China Comments On Downgrade

It did not take long for the Chinese to comment on the S&P downgrade of American debt.  If you read the following article from Reuters, you will see that some of my earlier predictions this morning are not so far off.  Scary times are coming to America!  Don't be taken in by the talking heads (who are really dummies given words speak and questions to ask) and their comments. They know less than you do!

We are in for times that the United States has never experienced and it will take all of us pulling together to make it out the other side. Can this happen?  Maybe, but I am not optimistic. We are too spoiled, too irresponsible and self centered to want to give up things we have received from our government over the past years.  Why should I give up my favorite benefit, if Joe over there does not have to give up his?  Yes, it is hard to lower our standard of living temporarily,  but it will be permanent if we do not act soon.  Are you willing to do the unthinkable?

Let me know if you are willing to give up your favorite benefit whether it is your home mortgage deduction, your Social Security, your Medicare, your welfare, your aid to dependant children, your low tax rates, your education credit or your IRA, 401(k) or 403(b)? Which one would you give up?

I am listening and will forward to our Congress people--let me know.  I doubt that I will hear anything which only means that Americans are too self absorbed to take the necessary actions to prevent a catastrophe. I sure do hope that I am wrong.  Blast me!!

 

 

China tells U.S. "good old days" of borrowing are over

On Saturday August 6, 2011, 10:23 am EDT

By Walter Brandimarte and Melanie Lee
NEW YORK/SHANGHAI (Reuters) - China bluntly criticized the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.
Standard & Poor's cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation's budget deficits and climbing debt burden.
China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.
"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.
After a week which saw $2.5 trillion wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the euro zone crisis.
Finance ministers and central bankers of the Group of Seven major industrialized nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.
The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.
"The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.
French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.
In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.
"China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.
It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.
"International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.
In Washington, President Barack Obama urged lawmakers on Saturday to set aside partisan politics after the debt battle, saying they must work to put the United States' fiscal house in order and refocus on stimulating its stagnant economy.
S&P blamed the downgrade in part on the political gridlock in Washington, saying politics was preventing the United States from addressing its deficit and debt problems.
Obama called on Congress to back measures to give tax relief to the middle class, extend jobless benefits and pass long-delayed international trade pacts.
"Both parties are going to have to work together on a larger plan to get our nation's finances in order," he said.
"In the long term, the health of our economy depends on it...in the short term, our urgent mission has to be getting this economy growing faster and creating jobs."
STAY COOL
In contrast to the Chinese criticism, France's Baroin said France had faith in the United States' ability to get out of this "difficult period."
Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction, he said.
"Therefore, one should not dramatise, one needs to remain cool-headed, one should look at the fundamentals," he told France's iTele.
While the impact of the rating cut on financial markets when they reopen on Monday may be modest because the decision was expected, the shift may have a long-term impact for U.S. standing in the world, the dollar's status, and the global financial system.
"I think even if it was half-expected, the consequence will be far reaching," said Ciaran O'Hagan, fixed income strategist at Societe Generale in Paris.
"It will weigh on secure assets. The bigger reaction will be on risky assets, including equities and on agencies (Freddie Mac, Fannie Mae) and states backed directly by the federal government."
But he added: "U.S. Treasuries will remain a benchmark. This is a ship which takes a long time to turn around."
Norbert Barthle, a budget expert for German Chancellor Angela Merkel's conservatives said the downgrade would certainly provoke further turbulence in markets.
"I'm not surprised about the U.S. rating downgrade, rather I am astonished that for weeks, international rating agencies have focused their attention on the European debt situation but not the American one. For a while, there have been clear worries about America's economic woes but also the fact the U.S. is heavily indebted."
NO EARLY ITALIAN ELECTION
In Europe, Italian Prime Minister Silvio Berlusconi on Saturday ruled out calling early elections to stem market panic that has pounded Italian assets and forced his government to bring forward austerity measures.
Italy buckled on Friday to world pressure by pledging to bring forward cuts to balance the budget in 2013 in return for European Central Bank help with funding.
European policy makers are concerned that a debt emergency in the euro zone's third largest economy could completely overwhelm bailout mechanisms set up to help smaller troubled countries like Greece or Ireland.
Italy is due to go to the polls in 2013 but Berlusconi dismissed any suggestion of emulating Spain, where Prime Minister Jose Luis Rodriguez Zapatero has called an early election to tackle the crisis.
"This has absolutely not been talked about," Berlusconi told reporters. "This has never been an option."
The European Union's top economic official praised Italy's decision to accelerate budget-balancing measures and structural economic reforms and said swift implementation was now crucial.
"I strongly support this announcement and call on the authorities to quickly translate it into concrete measures," European Economic and Monetary Affairs Commissioner Olli Rehn told Reuters in a telephone interview.
"This will help to boost potential growth, secure budgetary retrenchment and bolster market confidence," Rehn said.
The European Central Bank sources said the bank remains divided over whether to buy Italian government bonds but even some of those who favor the move say Italy should do more to front-load austerity measures.
Two sources said they expected ECB President Jean-Claude Trichet to hold a teleconference of the bank's policy-setting Governing Council over the weekend to discuss how to respond to turmoil in financial markets and Italy's latest measures.
China and Japan have called for coordinated action to avert a new worldwide financial crisis. India's finance minister Pranab Mukherjee told reporters: "There is no need to unnecessarily press the panic button."

Congress Already Unpopular, Will The S&P Downgrade Further Erode Their Popularity?

With recent polls (see article below) already showing Congressional approval at 18%, last night's downgrade by S&P of our nation's credit worthiness can only further erode this all time low. How much lower can it go?

It always has been said by Americans that "I hate Congress but my Congressman/woman is pretty good."  Now I think we are seeing that sentiment also eroding.  Congress does not seem to be able to do what is in the best interests of the United States. They talk about pork but keep putting it in bills. The "bridge to nowhere" is only surpassed by appropriating money for Chinese prostitutes so they can learn how not to get drunk before going out with their johns.  Insanity has somehow taken over our government and it is time that we do something about it. Otherwise, we will end up like the Roman Empire.

The Roman Empire stretched from Scandinavia to Africa. It had the most powerful armies in the world, at that time.  Its citizens lived very well and got benefits from its generous government. However, over time, its armies became involved in conflicts throughout the world and were soon stretched to a point they were no longer strong.  The money that had flowed from the booty from conquered countries slowed also.  The Roman Senate argued incessentantly and turned more and more power over to the leaders of the country. When things got worse, there were no leaders who stepped up and soon Rome degraded into a dictatorial government.

Does any of this sound familiar?  Our troops are stationed in 80 plus countries around the world.  We still have troops in Germany, twenty years plus years after the Cold War was over. The troops that  Bill Clinton put in Kosovo (who attacked us there?) are still there. How many years ago was that? And there are our troops operating under NATO in Libya.

Our Congress argued for weeks over the debt issue and then passed an insignificant piece of legislative lies and deceit.  Spending increases were reduced and called spending cuts. Rating agencies told them to cut the budget by 4 trillion and they could only get half way. Now we get a downgrade and everyone is surprised.

In past years, Congress had turned more and more of the legislating to the Executive Branch.  "The President has not proposed anything" was the talking points during the debt limit discussion..  Folks, that it not his job.  The House is responsible for submitting all finance bills, period, not the President.  We have forgotten that.  Other bills can be created in either house and then sent to the President for his signature or veto. Yes, he can propose bills to either house for their consideration, but he is not responsible for legislation. 

Additionally, why was the President in the middle of the debt discussion? Yes, he should have input and should be consulted so a bill can be constructed that could get signed but, it is the responsibility of Congress  to create the bill.

We see both houses giving the President too much power and it is time the power is returned to the Congress otherwise the Executive become too powerful and the legislative becomes a rubber stamp. This was not the objective of the Founders.

Can Congress change this way of doing business?  I doubt it.  In an effort to get things done, the President will continue to propose bills and hammer Congress to pass them. The more this occurs, the less power and influence they will have and we will degrade just like Rome did.

18% approval is terrible and it shows the concern that Americans of all political stripes have with their government.  It is time that Congress wakes up and smells the coffee otherwise, we, as their bosses, must fire the lot and start over.  My brother-in-law, who is a Democrat told me the other day, "I want to fire them all." I think his sentiments are pretty universal.  What about you?





Poll: 82 percent disapprove of Congress
By Michael O'Brien - 08/05/11 06:00 AM ET
A record number of Americans said they disapprove of Congress in the wake of this week's move by lawmakers to approve compromise legislation to raise the nation's debt ceiling.
Eighty-two percent of Americans disapprove of the way Congress is handling its job, according to a New York Times/CBS News poll released Friday. Lawmakers' approval rating stands at 14 percent, matching the low point at which Americans rated Congress in March of 2010, in the midst of the healthcare battle.
The figures suggest a deep dissatisfaction with Congress in the wake of the protracted fight over spending cuts related to the debt limit that has dominated political discussion in Washington over the past few months.
Just 14 percent of registered voters said that most members of Congress deserve reelection; 74 percent said that lawmakers don't deserve another term.
President Obama is also pummeled in the poll, though he fares better than Congress.
Forty-six percent of Americans said they approved of the way Obama handled his job, compared to 47 percent who expressed a disapproving view of the president, according to the poll.
The poll numbers suggest that the tarnish associated with the debt-ceiling fight has stuck to most political actors, but especially to Republicans in Congress.
Seventy-two percent of poll respondents disapproved of the way Republicans in Congress handled debt negotiations. (By comparison, 66 percent disapproved of Democrats' handling of the crisis.)
And House Speaker John Boehner (Ohio), the primary voice for Republicans throughout the debt-ceiling fight, saw his unfavorable numbers rise, too.

Fifty-seven percent of respondents said they disapprove of the way Boehner is handling his job, up from 41 percent in mid-April. Boehner'sBoehner.

S&P Warned Us, Now We Get To Pay The Piper

Can you believe it? S&P told the American government what it needed to do to keep its AAA rating and when our legislators didn't do it, they followed through with their warning.  Wow, what a relevation, actions have consequences! It is kind of like a parent telling us not to touch the hot stove!

We now will have to pay the price for our legislators ignoring the warning. Will it immediately result in higher interest rates, will other countries stop investing in our debt, will this embolden those foreign leaders who wish to remove the US dollar as the currency of world trade, will the other rating agencies follow S&Ps, leadership?  These are all unanswered questions, however, the answers will determine where the US goes from here.

The consequences of this lack of leadership by our national leaders will be rapid and probably more devastating than anyone can predict at this time. Take the worst result of each of the above questions and that will probably what happen. For instance:
      --interest rates probably will jump 2% starting Monday making home mortgages less attractive further degrading the housing market and making credit card debt more expensive. Additionally, the interest the government has to pay will jump making the debt problem even worse.
     --other countries, like China, will pull away from buying any additional debt from the US and will start selling off their existing holdings.
     --there will be immediate calls for the removal of the greenback as the world's reserve currency to be replaced by a basket of other currencies.  We can expect this next week.
     --the other rating agencies probably will not jump onto the S&P bandwagon for one very chilling reason. One can expect a Justice Department/Congressional investigation into the downgrade by S&P within a couple weeks.  (An Italian rating agency downgraded Italy's bonds and was raided by the national police this past week.)

At times when governmental leaders stop being leaders and become political hacks, these are the type of results that we get. When McCain calls Tea Party members, "hobbits" or when the Vice President of the United States calls them "terrorists", it shows how far away from leaders they all have become. It is not surprising that the world is concerned with the United States. The S&P downgrade is only a symptom of the problem, it is not the problem. We have no leaders!

We are now approaching a Y in the road. Do we take the left branch and continue business as normal or do we take "the road less travelled".  My fear is we will take the easy way out, doing the same things and expecting different results.  Instead, we should be "shocked" by the downgrade and make the necessary course corrections. Today on NBC, Lawrence O'Donnell made a sophmoric point by looking into the camera and saying "S&P is wrong."  He wants the status quo and obviously does not understand the debt issue or he is a politician faking it as a newsman.  We need to take S&Ps rating change as a wake up call. Our debt is killing our economy and our way of life.

Unless our leaders awaken or are replaced with individuals who will do what is in the best interests of this country (and not their own re-election), we can expect further downgrades and further degradation in the American lifestyle. Do we really want to be Greece or Argentina? I sure don't!

I propose that a National Commission of ten people be estabilished by Congress. Four of those on the commission would be regular citizens, average Joes and Janes who never have been involved in politics but have experience in running businesses.  The Congressional Budget Office would  have two members on the commission and the balance would be two Republicans and two Democrats.  The goal of this group would be to come up with proposals what would reduce government spending immediately by 1 trillion and 1 trillion a year for the next ten years. A report would be required in three months.  All programs would be on the table. If the commission could not decide on a plan, immediate 5% cuts in government spending would be mandated to occur on January 1, 2012 and each year thereafter. Strong medicine, yes.  Necessary, definitely. Will it happen, probably not because it makes too much sense.

Congress would never give up so much control to a bunch of  naive citizens. They would rather produce garbage bills like the Debt limit one that just passed Congress. And now we see the results of the trash that these "public servants" produce. Don't you think it is time that we let someone else run the government as it looks like these fools are not very good at it!

What do you think?  Where are we heading?  I want to hear from you.

Palestinians In Favor Of Eliminating Israel

The good news just keeps on coming.  In a recent poll there is more evidence that forcing Israel to negotiate with the Palestinians is a waste of time.  Neither do the Muslims want to discuss an agreement but more important, they believe that any agreement should not be the end of the conflict.

 

The American administration believes they can force an agreement and that the world will be better for their efforts.  That might be true if both sides wanted a solution to the issues that divide them. Unfortunately, that is not the case. As the following article clearly indicates, the Palestinians are not of the mind to be satisfied with Israel existing long term.  How can Obama be so mis-informed?  Or is that the game plan?

 

Here is the article:

Eliminating Israel

Benny Morris - The National Interest, July 19th, 2011

A well-known hadith (a saying of the Prophet Mohammed accepted by Muslims as canonical and weighty), relating to the prospective end-of-days battle between Muslims and Jews, states:
The Prophet … says: 'The hour of judgement shall not come until the Muslims fight the Jews and kill them, so that the Jews hide behind trees and stones, and each tree and stone will say: “Oh Muslim, oh servant of Allah, there is a Jew behind me, come and kill him” …'
This hadith is approvingly quoted in the 1988 Charter (or constitution) of the Hamas, the fundamentalist Palestinian organization that controls the Gaza Strip and won the 2006 Palestinian general elections.
And last week it received the approval of 73 percent of Palestinians in a poll run by American pollster Stanley Greenberg, conducted jointly by the Palestinian Center for Public Opinion, based in Beit Sahur in the West Bank, and the Israel Project, a peace-promoting international nonprofit organization. The finding was based on lengthy interviews with 1,010 Palestinian adults in the West Bank and Gaza Strip. About 80 percent of those polled agreed that it was the duty of all Muslims to participate in jihad to eradicate Israel.
The poll also found that 61 percent of Palestinians rejected the American-Israeli formulation for a settlement of the conflict based on two states for two peoples, one for the Arabs and one for the Jews. Only 34 percent of Palestinians questioned supported a “two-states-for-two-peoples” solution.
The poll reflects the decades of Palestinian—PLO-Palestine National Authority and Hamas—education and incitement of the population of the territories against Israel and, more generally, the Jews. Fifty-three percent of those polled favored teaching in Palestinian schools songs promoting hatred of Jews. But 66 percent of those polled adopted the PLO-PNA gradualist approach of a two-stage “solution” to the problem of Israel, approving a first stage in which there would be two states before moving onto “stage two” with the establishment of one Palestinian Arab-majority state over all of Palestine. (The Hamas rejects this strategy and speaks frankly of its goal as being the elimination of Israel at one go, without any prior or intermediate stages or agreements with the Jews.)
Most of the poll's findings conformed to this outlook. Only 1 percent of Palestinians thought that Jerusalem should be Israel's capital; 92 percent thought it should be Palestine's capital. Only 3 percent thought the city should serve as the capital of both states.
The poll also reflected former Palestinian leader Yasser Arafat's famous denial (at Camp David in July 2000) of the Jews' historic link to Jerusalem and, by extension, to the Land of Israel/Palestine. Seventy-two percent of those polled denied that there was any historic link between the Jewish people and Jerusalem.
Interestingly, the poll found that only 22 percent of those polled supported firing rockets into Israel, 65 percent favored a diplomatic-political solution to the conflict and only 20 percent preferred the road of violence. This perhaps reflects the average Palestinian's tiredness of the conflict and unwillingness to pay the costs of violence while supporting the goal of Israel's elimination. Eighty-three percent of those polled thought that PNA President Mahmoud Abbas's priority should be creating jobs. But only 2 percent thought it should be peace talks with Israel.
Most Palestinians—64 percent—backed the current PNA initiative of unilaterally declaring statehood and obtaining UN support for such a declaration later this summer.
Perhaps the international quartet that is currently prodding Israel and the Palestinians to restart negotiations should take this poll, and what it tells us, into account when considering Netanyahu's fears regarding the Palestinian leadership's real aims in pressing on with its intention to unilaterally declare independence and obtain international endorsement of Palestinian statehood in the West Bank and Gaza Strip, along the 1967 borders. Abbas's people, if this poll is to be believed, clearly regard this diplomatic initiative only as part of “stage one,” and nothing more.