Steven Taylor’s article about the veto points in our system, as well as its lack of broken-ness, is well worth a read. Taylor has been arguing that we’re seeing the system working as designed, however unpleasant the outcomes.
We know that S&P’s math was laughably wrong, but Economics of Contempt makes a good case that they don’t understand politics, either:
It’s true that the debt limit debate was ridiculous, and that a large contingent of Tea Party freshmen in the House were threatening to not raise the debt ceiling. But here’s the thing: we still raised the debt ceiling, and in such a way that this Congress won’t have the opportunity to use the debt ceiling as a political bargaining chip again.
S&P’s assessment is only remotely serious if you assume that this particular Congress, with its huge contingent of crazy Tea Partiers, is going to serve in perpetuity. But this Congress isn’t going to serve in perpetuity — there are elections next year, and many of the Tea Party freshmen are likely to lose. They won in 2010 because it was a “wave election” in the middle of a very severe economic slump. But 2012 is a presidential election cycle with an incumbent Democratic president. A lot of these Tea Partiers who won in traditionally Democratic districts (and swing districts) are going to lose. In fact, it’s probably even odds that the Dems take back the House.
The simple fact is that the Tea Partiers are almost certainly at the height of their power in this Congress. And no, the debt ceiling debate doesn’t reflect some sort of secular change in US policymaking — the next time there’s a Republican president, House Republicans will be all about raising the debt ceiling, and Democrats won’t engage in the same kind of political brinksmanship. You’d have to be stunningly naïve not to believe this.
The post also contains a firsthand account of just how dumb S&P is. (via)
jayackroyd
AAA corporates and munis are trading at higher yields than AA treasuries.
http://yhoo.it/ockYgR
But, nonetheless, the NYT tells us that this changes everything.
http://nyti.ms/nUQFGq
Emma
Somehow none of it surprises me. These are the people who kept handing AAA ratings to some of the eff-ups happening in the real estate world in Florida. Question is, dumb or evil?
Dave
S&P got math wrong when the math was the thing, it got politics wrong when politics was the thing.
I’m surprised they didn’t downgrade the debt from AAA to “We don’t want the smoking gun to be a mushroom cloud.”
jayackroyd
Oh, and not “stupid.”
http://bit.ly/oU4ymh
Pococurante
I disagree that we’ve reached peak tea party wingnut.
Whatever the S&P’s crass corporate motives, I think they are right to note that there is no reason to expect the process will work more sanely in the future.
Why should we – after all McConnell is telling every stenographer that will listen that we can expect nothing else. The 28%s that support the tea party think they’ve won.
Chris
I’m not at all convinced that they’ll get screwed in 2012. In 2008, the freshmen Democrats didn’t end up worse off, did they? It usually takes a couple cycles for opinion to switch from one party to another.
ant
Only if Hilary is at the top of the ticket.
If she’s not, I’ll vote for all republicans.
arguingwithsignposts
@Pococurante:
Yes, at least three more Friedman Units.
MattF
I agree that ‘the system is irremediably broken’ is a line that comes up fairly often. If the next line is ‘… and therefore you should vote for me’ it’s reasonable to feel suspicious.
dpCap
@ant:
Hillary? The “let’s bomb foreign countries without declaring war” Secretary of state? Yeah. What a big step up from Obama.
Linda Featheringill
I think this could be the peak of TeaParty power. The debt ceiling has been taken away from them. The Administration is handling a number of things in ways that go around the House [FAA] if only temporarily. If we challenge every last one of these crazy people in the next election, we’ll take some of them out.
In state governments, the TeaParty may have also peaked as states are already fighting back [Wisconsin and Ohio].
There will be some push-back from voters. In Ohio, Kasich’s union-limiting law has tilted the state towards Democrats in the next election.
Maybe we are at the worst of the TeaParty effectiveness, or at least close to it.
Napoleon
If that is his conclusion I am not even going to waste my time reading him because he obviously does not know what he is talking about if for no other reason a major part of the dysfunction of the system is the extra constitutional filibuster/hold system. By definition it was never part of the founder’s design.
RossInDetroit
Probably already noted, buy Prof. Dr. Shrill has been pounding S&P here and here (paywalled).
RossInDetroit
I don’t think it can be determined at this point if the TP’s power has peaked. It depends on a few things. How quickly the public realizes what craziness has been unleashed in Washington, who turns out to vote in 2012 and whether people are turned off from voting for the radicals because of the problems they cause. Guessing the actions of a disconnected and underinformed (and intentionally misinformed) electorate is nearly impossible. These are not normal times.
Linda Featheringill
@ant:
:-)
Nethead Jay
@ant: Wow. You’re either fucking nuts or a glaringly obvious ratfucker wannabe.
TD
Well, isn’t this analysis starry eyed. The Democrats are going to take back the House? With 9-10 percent unemployment? Seriously? .
A bunch of counter-intuitive tripe, if you ask me.
beltane
Dealing with the ratings agencies should have been the first order of business in the aftermath of the 2008 crash. By not dealing with them, the Serious People all but guaranteed they would cause further crises down the line. Who could have anticipated that?
Alex
If the Republicans control any chamber in Congress and the White House is under Democratic control, there will probably be another debt ceiling showdown.
Politically, there is a major political party that promises to use the uniquely US circumstances to force debt crises over the debt ceiling.
I don’t see how the United States can keep a AAA rating if there’s any chance the Republicans have any power.
Ron
@ant: Are you that fucking stupid?
Thomas
Talk about laughably wrong…
burnspbesq
Krugman notes that the invisible bond vigilantes have mounted another invisible attack.
http://krugman.blogs.nytimes.com/2011/08/08/what-if-they-announced-a-downgrade-and-nobody-cared/
Ron
@TD: So with 9+ percent unemployment people are going to vote for the incumbents in the House? I don’t get it.
Mjaum
This analysis could (maybe) have been correct. However, since the rest of the republican party seems just as hell-bent on idiocy as the tea-partiers, or at the very least will neither confront nor vote against idiocy (or even abstain)…
It seems odd to claim that only the extremists are to blame when their allies support them and their opponents fold.
So it just seems likely that you’re screwed. So are the rest of us. Thanks loads.
wvng
If the media hadn’t just spent thew weekend largely saying the downgrade was both side’s fault I might agree. But our media is broken, which means the average American’s ability to understand events is broken, which means all bets are off. And Fox isn’t going anywhere.
As for ant, yeah, that’ll show em. Did you sit on your hands in 2010? Or did you vote republican?
TD
“Taylor has been arguing that we’re seeing the system working as designed, however unpleasant the outcomes.”
Also, what is this supposed to mean? Governmental systems are designed to produce decent outcomes, at least most of the time. If the system repeatedly produces unpleasant outcomes, that’s a sign that the system is broken–or at least outmoded (which is the same thing, for all intents and purposes).
Linda Featheringill
I assumed that what ant said was snark, in a pretend-puma kind of way. Others disagree. Maybe we could get a clarification of this?
TD
@Ron:
At this point it isn’t easy to predict, but the Democrats, being the party in “charge”, are likely to punished by the voters for the bad economy. “The Obama Recession”, “the Obama Downgrade”, etc. GOP messaging is very good. Unless something changes, 2012 is not going to be another 2006.
Ash Can
I have to wonder if the Tea Party would have gotten anywhere near the press coverage it did if it were a genuine grass-roots movement, and not astroturfed by the newsies’ GOP muckity-muck buddies.
darkmatter
@ant:
Excellent troll good sir.
ant
lol
Ash Can
@Linda Featheringill: I thought the snark was obvious, and I’m gobsmacked that others missed it.
Yurpean
The downgrading hasn’t taken US Treasury bonds to junk status – AA+ is still almost as safe as houses (as the (British?) saying goes), with only a tiny risk of default. Are you saying that you can’t see, over the next ten years, a similar crisis occurring, again with default a slim possibility?
cintibud
Due to the current unchecked breathless hyperbole epidemic, snark detector meters are selling at deep discounts – they give too many false positives these days
Ash Can
@cintibud: I’d say too many false negatives. :)
WereBear
At a certain point, dumb IS evil.
They have to take some responsibility; OR the people around them, who are not dumb, have to.
RossInDetroit
@WereBear: If evil is the absence of compassion, then Dumb may be the same thing at times. Being intentionally ignorant of the consequences of your actions when you should know full well that they will cause harm = evil.
Samara Morgan
/yawn
its actually hilarious watching American pundits trying to bully S&P into giving us our AAA back, and alternatively arguing that it doesnt matter.
Geither said this was coming months ago, and the conservatives chose this in spite of being warned.
Taylor is right, the system is WAI. There is nothing in the concept of the Founders representative government that says stupid people cant vote.
The is the natural outcome of stupid people voting in demagogues.
Its selfcorrecting, but its very slow, and many will suffer while it corrects.
Linda Featheringill
@Samara Morgan:
Repeatedly.
Ivan Ivanovich Renko
I suspect Ant’s tongue is firmly planted in it’s
cheekmandible, as it were…Linda Featheringill
Stock market fun:
http://www.reuters.com/article/2011/08/08/markets-stocks-idUSN1E77709U20110808
ant
That would be nice, and I wouldn’t be surprised to see that come to pass, however, I think it unwise to expect that such will be the case.
Republicans are redistricting like mad, and house districts seem to favor them naturally anyway. They are busy passing voter id laws, and will depress turnout with all kinds of typo mailers and so on.
Dems seem to be happy to cut SSI and such, so apathy could very well set in deep by this time next year. I know I’m not feeling very hopeful that things are gonna change.
Don’t misunderestimate the “get that nigger out of the white house” vote.
Judging from the mail I been getting for Wisconsin’s election tomorrow, that seems to be the trump card the GOP can play to great effect.
We’ll see.
Mino
What is scaring the bejesus out of me is the notion that voters may figure that with Republicans saying no to everything, the only way out of our trap of inaction on jobs is to vote FOR Republicans because IOKIYAR who suggests a stimulus.
Voters can depend on Democrats to be adults when Republicans have the White House/majorities.
I’m praying that voters are paying attention to what is going on with the Republican governors in the Great Lake states.
Judas Escargot
Does anyone else read this and think of a mafia shakedown?
“Not only are we going to downgrade you, but we’ll downgrade anyone you’re financially entangled with”.
Shinobi
I am going to go out on a limb here and propose that maybe the S&P downgrade is actually a good thing.
One of the big problems I see in American politics is that we rarely see immediate consequences to stupid actions. (Unless we’re talking about tweeting your dick. When it comes to political posturing and other crap, it seems to be consequence free.)
The republicans tried to hold American’s fiscal status hostage, and they may not have ended up shooting that hostage, but they certainly wounded it by their actions. This downgrade is the republican’s fault, and the more we can press that in the minds of the public the better off we are.
TD
So I just read the article. Not impressed. It basically comes down to a semantic point about the meaning of the word “broken”.
“Broken” he argues, means the system isn’t working like it was originally supposed to. Our system was created with a lot of choke points, therefore living in a time when every single on the them is utilized doesn’t mean the system is broken. They exist as they have always existed, after all!
He then goes on to say, maybe so many choke points aren’t a good idea, but that doesn’t mean the system is broken, it just means it needs to be changed! Repairing something means returning it to a previous state, not altering it from that original condition, duh.
Wow. What a bullshit analysis this is. Fine, the system doesn’t need to be “repaired”, it needs to be “altered”. Whatever.
cintibud
@Ash Can: That too :) Snark meters just aren’t reliable anymore.
malraux
@TD: I wholely agree. A broken political system, to me at least, is one that is unable to move, respond, and head off problems. I don’t feel like that describes our system at all. Major issues seem to take several decades to address. Jim Crow/voting rights act, health care, or global warming all seem like they’ve taken half a century or more to get passed from the point at which it should have been obvious that something needs to be done. Now just because the system is designed to be slow doesn’t mean that its not broken.
jwb
@cintibud: That’s going to be the case whenever what the Onion is publishing becomes indistinguishable from real news.
no video at work
@Nethead Jay:
I assumes ant was joking, nobody here is that stupid, not even Brick Head Bill
TD
Also, thinking about it, the idea of original systemic intent (as a determiner of what constitutes “repairing” and what constitutes “altering”) cuts both ways.
In a sense, the system has been broken, according to Taylor’s own dubious definition (not obeying original intent), for well over a hundred years. The original system, after all, was created to support slavery. We “altered” that aspect of our system (but didn’t repair it!), but it remains the case that we haven’t been following original system design for a very long time.
And in another sense, there is little reason to think that it was the founders original intent to create a system which was unable to deal with contingency and societal/political/economic development. So there is plenty of reason to think that a system can be “broken” just by dint of sclerosis, of old rules no longer being applicable/helpful in changing contexts.
Government isn’t a toaster. Like the old saying goes: it’s like a river, you never get into the same one twice. So the idea that there is a meaningful difference between “altering” and “repairing” just doesn’t hold water.
LongHairedWeirdo
What I see as naive is the idea that this was some “Tea Party” inspired game. This was a pure Republican power play, “Let’s show that *we* can accomplish things!”. If it wasn’t for the tea partiers, it would have been something else.
That is why I think S&P could downgrade our debt with some basis. Once you have a party willing to take the debt ceiling hostage, and whose leadership says that they’re going to next time, too, you can’t wait for one side to call the other’s bluff and find out that they’re not bluffing.
This is not to say that S&P’s decision was sound, nor that they’re competent. But the idea that people buying our bonds should feel comfortable knowing that there will *never* be a big, major disruption to payment is no longer as sound as it once was. AAA says “you will get paid back in the normal course of events; some natural disaster may strike, but that’s always a risk.” Well, arguably, people no longer have that comfort. Political maneuvering could cause a late payment.
FormerSwingVoter
Please read the Economics of Contempt piece – it’s hilarious:
TD
@malraux:
In a sense I agree with you. None of those issues, after all, resulted in the breakup of the United States. But I don’t think it’d be an exaggeration to say that the system has broken down at numerous points over the course of the last century. Jim Crow South really WAS broken. It took a massive grass-roots movement, and governmental diligence, to change it. The wider system survived because it fixed itself, but that doesn’t mean it was never broken.
chopper
@jayackroyd:
yeah, it’s clear that the treasury market, which actually decides the risk in treasuries, is giving S&P a huge middle finger. fuck you, we’re still buying. if US treasuries aren’t AAA rated then nothing else is.
Roger Moore
@RossInDetroit:
If you want a really effective takedown, take a look at Nate Silver’s analysis. He shows convincingly that S&P’s ratings have more to do with cultural than economic factors and that they’ve been bad enough at predicting credit problems that you could probably make money by betting against their ratings. I guess you probably need to know something about basic modeling, but his figures and arguments are damning.
beergoggles
I’ve been really fatalistic about the recent debt limit negotiations – so much so I remarked to a (notheast) republican friend of mine that this is what americans wanted when they voted for the teaparty and not for their perfectly rational opponents. It was part of a larger discussion about how scott brown would not win re-election without teahadist backing – even in oh so blue mass. Americans really do deserve the government we elect and we are so bad at it that we try out all the failures before we elect someone competent.
Elie
@RossInDetroit:
Thanks for sharing, Ross…good pieces.
burnspbesq
@Roger Moore:
“you could probably make money by betting against their ratings.”
You can, and some of us did. My rollover IRA is in a long-term bond fund. It went up more than 10 percent in the last two weeks.
Elie
@Samara Morgan:
I think you nailed this completely. Totally.
burnspbesq
In case you missed it on Friday, this item reads like something from the Onion, but it’s actually from the Economist.
http://www.economist.com/blogs/democracyinamerica/2011/08/stimulus-thinking?fsrc=rss
RossInDetroit
@Roger Moore: Late back to the party, but thanks for the link to Nate Silver. As a statistics geek this is just the kind of analysis I like.