what if the USA gets down graded again

[Beau]

http://money.msn.com/exchange-traded-fu ... watch.aspx



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[OneBiteAtATime]

This guy just assumes Obama is reelected. Unbelievable.

The downgrade will happen despite what he says, unless the American people make the decision to stop suckling at the teet of socialism. A difficult decision to make, when more than half of us pay no taxes, and food stamps are suddenly sexy.

[misteroman]

As bad as I don't like hearing it or much less saying it, we're in for 4 more yrs.

[IdahoCopper]

Romney was selected to be beatable by Obama. Gingrich and Santorum stayed in too long for the sole purpose of dividing the vote to make it look like Paul had no chance. So yes, its gonna be another 4 years of Big O.

[Thogey]

As bad as I don't like hearing it or much less saying it, we're in for 4 more yrs.

The truth is, It does not matter who gets elected. We are screwed because all the revenue collected by the Gov goes to keeping old people alive(social security and medicare) and other entitlements for the "poor". Everything else is paid for with borrowed money. Unless some how the economy suddenly triples in size, we are screwed. The politicians will not "kill old people and the poor" by reducing the entitlements.

Even if the US Government decided to sponsor oil drilling, mining and other exploitation of natrual rescources to sell and pay off debt, they would screw that up too. They would not be able to turn a profit, because they're the US government.

[RichardPenny43]

Unless congress can cut spending or raises taxes enough before we hit our debt limit again we will get down graded. The rate on treasury bonds will go up and it will cost the Gov. more to borrow. Repeat the process a couple more times and no one will buy T bonds any more and we go bankrupt.

[PADFH]

I wondering why it would matter. First, is there anyone who still thinks rating agencies have a damn clue about risk management and asset valuation? Second, the last time the US was downgraded what happened? Investors rushed to buy T-Bills. Long term rates are negative. They arent worried about us paying, they're worried about stagnating growth and hey should be.

[fb101]

The last time the ratings were downgraded the fed bought more tbills and nobody noticed.

?Thogey, I'm unclear. Are you saying that the gov should be putting old people to death?
they put babies to death to buy votes, so I would not put it past them.

[Thogey]

The last time the ratings were downgraded the fed bought more tbills and nobody noticed.

?Thogey, I'm unclear. Are you saying that the gov should be putting old people to death?
they put babies to death to buy votes, so I would not put it past them.

Put old people to death? No. But I certainly expect the, slot machine pulling, blue hairs to take a little more responsibility for thier healthcare expenses. If they don't, than we go broke.

But anyone who suggests that the medicare population pay more for the stuff that keeps them alive will be characterized as "killing old people and the poor", As was just demonstrated.

The government does not put babies to death. Those decisions are made by individuals, with the full support of the US government. Those individuals will have to answer, to a higher authority, for their decisions.

[Engineer]

Put old people to death? No. But I certainly expect the, slot machine pulling, blue hairs to take a little more responsibility for thier healthcare expenses. If they don't, than we go broke.

IMHO, the bigger problem is insurance discounting.

When insurers are allowed to pay less than 5% of the cash price, people are forced to buy insurance so they won't go bankrupt if they have to go to the hospital. A prime example is 2 hours of anesthesia I had a couple years ago. The anesthesiologist and his nurse each sent me a $14K bill. They accepted $600 each as their contracted rate with the insurance company. Remember this when you hear your local hospital say they need to raise rates because they lost X many millions to insurance discounting and low medicare reimbursement. In reality, they only lost it on paper and still made a profit.

Rather than forcing everyone to buy insurance to spread the burden, there's a much simpler solution. Outlawing discounts greater than 50% would force hospitals/doctors/dentists/pharmacists/etc. to reduce their pie in the sky list prices to double what the insurance companies are willing to pay. Health care providers would still make a decent profit, prices would come down to reality, and people wouldn't have to worry about paying $24K to get knocked out for two hours or $1K/month for the same drugs that sell for $100/month overseas.

The only losers would be the insurance companies...and I won't cry over them.

[1945v]

I think in the long term the USA will be the winner.

The crisis in Europe is getting worse and when Greece finally defaults on its debts, it will trigger a chain of events leading to the abandonment of the Euro, in turn further strengthening the US dollar.

China is already starting to see it cannot sustain double digit growth forever and is beginning to experience significant inflation.
As Chinese exports to Europe, Japan and the USA drop off, the state-managed machine of capitalism will be in big trouble with less cash coming in to buy the peace of 1 billion people..

According to the following article, the USA will be the winner in long term thanks to its growing population of young workers and its long standing leadership in technological innovation.
http://online.wsj.com/article/SB1000142 ... 70172.html

[ZenOps]

To me, its not even a matter of country anymore. Its a matter of generational slavery.

The ultimate goal of course is to get students into $200,000 or so worth of student debt at a rate of somewhere between 3% and 6% in interest.

Which is just enough to let a grad make a tiny bit of money, but still have the vast majority of it go to the senior generations (the 60's generation, or the "selfish" generation.)

But if you want to talk nations, middle east youth first, then european youth, and probably US youth after that. So in that sense, the US will be the one to lose last, but in general anyone under 20-something is in for a rough decade (especially in nations that have overspent for a couple generations previous)

[barrytrot]

To me, its not even a matter of country anymore. Its a matter of generational slavery.

The ultimate goal of course is to get students into $200,000 or so worth of student debt at a rate of somewhere between 3% and 6% in interest.

Which is just enough to let a grad make a tiny bit of money, but still have the vast majority of it go to the senior generations (the 60's generation, or the "selfish" generation.)

But if you want to talk nations, middle east youth first, then european youth, and probably US youth after that. So in that sense, the US will be the one to lose last, but in general anyone under 20-something is in for a rough decade (especially in nations that have overspent for a couple generations previous)

I actually *WISH* that was the goal. As if every kid went to that level of university we would EASILY double the size of the economy every 4 years or so.

However, going to college is optional. And sadly, becoming more optional. NOTE: I'm not saying college is the end all be all to gaining knowledge. I'm speaking to the larger issue of TRYING TO ACHIEVE. TRYING TO BETTER ONESELF. Which is what you are doing to get $200,000 in college debt. That can be via college or via a 1,000 other routes. But taking *A ROUTE* to success is what I wish was happening. And is sadly not

Figuring out new and better ways to "skin a cat" IS THE SOLUTION. Not the problem.

[ZenOps]

I don't know that this generation has the shoulders or the will to take on that type of responsibility.

http://en.wikipedia.org/wiki/2012_Quebe ... t_protests

"The 2012 Quebec student protests are a series of ongoing student demonstrations led by Quebec students' associations, students, and their supporters against a proposal by the Quebec Cabinet, headed by Premier Jean Charest, to raise university tuition from $2,168 to $3,793 between 2012 and 2017."

Its actually a huge movement here in Canada. Quebec has been lobbying for free post secondary on and off for decades. They are protesting a $325 hike each year for 5 years.

The US somehow totally destroyed perception of value a long time ago IMO. IE: The oldest Canadian penny here in Canada in mint condition sells for roughly $900, you people in the US just snapped up a 1792 penny for $1.15 million. Totally different perspectives on value, especially when it comes to paper value.

[shinnosuke]

Actually, the US has already been downgraded, in ways much more damaging than what a credit agency announcement might signify. The fed gov spews out an endless stream of regulations and sanctions, but entities around the world are buying fewer treasuries and transacting more cross-border business with some currency or exchange methodology that does not involve the US dollar. Writing on the wall. Too bad that most can't see it.

Over on zerohedge, there's an article about our champion (sarc: off) Larry Summers. Here's a copy/paste:
Larry Summers Does It Again
Submitted by Tyler Durden on 06/03/2012 20:10 -0400

Back in October 2011, our inaugural "Quote of the Week" went to that destroyer of pretty much everything, deep fried twinkies and value most certainly included, Larry Summers:

"The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending." Larry Summers

It is only fitting that the sequel to what to a large majority of people is the dumbest quote in history, will once again come from Larry Summers:

"Rather than focusing on lowering already epically low rates, governments that enjoy such low borrowing costs can improve their creditworthiness by borrowing more not less." (end quote)

Our dumb-downed countrymen, being unable to distinguish the sheer lunacy of this sort of pablum, have allowed the elite to enrich themselves at our expense. The only solution now is refreshing the tree of liberty (Tho. Jefferson). I always thought it would happen sooner, when I was a younger man. Now it may fall to my sons to bear this burden. I hate that.

[Gobirds66]

Unless congress can cut spending or raises taxes enough before we hit our debt limit again we will get down graded. The rate on treasury bonds will go up and it will cost the Gov. more to borrow. Repeat the process a couple more times and no one will buy T bonds any more and we go bankrupt.

And I would like to agree with you on this but they will not cut spending and they will mask the "real" tax hikes in ways you will not know until it is too late. What most fail to realize is that there is a vast resource of wealth available to them that is very easy to take. They will take your 401K. They have tried to do it in the past. They will succeed in the future at some point. The government will pass some legislation via the IRS that all 401K holdings will be required to hold a certain percentage in T-bills in order to be considered "tax-deferred." They will sell it as a safe haven, and people will buy it. Then they will apply negative interest rates to the T-bills after the legislation has passed. Of course they will spin it to be some sort of way to tax foreign interests running to the American dollar. That allows the Fed to take a percentage of your 401K without taxing it.

Then, once that is accepted, they will work to annuitize your 401 so it lasts your whole life and you get payments forever. The general public will love it because they will get a paycheck for life! Well, we did that already. It is called Social Security and that worked out well? But the majority of the voting public will not see it until it is in place for years and they are consumed by it. Then they will have tapped the 401K honey pot, own it, and will make it impossible for you to opt out of it.

They want the 401K money. They are going to get it. best answer to defeating this is to not have money where they can get to it. First rule of gold and silver: What the government can't find, they can't steal! Keep stacking!

[shinnosuke]

Unless congress can cut spending or raises taxes enough before we hit our debt limit again we will get down graded. The rate on treasury bonds will go up and it will cost the Gov. more to borrow. Repeat the process a couple more times and no one will buy T bonds any more and we go bankrupt.

And I would like to agree with you on this but they will not cut spending and they will mask the "real" tax hikes in ways you will not know until it is too late. What most fail to realize is that there is a vast resource of wealth available to them that is very easy to take. They will take your 401K. They have tried to do it in the past. They will succeed in the future at some point. The government will pass some legislation via the IRS that all 401K holdings will be required to hold a certain percentage in T-bills in order to be considered "tax-deferred." They will sell it as a safe haven, and people will buy it. Then they will apply negative interest rates to the T-bills after the legislation has passed. Of course they will spin it to be some sort of way to tax foreign interests running to the American dollar. That allows the Fed to take a percentage of your 401K without taxing it.

Then, once that is accepted, they will work to annuitize your 401 so it lasts your whole life and you get payments forever. The general public will love it because they will get a paycheck for life! Well, we did that already. It is called Social Security and that worked out well? But the majority of the voting public will not see it until it is in place for years and they are consumed by it. Then they will have tapped the 401K honey pot, own it, and will make it impossible for you to opt out of it.

They want the 401K money. They are going to get it. best answer to defeating this is to not have money where they can get to it. First rule of gold and silver: What the government can't find, they can't steal! Keep stacking!

Awesome post. And somebody in Homeland Security just identified you as a terrorist.

[barrytrot]

I agree with Gobirds66 that they definitely want the 401k money.

However, there generally do some sort of "roll up" in these cases with grandfathering, etc. So I would be surprised if they retroactively impacted existing contributions. The most logical thing for them would be to add these new "benefits" to the new contributions. That would be a path of almost zero resistance.

[Gobirds66]

Unless congress can cut spending or raises taxes enough before we hit our debt limit again we will get down graded. The rate on treasury bonds will go up and it will cost the Gov. more to borrow. Repeat the process a couple more times and no one will buy T bonds any more and we go bankrupt.

And I would like to agree with you on this but they will not cut spending and they will mask the "real" tax hikes in ways you will not know until it is too late. What most fail to realize is that there is a vast resource of wealth available to them that is very easy to take. They will take your 401K. They have tried to do it in the past. They will succeed in the future at some point. The government will pass some legislation via the IRS that all 401K holdings will be required to hold a certain percentage in T-bills in order to be considered "tax-deferred." They will sell it as a safe haven, and people will buy it. Then they will apply negative interest rates to the T-bills after the legislation has passed. Of course they will spin it to be some sort of way to tax foreign interests running to the American dollar. That allows the Fed to take a percentage of your 401K without taxing it.

Then, once that is accepted, they will work to annuitize your 401 so it lasts your whole life and you get payments forever. The general public will love it because they will get a paycheck for life! Well, we did that already. It is called Social Security and that worked out well? But the majority of the voting public will not see it until it is in place for years and they are consumed by it. Then they will have tapped the 401K honey pot, own it, and will make it impossible for you to opt out of it.

They want the 401K money. They are going to get it. best answer to defeating this is to not have money where they can get to it. First rule of gold and silver: What the government can't find, they can't steal! Keep stacking!

Awesome post. And somebody in Homeland Security just identified you as a terrorist.

I guess the definition of a terrorist is being 10% smarter than the gubberment. Bet there are a lot of us on here identified

[Gobirds66]

I agree with Gobirds66 that they definitely want the 401k money.

However, there generally do some sort of "roll up" in these cases with grandfathering, etc. So I would be surprised if they retroactively impacted existing contributions. The most logical thing for them would be to add these new "benefits" to the new contributions. That would be a path of almost zero resistance.

I agree, but think about this. Most people work for multiple companies over their career these days. They will get the grandfathered ones as well. Here is how.... When people change jobs, they move their money out of the 401K at their old job(grandfathered), and to their new 401K at their new job(not grandfathered as it is a new 401K.) The new 401K will have the percentage requirement for US T-Bills as it will not be grandfathered. With T-bills offering a negative return......Bam..... They just got your grandfathered money.

You may still get to opt out of the annuity part, but the Feds will spin that as well to get you to opt into it. They will offer an incentive to opt in, or worse, create a penalty if you do not. Leading the sheep to the slaughter, they will file in to be executed one by one. The worst part is that most will willingly do it, some volunteering to go first!

Keep stacking.....

[barrytrot]

I agree Gobirds66. I agree.

[SilverEye]

"Hey Mrs. First Lady, you know what is a big problem in this country? Childhood obesity. You should make that your cause." - some guy in DC.
"Hey Bloomberg, you could reduce the incidence of diabetes by having restaurants use smaller pop cups." - same guy in NY.

And so, we get start to get new smaller portions, but at the old price. Inflation, but under a false flag.

"Hey Mr. Random Reporter, did you know that it costs the gov't 3 cents to make a penny? You should do a story on that." - same guy somewhere else.

And so, we start getting news stories testing the waters about eliminating the penny. Gets us thinking, hey that's not a bad idea. Then we get stop thinking about $0.01 as the smallest denomination and start thinking that $0.05 is, and soon prices start to go up by nickels instead of pennies. And we get more inflation.

I've done my research. Inflation is coming. It's the only way that we can kick this debt mess down the road a little further. Default, even a partial, would be catastrophic. No president or member of Congress would allow that to happen on their watch. But crank up the printing presses? Easy! And not that hard to sell to Joe Sixpack.

"Dude! I got a 20% raise this year!"
"Yes, but inflation was 20%. Gas went up 20%, food went up 20%, rent went up 20%, beer and movie tickets went up 20%. You can't buy any more stuff or do more things than last year."
"... But dude, I'm getting 20% more dollars in my paycheck!"
"Not exactly. That raise put you in a higher tax bracket, so you're purchasing power actually went down."
"SilverEye, you're a real downer."
"I know. "

[Gobirds66]

I agree Gobirds66. I agree.

It is a sad thing that we have to think like this. I work too close to Federal Government Employees (without being one myself) and I have learned to think like them. Luckily my eyes are open, but so many are not. You guys on here let me know I am not crazy. I love this site so I finally got off the "site stalking bench" and decided to start posting.

[Beau]

I think the best way to put fat and lazy people to work.
is not give the food stamps and welfare.
you take the welfare away and hide their food stamps in their wook boots.

[SilverEye]

lol at "hide their food stamps in their work boots."