As I understand it, the US debt downgrade — along with all the shit going down in Europe — has led to unrest among investors…which makes them want to buy more US T-Bills.
In a strange way, it makes sense, even though it means that, in effect, downgrading US T-Bills makes people want to buy them more.
(Yes, I’ve been reduced to using lyrics from songs Beyonce sings in cell phone commercials.)
replicnt6
Kinda perverse, eh?
Villago Delenda Est
Totally counterintuitive.
Which is why I love it, and why the morons of the Village won’t be able to figure it out.
Mike Goetz
I guess zero yield is better than negative. I think Buffett made that same point.
Hunter Gathers
Well, according to Crazy Eyes Bachmann, raising the debt ceiling caused the downgrade, therefore a default would have caused the Market to skyrocket, and Prosperity Baby Jesus would have left us big piles of cash underneath everyone’s Festivus poles this December.
TK421
Even the stock market thinks the US economy is stalling. Only one thing to do now: cut even more government spending, maybe Medicare this time.
sigh.
gogol's wife
I have the solution for everyone. Just watch Shirley Temple movies all the time. It worked in the 1930s.
Mike Goetz
I haven’t seen any insta-polling on who the public blames for the downgrade. I’d be interested.
yeahyeahwhatevs (Studly Pantload, once upon a time)
Oh, to be home today to watch the cables as Tweety’s big, juicy head explodes over this madness.
On the other hand, Rachel’s back, tonight (right? right?!), so I’m sure she’ll have some fun with all this.
And I still like O’Donnell, even though he’d bet the house Obama was setting the Republicans up for a completely unencumbered debt-ceiling raise.
R-Jud
Panic on the streets of London, Panic on the streets of Birmingham… and meanwhile, in Italy…
Cameron returns to tip waitress
That right there is some Tory leadership.
JPL
@gogol’s wife: Careful, you might turn into a republican or worse.
Nied
What’s really depressing is that I was hoping that a downgrade really would lead to a sell-off of treasuries, which would depress the dollar and make our exports more competitive. Also since so many of those companies that have had record profits were just saving them as treasury bonds they’d dump them and go looking for more profitable investments, thus pumping more money into the real economy.
Instead the opposite is happening, and everyone who isn’t a teabagger is left babbling nonsense about platinum coins or carping about how the president refuses to use his infinitely-powerful-word-cannon™ to abolish the Republican party.
I know August is supposed to be silly season but this is just ridiculous.
trollhattan
Bring on the pain, also, too! You’re soaking in it.
http://www.washingtonmonthly.com/political-animal/2011_08/those_who_welcomed_a_downgrade031377.php
This is a great opportunity for folks everywhere who don’t know anything to demonstrate just that by self-declaring as experts.
Melville
Also, keep in mind that a lot of the market, especially the E-trade/CNBC types, are fairly shallow and uninformed. They listen to “S&P downgrade” but hear “downgrade of the S&P[500]”. They start heading for the hills (T-bills) and the insitutional investors have no choice but to follow.
RareSanity
Why is it that everything, that the VSP tell us will most assuredly lead to high interest rates, never does?
I mean, for Pete’s sake, are “bond vigilantes” as magical a creature as the Magical Unity Pony(C)?
Frankensteinbeck
It’s a shame that regular people can get hurt by it, but the market is a rich person’s polker game and has been bouncing up and down with only the vaguest connection to the real economy for decades. Trying to interpret it is a mug’s game.
Hill Dweller
K-Thug has already coined it “The Downgrade Doom Loop”:
1) US debt downgraded, sparking more insane calls for austerity.
2) Fears of said austerity driving down growth sends stocks down
3)Politicians and pundits claim the drop is from solvency fears, even though interest rates are plunging
4) This leads to more insane calls for austerity, returning us to #2
Steve
It doesn’t actually make sense. Yes, when there is a market panic people tend to flee to Treasuries, but you wouldn’t rationally expect that if the cause of the market panic is a downgrade of Treasuries.
The reality is that the S&P downgrade changed nothing. Everything that sucked before still sucks, but there are no new sucky things. No one seriously thinks that a default on Treasuries is a realistic prospect, which is why interest rates are going down and not up.
R-Jud
@JPL: She’ll want to roll her hair in rag curlers? The horror!
beltane
No “Guns of Brixton” this afternoon, Doug?
FlipYrWhig
@Nied: I don’t think I’ve ever seen explained why the trillion-dollar coins were supposed to be platinum. It’s not like they’re trying to pack a trillion dollars worth of metal into a single coin. The value has no connection to the material; it’s being given value by a declaration. Why couldn’t it be a couple of washers from the hardware store?
NonyNony
Look, Josh Marshall is a decent political reporter, but his knowledge of economics and financial markets is always lacking.
What this actually seems to point at is that investors have decided that Standard and Poors is full of shit. They already knew this – S&P kept bad mortgage bundles at AAA ratings until long after it was too late – but this is just more confirmation that S&P is full of shit.
S&P took some of their remaining credibility into the back yard and shot it through the head. Investors are looking at the economy and saying “hm, even with a fucking insane Republican controlled House of representatives, ready to drive the economy off a cliff, that’s a better investment than anything else in the world right now. Let’s move more of our money into Treasuries”.
In essence – investors are looking at the S&P downgrade and saying “if the US government is no longer AAA, then NOTHING is AAA”. Which is in fact the case – if you can’t count on the USG paying back your t-bills then you can’t count on ANYONE paying you back. So you might as well stick with the least risky option in an economy that looks like it’s going to suck for a long time and stick your money into T-bills.
In a truly libertarian economy, S&P recommendations would no longer be worth the electrons it takes to store the files to disk.
(And Krugman seems to be saying something complementary to this: that the S&P downgrade is meaningless because if you look at the data this is classic money fleeing the market into T-bills because the future prospects for the market look really goddamn bad. If it were the case that the downgrade were a problem, the money would be fleeing away from the market AND away from the US government – possibly into somebody’s mattress. But that’s not happening. So S&P is full of shit.)
snortasprocket
An example of the WTF-inducing commentary can be found over at Fox Business News, here:
This only makes sense if he was saying it with a hipster-grade eyeroll.
jwb
@Steve: I think we would have had something like today’s sell off even if S&P hadn’t downgraded.
JGabriel
DougJ @ Top:
The US credit rating is in down town, sleeping in the subway.
.
jwb
@FlipYrWhig: It has to do with special conditions for platinum in the legislation. Treasury is authorized to mint platinum coins of any denomination, whereas for coins of other metals, Congress placed limits on the face value.
cleek
@FlipYrWhig:
and why did there have to be two?
and why not mint one with a quintillion dollars on it? kick that can over the horizon.
Mike Goetz
@FlipYrWhig:
I think platinum is specified in the statute that permits minting the coins.
Han's Big Snark Solo
I think this is probably more about Europe than the US. Our politicians, pundits and wise folk have been telling us for years that this is a global economy; they were right.
But the Teatards will never understand. They don’t do nuance. I’m sure they will blame it on Obama being a, “Jive-Turkey” or whatever border line racial slur they’ve deemed socially allowable this month.
Napoleon
PeakVT
CowabungAA+.
mrami
Show me the results where they surveyed purchasers and sellers of t-bills and asked them why they moved. Otherwise, it’s a made-up narrative based on… ?
This is why the field of economics is such a steaming pile of shit.
Reality Check
Yup, this is about Europe. Those making it about the US are making the mistake that the world revolves around them.
The Euro is literally on the verge of a total collapse.
jwb
@cleek: I’ve been curious about the mechanics as well. Brad DeLong was very keen on minting a series of $100 billion coins for some reason. Others preferred $1 trillion coins. Never did get a good sense why the number of coins minted much mattered. Seemed the only thing that really mattered was the amount that was moved from Treasury to the Fed.
trollhattan
@Mike Goetz:
I’m holding out for plutonium, then dare Paulites to sieze it.
eric
If Euro fails, you want to be in Treasuries at least until the next debt ceiling fight. In the land of the blind men, the one-eyed man is king. Congrats America wears an eye patch.
ETA: The reason it follows the downgrade is the stated opinion (correct) that the GOP is so anti-stimulus that NOTHING beneficial will pass thereby assuring the US demand can not and will not save Europe.
cmorenc
One of the richest pieces of irony in this entire fiasco is that the magic bullet for reducing federal spending and reigning in the expansion of government is not avoiding any possible increases in taxation, but rather embracing them fully!! This may seem deeply counter-intuitive at first not just to conservatives but progressives as well, but the key is to directly tie EACH congressional expenditure on ANY item of whatever nature (military or social) to a direct incremental increase in the rate structure of income taxation. To begin with in any given fiscal year, the federal rate of income taxation would be ZERO for every income bracket. Then, when e.g. a congressman from Iowa successfully obtains an appropriation $100 billion for agricultural subsidies for the upcoming fiscal year, AUTOMATICALLY this would cause a proportionate incremental increase in the income tax rates, and similarly so would voting an appropriation funding military weapons systems. This means that ANY appropriation = a tax rate increase, which would unavoidably place responsibility for both benefit and burden on those voting for each particular expenditure, and would make it impossible for congressmen to claim credit for benefits brought to their own district and at the next moment decry wasteful spending of the taxpayer’s money. It would also make it impossible for congressmen to irresponsibly vote FOR expenditures while voting AGAINST the necessary level of taxation to support them.
Nied
@FlipYrWhig:
In essence someone I forget who (Matt Yglessias seems to have latched onto the idea the hardest), noticed that while the Treasury is nominally limited by statute in the amount of money it can print, someone recently added language in some bill or another permitting them to mint platinum coins without any limit on the amount or denomination. This was originally sold as a “creative” way out of the debt ceiling fight (mint two trillion dollar platinum coins and deposit them with the Fed) and now as a way to do stimulus independent of congress (Mint platinum coins and use them to pay for infrastructure programs without authorization from congress, or hand them out to random people as a variation on Bernranke’s helicopter drop).
While I could see the second one as an almost legal way of doing stimulus, the fact that such a bizarre scheme is even being contemplated by normally level headed pundits (I saw DeLong talking up the idea today) is to me at least, a sign of how much we are losing our minds.
yeahyeahwhatevs (Studly Pantload, once upon a time)
I keep reading “platinum coins” as “plutonium coins.”
Keeps my eyes open, that’s f’r sure.
Suffern ACE
@FlipYrWhig: I also couldn’t quite figure how they could mint coins without congress’s approval. I’ve never read those laws, but doesn’t Congress weigh in on the design of coins and where “in god we trust” appears?
chopper
looks like notes and bonds are selling better today than bills. eh, that’s what the fed has wanted this whole time, for investors to put money in other parts of the market including longer-term bonds. it’s funny how in spite of their mission to keep t-bill yields so damn low everyone’s been hoovering the fuckers up every chance they get.
RareSanity
@Steve:
Actually, it does, think about it…
You’re a Wall St. douchbag, and it finally starts to hit you:
“The nutjobs that we used to get Republicans the majority, knowing that afterward, they would just fall in line, aren’t falling in line. Not only that, they seem hellbent on causing as much destruction as possible, and giving them money isn’t making them do what we want. They actually came within a day of causing the US to default…Oh shit! There’s not another election for a year and a half, we’re fucked! Put everything in Treasuries, Mortimer, we’re gonna have to wait these crazy fuckers out…”
Derf
Yes, you understand correctly. So anyone who tries to tell you that the current run on the stock market is ANYTHING other than irrational fear (which will soon pass)doesn’t know what they are talking about or they have some sort of agenda.
Yea, I’m talkin to YOU Cole.
Reality Check
The platinum coin scheme sounds nuts. I mean if it works why not just mint a $14 trillion coin and pay off our debt in a day?
Raven (formerly stuckinred)
Great, they are flying all 38 killed to Dover because they can’t identify them there. That includes the Afghans.
taylormattd
She looked amazing in that commercial, the end.
jl
@21 what NonyNony said.
Barry Ritholz at The Big Picture has some good posts on the downgrade over the last few days. Below is one.
Downgrading USA: S&P Bites the Hand That Feeds It
http://www.ritholtz.com/blog/2011/08/on-the-sp-downgrade-of-the-united-states-of-america
I recommend clicking to the Big Picture homepage and looking for related posts.
one of them is a list of countries with AAA credit ratings, if people here are spooked and want to deal only with countries who have really sound business like credit practices.
I note all the Nordic countries have AAA: Denmark, Finland, Norway, Sweden.
As do countries who were previously downgraded, and have embraced destroying their national social investment and insurance programs to remain conservative hard core sound credit nations, like Australia and Canada.
And Japan is not AAA, and I think its bond yield is about 1 percent.
The S and P downgrade is bogus junk.
I did find out that Italy, apparently with support of other EU governments is investigating the credit agencies’ activities in their countries, to see if they were obeying regulations. Read about Italian government investigators raiding their offices recently. So, maybe the credit agencies have to fight back against pitiful helpless giants who might get wrong ideas about who is boss?
(Edit: the story about Italy and the credit agencies might not be on the Big Picture. No time to find link now, but read about it early this morning someplace)
Napoleon
@jwb:
I think it is kind of implicit in the situation. If you wanted to use the minting of coins as a last second fix you would have to make each one of them in a big enough denomination that you could mint them quickly (assuming you could turn out the tooling to make them quick enough). You would not have time to run out a trillion dollars at $10 a pop.
Jim, Foolish Literalist
Walking through a hotel lobby today Wolf Blitzer was standing in front of a very dramatic graphic, begging some smart person to tell him what we should do, I stopped long enough to hear what kind of answer might be forthcoming from which modern Solomon. It was Donald Fucking Trump. I couldn’t keep the “OFERCRISSAKES!” under my breath.
cleek
@RareSanity:
all that and the rest of the world is having their own troubles, too. which affects us. and we effect them in return. and it’s the:
CIIIRRRRCLE OF LIFE!
khead
Direct TV
The ad ran enough during football games to make me want to go Elvis on the TV some weekends.
Dexter
BTW, who hacked Reality Check’s account/computer? He/she is making lots of sense in the last couple of days.
RareSanity
@Han’s Big Snark Solo:
Now that is funny.
Although I don’t believe “jive turkey” is a proper noun…just sayin’
Raven (formerly stuckinred)
And Tweety starts out with a grim “Bad Times”.
JGabriel
FlipYrWhig:
It’s in the law about minting coins. Most of the legislated coins have specified values (quarters, dimes, etc.), even the ones intended for bullion or collectors — like gold bullion coins that are stamped “$50” by the mint, but which are actually intended to be worth whatever the market will bear.
For whatever reason, platinum coins, intended for the bullion market*, do not have a specified stamped value in the legislation — Congress left it up to Treasury. Currently, the mint produces only one platinum coin, stamped at $100 but worth whatever the market rate is for platinum.
(*Bullion market: Coins of a specific metal — silver, gold, or platinum — produced by treasury with 99 point something something percent purity, stamped with a specified value, but intended to be sold at market rates for that metal.)
It can be argued that the 14th Amendment was intended to be used, in extreme cases, to keep Congress from leading us into default. It’s obvious, though, that the coin minting law was never intended for that purpose. That said, it’s a definite loophole and might be legal anyway — as far as I can tell from what I’ve read about it on the intertoobz, anyway.
.
jl
Note to those who are in denial.
The news that the economic recovery will be weaker than previously hoped, for the remainder of the year, has been developing over the last month. That is when the current pattern of stock and bond market indices established itself.
Go look at the summaries over the last three months at yahoo finance, or whatever the google version is, and see if you can see a dramatic difference between today and the last month. I don’t see one.
The recent pattern is consistent with continued weak recovery in the real economy. Has nothing to do with panic, and nothing to do with the S and P nonsense, except to the extent that the incompetent S and P dog and pony show will make effective government fiscal stimulus less likely.
Raven (formerly stuckinred)
@jl: My financial dude says don’t listen to nobody.
cept him, of course.
RareSanity
@cleek:
If only Mufassa were here to save us…
Quicksand
I do believe that was a satellite television commercial.
Suffern ACE
@Raven (formerly stuckinred): your financial dude means “don’t listen to nobody but me”
Chris
This is, really and truly, more about worries re the disintegrating world economy than anything happening in the US. The USA is of course a big (huge) part of the world economy, so it’s not completely independent of S&P’s stupidity, but that’s just one part of the whole complicated blob.
Note that the US dollar has strengthened sharply against various other currencies (not just the Euro). Stocks prices are down roughly 15% over a few weeks ago, but the dollar that supports those prices is up almost 8%, which means that in other-currency terms they are “only” down half as much (depending on which “other” currency you consider, of course). Meanwhile Treasury prices are up, which means that if you’re in the Euro-zone, and bought Treasuries two weeks ago, you’re up whatever percent on the increase in Treasuries plus the eight or so percent in currency change.
JGabriel
@Suffern ACE:
They do, but they left a loophole for platinum coins, presumably so Treasury would have a way to mint hundred, thousand, or million dollar coins without needing to go back Congress for permission. It looks intended for the investor and collector markets.
.
Amir Khalid
@Dexter:
Maybe Reality Check had some kind of conversion experience. Hey, it happened to John Cole…
Reality Check
So….how long until the Euro collapses? I give it one to two years. The latest German plot to Europe ends in tears again.
Villago Delenda Est
@NonyNony:
S&P = Shit & Poo
TK-421
@TK421:
Um, dude…pick another handle please. There can be only one TK-421 (at least in this community). May I suggest you take the handle “General Veers”…?
FlipYrWhig
Thanks to all re: platinum coins. What a weird state of affairs.
Elie
@Hill Dweller:
And this is all because those fucking S&P shitbirds waded into something they should have stayed out of…this is the consequence of their scheme (backed by their Repub ork leaders) to continue to “destroy” the Obama Presidency and us along with it.
And I must further add my personal repugnance at having to see and to some extent read the crap on this site and others, including Steve Benen, which exacerbated the pile onto Obama… the proximate “cause” I guess of all this bad fortune since none of our progressive numbskulls can ever fault Republicans, but instead must help them out at every turn.
I don’t want to hear one more bleating sonofabitch asshole “progressive” complain during the Presidency of the cross eyed crazy woman, the limp dicked Mormon moron or the wild Texas Jesus freak. I wish that I could make just you all live those consequences but unfortunately we are all on the same planet with your sorry loser asses. I hate you more than the fucking republicans.
trollhattan
@Reality Check:
Four Friedman Units ain’t a prediction. I want a date.
Reality Check
@beltane:
November 1st 2013, or whenever they happen to hold the next German federal election and the German public decides they don’t want anything to do with bailing out Mediterranean countries anymore.
gogol's wife
@JPL:
Shirley was the kind of Republican who’d be a Democrat now.
TK-421
Reading through the comments, I noticed that a few people here and there kindasorta say it but don’t say it out loud: Doug, your analysis is wrong. The markets aren’t tanking because of the S&P downgrade- the S&P downgrade only applies to US Government debt, and those prices are up.
The markets were tanking all last week, and this is a continuation of that selloff. For some reason, the Galtian morons on Wall Street didn’t exactly think through their Austerity Plan until it hit him in the face and only then did they realize that Austerity will actually hurt the US economy. Ooops.
Oh my God, I just realized that Wall Street’s collective actions (i.e. the direction of the markets) signal that they’re actually shrill hippies that totally hate Austerity. Wow.
Reality Check
WTF? Meant for that to go to Trollhattan.
ThatLeftTurnInABQ
@snortasprocket:
Holy Double-Negative Batman! Assuming this isn’t just a transcription error on your part, maybe the dude speaking actually has a clue (but he can’t show it directly on-air or he’ll be fired). Next up, parsing eye-blinks.
Ol' Dirty DougJ
That is exactly what I said.
Villago Delenda Est
@TK-421:
Why the krif aren’t you at your post is what I want to know!
yeahyeahwhatevs (Studly Pantload, once upon a time)
So, wouldn’t introducing a super-mega-fuckton of
plutoniumplatinum coins into the M1 pool set off inflation and devalue the dollar?Not necessarily bad things at this point, but it’s not something I’m hearing about.
TK-421
Bad economic policy is bad economic policy, period. Bad economic policy is worthy of criticism, regardless of who is championing it. I’m not sure why taking a hostage (i.e. “oh you’re unhappy now? Then why don’t I give you a Republican right in the head and see how you feel then! Ha ha!”) somehow transforms bad economic policy into magical job-creating nirvana.
For most people (and for some liberals like me), it’s hard to tell the difference between “the economy sucks and I don’t/won’t have a job” and “the economy sucks and I don’t/won’t have a job BUT AT LEAST WE ELECTED A DEMOCRAT YEAH AMERICA F–K YEAH!” The two look pretty equivalent to me, and oh BTW lots of Americans are in that situation. In short, the political advantage of spinning bad economic policy by browbeating people within your own party looks pretty dubious, at best.
An uncomfortable hypothetical: what if President McCain had done exactly what the Obama Administration had done on the economy? Would people here really be holding back from criticizing President McCain’s too-small Stimulus, his coddling of Wall Street, the Green Shoots and Recovery Summer nonsense, the refusal to try extraordinary measures, the obsession with the payroll tax cut (and the simultaneous meh attitude towards ending the Bush tax cuts), and the Austerity Grand Bargain?
Yes, I know a President McCain in reality would have been far, far worse than President Obama. That’s why I’m calling it a hypothetical. And, well, what if a Republican President had done exactly what President Obama had done on the economy? Would you really be sitting here bitching about how liberals are being unfair and too critical?
I don’t think so, but I’d love to hear someone prove me wrong. And I imagine that reality is a little bit too uncomfortable for many to really admit.
burnspbesq
@RareSanity:
“I mean, for Pete’s sake, are “bond vigilantes” as magical a creature as the Magical Unity Pony©?”
Yes.
Villago Delenda Est
@TK-421:
Krugman’s been beating a drum about this for some time. He said back in 2008 that the stimulus proposed by Obama wasn’t enough…that Obama was making the same fundamental mistake that FDR did, which prolonged the Great Depression. It took much greater stimulus that no one called that, called building up a war machine to face Nazi Germany and Militarist Japan, to really bring the US out of its situation. But it was still…and this is key…government spending that did the trick.
jwb
@Napoleon: Yes, but that still doesn’t explain the difference between DeLong wanting $100 billion coins and others wanting $1 trillion coins. I was very amused by the suggestion that we put Reagan’s bust on the coins.
Elie
@Villago Delenda Est:
was Obama opposed to a larger stimulus, or was it that he could barely get the stimulus that he got through the Congress at the time. Hmmmm. Sometimes I read stuff that sounds like Obama didnt WANT a bigger stimulus. No, but he could not just wish and make it so… The Congress would not allow it.
ThatLeftTurnInABQ
@Villago Delenda Est:
So when do we get a tag that says: “FDR is worse than Hoover he sold us out!”
Villago Delenda Est
@Elie:
Krugman in part criticized Obama for not proposing one big enough to do the trick, and mind you, this was when he had majorities in both Houses. Getting Nancy *SMASH* to push it through was not an issue…just about everything Obama wanted got through the House, no muss, marginal fuss.
Now, of course, the other issue is the idiocy of the need for a supermajority in the Senate because of the cloture rule, which I hold Reid responsible for not forcing the GOP to actually filibuster (as in put their mugs on CSPAN2 and talk for hours) and make them OWN the sabotage of stimulus. Apparenly, that was just not collegial…to force them to do it old school way and face their own constituents for their intransigence.
The Republicans were able to block things without going paying the public political price for them, and I hold Reid fully responsible for the failure to do that.
TK-421
Before I answer your question, I just want to make clear that whatever the reasons or motivations, the Obama Administration got the Stimulus wrong. A few Administration officials have now admitted this on the record. They’ve now admitted that they didn’t even want to try for the correct amount because they figured they could always go back for more. I wish that was a joke. That massive political and economic miscalculation made early in 2009 has haunted this Administration to this day and will continue to haunt this Administration all the way through Election Day 2012. Economics is hugely important to an incumbent’s reelection, and the proper response to a Depression is not trivial- to paraphrase Joe Biden, being wrong here was a big effing deal, and reminding fellow Dems of this major mistake is not shrill nitpicking.
So, how did this happen? Did they want to do the right thing, but couldn’t do it because the Democrats in Congress wouldn’t let them? Or…did they instinctively shy away from Big Spending, because Big Spending = Liberal = Not Bipartisan = Not Obama? Or was it something else, like they wanted to do the right thing but they’re all a bunch of morons when it comes to economics?*
I think when someone chooses NOT to ask for something that some advisors thought he should ask for (e.g. Romer estimated the Stimulus needed to be at least $1.2 trillion), then that’s at least circumstantial evidence that he didn’t want that. No, it’s not conclusive, but it’s not meaningless either.
I’m not sure a bigger Stimulus could have been obtained, but let’s try to remember that it was Total Democratic Control at that point. If the Obama Admin really believed that a bigger Stimulus was needed, then we would have seen far more evidence of them twisting arms for a bigger Stimulus. I don’t recall President Obama or SecTreas Geithner or Larry Summers or anyone saying they wanted more. Do you?
I remember the opposite- I remember President Obama saying this Stimulus Bill was perfect and was just what the country needed and now we can pivot to health care reform and blah blah blah. I don’t remember any kind of public advocacy for anything bigger, I don’t remember any kind of messaging cover to give them credibility to ask for Stimulus 2 (“we hope this is enough, but we plan on revisiting this in six months…”). I don’t remember anyone saying anything about staying vigilant and being ready to respond. Again, this is circumstantial, but it’s not meaningless.
If you put those two bits of circumstantial evidence together, you can start to see an answer- they wanted the Stimulus they got. If they wanted more, they would have behaved differently. And, again because this is important, they were wrong.
*my own opinion is that it’s a mix of both believing their own transpartisan bullshit and also being clueless about economics. They wanted to do the right thing, but they also didn’t want to be perceived as partisan, so they tried to split the baby. The flaws in that approach should have been obvious, but when you’re clueless on economics you can delude yourself into thinking that Goldilocks won a Nobel and Paul Krugman is shrill.
NonyNony
@jl:
Nate Silver has piled on with a statistical analysis of S&P’s ratings as well as their methodology.
In essence his stats seem to say that you’re better of betting AGAINST S&P’s advice when it comes to government debt than taking it.
He also raises more suspicions that S&P is using their … ahem … “Bully Pulpit” with investors to try to push governments around, rather than give sound investment advice to their investors.
Nobody should trust S&P. They’re either idiots, or they’re running a con. Either way, nobody should trust ’em.
Marginalized for stating documented facts
Not quite accurate. American T-bills got a downgrade because of concerns about the dysfunctions in our political system. At some people, the movers and shakers are getting worried that these escalating political gridlocks will get so bad that America wouldn’t be able to pass a debt ceiling increase.
People are fleeing to safe investments like treasuries not because America’s debt has been downgraded specifically, but because there’s a real concern that the entire American political process is breaking down. In that case, conditions will be so chaotic that American businesses won’t be able to make money and the middle class will collapse. If that happens, the only sure way to avoid losing money you invest is to invest it directly with the U.S. government in T-Bills.
snortasprocket
@ThatLeftTurnInABQ:
Dear God. I suck. Thanks for catching that!
In the meantime, I’ll be over in the corner, wearing my dunce hat and continuing to lurk. :(