9 ms·

Both S&P and Moody's make good points, but have a different assessment of the uncertainty. Compared to other nations, The U.S. has a surprisingly healthy budget

by tybris 15y ago

Both S&P and Moody's make good points, but have a different assessment of the uncertainty. Compared to other nations, The U.S. has a surprisingly healthy budget. Cut out the bush tax cuts, end the wars, stabilize health care spending, and you could create a surplus in no time. Few other countries have that luxury. However, it has not only become questionable whether Washington will be able to make the necessary changes in the foreseeable future, the corruption that underlies this inability is very hard to get rid of and may cripple the government even further. I think these two different ratings appropriately reflect the uncertainty of the situation.

itaborai83 15y ago
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balance http://en.wikipedia.org/wiki/List_of_sovereign_states_by_cur...
- hugh3 15y ago
  More meaningful if you look at it as a portion of GDP. http://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance_as_a_percentage_of_GDP http://en.wikipedia.org/wiki/List_of_countries_by_current_ac...
  - nl 15y ago
    The current account has very little to do with the US Debt problems. The current account relates to the balance of trade[1], ie: the amount of good and services purchased from overseas vs sold overseas. The US Debt is money borrowed by the US Goverment[2], which isn't really related to trade directly at all. There is a Wikipedia article that lists the different types of deficits: http://en.wikipedia.org/wiki/Deficit http://en.wikipedia.org/wiki/Deficit. The current debate in the US is over deficit budgets, whereas a Trade Deficit is a different problem, [1] http://en.wikipedia.org/wiki/Balance_of_payments http://en.wikipedia.org/wiki/Balance_of_payments [2] http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
- ArbitraryLimits 15y ago
  There's a saying that goes, "If you owe the bank $100, that's your problem. If you owe the bank $100 million dollars, that's the bank's problem." (I've seen it attributed to John D. Rockefeller, but certainly other people had the same idea before hime). s/million/trillion/g, s/bank/China/g and s/you/United States/g and you've got my take on the current situation. Lots of the rest of the world's economy is based on selling things to the United States; it's pretty much China's explicit strategy for growth. If the US goes to everyone in turn and says, "Hey remember that $50 billion I said I'd get you last week? Yeah...I can give you $10 million," there will be a lot of grumbling, and hopefully some restructuring in the long term, but they'll still take the deal. Where else are they going to go? TL;DR US has a monopsyny on monkey shaped shower curtain rings.
  - dmm 15y ago
    The US treasury is currently borrowing at the lowest rates in 70 years. To obtain the lowest rates possible, about half of the US debt is in bonds that mature in less than a year. This means huge quantities of bonds are constantly maturing and being resold. Any change in interest rates will quickly result in much higher interest payments. These rates are so low because the fed is buying the bonds and treasuries are currently the safest place to park huge amounts of cash. The rates even go negative at times because US bonds are are safe place for cash. If the treasury starts defaulting on its debts, that will change very quickly. Not only that but the status of the USD will change very quickly.
hugh3 15y ago
However, it has not only become questionable whether Washington will be able to make the necessary changes in the foreseeable future, the corruption that underlies this inability is very hard to get rid of and may cripple the government even further. The issue in the US is that there is a genuine ideological split between the two parties about what the US government should look like. The Democrats want a big government, which takes in a lot of taxes and provides a lot of services to everybody. The Republicans want a small government, which takes in minimalist taxes and provides minimalist services. (I'm not interested in debating the relative merits of these two ideologies today.) And this isn't just the parties' ideologues, either -- the same ideological split genuinely exists in the US public (contrast to many other countries where the "big government" types seem to have largely won the argument). Either party could easily balance the budget on its own, given unlimited power. However, because of the way the US political system just happens to work, it's very hard to do anything without getting at least some of the other guys on board. The Republicans have for many years had a "starve the beast" strategy, figuring that if you keep on cutting taxes then eventually the Democrats will have to agree to cut spending as well. In recent years the Democrats have invented the opposite "gorge the beast" strategy, in which you figure that if you keep on increasing spending then eventually you'll be able to pressure the Republicans into agreeing to tax increases. And the poor beast being starved at one and and gorged at the other starts to... wait, no, this analogy is breaking down. What's the solution? There really isn't one. The ideological split in the American public is real and it isn't going away any time soon, and folks need to stop proposing "solutions" which basically just come down to "all we need is for the other side to come over and agree with us and it'll all be rosy." That's not gonna happen. But perhaps the first step is to acknowledge that this ideological split is genuine, and real, and does actually reflect the ideological split within the US population. Perhaps we can compromise, but first we have to acknowledge precisely what it is we're compromising about. edit: Wow, I can't believe this got modded down. I guess the true believers in the "No really, it's the other guys' fault" die hard.
- DevX101 15y ago
  I'd caution against taking the Republican's word that they want a 'small government'. History contradicts this assertion -- the last 3 republican administrations increased the budget deficit. I think Republicans want to allocate funding differently from the Democrats, but I'm not so sure they want to do any kind of 'small government'.

by tybris 15y ago

itaborai83 15y ago

http://en.wikipedia.org/wiki/List_of_sovereign_states_by_current_account_balance http://en.wikipedia.org/wiki/List_of_sovereign_states_by_cur...

hugh3 15y ago
More meaningful if you look at it as a portion of GDP. http://en.wikipedia.org/wiki/List_of_countries_by_current_account_balance_as_a_percentage_of_GDP http://en.wikipedia.org/wiki/List_of_countries_by_current_ac...
- nl 15y ago
  The current account has very little to do with the US Debt problems. The current account relates to the balance of trade[1], ie: the amount of good and services purchased from overseas vs sold overseas. The US Debt is money borrowed by the US Goverment[2], which isn't really related to trade directly at all. There is a Wikipedia article that lists the different types of deficits: http://en.wikipedia.org/wiki/Deficit http://en.wikipedia.org/wiki/Deficit. The current debate in the US is over deficit budgets, whereas a Trade Deficit is a different problem, [1] http://en.wikipedia.org/wiki/Balance_of_payments http://en.wikipedia.org/wiki/Balance_of_payments [2] http://en.wikipedia.org/wiki/United_States_public_debt http://en.wikipedia.org/wiki/United_States_public_debt
ArbitraryLimits 15y ago
There's a saying that goes, "If you owe the bank $100, that's your problem. If you owe the bank $100 million dollars, that's the bank's problem." (I've seen it attributed to John D. Rockefeller, but certainly other people had the same idea before hime). s/million/trillion/g, s/bank/China/g and s/you/United States/g and you've got my take on the current situation. Lots of the rest of the world's economy is based on selling things to the United States; it's pretty much China's explicit strategy for growth. If the US goes to everyone in turn and says, "Hey remember that $50 billion I said I'd get you last week? Yeah...I can give you $10 million," there will be a lot of grumbling, and hopefully some restructuring in the long term, but they'll still take the deal. Where else are they going to go? TL;DR US has a monopsyny on monkey shaped shower curtain rings.
- dmm 15y ago
  The US treasury is currently borrowing at the lowest rates in 70 years. To obtain the lowest rates possible, about half of the US debt is in bonds that mature in less than a year. This means huge quantities of bonds are constantly maturing and being resold. Any change in interest rates will quickly result in much higher interest payments. These rates are so low because the fed is buying the bonds and treasuries are currently the safest place to park huge amounts of cash. The rates even go negative at times because US bonds are are safe place for cash. If the treasury starts defaulting on its debts, that will change very quickly. Not only that but the status of the USD will change very quickly.

hugh3 15y ago

However, it has not only become questionable whether Washington will be able to make the necessary changes in the foreseeable future, the corruption that underlies this inability is very hard to get rid of and may cripple the government even further. The issue in the US is that there is a genuine ideological split between the two parties about what the US government should look like. The Democrats want a big government, which takes in a lot of taxes and provides a lot of services to everybody. The Republicans want a small government, which takes in minimalist taxes and provides minimalist services. (I'm not interested in debating the relative merits of these two ideologies today.) And this isn't just the parties' ideologues, either -- the same ideological split genuinely exists in the US public (contrast to many other countries where the "big government" types seem to have largely won the argument). Either party could easily balance the budget on its own, given unlimited power. However, because of the way the US political system just happens to work, it's very hard to do anything without getting at least some of the other guys on board. The Republicans have for many years had a "starve the beast" strategy, figuring that if you keep on cutting taxes then eventually the Democrats will have to agree to cut spending as well. In recent years the Democrats have invented the opposite "gorge the beast" strategy, in which you figure that if you keep on increasing spending then eventually you'll be able to pressure the Republicans into agreeing to tax increases. And the poor beast being starved at one and and gorged at the other starts to... wait, no, this analogy is breaking down. What's the solution? There really isn't one. The ideological split in the American public is real and it isn't going away any time soon, and folks need to stop proposing "solutions" which basically just come down to "all we need is for the other side to come over and agree with us and it'll all be rosy." That's not gonna happen. But perhaps the first step is to acknowledge that this ideological split is genuine, and real, and does actually reflect the ideological split within the US population. Perhaps we can compromise, but first we have to acknowledge precisely what it is we're compromising about. edit: Wow, I can't believe this got modded down. I guess the true believers in the "No really, it's the other guys' fault" die hard.

DevX101 15y ago
I'd caution against taking the Republican's word that they want a 'small government'. History contradicts this assertion -- the last 3 republican administrations increased the budget deficit. I think Republicans want to allocate funding differently from the Democrats, but I'm not so sure they want to do any kind of 'small government'.