S&P Downgrades U.S. Credit Rating

No surprise here: S&P Downgrades U.S. Credit Rating

We knew this was going to happen: no one can legitimately be surprised that it happened. S&P had essentially told us this would be the result even if we did come up with a reasonable debt plan (which we haven't).

Considering the nauseating display of incompetence by Congress over the FAA crisis, this is a very reasonable action on the part of S&P; they have every reason to be "pessimistic" about the ability of the U.S. to take reasonable action in curbing its debt and its deficits.

Source: http://www.realtor.com/blogs/2011/03/10/did-you-get-denied-for-home-loan/

There is a ray of sunshine: S&P expects to downgrade the U.S. debt rating further in the next two years. Two years to turn our country around. We have the tools, we have the solutions; all we need are the politicians willing to implement them and the citizens who are knowledgeable enough about the issues to vote politicians to office who will actually make meaningful progress to turn this economy around.

But this doesn't matter to me! people will whine.

It does matter, as it affects the ability of the government to borrow money to pay its bills, including its employees. Remember the 74,000 people at the FAA that were furloughed? That's a small example of what would happen if the government couldn't afford to pay its people - all 2.7 million of them (and that's as of Jan 2009, I'm sure the number is larger now). Our economy cannot afford to swallow another 2.7 million unemployed workers, and our local governments are already stretched beyond reason trying to support unemployment benefits and other social services for those who have been out of work. And the 2.7 million employees are just the start; I'm not even talking about all the Social Security benefits for the elderly and disabled. All of those people would suddenly be on their own.

And Congress expects us to sit by and watch as they run our country's good name and good credit through the mud. How many of children, parents, grandparents, aunts and uncles, cousins, neighborhoods, how many are government employees? Do their jobs matter to you? If so, then this downgrade affects you. Do you or anyone you know collect Social Security benefits, or have benefited from mortgage assistance, or have ever drawn from any federal government agency's services? If so, then this should matter to you.

I predict many people in Congress and Wall Street will throw a tantrum over this. Ignore them, the same as you would ignore a 3-year-old who is upset because he couldn't play with his favorite toy. Now is not the time for playing around, not when the lives of current and future citizens are at stake. They are throwing a tantrum to distract you from realizing the truth: they have no interest in actually fixing the problems you care about. The only thing they care about is deepening their pockets and their power in Washington.

Let's stop the descent now. Get the message to your representatives that you want meaningful debate on a progressive consumption tax that would make the tax burden more equal across income levels. Encourage meaningful discussions on value-added taxes that would more accurately tax corporations. Vote for politicians who back universal savings allowance taxes that encourage savings and investment both from families and from business.

Highest Disapproval For Congress Ever

Seems to me that Congress lost this battle: Congressional disapproval at an all time high

(Source: http://saxangle.com/2011/04/natural-gas-breakout-on-nuclear-tragedy/capitolhill-2/)

Only 14% of U.S. respondents approved of the job that Congress has been doing. A good chunk of that is no doubt due to the irresponsibility of Congresspersons going on vacation while the lives and livelihoods of 74,000 people hang in the balance (see story here). While a temporary patch has been applied, I suspect the U.S. is in for another political debacle similar to what we just went through with the debt situation. Can approval numbers go negative? I'm certain that's how a lot of U.S. citizens will feel if Congress fails to reach true action.

The U.S. seems to be calling out for action and leadership. The current tax system is inaccurate and insufficient for today's requirements. We need strong, proper debate on a progressive consumption tax that will help middle-class families save for college tuition, retirement, homes, and rainy days. We need a proper debate on a value-added tax that will encourage corporations to invest in good business practices, both in equipment and human capital like training, education, and research.

The free market fails to address long-term issues, and it fails to accommodate social needs that move across geopolitical boundaries. Governments are supposed to think bigger than the individual, recognizing that small sacrifices on everyone's part allow for larger gains.

We need investment in education, not military weapons designed to kill more than just combatants. We need investment in clean energy policy, not in ways to steal energy from other countries. We need investment in fighting global poverty, so that citizens in the U.S. can feel safe from fear of attack. We need investment in science and the free flow of information, so that global citizens can benefit from new technologies.

We need leadership, leadership that is non-existent in today's Congress. We need a new party, one that focuses on the recommendations of economists, who have the data and the background to explain why market forces are insufficient in today's global context, and how we can address these issues so that U.S. citizens can reap the benefits of the examples of the welfare states in Sweden and Denmark.

But more than that, we need debate so that we as U.S citizens can do it better than the Europeans. It should be a matter of national pride that our employment rate is better than the Europeans. It should be a matter of national pride that we have the best healthcare for the best price in the world. It should be a matter of national pride that we instill in our children the values of education, tolerance, understanding, and social responsibility. It should be a matter of national pride that we extend the hand of peace and charity to those groups of people who are struggling just to meet basic needs, instead of threatening them with guns and bombs.

Where is our national pride? Not in Congress, obviously. So now what are we going to do about it?

Debt Is Not The Answer

Oh man. We're still in a recession, and we haven't learned a darned thing! Department of Justice Asks Banks To Reduce Lending Standards

My cheeks are bleeding I'm chewing on them so hard.

Source: GIS

The reason the mortgage crisis occurred in the first place was because of lax lending standards. Blame the government, blame the banks, blame the consumers, the result is the same; two-income families trying to survive when nearly 75% of their income goes to the (relatively) fixed costs of mortgages, car payments, insurance and tuition. When you are barely making it with two people, what in the world are you going to do when one of you loses income due to health problems, a job loss, or divorce.

Humans don't seem to be the best at avoiding long-term problems, especially if those problems don't manifest themselves for 10 years or more. Here's a good example. The relaxation of lending standards starting in 1975 caused a bidding war in housing as families jockeyed for position to get into the best schools in the safest neighborhoods. Families in the 1980s wouldn't have known that 20 years later the entire market would collapse because the costs would skyrocket by 69 percent!

We are also not the best at predicting risk. Placing two adults in the workforce necessarily opens you up to double the risk: two workers, two chances of getting fired/ill/insert catastrophe here. Worse, governments tend to treat catastrophes as single events that resolve themselves individually. In reality, an illness can lead to a job loss which can lead to divorce, a chain verified by evidence. Unfortunately, often one can find help in one area of the crisis, but that help may preclude you from qualifying for other help. For instance, in California, you are disqualified from food stamps if you are taking more than 6 units a semester. We are forcing low-income, unskilled workers to choose between filling their stomachs and improving themselves and their culture. When education is the single biggest factor in a person's success or failure, not supporting adult students in getting basic education seems like a failure in human rights.

More debt is not the answer. More tax cuts are not the answer. Neither of these actually impact struggling families in any meaningful way, and more debt sabotages any potential recovery. When will Washington quit listening to the banks, and start paying attention to the realities of the average U.S. citizen?

When we start voting. Vote for politicians who support policies that get at the root crisis of the recession - education. Education is why families have bankrupted themselves in the attempt to buy houses in safe neighborhoods with good schools. Education is the single greatest investment a country can make, because it taps humanity's greatest resource: our minds.

Vote for politicians who see that we need to curtail excessive consumption, through progressive consumption taxes. This would allow poor families to buy necessities without paying any taxes, allowing them to put their full paychecks towards improving their condition. It would turn the magnificent spending of the rich into a form of philanthropy; the rich buys her $200,000 Ferrarri, and pays an addition $140,000 which could go into the coffers of education, health care, and aid to end poverty across the world. Every time we as a country have looked at the wealthy and gone, "I can't believe they paid that much!" we have missed an opportunity to make investments in our children.

Do the research. I've taken a lot of my information from Elizabeth Warren and Amelia Warren Tyagi's book "The Two Income Trap". The ideas on progressive consumption taxes come from Robert H. Frank's economics columns, specifically his compilation book "The Economic Naturalist's Field Guide." Think for yourself; don't take my word for it. And look at the evidence. Then go get the word out, and vote accordingly.

Crises Looms; Will We Get Solutions?

UPDATE (7/31/11): A brilliant Farker posted this link to an episode of West Wing which explains the debt crisis perfectly. Notice as well, that this weekend it was announced that the Democrats and the Republicans are nearing a deal, two days before the country is due to default. We are watching a completely manufactured crisis that distracts voters from much more important issues, allowing Congresspersons to appear to do something while in fact doing little more than pushing off solutions for years and years. These deals always fail to address root causes, while making the players appear to win at a game of panning for Fool's Gold. All show, no substance, while the rest of us are left to deal with increasingly difficult conditions.

Latest news: Senate Kills Latest House Debt Measure

I'm not normally a prognosticator, but it occurs to me that there are really two paths in front of the U.S. now. Either we get our collective heads out of our rears and take a more European path towards social welfare and economic, political, and financial peace and security, or we continue upon this path of greed-driven, narcissistic, myopic, excessive consumption, in which the money all ends up in the hands of an elite few and the rest of the population is left to struggle under increasingly difficult living conditions.

Oh wait, we're already there.

Sound familiar? How about Russia and Germany in the early 1900s? In our drive to avoid communism and fascism, we've failed to realize that socialism can be promoted within a democratic context.

Personally, I don't agree with either the Democratic or Republican positions. Both fail to address root causes of the current economic situation, and simply delay accountability and action until the next election. Meanwhile, if people attempt to improve their situation by going to school more than 6 hours a week, they are disqualified for food stamps. Where does it make sense to anyone that a person would have to choose between starving and educating themselves? This is not the United States I want to live in.

I want to live in a country where help is there if needed, even in long-term contexts. I want to live in a country where the disabled, elderly, and disadvantaged are given jobs in the public sector, helping out others like them or providing valuable community services. For instance, in China, many older citizens are given jobs as town helpers if someone needs directions, a ride to the store, or various other possible jobs.

I want to live in a country where two cents of every dollar earned goes towards ending global poverty. I want to live in a country where the rich are discouraged from spending frivolously, where the poor are encouraged to seek education and employment, instead of having to choose between books or food.

I want to live in a country where corporations are rewarded for social activism, discouraged from cutting workers in order to increase profits, and where taxes are simple and fair.

These things are easily within reach. We just have take a minute to look at other countries and see what they are doing right. I don't believe there is anything any other country is doing that we can't do better. The only thing to lose is rich people's money, and they are the ones that can most afford it.