"America appears to be sleepwalking towards disaster – does no one care?"

[financeguy]

There is now, according to S&P, "at least a one in three chance" that American debt will be downgraded from its top-notch status over the next two years – which would be a first in modern times.

A New York Times/CBS News opinion poll has also suggested the US public is now more economically pessimistic than at any time since President Barack Obama's first two months in office in early 2009 – when the country was still caught in the "Great Recession".

Amid renewed talk of a "jobless recovery", the number of Americans who think the economy has deteriorated spiked by 13 percentage points over the past month. Congress, meanwhile, is locked in a bitter dispute over the federal government's ability to make ends meet.

These are the stark realities facing the world's largest economy. They are set, furthermore, against Europe's sovereign debt turmoil, Japan's nuclear crisis and ongoing violence in the Middle East.

Yet despite all this bad news, this veritable litany of woe, the Dow Jones Industrial Average ended last week at a three-year high. US equities are now at levels not seen since mid-2008 – before the credit crunch really took hold. On top of that, despite S&P's announcement, the price of Treasuries kept rising, as their yield – the cost the US government must pay to borrow – fell to its lowest level in a month. Has the world gone mad?

America appears to be sleepwalking towards disaster – does no one care? - Telegraph

 

[PhilsFan]

I guess we'll find out in November 2012.

 

[corianderstem]

I think most people have no clue (and I mostly include myself in that statement; I hear people saying "The US is fucked," but I'm not about to even pretend I understand the details) about the true state of things.

We're too arrogant about how "powerful" we are and too distracted by the bullshit that keeps the 24-hour news cycle running to actually pay attention to what's going on in the bigger picture.

 

[yolland]

I guess we'll find out in November 2012.

I don't know, I think the current budget debate is giving us a clear enough picture and it's not a pretty one. Frankly I'm more upset with the Democrats at this point, not because the GOP plan is "better" but because I'm not seeing much evidence the Democrats are taking the crisis seriously, as opposed to playing politics with it. At least the GOP has a plan that acknowledges the scope of the problem and articulates solutions consonant with its own principles (or more correctly, with Paul Ryan's principles--I remain unconvinced the rest of them have any clue what they actually stand for, and mind you I loathe Paul Ryan).

 

[Irvine511]

i think it's mostly gas prices.

 

[GirlsAloudFan]

We'll be alright.

 

[mobvok]

What a daft article. First it dabbles in conspiracy-mongering by alleging that the dim reception must have been because S&P was in cahoots with the White House to time it poorly, too ignorant to realize that Moody's gave the same general outlook in January and no one gave a shit back then, either.

Strangely, the article itself then points out why:

Another reason is this latest move by S&P. The ratings agency's move was clearly a big moment – but a political moment, having little to do with finance. S&P didn't tell the markets anything they didn't already know about America's fiscal position. US Treasuries are, by a considerable margin, the world's most closely-watched asset class.

It turns out the author is worried sick that right-wing Congresscritters apparently lost a political opportunity to grandstand and panic low-information voters.

yolland, you're killing me here. Rising health care costs are the single largest driver of this so called "debt crisis", and Democrats just passed sweeping reform of Medicare into law- the Affordable Care Act. They spent a year in Congress being primarily focused on the ACA, cut $500 billion of Medicare (easily scapegoated, politically difficult) waste, and instituted reforms designed to cut future health care costs. That actual accomplishment counts for diddly squat compared to the proposed budget/wet dream of a Republican congressman whose previous most noteworthy deficit-fighting vote was an unpaid borrowing of trillions for Medicare Part D to reward a politically influential constituency? Very brave and principled, that man must be.

 

[yolland]

Well, stop dying; my posts are hardly worth it. Yes, Ryan's plan is standard supply-side drivel and his vision of Medicare "reform" is cruel. But he threw down a gauntlet on entitlements (knowing what a political liability that could turn out to be), and I'm not seeing a compelling Democratic counter to that yet. The ACA's cost-control measures are nowhere near adequate, it's not a longterm fix at all in its present form. And what about defense cuts, corporate tax deductions, retiring the Bush tax cuts (all of them), raising the retirement age? What was the point of Bowles-Simpson and Domenici-Rivlin if they're just going to get chucked aside?

But it's a lot easier to scare the electorate than convince them, I agree.