Thread: The strongest economy in the world

Cost of insuring against US default hits record high - Telegraph



"A Republican plan to cut the US deficit faced delay and stiff opposition, piling anxiety onto investors and ordinary Americans hoping for a late compromise to avoid a crippling debt default.
One-year US credit default swaps rose to a record high 85 basis points, up 8 basis points on Wednesday, according to data monitor Markit, surpassing high hit during the 2008 global financial crisis.
US stock markets also opened down, with the Dow Jones industrial average falling as much as 1.1pc in early trading in New York. The broader S&P index slipped as much as 1.5pc.
Timothy Geithner, the US Treasury Secretary, said: "The most important thing we can do right now to safeguard financial stability is lift the cloud of default hanging over our economy."
He was speaking after releasing the first annual report on Tuesday of the Financial Stability Oversight Council (FSOC), a group of regulators charged with guarding against a repeat of the 2007-2009 financial crisis.

The switchboard at Congress almost crashed yesterday as Americans voiced their anger at the stalemate in Washington over raising the country's $14.3 trillion (£8 trillion) debt ceiling.
The flood of calls came after President Barack Obama and John Boehner, the top Republican in Congress, used televised addresses to blame each other for the increasingly crippling impasse.
The websites of several Congressmen and Senators also briefly went down as the public sought to shake their politicians into action.
US Republican leaders had promised a vote today in the House of Representatives on a plan to increase the $14.3 trillion debt limit and avoid America's first-ever default, but it was put off until at least Thursday.
Tensions are rising across America as the White House, and Republicans and Democrats in Congress, struggle to find common ground on a deficit-reduction plan they all agree is a condition of raising the debt ceiling.
The US Treasury has said that without an agreement by August 2 it will not be able to pay all its bills, which include interest payments on its debt.
With less than a week until the August 2 deadline, Christine Lagarde, the head of the International Monetary Fund, added her voice to calls for an urgent agreement. "The clock is ticking," she said. "An adverse shock in the US could have serious spillovers on the rest of the world."
Following the collapse late last week of talks between Mr Obama and Mr Boehner, Republicans and Democrats are currently pursuing separate plans through the House of Representatives and the Senate."

Democratic and Republican Congressional sources involved in the negotiations tell ABC News that a tentative agreement has been reached on the framework of a deal that would give the President a debt ceiling increase of up to $2.4 trillion and guarantee an equal amount of deficit reduction over the next 10 years.

The details are still being worked out, and a senior White House aide tells ABC News, "talks continue but there is no deal to report."

Congressional leaders plan to brief their members on the framework tomorrow. The reaction from both parties' rank-and-file will determine whether this tentative deal becomes a final deal.

Here, according to Democratic and Republican sources, are the key elements:

A debt ceiling increase of up to $2.1 to $2.4 trillion (depending on the size of the spending cuts agreed to in the final deal).

They have now agreed to spending cuts of roughly $1.2 trillion over 10 years.

The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.

The special committee must make recommendations by late November (before Congress' Thanksgiving recess).

If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare. This "trigger" is designed to force action on the deficit reduction committee's recommendations by making the alternative painful to both Democrats and Republicans.

A vote, in both the House and Senate, on a balanced budget amendment.

Democrats won't like the fact that Medicare could be exposed to automatic cuts, but the size of the Medicare cuts is limited and they are designed to be taken from Medicare providers, not beneficiaries.

Two sources briefed on the framework say the automatic cuts would hit Defense spending harder than Medicare. A Republican briefed on the framework says this will be unacceptable to many Republicans because it could force them to face a choice between accepting tax increases (if that is what the committee recommends) or automatic cuts that would gut the Pentagon's budget.

link: Congressional Sources: Republicans and Democrats Reach Tentative Debt Deal - The Note

Originally Posted by S Landreth

The potential budget agreement "does nothing to restore household and corporate confidence. So unemployment will be higher than it would have been otherwise, growth will be lower than it would be otherwise, and inequality will be worse than it would be otherwise."

El-Erian questioned the impact of discretionary spending cuts that will likely make up the short-term budget savings in any final agreement.

"We have a very weak economy, so withdrawing more spending at this stage will make it even weaker," El-Erian said.


If the statement rings true, Obama might have a difficult time getting elected for a second term, because it is the economy stupid: PIMCO CEO Mohamed El-Erian: Budget Deal Will Only Bring Short-Term Relief - ABC News

True, Landreth.

This "deal" is a short-term pseudo-deal. It's still kicking the can down the road.

It's a band-aid. $2.2 Trillion over 10 years. The major problems are not even addressed.

And note* that this deal was construed so that the next 'debt ceiling issue' will not occur until after the next Presidential election in 2012.

Originally Posted by barbaro

Originally Posted by Humbert

http://www.nytimes.com/2011/08/01/opinion/the-president-surrenders-on-debt-ceiling.html?_r=1

A very sad and disturbing outcome. Obama is a disgrace for capitulating to right wing extremists.

Obama has moved to the Center for quite some time.

He is (IMO) focusing in his re-election.

He's catered to the MIC by increasing their budgets, also.

Medicare WILL be on the chopping block soon.

There money, simply, is not there.

That's not just your opinion only. He doesn't want to become another Jimmy Carter although it's just a matter of time:

‪Obama: Screw Congress I'll Do It On My Own‬‏ - YouTube

Well, Kthug has weighed in, and is much displeased:
http://www.nytimes.com/2011/08/01/op...ling.html?_r=1
"After all, how can American democracy work if whichever party is most prepared to be ruthless, to threaten the nation’s economic security, gets to dictate policy? And the answer is, maybe it can’t."

The gold price has discounted the " historic nearly there deal" within 12 hours. Gold went down to $1608 on the "news", back up up $1626 today.

"
(Kitco News) -Comex gold futures have rebounded from their daily lows and are trading slightly lower in mid-morning dealings Monday. A weaker-than expected U.S. manufacturing survey quickly sunk the U.S. stock market, which in turn led to some fresh safe-haven buying interest and bargain hunting in the precious metals. December gold last traded down $4.50 at ounce at $1,626.70"

DOW down 1%

FTSE flat

If you have funded your own social security, I agree that you have the right to spend it where and how you want. It comes back to that old right wing canard that social security is an entitlement, something to do with a 'nanny state'. Well, I suppose if you've never worked and only collected SS that is correct, but if you've worked you have also funded social security from your own pay packet. So it's yours, effectively your own private property- being maintained on your behalf by a Trustee. Or at least it should be.

So here you can blow yet another hole in right wing 'thinking' (I use the term loosely). These are the same people who support the right of private employers, such as GM and United Airlines, to raid the pension funds of their employees- as they have done, repeatedly. Excuse me, didn't the right say they support peoples rights to their own private property? Well, it's easy enough to say that- or just parrot the lies of others without thinking it thru' yourself- but the reality is they don't. They are the ultimate Socialists really, except the socialist largesse is directed to the corporate sector, the beneficiaries being the rich.

Then there’s the Bailouts- bail out the arses of Rich individuals and Corporations after they stuff it up, then reduce their taxes further (off an already unsustainably low base). The ultimate in right wing logic, but lets not sully the term 'Logic' here. It's greed and selfishness, plain and simple. The right wing PR angle to this lack of patriotism and logic? Call themselves the true Patriots. I mean seriously, if this was happening in a parrallel universe it would be hilarious. But plenty of you folk swallow this whole.

Similarly, taxation. If we go back to the original laws that set up 'limited liability companies', a corporate body is a legal 'person'- a legal entity in it's own right. Which means it can sue, be sued, own trademarks & patents etc. And pay it's own tax. So, by what logic are corporations and the rich paying less tax on their earnings than the average American? Just bizarre. Right wing logic- reduce taxes on the rich and corporations further- this after the abject failure of the Bush tax cuts. That's some great Kool aid you've swallowed there.

So is it any wonder the right wing socialist paradise of the US is being trounced by the countries they laughably call socialist, such as Germany, the Scandinavian states and China? No, of course it isn't. That is what happens to a country that has forgotten how to think, even down to basic arithmetic and logic. I suppose the future of the USA looks like the true stakeholders, the corporations and rich, will do just fine. The peoples misery will obviously get worse, but USA Inc is not about them anymore, if it ever was. A country who’s greatness is being rapidly destroyed from within, so lets get back to some right wing ‘logic’ again- what are they worried about? Moslems and II’s. They say they are worried about debt, but how can they be- they have just reduced their nations revenue base further. Seriously, you couldn’t make this stuff up. Ah well, you get the government you deserve I suppose- I have to agree with you there. Sure glad I’m not American.

Rant over. Enjoy yerselves while 'nanny states' eat yer lunch. Well the true stakeholders certainly will- the Rich can hop on a plane anytime, as can Corporates in a legal sense, eg Halliburton & Xe/ Blackwater- which are no longer even legally domiciled in the US. Priceless.

Here is an example of how citizens money is being wasted on projects to ensure that the citizens receive the benefits of thier economic strength. This is a US example, they do publicise some of their financial woes, but it could be any country.

US hypersonic test glider Falcon disappears - Telegraph



"The unmanned Falcon Hypersonic Test Vehicle (HTV-2) is designed to travel at 20 times the speed of sound.
In theory it could fly from New York to Los Angeles in 12 minutes, and be used by the US military to strike anywhere in the world within an hour.
The US Defence Advanced Research Projects Agency (DARPA) said: “More than nine minutes of data was collected before an anomaly caused loss of signal.
“Initial indications are that the aircraft impacted the Pacific Ocean along the planned flight path.”

The test flight from Vandenberg Air Force Base, 130 miles north west of Los Angeles, was the second for the experimental aircraft. Contact was also lost during the first mission in 2010.

Shaped like the tip of a spear, the HTV-2 is designed to be launched to the edge of space, separate from its booster rocket and re-enter the atmosphere at 13,000mph, before intentionally crashing into the ocean.
But after the plane separated from the Minotaur 4 rocket in the upper reaches of the atmosphere for its “glide” phase yesterday, contact was lost, DARPA said.
Air Force Major Chris Schulz, the HTV-2 program manager, said: “We know how to boost the aircraft to near space. We know how to insert the aircraft into atmospheric hypersonic flight. “We do not yet know how to achieve the desired control during the aerodynamic phase of flight. It’s vexing. I’m confident there is a solution.
We have to find it.”
Loren Thompson, an analyst at Lexington Institute with links to the defence industry, said: “The military has a long way to go before hypersonic vehicles are ready for deployment.”"

We have the ability to produce a good graphical image to sell the project. (US)

We have the technology to launch a rocket into outer space - 1950's technology, (EU).

We have the technology to track an object on radar, for the first 9 minutes when it is on a large rocket- 1950's technology (EU).

We have the technology to hit a random place on earth in under an hour. - 2500BC technology, (Africa)

We can drop small bricks from outer space. (EU)

We have the ability to track a missile for 9 minutes and receive data from it (worldwide)

We have the ability to con our government to fund "the ability to drop a bomb anywhere in the world in an hour" (Worldwide)

We have, for the second time been found out. (US)

We still have another 5 years funding and we will be retired by then. (Worldwide)

We have put in a funding request for a "Transporter - beam me up Scotty" device and are assured that the funds will be forthcoming (we can print some more money). (Worldwide)

We have the ability to hit a Chinese aircraft carrier with a brick from outer space as long as it is in the right position.