After threatening another downgrade of the U.S. credit rating before the fiscal cliff deal, agencies like Moody’s and S&P both essentially say nothing’s changed. Washington’s failure to address our long-term debt continues to put Americans at risk of higher interest rates and undermine our standing in the global economy. With today’s jobs report showing hiring is still well-below the typical rate needed for this stage of a recovery, the question is whether Washington will finally wake up to its overspending … or if America will continue to sink into “an abyss [we] can never come out of.”
CREDIT RATING AGENCIES SEE NO “MEANINGFUL IMPROVEMENT,” CITE FAILURE TO ADDRESS DEBT
CNN’s Felicia Taylor: “As one analyst said, we only got half a loaf out of Washington. We didn’t get the full thing yet. We’re still waiting to find out if those spending cuts are actually going to happen. … The deal just wasn’t enough.” (CNN Newsroom, 1/3/13)
Moody’s: Fiscal Cliff Deal Not Enough To Avoid Risk Of A Downgrade. “Moody’s Investors Service warned Wednesday that the ‘fiscal cliff’ tax deal was not enough to remove the risk of a downgrade of the U.S. credit rating. … [T]he package, which averted income tax increases on most Americans, did not produce ‘meaningful improvement’ in the ratio of the federal government’s debt to its economic output.”(Jim Puzzanghera, “Moody’s says fiscal cliff deal doesn’t end credit downgrade risk,” Los Angeles Times, 1/2/12)
“The nation’s debt outlook after those negotiations will determine whether Moody’s downgrades the U.S. rating a notch to Aa1.”(Jim Puzzanghera, “Moody’s says fiscal cliff deal doesn’t end credit downgrade risk,” Los Angeles Times, 1/2/12)
Standard & Poor’s: “[T]he compromise doesn’t affect our [S&P] view of the country’s credit outlook, given that we believe yesterday’s agreement does little to place the U.S.’s medium-term public finances on a more sustainable footing.” (Standard and Poor’s, “”Fiscal Cliff Deal Will Not Affect U.S. Outlook,” Reuters, 1/2/13)
GLOBAL INFLUENCE CONTINUES TO DECLINE
Military Leaders Worried U.S. Is Squandering Its Global Influence. “Most pointedly, military and diplomatic experts wonder whether the United States is at risk of squandering its global influence.” (David E. Sanger, “Fiscal Cliff Deal Fails To Allay Doubts On U.S. Global Power,” The New York Times, 1/4/13)
State-Run Chinese Xinhua Newspaper: “‘The politicians have chosen to kick the can down the road,’ [China’s] state-run Xinhua news agency said in a commentary on Wednesday. ‘The can will never disappear,’ it continued, warning that the United States was falling ‘into an abyss you can never come out of.’” (David E. Sanger, “Fiscal Cliff Deal Fails To Allay Doubts On U.S. Global Power,” The New York Times, 1/4/13)
Iranian President Mahmoud Ahmadinejad: “Iranian President Mahmoud Ahmadinejad predicted the impending downfall of the ‘US empire,’ blaming the collapse on a combination of the country’s massive debt and its loss of legitimacy within the international community, Iran’s official news agency IRNA reported Thursday. ‘How long can a government with a $16,000 trillion foreign debt remain a world power? … The Americans have injected their paper wealth into the world economy and today the aftermaths and negative effects of their pseudo-wealth have plagued them.'” (“Iran: How Long Can Debt-Laden U.S. Remain World Power?,” Jerusalem Post, 10/18/12)
German Finance Minister Wolfgang Schaeuble: “In an unsatirizable display of chutzpah, Mr. Obama reproved Europeans for not wrestling their debt problems under control. … ‘People are always very quick at giving others advice,’ an irritated German Finance Minister Wolfgang Schaeuble said on Sunday. ‘Mr. Obama should first of all take care of reducing the American deficit, which is higher than in the eurozone.'” (Brett Decker, “Obama’s German Tutorial,” Washington Times, 6/25/12)
EXPLODING DEBT UNDERMINING U.S. NATIONAL SECURITY
Long-Term Debt A Growing Concern For National Security. “Now that Congress and President Obama have slipped past the latest budget deadline with a bill that does little to address the country’s long-term debt issues — and by some measures might worsen them — the worries of the national security establishment have been reignited.” (David E. Sanger, “Fiscal Cliff Deal Fails To Allay Doubts On U.S. Global Power,” The New York Times, 1/4/13)
Secretary of State Hillary Clinton: “Secretary of State Hillary Clinton waded into the nation’s fiscal debate Wednesday, calling the expected $1.3 trillion U.S. deficit a ‘message of weakness internationally.’ ‘It poses a national security threat in two ways: it undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable…'” (“Clinton Says deficit is a national security threat,” The Hill, 9/8/10)
Debt Could Limit U.S. Leverage With Foreign Powers. “If the debt continues to grow unbridled, the U.S. government will be constrained in its ability to pay for what it wants to do militarily and diplomatically. And it could limit the country’s leverage with foreign powers.” (Jeanne Sahadi, “Why debt is a threat to national security,” CNN Money, 10/22/12)
WHILE THE AMERICAN ECONOMY CONTINUES TO SPUTTER
Hiring Well Below Typical Pace. “Other employment indicators suggest the U.S. continues to add jobs at a modest pace. While hiring is taking place fast enough to slowly reduce the unemployment rate, it’s well below the typical pace of job creation at this stage of a current economy recovery.” (Jeffry Bartash, “U.S. Gains 155,000 Jobs in December,” MarketWatch, 1/4/13)
‘Least Anticipated Jobs Report of All Time.’ “There was no political angle or economic angle that anyone was excited to see … And the meh number justifies the lack of hype. It’s a fine, nothing special number that won’t move the needle on anything.” (Joe Weisenthal, “The Least Anticipated Jobs Report of All Time Comes in Exactly as Expected,” Business Insider, 1/4/13)
Wealth is not Created at the Top: It is Only Devoured There
The UK has left the EU and we can argue about the minutiae of Wealth until we’re blue in the face. But the overriding factors are apparent and in one of the richest countries in the world it is shocking that so many people can’t even be sure if they are going to be able to eat enough today or provide for their loved ones.
These days, politicians from the left to the right assume that most wealth is created at the top. By the visionaries, by the job creators, and by the people who have “made it”. By the go-getters oozing talent and entrepreneurial-ism that are helping to advance the whole world – Opinion by Rutger Bregman
… across the spectrum virtually all agree that wealth is created primarily at the top and so entrenched is this assumption that it’s even embedded in our language. When economists talk about “productivity”, what they really mean is the size of your paycheck. And when we use terms like “welfare state”, “redistribution” and “solidarity”, we’re implicitly subscribing to the view that there are two strata: the makers and the takers, the producers and the couch potatoes, the hardworking citizens – and everybody else.
Bankers, pharmaceutical giants, Google, Facebook … a new breed of rentiers are at the very top of the pyramid and they’re sucking the rest of us dry
In reality, it is precisely the other way around. In reality, it is the waste collectors, the nurses, and the cleaners whose shoulders are supporting the apex of the pyramid. They are the true mechanism of social solidarity. Meanwhile, a growing share of those we hail as “successful” and “innovative” are earning their wealth at the expense of others. The people getting the biggest handouts are not down around the bottom, but at the very top. Yet their perilous dependence on others goes unseen. Almost no one talks about it. Even for politicians on the left, it’s a non-issue.
To understand why, we need to recognise that there are two ways of making money. The first is what most of us do: work. That means tapping into our knowledge and know-how (our “human capital” in economic terms) to create something new, whether that’s a takeout app, a wedding cake, a stylish updo, or a perfectly poured pint. To work is to create. Ergo, to work is to create new wealth.
But there is also a second way to make money. That’s the rentier way: by leveraging control over something that already exists, such as land, knowledge, or money, to increase your wealth. You produce nothing, yet profit nonetheless. By definition, the rentier makes his living at others’ expense, using his power to claim economic benefit.
But here comes the rub. Most rentiers are not as easily identified as the greedy banker or manager. Many are disguised. On the face of it, they look like industrious folks, because for part of the time they really are doing something worthwhile. Precisely that makes us overlook their massive rent-seeking…
The problems we face are that the politicians are firmly in the hands (pockets) of the uber wealthy. We live in a corporate plutocracy and those holding all the wealth and therefore power have no intention of changing the status quo, even if it isn’t sustainable. They remind me of bacteria (or cancer) devouring the host body more and more even though eventually it will kill them too.
Donald Trump Forgets Important Lesson From Grandad:
Harper’s Magazine reprints an interesting letter from US President Donald J. Trump’s own grandfather that may get you thinking. Here is it then:
The Emigrants – By Friedrich Trump – From a letter written in 1905 by Friedrich Trump, Donald Trump’s grandfather, to Luitpold, prince regent of Bavaria. Trump had been ordered to leave Bavaria for failing to complete mandatory military service and to register his initial emigration to the United States twenty years earlier.
Prince Luitpold rejected Trump’s request for repatriation; the family later settled in New York. Translated from the German by Austen Hinkley.
Most Serene, Most Powerful Prince Regent! Most Gracious Regent and Lord!
I was born in Kallstadt on March 14, 1869. My parents were honest, plain, pious vineyard workers. They strictly held me to everything good — to diligence and piety, to regular attendance in school and church, to absolute obedience toward the high authority.
After my confirmation, in 1882, I apprenticed to become a barber. I emigrated in 1885, in my sixteenth year. In America I carried on my business with diligence, discretion, and prudence. God’s blessing was with me, and I became rich. I obtained American citizenship in 1892. In 1902 I met my current wife. Sadly, she could not tolerate the climate in New York, and I went with my dear family back to Kallstadt.
The town was glad to have received a capable and productive citizen. My old mother was happy to see her son, her dear daughter-in-law, and her granddaughter around her; she knows now that I will take care of her in her old age.
But we were confronted all at once, as if by a lightning strike from fair skies, with the news that the High Royal State Ministry had decided that we must leave our residence in the Kingdom of Bavaria. We were paralyzed with fright; our happy family life was tarnished. My wife has been overcome by anxiety, and my lovely child has become sick.
Why should we be deported? This is very, very hard for a family. What will our fellow citizens think if honest subjects are faced with such a decree — not to mention the great material losses it would incur. I would like to become a Bavarian citizen again.
In this urgent situation I have no other recourse than to turn to our adored, noble, wise, and just sovereign lord, our exalted ruler His Royal Highness, highest of all, who has already dried so many tears, who has ruled so beneficially and justly and wisely and softly and is warmly and deeply loved, with the most humble request that the highest of all will himself in mercy deign to allow the applicant to stay in the most gracious Kingdom of Bavaria.
Your most humble and obedient,
… Well then. Long ago, yes.. Still applies? You tell me.
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