NP: No gov't; best gov't..from John Lanchester LRoB

[Mark Kohut]

Some twitter wit wrote that the FACEBOOK Like button carries more authority than an
S &P AAA..............................

From: alice wellintown <alicewellintown at gmail.com>
To: pynchon -l <pynchon-l at waste.org>
Sent: Friday, September 2, 2011 2:18 PM
Subject: Re: NP: No gov't; best gov't..from John Lanchester LRoB

> Governments DO need to pay their bills when they are due (remember
> debt-ceiling hostage taking by the GOP?).  When they threaten to
> renege on their bills, THAT's when full faith is shaken (as S&P
> explained).  With current interest rates below zero, Governments are
> FOOLS to not start borrowing for gigantic infrastructure projects that
> will more than pay for themselves in the long run.  And when inflation
> does start eventually, the lower value of money will make it that much
> easier to pay back that free money.

No.  That's not right. S&P simply downgraded the US debt from AAA to
AA+ and this is not a rating that says that the USA will not or can
not pay its debt. If this is what S&P wants to say it would need to
downgrade the USA debt to junk (high yield, relative to better credits
because the possible default risk). The full faith and credit of the
USA was never shaken or even stirred. No. Governments are not like
households in many respects but in this they are not housegolds
because they run huge funds deficits. So do corporations. Tax payers
do not and can not. Someone has to be cash rich and in the USA, that
someone is the people. The people need to save and invest. If they
don't, the government will fail. BUt governments run huge deficits and
this is not a bad thing as long as it doesn't get out of control. The
US debt is far from out of control, but it is higher than it should be
and needs to be brought down, not only to protect the taxpayers and
the state but the stability of markets and other states. HOW the
government brings the debt down after the credit crisis and the great
recession is the issue. The President, who looks more and more foolish
and naive, though grey with the job, would like to raise more revenue
by raising taxes and while helping workers and banks and agencies out
of the REO criss. The congress would rather not. As Paul M. noted,
there is no game of chcken here, it's the Old Confidence Game Again.

I'm not sure that spending out will work or that the Chinese will put
up with too much of that.

A real hero in all this is Dilma. Brazil cut its interest rates ti
help the poor and the new middle class. Lula, as I've said many times,
should be given Obama's Nobel. He lifted 20, 000,000 out of peverty!
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