Now that the Tea Party has not only demonstrated its power to force the Republican Party to begin acting like a true party for less government, it has also shown that it has staying power. The elections of 2010 were just the beginning of the Tea Party’s ascent to power in Washington, and the liberals are running scared. And when they run scared they begin calling names.
In a two-hour, closed-door Democrat Caucus meeting, Rep. Mike Doyle of Pennsylvania angrily said, “We have negotiated with terrorists. This small group of terrorists have made it impossible to spend any money.” Vice-President Biden agreed: “They have acted like terrorists.” Biden later denied that he had said that, but after Politico published the remarks, spokeswoman Kendra Barkoff said: “The word was used by several members of Congress.”
Now that the politicians have delivered an anti-debt deal that adds an estimated $8 trillion to the current $14.5 trillion federal debt over the next 10 years, President Obama is getting ready to head off on a pro-jobs bus tour of the Midwest.
With more than 2.5 million additional Americans without jobs since he moved into the White House, President Obama would do better on jobs if he cancelled the bus, saved the gas, and just stayed put in the Oval Office to work on reversing the policies he’s promoted that have only made things worse, starting with ObamaCare.
Freshman in Economics-101 learn that price hikes reduce demand. That applies to how many steaks we buy and to how many workers are added to payrolls by employers.
Standard and Poor’s was blunt in its assessment of America’s deteriorating financial condition when it announced Friday night that it was cutting its credit rating on United States’ Treasury securities from AAA to the second-tier AA+, with a negative outlook.
S&P said: "Progress [in] containing the growth of public spending, especially on entitlements, or on reaching an agreement on raising revenues, is less likely than we previously assumed.... The fiscal consolidation plan [Budget Control Act of 2011] that Congress and the Administration agreed to this week falls short of the amount we believe is necessary to stabilize the general government debt burden.... Elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating." (Emphases added.)
Investors will be anxiously watching when the New York Stock Exchange market opens Monday morning to see what effect Standard and Poor's downgrade of the U.S. credit rating will have on trading. The stock market fell by 7.1 percent last week, before S&P issued its report of the downgrade at the end of the day on Friday. The market fell despite the bill signed into law last Tuesday that allowed the raising of the debt limit to prevent the government from defaulting on its financial obligations, accompanied by a deficit reduction package aimed at trimming $2.1 trillion of deficit spending over the next 10 years.
The S&P downgrade of the U.S. government's credit rating from AAA to AA+ set off alarm bells in foreign markets as well, as the news coincided with increased concerns over the economic crisis in Europe. Finance ministers of both the Group of 7 and Group of 20 nations were conferring by phone, Reuters reported, while the governing council of the European Central Bank was also holding an emergency conference call late Sunday. The central bank was reported to be considering buying Spanish and Italian bonds to keep the cost of borrowing for those two counties manageable.
The problems of European public debt reach beyond the borders of the nations that cannot pay their bills. The meltdown of the Greek economy, which is prompted by the sovereign debt crisis, is affecting banks throughout Europe. On August 5, the Royal Bank of Scotland announced that it suffered a net loss in the first half of this year in the amount of £1.4 billion due to its exposure from the struggling Greek economy.
The citizens of the United Kingdom ultimately will pay the price of this loss. The government owns more than 80 percent of the stock in the Royal Bank of Scotland. Four years ago, the Royal Bank of Scotland was rescued from collapse by the British government providing an enormous £45 billion bailout, which was the biggest single bailout in the world.
What is “Capitalism”? First, it is a term that was originally coined by its enemies. Second, it suggests that the phenomenon—or, more precisely, the phenomena—that it denotes composes a system, and since the systems of which the human (as opposed to the “natural”) world is comprised are almost always the products of design, “capitalism” appears to refer to but one more such system among others. So, according to its critics, “capitalism” differs, say, from socialism and communism only in degree: While the latter “distribute” material goods “equally,” the former “distributes” them “unequally.” Or maybe the difference between “capitalism” and its competitors can be summed up as thus: “the poor” and “the middle class” are the targeted beneficiaries of socialism and communism while “the rich” are intended to benefit most from “capitalism.”
Amid all the sound and fury and the "high noon" drama surrounding the debt-limit deadline and the passing of a deficit reduction measure this week, one discomforting fact emerged: Federal spending will continue to increase and the national debt, now approaching $15 trillion, will grow, not shrink, over the next 10 years.
You might not think so, judging by the reaction found in some of the editorials and columns to the passage of the Budget Control Act of 2011. The budget deal will mean "massive spending cuts borne by the poor, the sick, the elderly and the middle class," wrote Politco's Roger Simon. A New York Times editorial called it "a nearly complete capitulation to the hostage-taking demands of Republican extremists." The headline over a Maureen Dowd column in the same paper called the budget agreement "The Washington Chain Saw Massacre." So what really happened?
Despite protestations from Jon Corzine, former New Jersey governor, that he has no interest in taking Treasury Secretary Timothy Geithner’s place if Geithner decides to step down, Corzine did manage to have a clause put into his company’s bond offering prospectus that if he did accept the position, bond holders would be paid an extra one percent interest, just in case. Corzine now heads up MF Global Holdings Ltd. which is planning on selling $300 million of five-year notes which includes an unusual “key man event” clause which pays bondholders an extra one percent:
Upon the departure of Mr. Corzine as our full time chief executive office due to his appointment to a federal position by the President of the United States and confirmation of that appointment by the United States Senate prior to July 1, 2013.
The highly publicized debt ceiling debate has drawn to a close. Politicians and commentators from both political parties are hailing this as a victory for the Tea Party. I am not so sure. In fact, I am disposed to judge this a victory for President Barack Obama.
As U.S. politicians scramble to defend themselves against raising the federal government’s astronomical debt to an even higher level, Americans may be seeing the reflection of their own future in the grim picture of insolvency across Europe.
The so-called PIGS nations of the European Union (Portugal, Ireland, Greece, and Spain) are all caught in a vise: on one side, spiraling debt and obligations which can be serviced only through borrowing, and on the other, the increasing costs of borrowing resulting from profound doubt in the minds of potential buyers of government debt instruments that bonds can be repaid.