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Standard and Poor’s, My Thoughts

  • Posted on August 10, 2011 at 4:27 pm

Just like every other American I have been wondering about the Standard & Poor’s decision to down grade the United States long term rating.  I have been thinking what affect it might have on the country and even my own personal situation.  The personal situation comes up because the stock market is so volatile.  Now I don’t have a lot of money, but I do have some investments and it seems to me that they had just bounced back from the beating they took in 2008.  I decided I would do my own investigation into this rating decision.  Instead of reading the newspapers, I personally think it’s best to go the source.

The reason seems to be tied more to politics than anything else.  We all know that the country seems to be on a confused path.  Most Americans know that the Bush tax cuts, especially for the wealthy, should not have been renewed.  We are at a point in this country where the politics from the Republicans and the Democrats seem to be weighing heavily on our country by the very ineptness showcased by both parties. We are left in our small towns and big cities wondering if there is anyone in this government that knows what the hell their doing.

I really believe that the Tea Party rhetoric totally exacerbated this situation.  Michelle Bachmann even continues to use this in her speeches as if she somehow has the correct solution to the problem.  The problem with her stance is that she still clings to the idea that voting no was a good solution because after all raising taxes should never happen.  President Obama, for his part, has been weak and ineffectual.  While he seems to be embracing those very items that the Republicans want like changes to Medicare and Social Security, he refuses to really push two things that could be game changers, raising taxes on the higher incomes and retracting from these endless wars.  President Obama has embraced just about every program President Bush began.  The Republicans actually should love President Obama as he gives into them at every turn.  The change in governing from the Bush times to the Obama times is really flawless.  There really isn’t any real change.  I know President Obama ran on the words, hope and change, but actions speak much louder than words.  From my perspective, President Obama is much closer to Republican thought process and governing philosophy than he is to Democratic principles.  So, you might be wondering why I see this as basically a political problem even though in my mind the two factions are actually close in their basic philosophies.  I see them as playing “good cop, bad cop” roles.  They show us how divided they are but secretly they are still going to parties together, golfing, and having friendships with each other.  How else could such seemingly diverse people like James Carville and Mary Matlin stand each other enough to be married to each other?  Now, you can say politics makes strange bedfellows, but I believe this is just another hoax on the American people.  The people in the two parties seem more interested in their own personal situations than they do the best interest of the country.  The politics have gotten in the way of governing.  Each decision seems to be a calculation about who is going to gain or lose from the decision.

There is an article that caught my attention.  It’s from June of 2009 in the Bloomberg Businessweek.  http://www.businessweek.com/investor/content/jun2009/pi20090615_088345.htm

This article is by Nikola G. Swann who is the primary credit analyst for the rating decision.  The article was about why the United States still had a AAA rating status.  One thing caught my eye, so I compared what he said to the current document about why they changed the rating status.  Here is the most important part of that document.

Why does Standard & Poor’s continue to view the U.S. as a AAA credit?

We believe the U.S.’s key credit strengths include:

• A high-income, highly diversified economy, with unusually flexible labor and product markets.

• The unique advantages associated with the U.S. dollar’s preeminent role as the world’s most used currency.

• The country’s openness to trade and capital flows and experience in adapting to associated fluctuations.

The country’s stable political system with strong, long-established institutions, its ability to respond to changing economic and financial circumstances, and its transparency in policymaking.

However, this is the part that really caught my eye.

Still, we believe that the fiscal outturn in the U.S. will be somewhat better than that in the U.K. because of what we view as the greater diversity and, consequently, resiliency of its economy. We expect that the U.S.’s net general government debt will rise to about 90% of GDP by 2013; we expect that of the U.K. to rise to nearly 100%.

It’s the 90% by 2013 of GDP that I found interesting.  If you go to the current document, in one scenario the 90% is met at 2015 and 101% by 2021 and in another 77% by 2015 and 78% by 2021.  Obviously, one is the downside and one is the upside scenario.  The document than goes on to compare what S&P deems to be similar countries to the USA and why they made a rating change.   The country that stands out is Canada.  Of course we are friends with Canada and there are always comparisons to be made.  However, I will point out here that there is a huge difference between our populations.  Canada has nearly 34 million and we have over 307 million.  The debt to GDP ratio for Canada is much lower than any of the other countries and is listed at 30% of GDP.  I found this interesting considering the fact that Canada has universal health care.  Their taxes aren’t crazy really and they don’t even tax lottery winnings. http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html

They have oil reserves that are second only to Saudi Arabia.  That’s something I didn’t know.  They also rely on the United States for both import and export business.  I n 2009 73% of their exports were to the USA and 63% of their imports were from here.  So, you might be thinking how does this all tie together?  In the document that explains how the S&P came to their decision they said this:

We have changed our assumption on this because the majority

of Republicans in Congress continue to resist any measure that would raise

revenues, a position we believe Congress reinforced by passing the act.

They also said this:

The political brinksmanship 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. The statutory debt

ceiling and the threat of default have become political bargaining chips in

the debate over fiscal policy. Despite this year’s wide-ranging debate, in our

view, the differences between political parties have proven to be

extraordinarily difficult to bridge, and, as we see it, the resulting

agreement fell well short of the comprehensive fiscal consolidation program

that some proponents had envisaged until quite recently. Republicans and

Democrats have only been able to agree to relatively modest savings on

discretionary spending while delegating to the Select Committee decisions on

more comprehensive measures.

From my viewpoint it looks like politics got in the way of everything.  Some people think that this was political because of S&P alone.  I don’t know about that.  This document might explain something about their influences.  http://influenceexplorer.com/organization/standard-poors/69ef116db51541288f82666a423a5fe5

It appears that some of the people and their families that work for S&P have given more to Democrats than Republicans.  As you scroll down, you will notice S&P contracts with the federal government.  I don’t know how any of this ties together, but I’m sharing it here because it might be important as a matter of disclosure.

The truth is we have been on a downward spiral for years.  We have spent money on two wars that was essentially borrowed money.  We were told early on that the Iraq war would be paid for by Iraq oil reserves or some such nonsense.  The military has basically doubled in spending and while doing all of this, we did not sacrifice anything other than our young people who gave so much for these wars!  While our soldiers were giving their lives and limbs, back home we were embracing the Bush tax cuts.  In each of our states we have witnessed the problems associated with all of this.  As the federal government put more in the wars, we received less in our respective states.  Many states are hurting and a good reason they are hurting is the lack of funds.  Cuts have been made across the country.  This year is unprecedented in the cuts that many states are facing.  The cuts that are most personal to me are those to education.  To me, educating our people is extremely important for the future growth and stability of our country.  An uneducated electorate is dangerous.

I sit here frustrated by a president and Congress that can’t seem to do what is necessary for the betterment of our country.  Get us out of these wars, including Libya, and get rid of the Bush tax cuts!  However, the most important thing our government should do is a jobs bill.  Certain states get an influx of cash from the federal government in the form of disaster relief.  Texas received $74,523,000 for hurricane Rita alone.  http://www.hud.gov/news/katrina05response.cfm

I feel Michigan and many other states have economic disasters that are never addressed quite like those states that have floods, hurricanes, and tornadoes.  Our whole country needs some disaster relief to rebuild the shambles from the economic disaster left from the loss of the manufacturing jobs.  In my mind, if we build it, they will come.  Just like in the movie, “Field of Dreams”, we should build our country up.  We should fix our infrastructure, transportation, and bring broadband everywhere in the USA.  We should not be cutting money from education but infusing money into education to get every student prepared for 21st Century jobs.  If we do this, we will make this country a better place for business and growth.  Everyone will win from this scenario.  Yes, if we build it, they will come.

Here is some food for thought.  I think if the Republicans hadn’t taken over the House of Representatives, we wouldn’t have received this rating.  In fact, we will never know, but I believe the stock market would be far more stable.  Prior to the Republicans taking over the House, the stock market was coming back.  Things were picking up some.  I was happy to see my personal portfolio coming back.  However, when the Republicans came in, everything changed.  Everything constricted in government from money to jobs.  The FAA even had to furlough people because decisions couldn’t be reached.  Jobs were held up because decisions couldn’t be made.  Representative Boehner and the Tea Party may be standing by their convictions, but I say at the detriment of the entire country.  I say shame on the Tea Party Republicans for letting our country down and shame on President Obama for treating this deficit debate like a political game as well.  After the debate all we heard from the pundits is who won and who lost.  It’s obvious the American people lost and no one could possibly consider these politicians to be winners!

Some of the American People……

  • Posted on August 8, 2011 at 3:23 pm

According to the President, the United States hails some of the most productive workers in the world.  I would say words matter Mr. President.  Today you said there were two things we could do.  I waited anxiously to hear about taxing the wealthy and creating a jobs bill.  Neither one was one of the two.  According to you the two things we can do is make cuts to Medicare and “reform” the tax code.  You still are repeating the same old sorry agenda that got us into this mess.  Shame on you!  You have chosen to follow the “Bush” agenda from dealing with the economy to continuing in endless made up wars!

http://abcnews.go.com/Politics/president-obama-dismisses-downgrade-sees-urgency-debt-talks/story?id=14255055

President Bush came from a structure of corruption and bankruptcy.  The businesses that he and his family have been involved in have many questionable features.  Whether it was the sale of his Harkin oil, his daddy’s deal back in 1989 to grant a national security waiver for the sale of two Hughes Aircraft company satellites to China, Neil’s Savings and Loan scandal, or Jeb’s defaulted loan from Broward Federal Savings and Loan any way you look at it, Bush came from a family of corruption.  http://www.campaignwatch.org/more1.htm

Yet, somehow he managed to get those corrupt hands on our government.  Bush became President and ushered in the Bush tax cuts and the notion of endless war.  He destroyed what little gain we had made under the Clinton years with these moves.  However, ultimately with these moves the rich were allowed to get richer and the regular people and the poor were appeased by their personal tax cut not realizing that their personal wealth would eventually shrink and their wages would stagnate.  The American people were fooled by the Carny of all carnies.  So, I ask you Mr. President why you would choose to continue this fraud on the American people.  What are you getting out of this?  Your speech didn’t inspire confidence in the American people.  I was ready to give you a break.  After all, the Tea Party has literally brought us to the brink of disaster with their game playing.  However, it appears that you are right there with them!  You stand there ever the “Pied Piper” expecting us to follow your melody and jump into the sea with you.  This is not leading.  The small mention of jobs was so miniscule that it’s obviously not something you spend a great deal of time worrying about.  That crack about “some” of the American people are the most productive in the world was really quite un-American in its left handed compliment.   In other words, some of the American people suck!  I guess the “suckiest” one of all, is you!  You fail to inspire people to do the right thing.

The priority in this country should be jobs.   The only way we are going to compete in the future is if we start working now on building up what we’ve lost in this country.  We don’t even have to go to the big cities any more to see where our infrastructure is failing.  We can drive over any road in America and know that something needs to be done.  We can visit any town or city in America and see abandoned buildings where there once was a bustling factory or store front!  We need to revive our country and make it have a first class infrastructure.  Take the money out of defense and put it into our infrastructure because this has become a national defense problem.   We have the best military in the world.  We spend more than all the other nations combined to get it.  However, what is it fighting for?  Is it fighting to keep our American values here at home?  If that is the case, then we are losing the war because our jobs have been outsourced and believe it or not people are valued by what they do.  Why else would we refer to people as being a “lazy bum” or a “brilliant surgeon”?  With so many people in our country out of work what do you think they feel like?  I believe most people want to be productive in our society.  So, when you say “some” of the most productive workers in the world, I have to wonder what you mean by that.  People need to be inspired Mr. President.  They need to know that everything possible is being done to get our country on the right track for the masses, not just for the wealthy.  The divide in this country is continuing to grow deeper and deeper.  You are in Washington D.C. surrounded by other people of wealth.  I suggest visiting the real world for a change.  You live in an artificial world that just doesn’t understand what it means to be out of work without any real new prospects for work.  You live in an Ivory Tower surrounded by corruption where deals are made every day that don’t take the middle class and the voiceless poor into consideration.  You live in a world where no bid contracts are given out in places like Iraq, probably in exchange for some political apple polishing for the next big political race.  You live in a world where talk is cheap about transparency but where the American people are always the last to really know when they have been royally screwed.  The problem in our government Mr. President isn’t just that you lack leadership.  The problem with our government is that you probably are right.  “Some” of the American people are the most productive in the world, unfortunately they are not, and I repeat, “Not!” the American politicians.

The Cut, Cap, and Crap Bill

  • Posted on July 19, 2011 at 3:46 pm

I was listening to CSPAN the other morning when they were addressing what President Obama said about Social Security checks and how he couldn’t assure people that the checks would be in the mail if the debt ceiling bill isn’t passed by August 2nd.  That morning I heard a caller from Texas on CSPAN lament the fact that she depends on her Social Security check to be there in August as she only has ten dollars left to her name.   There were other calls with similar concerns.  People were worried about how they were going to pay their bills.  Now, just stop right there because I don’t want to hear about how she should pull herself up by her bootstraps or some right winger commenting on how pathetic she is for not having some savings to her name.  In our country, we used to be compassionate first.  Most of the working class people in the United States are merely a paycheck away from disaster at any given moment anyway.  Do you think it’s because they planned to fail or failed to plan?  Perhaps it has something to do with the regressive way that income has not kept up with inflation.  We have been told that inflation is kept in check, it’s not bad.  I think it depends on who is fudging the numbers.  Most Americans are well aware of the continuing cost of energy in this country.  From the high cost of gas for our vehicles, to the ever rising cost to heat and cool our home, and even the cost of food.  Everything has gone up while wages for most Americans have been stagnant.  So what is the response in Washington?

The Republicans want to hold fast on keeping the taxes down for the “job creators”.  Yes, we all know that these are the new code words for “rich” people.   We don’t want to refer to their wealth.  We must refer to them as “job creators” because they have created so many jobs since the Bush tax cuts were implemented!  Quit laughing!  I know I can be quite sarcastic when I think of these things.  We all know that those jobs have yet to materialize for most Americans, including young college graduates.  Some of them are working, but many are stifled by huge school loans and struggling to pay these back.  These rich people, aka “job creators” probably have created jobs….in China, India, Bangladesh, and anywhere else that might have cheap labor.   Here is GM working in South Korea but these South Koreans better be careful and thankful for what they have or GM will pull out and go where labor is even cheaper.  http://www.reuters.com/article/2011/07/11/gm-korea-idUSL3E7IB00U20110711

So a few days later we hear this.  http://www.autonews.com/apps/pbcs.dll/article?AID=/20110714/OEM/110719936/1277

So now GM is spending a little money over here in Michigan at Flint.  http://www.freep.com/article/20110719/BUSINESS01/107190335/GM-invest-328-million-Flint-plant?odyssey=mod|newswell|text|FRONTPAGE|p

However, behind the story is one of workers that have agreed to a tiered wage system here in the United States.  The young people of today are being screwed in every which way possible.  http://www.indypendent.org/2011/07/18/will-autos-three-tier-wages-be-on-the-table/

I can’t say what will happen for these workers as they negotiate new contracts but I’m sure they won’t get what they want because there are other eager workers willing to work for less!  That is the problem.  We have created a pool of unemployed people that want to work but cannot find jobs.   This pushes the wages down because the “job creators” know they can replace their workers with someone else or they can outsource their jobs to another country where the wages are even lower!  The job creators might say why create jobs over here when we can make more money over there!  It is kind of like when GW Bush used to say we are fighting them over there so we don’t have to fight them here.  So, with all of this “stuff” in my head I keep wondering about all of the political posturing in Washington.

It almost seems like the two parties are clueless to what the American people are feeling or they just don’t care.  Both sides think they can use this “issue” to garner votes in 2012.  If more people think like I do, we would all be looking for a way to get third party candidates elected that are not loyal to either of these worthless parties.  I, for one, wish Senator Barry Sanders would run for President.    http://sanders.senate.gov/newsroom/news/?id=58d258f8-01bc-417d-ae92-247951a1b9e2

Oh, yes, I know he is a self proclaimed “socialist”!  He is a cancer among the pure Democrats and Republicans who are the wonderful epitome of the capitalist society we live in.  Socialist isn’t a dirty word for me because as a born and raised Catholic, I was always taught about “social justice” and what is truly right and wrong!  It doesn’t take a genius to know that there is something wrong with a country that has so much in wealth but cannot seem to take care of the least of its people.  As the Republicans continue to posture and take care of “their” people, you know the “job creators”, and President Obama keeps his fake stance of indignation going, many people in this country are suffering and worrying about their futures.  This bill the Republican House is working on today is nothing but a cut, cap, and crap bill.  If they cared about balancing the budget, they would not have pushed so hard for extending the Bush tax cuts in December.  Our country is in trouble.  We are now involved in three wars with two parties that seemingly don’t care if we ever end them.  We have two worthless political parties that care more about their individual next election than they do about the American people.  In addition to this, we have those “SuperPacs” that will continue to run their ads infiltrating into the minds of common people to get them to vote for their candidate!  http://www.opensecrets.org/outsidespending/index.php

Doesn’t anyone see how corrupt these SuperPacs are when Stephen Colbert makes them into something he can use to get laughs with on his show? http://www.npr.org/2011/06/30/137527309/theres-nothing-funny-about-colberts-superpac

It was funny last night when I saw the names of his contributors scrolling across the screen but this is the price of our democracy!  Neither party will do anything but what their “SUPERPAC” powers want them to do.  So, if you really think President Obama is holding out for a deal for the American people, well, I suggest that you just don’t hold your breath or be too disappointed when once again the “common” people are left holding a bag full of empty promises!  If you are a Republican thinking that Representatives Ryan and Cantor understand you and know your pain and will vote in your best interest, rest assured, they will both vote in their own best interest.  If you are a “job creator”, aka “rich”, it could be yours as well!

I just got this tweet from Bernie about a “Fair Deal”.

Bush Tax Cuts + Wars = A Deficit Problem

  • Posted on April 17, 2011 at 4:03 pm

Two peas in one proverbial pod!

Okay, it’s a simple math problem.  The Republicans would have us all believe that the deficit issue is because of the American people.  That’s right folks, you are the problem.  You are really the problem, if you are a union member and you work for the government.  You are not the problem, if you are a member of Congress or the head of some government entity because your position is so very necessary for the proper functioning of government.  You caught me laughing again!  You are so very “special” if you work for the military.  You don’t have to worry about losing your job because they’ll never cut enough to matter.  However, if you are a lowly Private in the military, it’ll be mostly talk about honor and bravery, less about money and benefits!

Rep. Dennis Kucinich says, “The geniuses on Wall Street decided that a certain amount of unemployment is necessary for the proper functioning of the economy.”  You must ask yourself a question.  Does your job fall under the category Dennis is talking about?  If it does, beware!  You could be next.  So, I’m thinking what does this mean?  It might explain why a friend of my son went in for a job interview thinking he was really competing for a job, when he really wasn’t.  It turns out, they weren’t really hiring at all at that time.  The business was just seeing what’s out there to hire.  Of course that isn’t how the posting was listed.  My son works for the company and was surprised to find out that they weren’t really hiring.  So, why would the economy benefit from a certain amount of unemployment?  Could it be that it makes people hungrier and willing to work for less?  You know less money, less benefits and more hours for less.  Who benefits under this scenario?  Certainly not the American worker!  Here is Dennis talking about the deficit and President Obama.

Dennis is right.  If we get more jobs going out there, there will be a bigger tax base.  Why have the politicians decided to focus on “contracting” government instead of focusing on job creation.  James Carville had that catch phrase, “It’s the economy stupid!”  Someone needs to be whispering these words into President Obama’s ears every day because for some reason, he hasn’t figured this out either.  Instead of going to the Republican playbook of tax cuts for the wealthy and reducing spending to cut the deficit, President Obama should be focusing on JOBS!

The other night I caught a bit of a program on the History channel about our collapsing infrastructure.  Here is just a taste of that program.  It’s a nightmare.  However, it’s not the Freddie Kruger kind where you watch it at the movies and know it’s not real.  This is a real nightmare that could have a profound effect on our lives.

We all remember the bridge in Minnesota.  Most of us know that the roads, bridges, sewer systems and many other structures in our states are failing.  So when our infrastructure truly is at risk, what are the politicians doing?  They are like Henny Penny screaming, “The sky is falling!”  Of course, the sky they are talking about relates to the deficit and the hole we have dug ourselves into.  They weren’t singing that tune back in December when they ushered in two more years of the Bush tax cuts and decreasing the amount we pay into social security by 2%.  This is corruption at its core.  There is a systematic effort here to destroy wages and benefits for the American workers while continuing to prop up business, banks and the super wealthy.  If the politicians and their cohorts can do enough damage to the American workers wages and benefits, we might have enough unemployed that will be willing work for peanuts.  Now, you might be wondering why this is important.  I’m thinking that the cost of fuel is far too high to ship things.  It only makes sense to produce things locally to save energy costs.  However, the wages have to be low enough so that business can make the type of profits they really want.  Those profits have to be big enough to be able to give out the big bonuses to the big bosses.

Now let’s get back to that equation, “Bush Tax Cuts + Wars = A Deficit Problem.”  War is very profitable.  One of the things that the politicians are really pushing for is PRIVATIZATION.  They want to privatize everything from health care to education.  They have already taken over our military.  This is happening throughout our government.  Tonight my sister asked me if I knew that while we have 50,000 troops in Iraq, did I know there are another 77,000 working with private companies.  Of course these aren’t military.  They are probably ex-military working for “for profit” companies that have been hired by the Department of Defense.  Of course, the American tax payer is still footing the bill.  Don’t be thinking we will be getting out of any of these wars too soon.  They are far too profitable for private businesses that are invested in them.

So, where are President Obama and the Democrats in all of this?  Our fearless leader is spending his time dangling carrot sticks at us at moments when he thinks we might be vulnerable.  He was “unaware” that his mike was on and he was being recorded recently.  He sure gave it to those Republicans in that private conversation, or so we have been led to believe.  As we get closer to the election of 2012, he will probably look more like he’s actually in charge.  So far in my book, he has looked like a wimp.  This is all window dressing for the next election.  My brother says he will win the election.  I don’t know if he will or he won’t.  However, I think it’s interesting that the Republicans and Democrats publicly sound so different, but when they get behind closed doors they both do everything they can to dismantle social programs, subsidize the rich with deep tax cuts and ignore the plight of the poor and they do it all on the backs of the middle class, or what’s left of the middle class.  Is the problem in our country really all about the deficit?  If it truly is about the deficit then what on earth were these two parties doing in December when they set us up with two more years of the Bush tax cut?

Here is another good piece from the Real News Network.  It’s an interview with William Black and you should watch it through the end.

Think back to what Dennis said about this being a transfer of wealth.  This is not about transferring wealth, like robbing the rich to give to the poor as in Robin Hood.  It’s all about taking from the majority and giving to the wealthy.  The government is giving tax breaks and tax cuts to the wealthy and they are also privatizing much in government and giving those no bid contracts to their buddies!  There is a constant drumbeat that we have to get on board whatever those “brains” in Washington think we must do to fix the economy.  Just remember those “brains” are listening to the geniuses on Wall Street!  Remember  William Black said, “Deficit hysteria has nothing to do with anything.”