(8 am. – promoted by ek hornbeck)
Look at all the happy people on CNBC! Don’t they look relieved?
Yeah. So, here’s the thing. The US Government does not have unlimited ability to backstop the financial markets. And it just kinda did – essentially, the US Government just guaranteed about one trillion dollars of debt (while also banning shorting, which seems to me to be a decent way of ruining hedge funds to no recognizable purpose, unless the government has decided to ruin hedge funds).
But, as we all know, the US Government already has quite a bit of debt. And this addition to its debt burden makes it five times the total annual federal revenues, from taxes and other sundries.
What this essentially means is that the AAA credit rating of the US government is now considerably imperiled. The stock market might go up, and banks may stop failing every week. But if the credit rating goes, then, well, the shit will really hit the fan. The dollar will drop like a stone against other currencies. Worse still, the interest rate of the Federal government’s debt, which already makes up over 9% of annual government expenditures, will skyrocket.
Unscientific poll time: will the US lose its AAA rating? If so, how long before it is downgraded?
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…does it strike anyone else as staggering that all this has happened without public debate – hell, without the involvement of a single elected official? I know we’re only talking about 1/12th of national GDP here, so I guess democracy and all is no longer important.
I’m not even really opposed to a lot of these actions, but since when did the Federal Reserve and the Department of the Treasury have the right to nationalize publicly traded companies, or lend money to insurance companies, without so much as a permission slip from Congress?
…because the phrase “austerity measures” and “true free market reform of the socialist US economy” just sort of flow, naturally, as consequence.
had a short diary on the rec list at dKos this morning, and he made a suggestion: Punitive taxes on the rich. If we even returned them to the tax bracket they were in during the 1960s it would go a long way toward starting to pay down debt. I would go even further than Jerome: no loopholes, no exemptions, no write-offs, NOTHING, for millionaires. And no tax shelters in the Seychelles or Cayman Islands. Tax ’em right off the top, the way my paycheck is taxed. Put a lien against their accounts, and just take the money.
heh…but I’m a socialist, you see.
Jay, as I read and watch this not surprising turn of events. As to your question since when is our credit rating AAA? The dollar has been dropping for awhile now and our ‘financial’ institutes are owned by other nations from China to the Saudi’s and in between. Our nation was sold long ago. Then there is the economy that people actually live in the one that pays them and the markets that provide goods people need to live on, like food, jobs, housing, transportation you know stuff you need to live. Not to worry Wal Marts doing great.
The thing is if it’s a free market why are taxes being used to keep it afloat? What good is this so called market to the real economy the one the people live off of? Crisis Capitalism in action right here and now. Apparently it’s as unrelated to the common good as I thought. It’s piracy and now that the suckers have been fleeced they also get to pay the tab for another round. They get our taxes, our consumer dollars, inflated, and we pay for their enforcers in arms and war. That’s not freedom it’s a criminal conspiracy. RICO? Hedge funds? A polite word for gambling on peoples misery a hedge against what? Can you eat them?
Who gives a rats ass about keeping this crap game alive. No thanks. Looks like Marx was right. Capitalism run amok! Forgot what brought this hose of cards down, were all now going to rally and be populists to save the day. Whose day? Why do I think it’s not ours. FDR was right the crisis is not the problem it’s the basic distribution which right now is unhinged, has been for decades. Can’t have it both ways which is what their going to do. We get screwed and the dance continues.
… be held be the people that issue the actual fiat money. So, while the US dollar could lose standing abroad and with it would go the top ranking of US Treasuries overseas, it is institutionally entrenched as the AAA ranked US dollar denominated financial asset.