US POLITICS SPRING 2011: Let's just call off this country.

Deficits don't matter until they do. Reinhart & Rogoff's This Time is Different has been widely feted as the most important finance book of the last year for documenting how predictable, and how sudden the phase shift becomes when lenders realize that a nation is bound for default or devaluation. The U.S. has chosen devaluation, which will suck for those Americans who buy food, energy, imported goods, or travel. On the other hand, once living standards erode U.S. labor may become globally competitive.

When the world's largest bond fund manager goes short U.S. Treasuries, the game is almost up. When Bush's Treasury Undersecretary Peter Fisher eliminated the 30-year and reduced the average maturity to 5 years (to reduce annual interest), he basically placed a ticking bomb under the national finances. Other indebted nations like Japan and Britain have average maturities out a dozen+ years, but the U.S. is forced to roll much of the debt very soon, into a market where the only consistent buyer of late is the Federal Reserve monetizing the debt (printing dollars).

I certainly don't agree with the particulars of the Ryan plan (it just shifts medical costs to states, and cuts top marginal income rates which should be higher), I give him credit for being about the only Washington politician with the cajones to present a plan that touches the third rails. I'd much prefer the Gang of Six plan, but even what we've seen of that probably doesn't go far enough reversing the "household budgeting" of putting Grandma's nursing home on the kid's credit card to avert serious, near-term consequences.

really guys, as much as I loathe Bam I don't want to forecast President Romney, but you're tempting fate here.

also, they all work for the same people.

yeah i think ppl need to start entertaining some worst-case scenarios here

i'm probably overestimating how batshit and entertaining the GOP primary is going to be. after a couple rounds the money people aren't going to take a whole lot of fucking around

― goole, Tuesday, April 12, 2011 1:21 PM (13 minutes ago) Bookmark Suggest Ban Permalink

both romney and huckabee are on top of obama in FL polls!

On the other hand, once living standards erode U.S. labor may become globally competitive.

hurrah

both romney and huckabee are on top of obama in FL polls!

neither Romney nor Huckabee can win CA so who cares

California doesn't matter

MAGIC!

On the other hand, once living standards erode U.S. labor may become globally competitive.

sure, with India and China. welcome, Slumdog Millionaire future.

Thanks for reminding me I have to read This Time Is Different, Sanpaku.

I think Romney will get the nom, but my guess is he'll be irreparably damaged, and the tea party will bolt to a third party candidate if one arises

xp

As a result of that sleight of hand, Obama was able to reverse many of the cuts passed by House Republicans in February when the chamber approved a bill slashing this year's budget by more than $60 billion. In doing so, the White House protected favorites like the Head Start early learning program, while maintaining the maximum Pell grant of $5,550 and funding for Obama's "Race to the Top" initiative that provides grants to better-performing schools. Food aid to the poor was preserved, as were housing subsidies.

Instead, the cuts that actually will make it into law are far tamer, including cuts to earmarks, unspent census money, leftover federal construction funding, and $2.5 billion from the most recent renewal of highway programs that can't be spent because of restrictions set by other legislation. Another $3.5 billion comes from unused bonus money for states that enroll more uninsured children in a program providing health care to children of lower-income families.

Still, Obama and his Democratic allies accepted $600 million in cuts to community health centers programs, $414 million in cuts to grants for state and local police departments, and a $1.6 billion reduction in the Environmental Protection Agency budget, almost $1 billion of which would come from grants for clean water and other projects by local governments and Indian tribes. Community development block grants, a favorite with mayors of both political parties, take a $950 million cut.

The National Institutes of Health, which fund critical medical research, would absorb a $260 million cut, less than 1 percent of the NIH budget, instead of the $1.6 billion cut sought by House Republicans. Family planning programs would bear a 5 percent cut rather than being completely eliminated.

Homeland security programs would have to take their first-ever cut, though much of the 2 percent decrease comes from a $786 million cut to first responder grants to state and local governments. The IRS would see its budget frozen but be spared the 5 percent cut sought by House Republicans.

also, there's absolutely nothing courageous about the Ryan Plan. it's the same old GOP horseshit (slash entitlement spending and cut taxes) as before, only this time with the rationale of allegedly cleaning up the aftermath of the Great Recession.

^^OTM

also its spelled "cojones"

^ honorary mexican

btw obama passed a p big bill last year that touched one of those scary third rails! you may have heard of it; it was called the "affordable care act."

a nation is bound for default or devaluation. The U.S. has chosen devaluation

Surely the more sensible of the two options.

BTW, the Fed's monetizing the debt by buying US Treasury bonds came as a result of the decision to refloat the banks, AIG, Freddie Mac and Fannie Mae, which crashed and burned when the mortgage/CDO bubble burst. So many assets were torched off balance sheets during that crash that Fed monetization is the only thing keeping the US as a whole remotely solvent. Without it, we'd be in Great Depression II, with unemployment around 30%, instead of just this Really Sucky Recession.

Since Great Depression II would have dragged the entire world economy down with us, we've been cut some slack on the devaluation by other central banks. It does, however, point out how divorced finance has become from anything you might call orderly markets.

I hate that "third rail" cliché, especially when a TV reporter hack intones it like she birthed it into existence.

no don't you see now those markets are FREE! free at last, free at last, thank god almighty...

xp

Homeland security programs would have to take their first-ever cut, though much of the 2 percent decrease comes from a $786 million cut to first responder grants to state and local governments.

Utterly laughable, considering the outlay to it over the last decade, and the actual expansion still going on through Border Patrol programs.

Slumdog Millionaire future

It was pretty obvious with the push to get unions onboard with NAFTA in 1994. Great, however, for those managing the capital outflow.

There's about 200 years of economic study since Ricardo espoused his Law of Comparative Advantage, which applies when capital in the form of productive land, running streams, populace - is immobile. Alas Ricardo is about as far as most politician's economics education goes re: international trade.

I hear some of those first responders were/are in public unions, btw. Aren't we being too easy on them?

j/k

Every once in awhile the Washington Post offers editorials from folks who are not conservative or neo-conservative. Here's the Nation's editor:

http://www.washingtonpost.com/opinions/its-the-economic-debate-not-the-us-thats-bankrupt/2011/04/12/AFVjUsQD_story.html?hpid=z3

my cousin found this story ... Tax Me, I'm Rich, Says Deep-Pocketed Group

There's no reason, self-serving or otherwise, why the Republicans would allow the US to default. I'm taking any capitulation from Dems & Obama using that for an excuse as another sign that they don't have any real values.

most of the cuts aren't really cuts?

http://www.nationaljournal.com/congress/details-of-spending-deal-demonstrate-that-budget-cutting-ain-t-easy-20110412

i need to figure this out...

I posted a bunch of stuff related to that upthread but yes, there was a lot of accounting trickery used (of course)

lol taibbi never change

http://www.rollingstone.com/politics/blogs/taibblog/tax-cuts-for-the-rich-on-the-backs-of-the-middle-class-or-paul-ryan-has-balls-20110407

just reading this thread now but i'm pretty convinced that 2012 is gonna be pretty much an exact replay of 2004 w/ the parties flipped -- the GOP is prob going to end up running a candidate that is forced to try a little too hard (romney, pawlenty) and will probably get close purely on the merit of being just milquetoast enough, but won't be able to beat the incumbent -- just like i think a lot of dems look back on 04 and go "bush could've easily been beaten if only we had a candidate that wasn't pretty much utterly terrible..." (not that john kerry isn't a pretty admirable politician all things told, he just sucked as a nat'l prez candidate), i think the GOP will rue having running whoever they run

also it would be pretty funny if ron paul naders their candidate

I feel like a right-wing 3rd party vote sucking up votes is almost a safe bet at this point, it's just a question of how many votes and where

J0rd, you mean their candidate sucks and beats himself but they have a principled scapegoat to whine about for 20+ years?

(I CAN see Bam stealing the election if he has to. Chicago etc)

A liberal group called the Progressive Change Campaign Committee on Tuesday said that more than 60,000 liberals responded to an e-mail by committing not to donate to Obama’s reelection campaign if he cuts Medicare or Medicaid

I joined this group boldprogressives.org I think Russ Feingold helped found this

So Obama's speech on the budget, entitlements, and debt is at 1:30 eastern time at George Washington U

Wonder how much attention the Lockheed-Martin/Haliburton entitlements will get.

Also im not so thrilled about the prospect of a uber-right wing 3rd party candidate slipping into the presidential race. Not worried so much about them winning, as them presenting more and more batshit ideas and those ideas being taken seriously by our sensationalist media. I kinda fear it will drive the 'center' which Obama loves further and further to the right.

Agreed. It is bad enough that the Simpson-Bowles plan is being presented as the liberal alternative to Ryan. The "center" just keeps getting defined rightward.

I don't think it's that simple. the entire wing loses credibility among 'serious people' when the crazies get in front of the camera.

*right wing

But the non-"crazies" have adopted roughly the positions of the crazies, and the liberal ideas never even get discussed--

I mean michele bachmann the presidential candidate is a lot better for us than michele bachmann the soundbite. when characters like that are recognizable national figures who jay leno can make fun of, they become a bigger part of what people consider to be 'conservatism' xp to myself

^^^this. do you guys not remember how liberalism got demonized in the nat'l consciousness or what

(hint: it was by shitty Dem politicians espousing "radical" liberal ideas that the majority of Americans found frightening)

really, look how the currency of progressivism has expanded since Jon Stewart started imitating Glenn Beck

not sure what that has to do with anything, Jon Stewart is not progressive

he is perceived as such.

when characters like that are recognizable national figures who jay leno can make fun of,

genuine lol

Since 1980, late-night TV comedy has feasted on right-wing nuts from Helms to Robertson to Keyes to Bachmann and Palin, and that's been accompanied by the effective extinction of the American liberal, so I'm not sure what your point is.

helms, robertson and keyes were 'fringe' ihttp://blog.devstone.com/images/emote_ellipsis.gifay that bachmann and palin aren't

huh weird

helms, robertson and keyes were 'fringe' ihttp://blog.devstone.com/images/emote_ellipsis.gifay that bachmann and palin aren't