Exports look solid. government debt. Having seen no evil during much of the housing boom, S&P has flipped to the other extreme in regard to Washington’s fiscal problems, declaring T-bills to be a less reliable investment than bonds issued by Luxembourg or the Isle of Man. The following editorial appeared in the Los Angeles Times on Tuesday, Aug. Treasury bonds that S&P devalued. The economy is better off than the recent performance of the Dow would indicate.</p><p> America has problems, and this page frequently cajoles political leaders from President Barack Obama on down to rein in public spending, borrowing and taxpayer debt. That panel already is handcuffed and probably will not consider new revenues or substantial changes to restrain the growth of Medicare and other entitlement programs.</p><p> Even if this committee does the best possible job, it should not be the only game in town. There has been almost no recovery. Stocks command more public attention, but the performance of Treasury securities was encouraging. He should have said clearly that it’s GOP lawmakers’ failure to act in this way – to put the national interest above their own political fortunes and ideology – that caused the debt downgrade last week.</p><p> Obama must relentlessly exhort his opponents to end their self-interested refusal take action on the economy. It took many years of poor stewardship to dig so deep.</p><p> President Obama had it right when he interrupted the market’s precipitous downward slide Monday to reassure the nation that "markets will rise and fall." But the president veered off course when he indulged in this wishful thinking: "No matter what some agency may say, we’ve always been and always will be a triple-A country."</p><p> The lesson from the latest debacle on Wall Street is that America won’t be a triple-A country unless those in power step up to their responsibilities. He must make the case to the nation that major congressional action is needed to pull us out of this new downward spiral. Yet it stuck by its conclusions despite the error, suggesting that the data weren’t as important as the politics.</p><p> In essence, the downgrade was a vote of no confidence in U.S. to meet its financial obligations in full and on time." The particulars of America’s future political process, even as messy as it has become, simply is none of S&P’s business.</p><p> The markets appear to be putting little faith in S&P’s assessment. America’s full faith and credit were held hostage by the House of Representatives’ right-wing cadre’s demands for ruinous cutbacks in services and rigid opposition to any effort to raise more money.</p><p> The president and Democrats in Congress were outmaneuvered, at least partly because they allowed the opposition to define the terms of engagement. Global investors once again turned to the U.S. The Gang of Six presented a bipartisan framework that could guide Washington toward spending cuts and tax reform to reduce the debt by $4 trillion over 10 years. FINANCIAL RISK</p><p> The credit ratings firm Standard & Poor’s didn’t enhance its tarnished credibility with its decision Friday to downgrade Treasury securities from "risk-free" AAA to AA+. And on financial terms, it’s hard to justify even a slight downgrade on U.S. Stabilizing the debt requires deeper cuts "in the growth of public spending, especially in entitlements," S&P said, plus the expiration of the Bush tax cuts or equivalent increase in taxes.</p><p> We concur, in part, on targeted tax increases. Unemployment has leveled off and started to recover – albeit at a sluggish, unsatisfying pace. But if it helps get our leaders to get serious about our genuine long-term problems, it will be worth it. fiscal budget math."</p><p> Shooting the messenger won’t make the debt problem disappear. Despite Monday’s stock market plunge, corporate America rests on a more solid footing than even a year ago.</p><p> Some of the biggest drags on the economy show signs of bottoming. sovereign credit, an action it extended Monday to the bonds of Fannie Mae, Freddie Mac, the senior debt of the Federal Home Loan Bank System and the Farm Credit System.</p><p> The reason for the downgrade, S&P said, was that the debt-ceiling deal "falls short." It is not enough to keep the debt from growing as a percentage of economic output. government. He has to go on the offensive – and not about debt and deficits, which seem to have consumed him of late. 9:</p><p> FEAR, PANIC AND LEADERSHIP</p><p> It’s an old truism that the stock market balances fear and greed. His failure has helped the tea party’s ill-timed austerity pitch gain traction in spite of the fact that it will slow desperately needed economic growth. It is time for an impassioned case for government action, even if it means Obama has to reverse some of his wishy-washy, conciliatory rhetoric.</p><p> The ideas he’s proposing will help many thousands of Americans avoid the devastation of joblessness, reason enough for Congress to pass them. 9:</p><p> SHOT ACROSS THE DOW</p><p> There is no shortage of good reasons to write off the one-notch credit-rating downgrade that Standard & Poor’s issued last Friday on long-term U.S. It’s quite another, says S&P, if gridlock and a woefully inadequate debt-reduction plan are the best Congress can do. S&P may merely have been stating the obvious about Washington’s policymaking foibles. When he spoke to the nation Monday morning in light of an early drop in stock prices, the market plunged another couple hundred points.</p><p> In his most recent weekly Saturday address to the nation, Obama laid out a string of economic stimulus ideas he’s been pressing an unwilling Congress to approve. One is S&P’s $2 trillion calculation error, suggesting that its number-crunchers could use a remedial math class at the No Ratings Agency Left Behind Academy.</p><p> Another reason is S&P’s track record before the 2008 market collapse. But that’s far below the debt load in Greece and only a third of Japan’s.</p><p> In addition, unlike Greece and the other financially troubled countries in Europe, the United States’ central bank controls the country’s currency. 1 economy by far.</p><p> The investment fundamentals that propelled the market’s rally from the depths of the recession in March 2009 remain largely intact. It went up against the euro, the pound and the yen. Yes, the downgrade and tumult in the international economy have thrown stock markets into a three-day slide that included a 634-point drop Monday in the Dow industrials average.</p><p> But even as they abandon equities, investors are snatching up the very U.S. It has fallen in the past few years, however, which reflects seriously on the financial policy of the United States.</p><p> Following the Bush bailouts, the Obama administration has responded to the recession with even larger doses of borrowing and spending. Now the world realizes that it doesn’t matter. The Federal Reserve has also printed money under the name of "quantitative easing."</p><p> This was the stimulus that did not stimulate. It involves both health care and personal financial security, and the two are inextricably bound. Then came Standard & Poor’s, with its downgrade of U.S. Yet it’s another layer of protection against default.</p><p> One of S&P’s main complaints was that the $2.4 trillion to $2.7 trillion in deficit reduction that Congress and President Obama finally agreed to this month wasn’t enough to stop the U.S. The broader S&P 500 index fell 6.66 percent</p><p> Yet just because speculators were dumping risky assets, everyday Americans should not give in to fear. 9:</p><p> FINANCIAL MARKETS, PUBLIC HAVE LOST FAITH IN CONGRESS</p><p> Years of fiscal recklessness and political dysfunction have caught up to Washington.</p><p> The United States lost its AAA rating from credit rating agency Standard & Poor’s on Friday. Instead, they have been drawn into battles over extreme cuts in short-term spending.</p><p> The cuts demanded by Republican ideologues and accepted by Democrats already threaten to rekindle the fires of recession, even before the embers of the last one have died out – even as millions of Americans still struggle to get by.</p><p> The S&P downgrade was ill-considered and arguably inappropriate. At the moment, the U.S. Many of America’s most important companies have piled up strong earnings. And he’ll ensure that those lawmakers pay a price for their refusal to lift a finger to help the American people, who stand on the brink of another economic disaster.</p><p> The following editorial appeared in the Dallas Morning News on Tuesday, Aug. Millions of Americans are still suffering because of the slow recovery from the 2008 economic collapse. And he must make the public argument often and consistently, reviving the rhetorical talent that helped him win the presidency. It is the only hope for restoring even the weak recovery that had seemed to be under way.</p><p> His current approach is not working. In an interview Sunday, Treasury Secretary Tim Geithner said S&P "has shown really terrible judgment, and they’ve handled themselves very poorly. There may be some little stimulants made to look like big ones, but essentially the patient is on its own.</p><p> That is why the market plunged.</p><p> The following editorial appeared in the San Jose Mercury News on Tuesday, Aug. as a safe haven from the latest financial storm. Its overreaction prompted sell-offs in financial markets around the globe, causing billions of dollars worth of equity to evaporate.</p><p> Nevertheless, the company has a point about the exceptionally polarized and dysfunctional U.S. Far too many lawmakers seem to have a cavalier attitude about the commitments their predecessors have made to the people who lend to, do business with or rely on the federal government. Unlike Greece or Italy, which borrow in a currency they don’t control – the euro – the U.S. GOVERNMENT MUST SHREWDLY STABILIZE ECONOMY WITH FEWER OPTIONS</p><p> Monday’s loss of 634 points on the Dow Jones industrials is not a sign that the world is worried about a default on United States bonds. Even with the enormous deficits the government has been running, Washington still collects far more money each month than is needed to stay current on its debt payments.</p><p> The recession, a succession of tax cuts, two simultaneous and expensive overseas wars, a new prescription drug entitlement and a surge in federal spending have all driven up the federal debt to 69 percent of the country’s gross domestic product, an unusually high level. In doing so, S&P – along with ratings agencies Moody’s and Fitch – helped fuel the global economic crisis from which we still have not recovered.</p><p> And a third reason would be that S&P’s credit ratings ought to stick to their stated purpose – expressing an "opinion about the ability and willingness of an issuer . governance. The biggest banks have made a comeback from their collapse three years ago, courtesy of a taxpayer-led bailout. Millions more are now at risk as the job market fails to keep up with population growth and the stock market plunges, terrifyingly, day after day.</p><p> It’s time for President Barack Obama to stop trying to look like the most reasonable, centrist guy in Washington. Obama’s remarks Monday failed along the same lines.</p><p> The true financial challenge facing the United States – and it is profound and formidable – is the long-term need to keep our promises to America’s seniors today and to seniors of future generations. In cutting the nation’s rating to AA+, S&P said America’s governance and policymaking "is less stable, less effective and less predictable than what we previously believed."</p><p> That’s a polite way of saying to Congress that "you’re scaring us, because we haven’t the slightest idea that you understand the stakes of fighting each other instead of the debt."</p><p> S&P and financial markets aren’t alone in this assessment. 9:</p><p> OBAMA MUST AGGRESSIVELY MAKE THE CASE FOR ACTION TO BOOST ECONOMY</p><p> The nation is on the cusp of a double-dip recession. trading session since Standard & Poor’s cut the federal government’s credit rating late Friday turned into a rout: The Dow Jones Industrial Average dropped 634 points, or 5.55 percent. And they’ve shown a stunning lack of knowledge about basic U.S. Weak political leadership is one of the main reasons for the poor sentiment and low confidence that are sapping the financial markets.</p><p> But try to keep the panicky selling of the past week in perspective.</p><p> For starters, even as stocks plunged, bonds rallied. As then-Federal Reserve Chairman Alan Greenspan said in 1997, "A government cannot become insolvent with respect to obligations in its own currency." If it needs more dollars to pay its debts, it can print more. Even if he fails – again – he will help us better understand the reasons for these terrible times. That’s a horribly inflationary policy, of course, and markets wouldn’t react kindly. government debt, even at AA+ instead of AAA, as a safer and more secure alternative.</p><p> And yet, as President Barack Obama noted in brief remarks Monday afternoon, the S&P action reflected "a legitimate source of concern" about whether America’s ever more fractious political system is capable of dealing seriously with the financial challenges it faces.</p><p> The downgrade followed the ugly and prolonged fight over raising the national debt ceiling. Also, we would add, it requires large cuts in military spending.</p><p> All of which means less medicine from Washington. That may be because the medicine wasn’t strong enough, or that it wasn’t much of a stimulant. Greater and greater doses are simply unaffordable.</p><p> That is the news from Europe. That reaffirms America’s status as the world’s No. John McCain, R-Ariz., said Sunday, the whole Congress needs to take on this issue.</p><p> So far, Congress hasn’t even come close to doing the job – yet it’s one that must be done.</p><p> The following editorial appeared in the St. In fact, as Sen. It granted investment-grade ratings to securities made up of bad subprime mortgages and other severely defective investments. Mr. If the markets thought it was, the dollar would have plunged Monday, and it did not. Fear for the nation if its leaders fail to get spending, borrowing and taxpayer debt under control.</p><p> The following editorial appeared in the Seattle Times on Tuesday, Aug. But by putting its imprimatur on the prevailing pessimism about the economy, the agency only exacerbated the problem.</p><p> The following editorial appeared in the Chicago Tribune on Tuesday, Aug. In the heat of the moment, at least, the market apparently considers U.S. Lately, fear has come out on top.</p><p> On Monday, the first U.S. But for those who believe the national debt is the main problem facing us, pulling out of this downturn will do more than any other strategy to reduce the deficit: More people working means more tax revenue and less money spent on safety-net programs.</p><p> At the end of his brief speech Monday, Obama compared American servicemen and women – including the 30 who died in Afghanistan over the weekend – with Washington politicians. Both the military and Congress are charged with serving their nation, but the contrast is clear:</p><p> "No matter what differences they might have as individuals," Obama said of the soldiers and Marines, "they serve this nation as a team, and they meet their responsibilities together."</p><p> As usual of late, the president left his point too subtle to hit home. Fear not for the economy, at least not in the short run. As Alan Greenspan noted on "Meet the Press," in an emergency the U.S. government can print dollars.</p><p> That is not the solution. He wants to extend the payroll tax cut and unemployment benefits; institute a new tax credit for businesses that hire veterans; pass patent reform and several stalled trade deals; and create an infrastructure bank to finance essential projects and put construction workers back on the job.</p><p> These are ideas Republicans supported in far milder recessions but now have turned against. The most obvious explanation for the reversal is that they don’t want a stronger job market or economy that could help Obama win re-election – and that is truly frightening, as out-of-work and under-employed Americans watch their job prospects and nest eggs, if they’re lucky enough to have them, dwindle.</p><p> For the public, Obama utterly has failed to connect the dots from stimulus to economic recovery to the government’s balance sheet. Stocks took a massive beating Monday, with the Dow Jones plummeting below 11,000 for the first time since November.</p><p> The twin messages from S&P and financial markets couldn’t be clearer – but first, lawmakers must stop finger-pointing long enough to take a listen, then act. The 14th Amendment arguably requires that the Treasury pay bondholders ahead of any other creditor. 9:</p><p> U.S. 9:</p><p> POLITICAL VS. Its initial analysis, however, was based on outdated budget projections that ignored previous spending cuts, throwing its calculations off by $2 trillion. Those leaders need to be part of the discussion. That’s an understandable reaction to the spectacle of the debt ceiling negotiations, when dozens of lawmakers – egged on by a chorus of GOP presidential candidates – declared that it would be better to shut down the government and stiff some of its creditors and beneficiaries than to compromise with Obama over the size or composition of the deficit reduction package.</p><p> Despite the real problems posed by the deficit, the struggling economy and a bitterly divided government, however, the Treasury can be relied on to make payments on the debt. bonds. Although prices may yet go lower in the troubled housing sector, many analysts expect the real estate market to stabilize over the next year or two. Consumer spending is barely growing, mostly because Americans spent beyond their means during the boom years. Interest rates that taxpayers pay to bond buyers, already low, went lower. government borrows in its own dollars. currency is stable. The Greeks have to cut back. At home and abroad, there’s no faith in Washington leaders, a more unsettling prospect to financial markets globally than the already disconcerting national debt.</p><p> It’s one thing if Congress had a credible plan and the will to act. debt from growing relative to the size of the economy. All the countries in trouble have to cut back.</p><p> Even with the debt-ceiling deal in Congress, there was a thought that most of the cuts could be put off until later. Although Washington won’t default on its bonds, those relationships can no longer be considered "risk free."</p><p> Credit rating agencies are supposed to make judgments about financial risks, not political ones. It requires finding ways to reduce the actual costs of health care – not merely cutting what government pays providers – and ensuring that aging Americans can live out their lives in reasonable safety and security from financial hardship and physical need.</p><p> But neither the president nor his congressional colleagues have successfully separated this long-term challenge from the hot-button issue of short-term government deficits. Louis Post-Dispatch on Tuesday, Aug. The dollar mostly strengthened, though it remains understandably weak in light of a national debt at $14.3 trillion and counting. Technology is a font of innovation, promising future growth. Republicans and Democrats have been able to agree to only a relatively modest $917 billion in spending cuts and have punted measures to cut $1.5 trillion more from the debt to a 12-person committee. A New York Times/CBS News poll last week showed that 82 percent of Americans now disapprove of the way Congress is handling its job, the highest rate since pollsters first asked the question in 1977.</p><p> Yet Democrats and Republicans on Capitol Hill were up to their usual tricks after Friday’s downgrade, immediately exchanging partisan accusations, while the White House whined that S&P acted unfairly. Now they’re paying down those debts.</p><p> These problems stand to linger, but there is good reason to believe the worst is past.</p><p> America’s descent into a debt hole comes as no surprise.
Having seen no evil during much of the housing boom, S&P has flipped to the other extreme in regard to Washington’s fiscal problems, declaring T-bills to be a less reliable investment than bonds issued by Luxembourg or the Isle of Man. The credit ratings firm Standard & Poor’s didn’t enhance its tarnished credibility with its decision Friday to downgrade Treasury securities from “risk-free” AAA to AA+. Its overreaction prompted sell-offs in financial markets around the globe, causing billions of dollars worth of equity to evaporate.
Nevertheless, the company has a point about the exceptionally polarized and dysfunctional U.S. Far too many lawmakers seem to have a cavalier attitude about the commitments their predecessors have made to the people who lend to, do business with or rely on the federal government. Although Washington won’t default on its bonds, those relationships can no longer be considered “risk free.”. government.
And on financial terms, it’s hard to justify even a slight downgrade on U.S. bonds. Credit rating agencies are supposed to make judgments about financial risks, not political ones. The 14th Amendment arguably requires that the Treasury pay bondholders ahead of any other creditor. Even with the enormous deficits the government has been running, Washington still collects far more money each month than is needed to stay current on its debt payments.
As then-Federal Reserve Chairman Alan Greenspan said in 1997, “A government cannot become insolvent with respect to obligations in its own currency.” If it needs more dollars to pay its debts, it can print more. Yet it’s another layer of protection against default. That’s a horribly inflationary policy, of course, and markets wouldn’t react kindly. In addition, unlike Greece and the other financially troubled countries in Europe, the United States’ central bank controls the country’s currency.
S&P may merely have been stating the obvious about Washington’s policymaking foibles. But by putting its imprimatur on the prevailing pessimism about the economy, the agency only exacerbated the problem. Despite the real problems posed by the deficit, the struggling economy and a bitterly divided government, however, the Treasury can be relied on to make payments on the debt.
For starters, even as stocks plunged, bonds rallied. 1 economy by far. The dollar mostly strengthened, though it remains understandably weak in light of a national debt at $14.3 trillion and counting. Interest rates that taxpayers pay to bond buyers, already low, went lower. as a safe haven from the latest financial storm. That reaffirms America’s status as the world’s No. Stocks command more public attention, but the performance of Treasury securities was encouraging. Global investors once again turned to the U.S.
The investment fundamentals that propelled the market’s rally from the depths of the recession in March 2009 remain largely intact. The biggest banks have made a comeback from their collapse three years ago, courtesy of a taxpayer-led bailout. Many of America’s most important companies have piled up strong earnings. Exports look solid. Despite Monday’s stock market plunge, corporate America rests on a more solid footing than even a year ago. Technology is a font of innovation, promising future growth.
Consumer spending is barely growing, mostly because Americans spent beyond their means during the boom years. Now they’re paying down those debts. Some of the biggest drags on the economy show signs of bottoming. Unemployment has leveled off and started to recover – albeit at a sluggish, unsatisfying pace. Although prices may yet go lower in the troubled housing sector, many analysts expect the real estate market to stabilize over the next year or two.
Millions more are now at risk as the job market fails to keep up with population growth and the stock market plunges, terrifyingly, day after day. The nation is on the cusp of a double-dip recession. Millions of Americans are still suffering because of the slow recovery from the 2008 economic collapse.
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