote:

The Big Elephant in the Room is the Federal Reserve.  This isn't about "out of control" or "irresponsible"  spending at all.  It's about an irresponsible system creating out of control borrowing.  That's what the US government's financial system is based on.   It borrows Federal Reserve Notes from the Fed (a separate private entity) and distributes it across the world as currency.  Every FRN in your wallet is owed back to the member banks of the Federal Reserve.  Every FRN represents debt that the US gov't has to make monthly interest payments on, causing even more money to be "created" (borrowed) in order to make said payments.  It's a ponzi scheme of the highest order and the only ones making a real profit in it are the member banks of the Federal Reserve.

The Federal Reserve (or should I say ANY central bank) is a cancer that will continue to eat away at the wealth of citizens, until some sort of currency based on REAL money is returned to. 

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#16) On July 31, 2011 at 1:04 AM, ChrisGraley (31.53) wrote:

Here I am thinking that the Tea Party isn't even doing enough.

How did we as a civilization get this fat dumb and lazy? 

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#17) On July 31, 2011 at 3:41 PM, wolfman225 (76.77) wrote:

@ChrisGraley #16:

Here I am thinking that the Tea Party isn't even doing enough.

How did we as a civilization get this fat dumb and lazy? 

I think that's an easy one. An increasingly large portion of our population has been raised with the notion that achievement  of a certain standard of living without effort is not only possible, but their "right". 

Think about it for a few; many of our grand-parents went through the Great Depression (either as adults or children), leaving an indelible impression on their view of the world, and what their responsibilities were to themselves and their families.  This was passed on to the next generation (The Greatest Generation) who guided the country through WWII.  After that, the US went through one of the greatest expansions of the middle class ever seen, with families attaining a previously unimaginable standard of living (comparable to the Industrial Revolution that lead to the Roaring 20's).

Since, we (as a nation) have had it relatively easy.  Sure, we had our hiccoughs along the way: the Oil Embargo in the 70's (the "rationing" then was nothing compared to the real rationing that went on during WWII), relatively minor Recessions (no bread/soup lines) in which people were for the most part able to provide the basics for themselves, and even a couple "wars" (let's be honest here, the US hasn't fought a real war since WWII, they've all been scaled down efforts subject to public/international "approval") that have asked for little or no sacrifice from the general population.

During this same timeframe, standards of living have continued to rise, what were once considered the frivolous indulgences of the rich are now perceived as "necessities".  Mis-guided parents have been increasingly generous/lenient with often-wayward children, making allowances when they should have been imposing discipline and teaching life lessons that would enable them to be self-sufficient adults.  This has resulted in an increasing percentage of the population that believes itself to be "entitled" to things they haven't earned, to be paid for by others; that those who have dared to succeed where they haven't should be made to "pay their fair share".

We have so-called schools who, instead of teaching our kids the ABC's and educating them in History and Civic Responsibility, are becoming more like indoctrination centers whose sole aim is to impress young minds of their duty to the state; places where "self esteem" is of higher importance than actual accomplishment (which itself is sometimes punished) and "rights" are emphasized without accompanying responsibilities.  And we have a government that has come to actively endorse this viewpoint and foments resentment among the populace at large between those who seek a handout, and those who seek to be "allowed" to succeed.

Given all of this, ".....fat, dumb and lazy" doesn't begin to describe the situation.

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#18) On August 05, 2011 at 10:51 PM, ikkyu2 (99.52) wrote:

Mission accomplished: AA+.  Instant rate hike of 0.5%, undoing the last $500 billion or so of fiscal stimulus.  That money, spent by Congress, has now been ensured to have been *wasted* by Congress as its effects were just undone.

Thanks, Tea Party Republicans!  I'll enjoy watching you, as individuals, after you leave office, continue to grow your own personal wealth as "consultants" to large hedge funds.  Meanwhile, I and the rest of the America you ruined will grow poorer.

Where will you be living in 10 years, Tea Party Republican?  Inner city D.C.?  I doubt it.  Paris, probably, or Venice; London, or Hong Kong.  Chateau in Provence; castle in Tuscany.  Somewhere nice.  Not the USA you ruined and gutted.

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