Well, it became official last night, about three hours after I had wrapped up my first Virtual Front Page in awhile:
S&P Strips U.S. of Top Credit Rating
A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor’s said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.
S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn’t do enough to address the gloomy outlook for America’s finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen countries, including Liechtenstein, and on par with Belgium and New Zealand. S&P also put the new grade on “negative outlook,” meaning the U.S. has little chance of regaining the top rating in the near term…
S&P said 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.” It also blamed the weakened “effectiveness, stability, and predictability” of U.S. policy making and political institutions at a time when challenges are mounting…
The WSJ report (and here are others from the NYT, NPR, BBC and the WashPost) goes on to say that it might not be too bad, since the other ratings agencies have kept the U.S. at the triple-A rating, then says…
But the move by S&P still could serve as a psychological haymaker for an American economic recovery that can’t find much traction, and could do more damage to investors’ increasing lack of faith in a political system that is struggling to reach consensus even on everyday policy matters. It could lead to the prompt debt downgrades of numerous companies and states, driving up their costs of borrowing. Policy makers are also anxious about any hidden icebergs the move could suddenly reveal.
Just what we needed, right?
As you see, the reason is that we failed to reach a comprehensive, rational, credible agreement on reducing U.S. debt. That was always the greater danger than the debt ceiling not being raised. And our elected representatives descended to the challenge of eroding the full faith and credit of the United States of America.
Of course, all involved in the government will vehemently defend their agreement against such condemnation as Standard & Poor’s. The Obama administration scoffed at S&P for making “a $2 trillion error” in its calculations. And indeed, well they might lash out, because all will share the blame.
But here’s the thing: Obama was willing to do a real deal. I’m not saying it would have fixed everything, but at least he was pushing the essential elements — both spending cuts and tax increases (or “reform” or “enhancements” or “revocation of cuts” or whatever you want to call it). That was and is essential to real deficit reduction for the simple fact that no one wants to go far enough in cuts.
Oh, four of the SC5 would go far enough. They have a nihilistic desire to cut, slash and burn; they are ideologues, and are not affected by pragmatic considerations. But Joe Wilson wouldn’t be with them; he wants to be re-elected. And if the cuts were deep enough to essentially eliminate the deficit without any revenue increases, they would be replaced in the next election by people who do give a damn about the essential functions of government (or what most voters regard as the essential functions of government, which in political terms amounts to the same thing). It would probably also split our two senators: DeMint cares little for the consequences of cutting, but Graham would balk at emasculating the U.S. military.
Gentlemen, if I may go so far as to call you “gentlemen,” you and those like you have brought us to this. I will watch, not without some trepidation, to see what you do next.
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By the way, that assessment above that it was the Republicans’ refusal even to consider tax increases was entirely mine; merely a reasonable assumption.
But almost as soon as I typed it, I ran across this direct quote from S&P explaining its action: “It appears that for now, new revenues have dropped down on the menu of policy options… 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.”
And what we’re talking about here is the destruction of a consensus that kept the United States financial stable and dependable. Up to now, the carping between left and right were never allowed to descend to the level that it actually did fundamental, structural financial damage to the country. Politicians held themselves above that. But what the Tea Party has wrought is the election of a bunch of people who do not understand how the world works, and do not care. Hence this situation, also quoting from the S&P report:
“The political brinkmanship 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… Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising US public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated.”
Dude! What are you doing up so early blogging on a Saturday? It’s like 7:10 where you are!
But welcome…
You’re too too easy on Wilson and Graham.
Neither showed any leadership on this; they both rolled over – and then sent out press releases about what swell guys they are and how well they fought the nihilistic fight.
At least it does appear that the great majority of Americans seem to understand where the blame lies for last week’s debacle; although I wonder if this is true here in SC as well?
Even Grover Norquist has said that restoring the 2001 and 2003 tax cuts wouldn’t violate his pledge, as these cuts were passed on the condition that they were temporary.
I suppose these SC congressmen want to secede from Standard & Poor now.
Funny how the Republicans are to blame when Democrats hold the Presidency and the Senate.
I wouldn’t call these people “gentelemen”. I call them “Finiancial Terrorists”!
Brad, I think you blogged earlier that Joe Wilson hitched his wagon to the new Tea Bagger guys since he didn’t know what the heck was happening; he just wants to keep living on our income.
Will Folks (fitsnews.com) said that Lindsey Graham is doing a shift to the extremist views of Jim DeMint to preserve his cushy position in DC since Graham is probably going to be challenged in the GOP primary.
It’s time to send these jerks packing!
Steven, you must watch FauxNews all the time as that’s where that line of political propaganda imitates. I do blame Obama for his lack of courage and lack of negotiating skill and forethought to give in to the Congressional Repugs. Read S&P’s rationale. S&P also rated CIT Corp as AAA and thought there was nothing to the mortgage charade. You lose any bond money on CIT? What are Moody’s and Fitch’s views on the national debt?
Burl, what Steven doesn’t understand is that I’m not blaming this on the REPUBLICANS per se. I’m blaming it on the Tea Party Republicans elected in 2010. And, of course, on those who were afraid of them, and let them control what happened.
Ha! I’m actually in Omaha right now!
Apparently, Steven needs to have filibustering explained.
Burl – I don’t need anything explained… are you implying that only Republicans filibuster? Is that your answer to your party not having control of all three?
j – Thanks for the NBC/CBS/ABC/PBS/AP/UPI reply.
Brad – So your answer to keeping a AAA rating is to allow Obama the right to keep filling out those Citibank Visa applications he gets in the mail even though he’s on the brink of bankruptcy? He’s too afraid to cut anything that’s going to reduce entitlements to his party base any further. Hillary must be loving this.
BTW – On CNN (just for j), they had one of the executives for S&P. Of the 5 countries that have had their rating reduced from AAA to AA+ and back to AAA, the timeline was between 5 and 18 years. It’ll be interesting to see how Obama reacts to this and if there will be a sudden correction next week.
Tea Partyers aren’t “real” Republicans, they just infect them. They’re actually financial Luddites.
Is Lindsey Graham now a Tea Party Republican? He voted right along with his Tea Party Bretheren.
Steven, S&P made this rating move for political purposes. Having their clients pay for their ratings is an inherent conflict of interest. They want to keep it that way. Sorry you don’t know about this rating agency and their past. As far as country ratings, have you looked at the list and the background rationale?
A major rationale for the US downgrade rationale was that there is no motivation (Republican stance) to raise revenue, but you don’t get that from cable.
Steven you might want to consider just one rational explanation that should be easy to follow from Juan Cole at the following link
http://www.juancole.com/2011/08/downgraded-us-credit-rating-what-comes-of-coddling-the-super-rich.html
I don’t follow the cable or news services line. My rationale is from personal experience with real money investments rated by S&P and their own financial interest and political motivations.
SC has kept it AAA rating from S&P and SC has followed many of the same fiscal dynamics that were followed by the Bush II era. SC cut business and corp taxes by over $1B during the 90s & early 2000s and have relied heavily on fed govt payments. The majority of the SC legislature signed the no tax increase pledge. A movement which started in the early 1990s by We The People, a philosophical predecessor of the TEA party principles.
The only significant tax SC has raised was the tobacco tax. It took many years to come to the rational conclusion that cigarette consumers impact medical costs significantly and therefore public costs. (are you the steven davis that worked for SCANA at one time?)
I’m so sick of “blame the Tea Party”. I’m not a member, but I do know that Obama and his crew (Clyburn, Clinton, Pelosi, Frank, etc.) are more to blame than a handful of freshman Senators and Representatives.
BTW, all the countries that NOW have AAA ratings, also have universal health care.
Burl – So why don’t you go ahead and write an editorial for your newspaper stating that to get the country back in line, we need to implement universal health care. That should sell some newspapers.
I created a Twitter list of these Financial Terrorists!
@ralphhightower/fracking-sc-tea-baggers
http://twitter.com/#!/ralphhightower/fracking-sc-tea-baggers
Whose administration made U.S. history with this dire debt downgrade?
Which high ranking member of the Obama administration stated that with the bipartisan deal that was reached, one not popular with the public, a debt downgrade would be avoided?
Can anyone, besides myself, see government incompetence yet?
Universal health care is available at Disney and other fantasy amusement pavilions. Elsewhere, it is rationed healthcare — remember Jimmy Carter’s rationed gasoline?
The little Tea Party that everyone keeps calling a fringe extremist group is able to cause the downgrade? Hmmm… imagine if they had some power.
There would be no downgrade if there wasn’t excessive debt. There wouldn’t be excessive debt if we didn’t fight “wars” that weren’t paid for. This is the pro-war crowd’s downgrade. Step up and take your medicine, Brad.
Doug, they DO have power — the power to destroy. They just did it.
It’s simple. Here’s the way it works: The Republican Party controls the House. The GOP’s leadership was terrified of the Tea Party frosh and would not oppose them. So they controlled the House. Without the House, no deal. And nothing sensible was going to come out of the House while the enfants terribles were holding it hostage.
Take my medicine? What on Earth are you talking about? I have always been for paying for what we do. The greatest missed opportunity of this century thus far was when Bush failed, on Sept. 12, 2001, to say “We are at war. No more cheap gas. We’re slapping a $2 tax on each gallon, and using it to finance the war, and a crash research program to free us from foreign oil.”
The greatest missed opportunity of this century …
-Brad
Huh? Now there’s a hyperbolic statement. Seriously the missed opportunity came a few months earlier when we somehow failed to elect Al Gore to the presidency. That would have probably meant 9-11 would not have occurred in the first place. And we wouldn’t have suffered through a tragic set of wars, the financial crisis and all the other mess created by Bush.
But if the government was unwilling to pay for the wars and you thought they should be, why did you continue to support them for a decade? I didn’t ever see you write that a condition to our fighting must be paying for it. It was just a suggestion. And when your suggestion was ignored, you jumped right onboard with the mission.
It’s pure foolishness to think the Tea Party destroyed anything. They aren’t a majority. They didn’t come up with the bad bill that was passed. They stated their case (the case they were voted into office to promote). And if their message “scared” other politicians it may be because those politicians understand the view is far more prevalent than the liberals are willing to admit. Obama didn’t care what the bill looked like as long as he got something out of Congress. He dropped the ball of leadership.
The blame for the downgrade goes to Bush, Obama, Reid, Pelosi, Boehner, McConnell and the other career hacks who created the mess.
All the Tea Party did was sound the warning bell. S&P listened.
And when your favorite presidential candidate John McCain was going around the country saying the government was “spending like a drunken sailor” well before the Tea Party even existed, did you agree with him? Or was that just more campaign talk that we aren’t actually supposed to believe?
Doug, I don’t know why I have so much trouble getting you to understand what I’m saying…
You don’t not fight a war because you’re not paying for it the way Brad wants to. You don’t say, “I’ve got some cash lying around; think I’ll start a war.” Nor do you say, in 1941 or 2011, to those attacking you, “Gee, guys, I’d love to come out and fight, but I need to cut back right now.”
And Doug, whenever we discuss legislative processes, you go to some weird, weird places. Obama and Boehner kept trying to come up with a rational deal, but Boehner’s caucus — driven by the extremists — wouldn’t let him. So every potential deal died. In the end, they threw together a lousy deal that accomplished little to nothing, because that’s all they could come up with — and S&P just called “B.S.” on it.
And yes, McCain was completely right that the government was spending beyond its means, particularly under Bush (more so under Bush than any president since LBJ). What was wrong with him saying that? And how is that inconsistent with anything else I’ve said?
You’re not making sense.
C’mon, Brad.. I’m making perfect sense. You’re the one who has to twist things to match your logic.
McCain calls Congress a bunch of drunken sailors on a spending spree = okay. Grover Norquist says essentially the same thing = very bad for America.
DeMint backs the Tea Party message = terrible; Graham gets on the bandwagon to save his political career = smart man who understands the nuances.
You call for a gas tax to pay for the “wars” and when it never happens, well, go ahead and do it anyway. Paying for the wars must not be that big a deal… I’m fairly certain if Obama decided we needed to up the ante in Libya or Iraq, you’d support doing it even if it took more deficit dollars.
You value process and compromise over results and principles. I don’t.
Brad, when you link dates like “1941” and “2011” as if these were similar moments of existential threat to the nation, or to Western civilization, you’re not doing your arguments any favors. In 1941 two major countries, with powerful nationalized industries and military might, declared war on us. We did not face a threat of that magnitude on Sept.10, 2001, and though few have the guts to say so, we did not face an existential threat of that magnitude on Sept. 12, 2001, and we certainly do not face that kind of threat now. We face serious terrorist threats to be sure, and should continue to take reasonable steps for our domestic security, but always with the understanding that terrorism is impossible to prevent 100% in a free, open society.
There IS an existential threat, of course, that we DO face: that of unraveling our democracy and society from within. The contrasts between the lines we saw last week in Columbia for free health care vs. the recent NYT article on the markup (and general boom) in luxury items is but one anecdotal piece of evidence of this unraveling; the exemption of the wealthy from bearing any of the burden of the recently negotiated spending cuts is another.
In a sense I agree with Doug above, that this cannot be solely pinned on the Tea Party. Whether it’s a lack of leadership by Obama as he says, or simply that things have gone too far and our fundamental governing structure is dysfunctional despite the best efforts of an intelligent President who holds out hope for bipartisan consensus (more my take), the fact is that the S&P downgrade and other signs of global lack of confidence in America are less about the economy per se and more about that inability of the federal government to function effectively. A credit downgrade is perhaps appropriate for a nation that is sliding away from representative democracy into some early form of oligarchy, a society truly governed by the wealthy and most powerful elements within it.
The Tea Party movement is only part of the problem. As Doug points out they only make up a fraction of the GOP caucus so in theory their support should have been irrelevant. The bigger tragedy is how the ENTIRE Republican party is playing along with the Tea Party. It is a sort of Defacto takeover of the entire party even if only 20% are actual adherents. But this has been coming for a long time in the GOP. The whole party has just gotten crazier and more out of touch with reality with each passing day. They continue to harp on this whole idea that the national debt is a serious problem when in fact the evidence shows debt really isn’t a concern to investors. Treasury bonds and all the other interest rates that key off of that are at historic lows. In fact 15 year mortgage rates hit an all time low on Friday.
But what is the icing on the cake is the whole media attitude about the situation. If I hear this non-sequetor “both parties are responsible” I’ll scream. It’s not both parties, it’s one party that is completely to blame for our nation’s problems. One party is creating the barriers to creating jobs. It’s one party that has brought our country’s financial situation to the brink. And that one party is the crazy GOP.
The tea party wielded power because those who should have known better did not confront the junk that defines the tea party’s weak grasp of reality.
I hope they have now realized that the fringe is the fringe and conduct themselves accordingly. It’s the GOP’s critical moment; who will get rolled?
As long as people of all stripes continue to say that social security is sacrosanct then I will con
…tinue to view them all as not serious about confronting the future. Medicaid, too.
Bud, both parties drove up spending without enough revenue to pay for it. Basic fact.
I’m about to hear from one of our culprits — Trey Gowdy — at Rotary. More later, if I get time to post…
This from the news about John McCain’s appearance on Meet the Press yesterday:
“McCain said he also would like to see more cooperation, but the Arizona Republican said President Barack Obama is at fault. The president failed to lead and did not present a clear plan during the debt-ceiling debate, McCain said.”
http://www.newsmax.com/InsideCover/USDebtRating-Senators/2011/08/07/id/406393
I agree.
And this kind of goes against Brad’s theory regarding term limits. How was it that all these supposed experienced politicians were hoodwinked by a small faction of neophytes?
“The greatest missed opportunity of this century thus far was when Bush failed, on Sept. 12, 2001, to say “We are at war. No more cheap gas. We’re slapping a $2 tax on each gallon, and using it to finance the war, and a crash research program to free us from foreign oil.””
The market would have only fast-forwarded 8/8/11 to 9/12/01.
Brad, you’re not reading what I said. I don’t find the current level of spending/debt a serious problem RIGHT NOW. What IS a problem NOW is a serious shortage of jobs. And the GOP is completely responsible for stopping measures to create more jobs.
Just heard Obama say on tv that he was going to put forth some of his ideas on how to fix the economy “in the next few weeks”. Where were these ideas a month ago?
Doug: Yeah, McCain’s been pretty much in “alla you kids get offa my lawn” mode the last couple of weeks. He blames Obama; he blames the Tea Party. All those wacky kids…
Going back up a few comments to when Bud said electing “Al Gore to the presidency… would have probably meant 9-11 would not have occurred in the first place…”
WHAT!!!!
Oh, I can see that, all right! Ol’ Osama’s been hating us all this time, nurturing his dream of striking a strategic blow at the U.S., blowing up the Cole, attacking the embassies, setting 9/11 in motion, all through the Clinton years, and now all of sudden he goes: “Oh, they elected Al. I LIKE Al. Never mind.” Meanwhile, the Taliban throws him out and institutes Jeffersonian-style democracy in Afghanistan, just to express their joy over how the election came out…
I say this as a guy who was kind of neutral on who got elected in 2000. Since my guy McCain didn’t get the GOP nomination, and since I had known Al from way back, I would have been OK with his election. Not thrilled, because I thought he had changed, for the worse, during his Veep years, but OK.
I remember election night, as the numbers went back and forth, thinking, “Which one do I actually WANT to win?” And not being entirely sure…
But to say Al being elected would have prevented 9/11? Surely you jest…
The DOW is in a free fall, under 11,000 now. Europe and Japan are having serious troubles. Interest rates are at historic lows. West Texas intermediate oil futures are in the low 80s. It’s a certainty that all this gloomy economic news is going to bring about even greater budget deficits. It’s a downward spiral that the government just keeps perpetuating with these insane attempts to balance government budgets. The states are laying off workers as are local governments. So what do our geniuses on capitol hill (mostly Republicans) do? They bring about even more layoffs by cutting the budget even further.
What we need is a no holds barred jobs program. There is plenty that needs to be done in this country. We can build roads, bridges and dams. There are great needs in hospitals, fire houses, police stations, schools and you name it. Let’s get on with it and stop all this monkeying around and hysteria over budget deficits. This is what happened in ’29 and again in ’37 and look where that got us. I see a lost decade for Americas economy. Saddest part is it doesn’t have to be this way.
Yes, I was indifferent in November 2000 who won the POTUS race. That was before the true horror of George W. Bush was fully on display.
No one knows for sure what would have happened if Gore had rightfully been sworn is as president back in ’00. (He got the most votes overall after all). But what we are 100% certain of is what DID happen on 9-11. Given Bush’s complete lack of interest in reading presidential briefings, no matter how important they seemed, it’s at least possible that Gore would have responded more zealously to determine what the briefing actually meant that said “Bin-Laden determined to attack America”. I suspect he would have acted a bit more forcefully and perhaps, no probably, would have gotten to the bottom of it and thwarted the attack just as Bill Clinton did in ’99.
There is considerable circumstantial evidence to support this consideration. Remember, Bush had nearly 8 looooong years to bring justice to Bin Laden after 9-11 (and before really if you go back to the Cole incident). But he failed to do much and even stated rather blandly that Bin Laden does really concern him any more. Obama demonstrated what a difference it makes to have a decisive leader in charge. Plus we have the whole Katrina debacle to show how clueless that man was. Face it folks, Bush just was not much of leader when it came to decisive action.
Could have a different man made a difference in the weeks leading up to 9-11? We’ll never know but I think it’s a strong possibilty, not withstanding Brad’s flippant dismissal of the idea.
I didn’t even see the Al Gore – 9/11 not happening thing… but then I tend to just glance over bud’s posts these days.
Like I said, “Bud, you’re a funny guy!”
Bud says, “What we need is a no holds barred jobs program.”
I’ll tell you what we need. We need people who are sitting on cash to get off of it. One of the few encouraging bits of news I heard in the last few days was on Thursday, when, as the WSJ put it, a New York bank “took the extraordinary step of telling large clients it will charge them to hold cash.”
Amen to that, say I. We need that money — which corporations and wealth individuals have been too scared to risk since 2008 — to be invested, and circulating. Then you’ll see some jobs.
Back in the day of job programs, the government was on the gold standard where every dollar was backed by a dollar’s worth of gold. The dollar today isn’t backed by anything but the value of the linen and ink used to print it. Work programs wouldn’t work today, the government is broke, broken and printing money which only devalues the existing dollars in circulation.
Why would I get off the cash I’m sitting on, to purchase things I don’t need? The last thing I’m going to do these days is go out and buy a new car, furniture, vacations, etc… I’m doing exactly the opposite as are many.
The base savings a person should have is six months worth of living expenses, I say it’s 2-3 years. I know too many people who make good money who are living paycheck to paycheck because they had to spend every nickle they made and had one-up their neighbors. They’re the ones with the For Sale signs in their front yard today.
If I received a note like the NY bank sent out, I believe I’d be looking for a new bank to deal with. When a bank orders me what to do with my money, they lose my business.
Brad didn’t you just reduce the level of service from your cable television provider? Isn’t that just the opposite of what you’re tell us to do?
Actually — and somebody who knows a LOT more about how money works than I do should jump in and correct me if I’m wrong — I don’t think all of the money we deal with is actually backed up by physical PAPER dollars, either. Maybe it does, but I seem to recall being told that it doesn’t (help me out here, smart people).
In any event, money only has the value we agree it has. That paper, while expensive to produce, doesn’t have inherent value. Neither does gold, except as a very pretty and malleable metal.
That’s what’s wrong with this situation — the WHOLE situation, from the economic trough we’ve been in since 2008 to the utter collapse of Washington’s ability to act effectively — these things have the value we THINK they have. And we’ve lost confidence. So we’re… depressed.
On the Today Show this morning they discussed a poll taken recently asking people if they would support a 100% recall of all Congressional elected officials… the results were 70% Yes and 30% No. The American people have lost all faith in their government officials.
http://www.youtube.com/watch?v=IWINtUCshxY
Steven — surely you know that the best part of that clip to anyone familiar with Mafia culture (Italians, Catholics, Cops…) is the part @ 0:45…
Do I ‘muse you?!? Amuse has to be said really foreign-like/mispronounced.
Which is very, very bad for America.
There’s no one in a position to take effective action in the public sector — as this WashPost story today testifies — and the private sector is too busy flailing its arms and running screaming off a cliff.
So we’re in trouble.
I’m waiting for the day when Brad recommends that the government force people and businesses to spend their money “for the good of the country”.
People will buy what they want to buy when they want to buy it. I think part of the problem (if you want to call it a problem) is that people overspent during the past decade, using cheap home equity loans and refinancing to pull money out of their homes to buy “stuff”… now everyone has a house full of electronic equipment, clothes, etc. and there’s no more pot of gold to tap to buy other things. People are still recovering from the bubble created by poor decisions and excessive lending. It’s going to take awhile to get back to normal…
@ Bud 3:16 PM
The current leader of the U.S. ship of state is truly an American first. He has earned the uncoveted description as our “foundering” father.
While he often cites the straits inherited from Bush II, let us not forget that he presented himself as totally competent to successfully navigate those straits when he ran for office.
Unlike the openly honest Jimmy Carter, a micro manager and man of words, Barack shares scant details of his vision for America to justify his many actions.
While Carter referred to the “malaise” during his tenure, Barack is reticent about a greater malaise he has overseen for the past 2+ years.
Can hardly wait for his administration to “update” the modern definition of ‘Misery Index’ so the October 2012 level appears less destructive than either Bush II’s or Carter’s.
An observant, but not stupid, independent.
I think part of the problem (if you want to call it a problem) is that people overspent during the past decade, using cheap home equity loans and refinancing to pull money out of their homes to buy “stuff”… now everyone has a house full of electronic equipment, clothes, etc. and there’s no more pot of gold to tap to buy other things.
-Doug
Yet another example of the fallacy of the free-market as infallible.
@bud
Spending what you don’t have on things you don’t need and ending up bankrupt is how the free market punishes bad behavior. Every moron who took out a home equity loan to buy “stuff” deserves what he gets. Every idiot who bought a house with no money down and financing all the closing costs SHOULD lose the house when they lose their job. People who work hard, save, and are reasonable with their spending don’t get into that kind of trouble.
The free market works perfectly.
Doug, you had me right up until the point where you said, “The free market works perfectly.” Then I cracked up.
I know, from personal experience, how much luck is involved. It is not a rewards system for virtue. You work your butt off one day, you make a bunch of money. You work it off again the next, and you starve. It’s random.
Is there a correlation between hard work and rewards? Yes. Is it perfect (as you just said)? Hell, no. Not even close. There are LOTS of factors involved.
Congratulations, Doug, on things going well at what you have worked at all these years. There are loads of people out there trying their best, being ground into the ground, and it’s not their fault. It’s the market, which can be extremely capricious.
Don’t tell me for a moment that it’s based perfectly on rational choices. The choices people are making right now — hanging on to cash, avoiding risk, etc. — are flushing the economy down the toilet, which ultimately hurts the people being so cautious, damaging their businesses and their children’s futures.
But it’s not perfectly random. There are certain predictable factors, but they don’t work perfectly. And when confidence in both the government and private sectors are as low as they are now, it’s very hard for anyone to take steps to help the situation. There is an interplay between the random, the completely unpredictable, and the rational and mechanistic. Plus all sorts of emotional intangibles involved in every kind of economic decision, from buying soap to investing in stock. It’s not at all an engineer’s world. It’s a mad collage.
Why don’t we make this a voluntary spending spree. Those that want to buy things they don’t need can run out and empty/sacrifice their bank accounts for the good of the country.
bud and Brad are telling us one thing, but then in the next thread are telling us how they are reducing spending on cable television. Do as I say, not as I do.
“You work your butt off one day, you make a bunch of money. You work it off again the next, and you starve. It’s random.”
Amazing, there’s a term to minimize all of this… it’s called “planning”.
How is the job market for Journalism students? In the toilet, yet journalism schools are still cranking out graduates. There’s a glut of lawyers on the market right now, but people still continue to go to law school. Sometimes as a student you have to take a look at the big picture, if you’re not going to graduate in the top 10% of your class you might want to go into something that’ll allow you to make more than minimum wage.
You cannot be a Christian and believe in concepts like “luck” and “random”.
There is no such thing as “random”. There are inputs and outputs. Every outcome is the result of choices made one person combined with choices made by all the other participants. Someone could work hard doing a job that others don’t value. That isn’t bad luck, just an outcome that requires a response.
You don’t have the slightest idea what you’re talking about, Doug. Not the slightest.
Steven’s concept of “planning” is particularly ridiculous.
Go ahead. Pick the hottest new job market to major in in college. Maybe that will suit you five years out of school after that investment has put you into hock for the next 20 years. And maybe it won’t. You can NOT know. There is far too much randomness in the universe, and far, FAR too many factors acting on what happens for anyone to predict. Some people will predict right, and people like Doug and Steven will praise them for their hard work and foresight. Others will make a decision based upon equally good input, and get the shaft.
As for the theological implications… you’re supposing that God always wants you to make money. Sometimes he doesn’t. Sometimes He wants you to go through hard times. Sometimes he’s like a drill instructor and he’s going to be tough on you to try to get your sorry spiritual ass in shape. That’s a basic theological concept that most Christians accept, unless they are of the Jim Bakker “prosperity theology” persuasion.
God doesn’t care about politics, and He doesn’t care how much money you make. And He certainly doesn’t care whether I have HDTV. In fact, I think He thinks that I’ve spent too much time over the last few months on my lazy butt staring at it. I’m sort of inclined to agree, but reluctantly…
Oh, and before you seize on that “randomness in the universe” bit and object again on theological grounds, Doug… What I mean is that for mortal humans, it might as well be random, because the forces, in their complexity, are BEYOND YOUR ABILITY TO CONTROL.
Can God step into all that and make things happen? Oh, yeah. Even when every rational analysis of the factors will say it couldn’t happen under the circumstances, somehow the circumstances will align so that it happens anyway. (One of the constants in this world is that things that are completely true today are not tomorrow — seas rise and fall, Catholics and Protestants in Ireland reach agreements; unchangeable things change. All the time.)
But we don’t have that power. We are not gods. We can just do our best, and navigate the flow the best we can. And never, ever give up. Because that’s the ultimate sin, they say — giving up.
Doug, the problem with allowing irresponsible folks to crash and burn is that they sometimes take the hard working people down with them. That’s why we had to bail out the financial industry with TARP. Had the irresponsible been allowed to fail we would now have plenty of very hard working, industrious people living in boxes. Some probably still do. Again, this is not a black and white, either/or situation. It is perfectly reasonable to reward the hard working and to an extent the lucky. But it’s gotten way out of hand today with the top 1% controlling half the nation’s wealth. That is simply not a reflection of hard work, industry or anything else but luck and good connections.
And what do you think people SHOULD be spending their savings on? If I have what I think I need now, why shouldn’t I wait until I actually need something to spend my money? It is up to the producers to create demand.
@Brad
Sorry, but there’s a difference between predicting what will happen and making choices that put you in a position to lessen the blow of unforeseen events. Saving money is a good way to cushion the blow. Learning new skills is a good way to give yourself options when things change. Being fair and honest when dealing with people means you might have more people to call on when times are tough.
Dropping out of high school isn’t a random event. Having multiple children out of wedlock is not a random event. Abusing alcohol and drugs is not a random event. Check out the unemployment rate of any of those three categories and you’ll see that perhaps people’s bad situations are self-inflicted.
Will there be cases where a person who does all the right things hits hard times? Sure. But most people recover. Those without the necessary foundation will have a harder time. And that’s not my problem.