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Thread: S&P cuts U.S. outlook to negative on fiscal worry

  1. #21
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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    With respect to the U.S. fiscal situation, one should not focus strictly on external debt relative to GDP. In their seminal book, This Time is Different (Princeton University Press, 2009), Carmen M. Reinhart and Kenneth S. Rogoff offer three key points:

    • Having a complete picture of government indebtedness is critical, for there is no meaningful external debt sustainability exercise that does not take into account the magnitude and features of outstanding domestic government debt, ideally including contingent liabilities.

    • Debt sustainability exercises must be based on plausible scenarios for economic performance, because the evidence offers little support for the view that countries simply “grow out” of their debts. This observation may limit the options for governments that have inherited high levels of debt. Simply put, they must factor in the possibility of “sudden stops” in capital flows, for these are a recurrent phenomenon for all but the very largest economies in the world.

    • The inflationary risks to monetary policy frameworks (whether the exchange rate is fixed or flexible) also seem to be linked in important ways to the levels of domestic debt. Many governments have succumbed to the temptation to inflate away domestic debt.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    1. our domestic debt, even more so in the long run, is unsustainably encumbered with the liabilities imposed by our three big entitlement programs, awareness of which has now become coin of the realm; in the shorter term, the service on that debt, mere interest alone, is racing toward a full trillion per year (according to nyt)

    2. the prime reason called out by the lady (december, 09) pointed directly at the implausibility of budget forecasts, their regular reliance on rosy growths and near zero interests, an ugly example of which is included in obama's 2012 budget, the only real plan he has so far submitted, which, by the way, is pretty much the opposite of what he's trying to say these days

    3. our govt has succumbed to the quantitative easing of two point seven trillion dollars of garbage-backed crap---undiversified

    in other words, it's that bad

    what was the white house reaction to this development, again?
    Last edited by The Prof; 04-18-11 at 09:35 PM.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    200 years to build it..........

    .........2 years for the Kenyan Demolition......Barack HusSame Obama--The Most Expensive President in History.
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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    As bad as the $14+ trillion national debt sounds, it isn’t even close to the real debt numbers. In reality, current and future US taxpayers are already on the hook for well over $100 trillion dollars and that’s if we stopped promising social security, medicare/medicade, military pensions and benefits, civil service pensions and benefits etc. starting today.

    "Too often we enjoy the comfort of opinion without the discomfort of thought."
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    Quote Originally Posted by Montecresto View Post
    It would seem that the constitution is just a god damn piece of paper, to be trotted out when expedient.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by PeteEU View Post
    What socialism? It is conservatism gone amok. It was Reagan and Bush jr that ballooned the debt... and are you calling them socialists?
    Such a childish understanding of America. It's a little more complicated than just applying it to the president of the time.

    Unions are massivley socialistic in nature. Government handouts are socialism defined. When 35 percent of your population receives their entire income from the government, which is the case here, it bleeds socialism. And THAT is what's put us in this mess.

    And now our socialist party expects the capitalists among us to fix their mess.

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