Presidential address last night

[buckethead]

An eye opener:

Traitors.

Joshua M Brown July 31st, 2011
Ladies and gentlemen, today is August 1st 2011.  We are no longer flirting with disaster, we are getting to second base with it in the backseat at Inspiration Point.

The worst thing about these Tea Party assholes is that they're actually right - even as what they are about to do may go down as the worst self-sabotage in the economic history of the United States.

Any rational, non-partisan person can see that the reckless spending and gigantic government of the last ten years are absurdities that need to be corrected - but there is a time and a place.  How dare these sonofabitches choose now to put the US on a collision course with a ratings downgrade?

How dare they stand in the way of a routine debt roll with over 9 percent of the workforce unable to find a job and at a time during which we're still trying to claw our way back from the worst recession in 70 years?

To be clear, the risk here is not one of real default or a lack of ability to make payments on the debt.  The estimated interest on our debt for 2011 is somewhere in the neighborhood of $225 billion, a large number but not an insurmountable one when you consider that total revenues for the Federal government should exceed $2.228 trillion this year.  For an illustration of this, please see the below chart via Barron's:



What we're really talking about is a rattling of confidence in the $14 trillion Treasury market, the most important asset class on the planet.  Keep in mind that Lehman Brothers, which precipitated a global asset market crash less than three years ago, had total debt outstanding of just $600 billion, less than 5% of the US debt pile we're flicking a zippo in front of.  While there are large and obvious differences between what Lehman Brothers was and what the US Treasury is, there is one commonality between these two situations that cannot be waved away:  The fear of a large institution missing a debt payment causes a shockwave through global markets as people freak out and begin losing faith in everything.

This "freaking out" leads to a repricing of risk as everyone looks twice at what their capital is funding.  Correlations shoot toward 1.0 and everything, safe or unsafe, is liquidated en masse.  Raise your hand if you think a hardline "message" being sent is worth risking this...Yeah, I didn't think so.

I think we can all agree that a ratings downgrade will come come in the not-too distant future if we are unable to get serious about the budget and deficit.  But to roll out the red carpet for that via technical default at this very moment just to "appease the base" is suicidal and, frankly, unpatriotic behavior.

I ask you to bear in mind that this intransigent clutch of radicals within the GOP have chosen to force this issue during a time when China, India and Latin America are tightening rates.  In the meanwhile, Europe is in the worst shape its been in since the Bubonic Plague swept westward in the mid-fourteenth century, adding even more heat to the pressure cooker.  And to top it off, our own economy is showing daily signs of weakening despite the ungodly amounts of stimulus we've seen thrown at it.

Now you'll have to forgive me, I'm not a Harvard Professor of Economics and so I can't tell you exactly what to do about a GDP run rate that's barely registering above 1%...but I can tell you what NOT to do:  Chris Brown-ing the credit markets by forcing a ratings downgrade while simultaneously imposing a shock-and-awesterity on the middle class would pretty much guarantee a double dip (or worse).  Go dig up Herbert Hoover and have Michelle Bachmann rouse him with an incantation.  He'll school you, retards.

As to the Tea Party's insistence on a "balanced budget" constitutional amendment and the end of casual deficits?  Okay - totally reasonable and I'd love to see them win out on both issues.  In a true, unhurried vote, I bet they could.  But at this moment we are in an emergency, largely a political one that they've forced upon us.  A patient in surgery doesn't start exercising and eating a salad with his fucking chest cavity wide open on the operating table.  Again, a time and place for everything.

There will be plenty of time to vote on spending cuts and amendments between now and the 2012 elections.  In fact, let's make this issue the focal point of the 2012 elections for a change, instead of the gay stuff and the religion stuff the rest of us are so tired of.   But come August 18th we've got a $29 billion payment due on debts we've already run up.  Fiscally, there's no reason we can't make it.  Not paying it will be catastrophic, regardless of what the lunatic fringe wants us believe.

Since these people like to dress up in costumes and embroider their rhetoric with Revolutionary War era motifs, here's a bit of a history lesson from those early days that ought to make it clear just how important not missing coupons truly is.

In September 1789, the recently victorious United States of America was saddled with a national debt accumulated during the war of $54,124,000 dollars.  Alexander Hamilton was only in office as Secretary of the Treasury for ten days when the House of Representatives asked him for a plan.  Europeans expected that there would be some kind of reduction in what the bondholders could expect from the fledgling nation and not a soul in America expected to be made whole.

And that's when Alexander Hamilton shocked the world and set the standard for what it meant to do business in America.

He told the House that every single promised penny would be paid to holders of United States debt.  He insisted that foreign creditors get full principle and interest so as to establish the US as a serious entity.  He also fought a brutal battle with Congress over whether or not the speculators who had bought up so many bonds from patriots and soldiers should be made whole.  "But they're just miserable speculators, we don't owe it to them to pay in full," Congress said.  But Hamilton strenuously disagreed and eventually carried the day.  This was a great man who instinctively understood the importance of doing what you say you will do, political pressures be damned.

For these so-called representatives of ours to even consider the notion of betraying that legacy is completely beyond the pale.  The potential damage to our still-fragile economy and the well-being of our citizens makes this type of behavior totally unacceptable.  In fact, in an earlier time it would be considered borderline treasonous.  The Merriam-Webster dictionary defines traitor as "one who betrays another's trust or is false to an obligation or duty."  The duty of our elected representatives in the Senate and the House is to avert calamity, economic or otherwise, and often times this means compromise.  You would think that people who like to wear tri-corner hats and powdered wigs on Youtube would understand this.

And the only thing worse than an economic dilettante voting idiotically in Congress is when someone who's actually worked on The Street acts like they don't know any better.  For shame to the hedge fund managers and finance guys who are providing intellectual cover for the bastards who dare push this nation closer to the cliff's edge!

To Stanley Druckenmiller and the rest of the Oldtimers' Game brain trust, let me say this:  Your ideas about missing a Treasury coupon "just to see what would happen" are so dangerous that I fear someone's been tampering with your meds.  How is it possible that otherwise intelligent people could reasonably believe that the world's reserve debt instrument should be used for a political gambit?  Mr. Druckenmiller (and friends), we agree on the need to get our house cleaned up, just not on your plan of swinging a wrecking ball at it to get the maids' attention.  Congrats on your retirement, please don't feel the need to ever offer public comment again.

And finally, to the narrow group of GOP holdouts in the House who have thus far "refused to negotiate," even with their own party, I say this:

No matter how principled you think you are being, it doesn't give you the right to torpedo your own country just to make a point.  Fuck your principles and your warped sense of conscience, start thinking with your brains instead.  Before the situation gets away and there are no further options left to any of us.

Joshua Morgan Brown
August 1st 2011

http://www.thereformedbroker.com/2011/07/31/traitors/

[FayeforCure]

An eye opener:

Traitors.

Joshua M Brown July 31st, 2011
Ladies and gentlemen, today is August 1st 2011.  We are no longer flirting with disaster, we are getting to second base with it in the backseat at Inspiration Point.

The worst thing about these Tea Party assholes is that they're actually right - even as what they are about to do may go down as the worst self-sabotage in the economic history of the United States.

Any rational, non-partisan person can see that the reckless spending and gigantic government of the last ten years are absurdities that need to be corrected - but there is a time and a place.  How dare these sonofabitches choose now to put the US on a collision course with a ratings downgrade?

How dare they stand in the way of a routine debt roll with over 9 percent of the workforce unable to find a job and at a time during which we're still trying to claw our way back from the worst recession in 70 years?

To be clear, the risk here is not one of real default or a lack of ability to make payments on the debt.  The estimated interest on our debt for 2011 is somewhere in the neighborhood of $225 billion, a large number but not an insurmountable one when you consider that total revenues for the Federal government should exceed $2.228 trillion this year.  For an illustration of this, please see the below chart via Barron's:



What we're really talking about is a rattling of confidence in the $14 trillion Treasury market, the most important asset class on the planet.  Keep in mind that Lehman Brothers, which precipitated a global asset market crash less than three years ago, had total debt outstanding of just $600 billion, less than 5% of the US debt pile we're flicking a zippo in front of.  While there are large and obvious differences between what Lehman Brothers was and what the US Treasury is, there is one commonality between these two situations that cannot be waved away:  The fear of a large institution missing a debt payment causes a shockwave through global markets as people freak out and begin losing faith in everything.

This "freaking out" leads to a repricing of risk as everyone looks twice at what their capital is funding.  Correlations shoot toward 1.0 and everything, safe or unsafe, is liquidated en masse.  Raise your hand if you think a hardline "message" being sent is worth risking this...Yeah, I didn't think so.............

No matter how principled you think you are being, it doesn't give you the right to torpedo your own country just to make a point.  Fuck your principles and your warped sense of conscience, start thinking with your brains instead.  Before the situation gets away and there are no further options left to any of us.

Joshua Morgan Brown
August 1st 2011

http://www.thereformedbroker.com/2011/07/31/traitors/

Yes, NOT NOW!!!!

[NotNow]

"After months of talk about the nation's runaway debt, lawmakers managed to agree on a plan that, at most, will cut spending by a mere 5%. Is it any wonder federal spending is out of control? ... According to IBD's analysis of available budget numbers, the deal's $2.4 trillion in 10-year cuts amounts to a mere 5% trim off total projected federal spending during that time. It's like a 400-pound man boasting that he plans to drop 20 pounds over a decade, while his doctors warn about the risks of losing weight so fast. Even calling these 'cuts' is a bit of a stretch, since spending will continue to increase, just at a slightly slower pace. ... By 2021, federal spending would still equal 22% of the nation's economy, above the post-World War II average of 20%. Not really a cut, is it? Plus, in the short term, these 'deep,' 'sharp,' 'slashing' cuts would still leave the federal government spending roughly 4% more in 2012 than it did in 2010, and 20% more than it did in 2008. Shorn of all the hyperbole, what this agreement really demonstrates is why it's so hard to get federal spending under control. Both sides routinely use budget gimmicks to exaggerate spending cuts, while armies of special interests swarm Washington to make sure their pet programs don't get touched. All the while, spending marches upward. And reporters too dumb, lazy or biased to understand how budgets work keep falling for this nonsense." --Investor's Business Daily

[Sigma]

f*ck your principles NotNow!  you and your stupid sense of logic! shame on you!

we are now walking into bankruptcy, instead of running - good find

[Sigma]

When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you...you may know that your society is doomed.
- Ayn Rand, Atlas Shrugged

[NotNow]

When you see that in order to produce, you need to obtain permission from men who produce nothing; when you see that money is flowing to those who deal not in goods, but in favors; when you see that men get rich more easily by graft than by work, and your laws no longer protect you against them, but protect them against you...you may know that your society is doomed.
- Ayn Rand, Atlas Shrugged

That Rand quote just says it all, doesn't it?

[JeffreyS]

I heard Paul Ryan say the other day that next year we won't spend as much as we did this year and that is a big shift.  NN and Sigma I think if you had the notion that the debt ceiling which previously had no conditions set on it was going have produce a deal that solved everything you were naive.  You obviously did not expect that but have joined the chorus of those who are complaining that it did not fix everything (debt wise).  It was a good first step and calls for more to be done.

[NotNow]

I do not think of myself as naive, I am worried for the future of my country.  While the deficit and debt is not our only concern, it is one that we have direct control over.  As I have stated before, this seems to be a simple problem and the failure of most of our politicians to show ANY leadership is very dissappointing.  And yet, most of the media reports I see show the same ignorance of reality that the politicians seem to have.

From the Washington Post:

The debt deal:  Disaster averted, decline straight ahead
  Text Size Print E-mail Reprints
By Matt Miller, Published: July 31
So this is what we’ve driven the global economy and America’s credit rating to the brink for?

This is why Republicans (who voted for the Paul Ryan plan that would add $5 trillion in red ink over the next decade) decided it was vital to not lift the debt ceiling to accommodate their own budget’s outsized debt?



Matt Miller

A senior fellow at the Center for American Progress and co-host of public radio’s “Left, Right & Center,” Miller writes a weekly column for The Post.




Fast Fix - A deal on the debt ceiling is reached, but the economy is far from fixed.


President Barack Obama says a deal has been reached to raise the government's debt ceiling and avoid a default. He said the deal includes more than $2 trillion in gradual spending cuts and no initial cuts to Social Security and Medicare. (July 31)

This is the best the White House could salvage after inexplicably failing to insist that the debt ceiling be raised as part of December’s deal to extend the Bush tax cuts â€" which would have let the country avoid this unprecedented exercise in self-inflicted damage?

If you put aside the talking points both sides will peddle, the disappointing contours of the emerging endgame run as follows:

First, Washington will do nothing more to boost jobs and growth. The best that can be said is that the spending cuts will be tiny in the next two years, so the feds won’t be contracting demand, save for the end of the stimulus. Our epic jobs crisis remains ignored.

Next â€" as to long-term deficit reduction, supposedly the reason the GOP put the country through this costly fiasco â€" the deal remains utterly inadequate, even if the joint congressional committee the plan would empower to address this succeeds.

Here’s why. The Congressional Budget Office says Uncle Sam will spend around $46 trillion over the next 10 years. Assume the committee proposes and Congress enacts a further $1.2 trillion in deficit reduction atop the deal’s $900 billion in initial cuts, and that all this is done on the spending side (though “tax reform” is supposed to be included). That means we’ll have trimmed less than 6 percent from federal spending that is already slated to increase from $3.6 trillion to $5.7 trillion by 2021.

In other words, the numbers sound big and can be sold as “historic,” but they’re not even close to what’s needed.

Sen. Lindsey Graham had it right Sunday. “It’s a $3 trillion package that will allow $7 trillion to be added to the deficit over the next decade,” he said, instead of $10 trillion. “We’re no longer running toward oblivion, we’re walking toward it.”

Politically, however, it’s a sufficient escape hatch. The Tea Party can claim it changed the debate. Other Republicans can say “this is the best we can do without the presidency.” President Obama can tell independents he got “a major down payment on deficit reduction” while still casting the GOP as unreasonably opposed to fair tax hikes on hedge fund managers, oil companies and corporate jet owners.

And the president got the only thing that was ever nonnegotiable from his perspective: a big enough increase in the debt limit to ensure he doesn’t have a repeat of this fiasco during the 2012 campaign, which would make him look fatally weak.

There’s a good chance this package will pass with majority Republican support. The Tea Partyers can huff and puff and say no, because House Speaker John Boehner can still find enough Republicans who will be satisfied to “disapprove” of the debt-ceiling hikes while nonetheless voting for the package. Most Democrats will back their leaders and take credit for “slashing the deficit” while keeping Medicare and Social Security safe.

As for the infamous “trigger” meant to assure the joint committee does its work? I’m told the cuts from any sequester it imposes for failure won’t take effect until January 2013 â€" about the time the Bush tax cuts expire. So it’s not clear the long-term parts of this deal will have any impact, because we’ll be revisiting everything after the election, with whatever cast of characters is sent back to Sodom to do the people’s business.

Taken together, then, the deal is an almost perfect blend of policy punt and political ploy. That’s what passes for “accomplishment” in Washington nowadays.

The media will now parse the byzantine details and the mechanics of passage. But the depressing big picture is this: We’ve averted disaster only to double down on decline.

The only sane agenda â€" more tax cuts and spending stimulus in the near term, coupled with much more deficit reduction in the long term, triggered once unemployment is back below 6 or 7 percent â€" is not even on the table. Nor is there room made for needed investments in infrastructure, research and development, and a new generation of teaching talent. All because the interest groups and ideological litmus tests in both parties ban an expression of a common-sense plan for American renewal â€" as well as utterance of the simple truth that as the boomers age, we’ll need to slow the growth of Medicare and Social Security, trim defense and raise taxes.

If you’re convinced people have more appetite for these truths than our “leaders” believe, now would be a good time to sign up for Americans Elect’s online nominating convention to put an independent ticket on the ballot that offers an alternative to these continuing charades.

Matt Miller is a senior fellow at the Center for American Progress and co-host of public radio’s “Left, Right & Center.” He writes a weekly online column for The Post.

[JeffreyS]

I don't think you are naive either. I do think we should be excited that for the first time in thirty years a Government not headed by Clinton is seriously looking at the deficit as a problem. The debate has been changed. I give the Tea Party credit it is not business as usual, I give the Republicans and Democrats credit they both sacrificed a little on the projects they want money spent on and I give the President credit he has convinced most Americans that corporations and the rich should share in the sacrifice of a balanced solution.  The journey of 1000 miles begins with one step.  Ok feel free to slap the Pollyanna right out of me.

[Sigma]

Not naive Jeffrey - and your assessments in your statements are fair.  I think most rational people realized that whatever happened that the deal would not correct everything.  I think you are right on that the debate has been changed.  I don't think Obama has the political savvy as Clinton.  Clinton moved to center and worked with the Republicans on several issues and it worked.  Obama can keep playing the "evil" corporations gig.  But I think its at his own demise. 

As you said - this is step 1 - it will only get more interesting from here to see if our representatives can execute. 

[JeffreyS]

I do get that if we don't take step number 2 we have not accomplished much.

[Non-RedNeck Westsider]

I'm asking a question here, 

It is clear that the defense budget will be cut, though whether dramatically or modestly depends on how things play out. Even with minor cuts, military items may be lost, including the F-35 Joint Strike Fighter, “a $300 billion program that is both behind schedule and over cost,” says Travis Sharp, a budget analyst at the Center for a New American Security. In addition, Pentagon officials may decide to take stock of current plans and money, roughly $200 billion, that is needed to modernize their stockpile of nuclear weapons.
http://news.yahoo.com/pentagon-worst-nightmare-032608302.html

I know that 300 B isn't a drop in the bucket, so while those of us (even on the right) that are willing to cut defense budgets, who has the oversight of the complete budget failures when it comes to defense contracts?   This is just one aspect and I've read many similar stories that come to the same conclusion - we're (taxpayers) writing checks to cover the costs of a mis-budgeted or intentionally mis-budgeted proposal and covering the difference so that the corps can still make their profits.  This does not make sense.  This is prosecutable in the private sector.  I'm just sayin'.