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darkkermit
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8/8/2011 3:51:33 AM
Posted: 5 years ago
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.
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Rockylightning
Posts: 2,862
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8/8/2011 12:23:05 PM
Posted: 5 years ago
At 8/8/2011 3:51:33 AM, darkkermit wrote:
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.

Thank you for your explanation. Every news source just b*tches about "Oh they went down boo hoo" but nobody actually says what they mean.
Ore_Ele
Posts: 25,980
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8/8/2011 12:28:26 PM
Posted: 5 years ago
At 8/8/2011 12:23:05 PM, Rockylightning wrote:
At 8/8/2011 3:51:33 AM, darkkermit wrote:
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.

Thank you for your explanation. Every news source just b*tches about "Oh they went down boo hoo" but nobody actually says what they mean.

It also means that many loans are going to see an increase in interest rates (I hope no one here has an ARM). Since many banks borrow from the government, they will have to pay a higher interest, and they will pass that interest on to the customers.
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RoyLatham
Posts: 4,488
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8/8/2011 12:39:57 PM
Posted: 5 years ago
It's unlikely that interest rates on Treasuries will rise. As one financial commentator put it, "We're still the best looking horse in the glue factory." People wanting to avoid risk are, ironically, going to buy Treasuries. The impact is most likely to be one level down, with interest rates on municipal bonds increasing. The logic is that there will be a flight to "the best available" away from second best. It may also help some of the big international companies, like Exxon, that have AAA ratings.
darkkermit
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8/8/2011 1:47:18 PM
Posted: 5 years ago
At 8/8/2011 12:28:26 PM, Ore_Ele wrote:
At 8/8/2011 12:23:05 PM, Rockylightning wrote:
At 8/8/2011 3:51:33 AM, darkkermit wrote:
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.

Thank you for your explanation. Every news source just b*tches about "Oh they went down boo hoo" but nobody actually says what they mean.

It also means that many loans are going to see an increase in interest rates (I hope no one here has an ARM). Since many banks borrow from the government, they will have to pay a higher interest, and they will pass that interest on to the customers.

Please explain this one to me. How can banks borrow from the government, If the government is in debt? Also, I thought that banks borrow from the Federal reserve system and other banks, not the US government.
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Ore_Ele
Posts: 25,980
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8/8/2011 1:58:42 PM
Posted: 5 years ago
At 8/8/2011 1:47:18 PM, darkkermit wrote:
At 8/8/2011 12:28:26 PM, Ore_Ele wrote:
At 8/8/2011 12:23:05 PM, Rockylightning wrote:
At 8/8/2011 3:51:33 AM, darkkermit wrote:
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.

Thank you for your explanation. Every news source just b*tches about "Oh they went down boo hoo" but nobody actually says what they mean.

It also means that many loans are going to see an increase in interest rates (I hope no one here has an ARM). Since many banks borrow from the government, they will have to pay a higher interest, and they will pass that interest on to the customers.

Please explain this one to me. How can banks borrow from the government, If the government is in debt? Also, I thought that banks borrow from the Federal reserve system and other banks, not the US government.

Federal Reserve is the government (part of it), sorry if I wasn't being clear.

The government has to now pay a higher interest on it's debt (estimated to be up about $75 billion more a year), and that higher interest get's passed down the line, just as if this were a company in a free market that got its rating changed.
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darkkermit
Posts: 11,204
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8/8/2011 2:13:35 PM
Posted: 5 years ago
At 8/8/2011 1:58:42 PM, Ore_Ele wrote:
At 8/8/2011 1:47:18 PM, darkkermit wrote:
At 8/8/2011 12:28:26 PM, Ore_Ele wrote:
At 8/8/2011 12:23:05 PM, Rockylightning wrote:
At 8/8/2011 3:51:33 AM, darkkermit wrote:
Present Treasury Bonds worth less money in the secondary market. Future treasury bonds will have to pay more interest. This extra expense will create a debt increase.

Thank you for your explanation. Every news source just b*tches about "Oh they went down boo hoo" but nobody actually says what they mean.

It also means that many loans are going to see an increase in interest rates (I hope no one here has an ARM). Since many banks borrow from the government, they will have to pay a higher interest, and they will pass that interest on to the customers.

Please explain this one to me. How can banks borrow from the government, If the government is in debt? Also, I thought that banks borrow from the Federal reserve system and other banks, not the US government.

Federal Reserve is the government (part of it), sorry if I wasn't being clear.

I understand that, however it is an independent agency.

The government has to now pay a higher interest on it's debt (estimated to be up about $75 billion more a year), and that higher interest get's passed down the line, just as if this were a company in a free market that got its rating changed.

However the FED doesn't act as a for-profit company. It generates a profit, which is delivered to the US government, however that isn't its main goal. Its goal is to use Keynesian or monetarist to "improve the economy". So it can still keep interest rates low.

Also, do you know if the FED actually changed its discount interest rate policy. As far as I'm concerned, hasn't the FED been implementing a policy of trying to increase the money supply. Which by the way, the FED can buy treasury bonds, which would monetize the debt instead of increasing the interest rate.
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PARADIGM_L0ST
Posts: 6,958
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8/8/2011 5:25:07 PM
Posted: 5 years ago
However the FED doesn't act as a for-profit company. It generates a profit, which is delivered to the US government, however that isn't its main goal. Its goal is to use Keynesian or monetarist to "improve the economy". So it can still keep interest rates low.:

And somehow people still drink the Keynesian kool-aid, as if the writing on the wall is not proof positive of its abject failure.
"Have you ever considered suicide? If not, please do." -- Mouthwash (to Inferno)
darkkermit
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8/8/2011 5:43:40 PM
Posted: 5 years ago
At 8/8/2011 5:25:07 PM, PARADIGM_L0ST wrote:
However the FED doesn't act as a for-profit company. It generates a profit, which is delivered to the US government, however that isn't its main goal. Its goal is to use Keynesian or monetarist to "improve the economy". So it can still keep interest rates low.:

And somehow people still drink the Keynesian kool-aid, as if the writing on the wall is not proof positive of its abject failure.

Hence why I put it in quotes, although I don't reject Keynesian economics completely. I remain agnostic about it until I read Keynes theory and Hayek's theory. It appears as If Keynes theory has some positive aspects, although government polices don't implement it properly. For example, Keynes stated that during economic booms, the government should try to create a surplus. The government has not done that, so trying to implement government spending now just seems as If it would be a disaster.
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RoyLatham
Posts: 4,488
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8/9/2011 11:58:32 AM
Posted: 5 years ago
The Treasury creates fiat money from nothing, then gives it to the Fed to distribute to banks at interest rates the Fed determines. At low rates, the banks consume more money than at high rates. One of the things the banks do with the Fed money is to buy Treasury bills, thereby financing government debt with artificially created money.

Keynes is right that government money stimulates the economy. Politicians always want a booming economy, so politicians want stimulus even in good times. Voters want government benefits without paying for them, so they vote for politicians who promise unlimited goodies that they don't have to pay for. Polls show that about 75% of the public want a sober fiscal policy with balanced budgets and no debt. At the same time, about the same proportion of voters want no cuts in benefits and no increases in taxes. Hence a politician like Obama who promises the impossible gets elected.

This continues until financial collapse is at hand. The demographics of entitlements is well determined, since we know the ages of the population. Within ten years, 90% of the Federal budget will be consumed by Social Security, Medicare, and interest on the national debt alone. Obamacare will step up entitlement spending sharply. Hence, with present policies financial collapse is certain. That's the issue behind the debt crisis, and it's not going to go away.
Ore_Ele
Posts: 25,980
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8/9/2011 12:39:24 PM
Posted: 5 years ago
At 8/9/2011 11:58:32 AM, RoyLatham wrote:
The Treasury creates fiat money from nothing, then gives it to the Fed to distribute to banks at interest rates the Fed determines. At low rates, the banks consume more money than at high rates. One of the things the banks do with the Fed money is to buy Treasury bills, thereby financing government debt with artificially created money.

Keynes is right that government money stimulates the economy. Politicians always want a booming economy, so politicians want stimulus even in good times. Voters want government benefits without paying for them, so they vote for politicians who promise unlimited goodies that they don't have to pay for. Polls show that about 75% of the public want a sober fiscal policy with balanced budgets and no debt. At the same time, about the same proportion of voters want no cuts in benefits and no increases in taxes. Hence a politician like Obama who promises the impossible gets elected.

That's actually not how Obama got elected. Remember how pissed his supporters where that he didn't let the Bush tax cuts expire? And that there were no tax increases with debt ceiling deal?

Heck many of his supporters supported cutting waste from Medicare before Ads were run all around saying that he was cutting benefits (when he was just cutting waste).

What you've described is actually how most of Congress got elected. Though they tend to get elected based on nothing but "no taxes" or "no benefit cuts" or some single simply stupid thing, and they just plant their feet and obstruct to any real changes.

The recent debt ceiling fiasco is the perfect example. Republicans want to place all the blame on Obama, even though they weren't even able to put a bill together that would pass the republican dominated house until the 11th hour, and that was just for show to be able to say that they did something.

We also find that the reason given by S&P for why we had the downgrade was because of pathetic way congress can't work together and the first thing that congress does, is blame each other (democrats blame the tea party, republicans blame Obama, la de da).

Is it any wonder why congress has such low approvals? With both sides saying that they represent the people and so have no need to comprimise and nothing ends up happening.


This continues until financial collapse is at hand. The demographics of entitlements is well determined, since we know the ages of the population. Within ten years, 90% of the Federal budget will be consumed by Social Security, Medicare, and interest on the national debt alone. Obamacare will step up entitlement spending sharply. Hence, with present policies financial collapse is certain. That's the issue behind the debt crisis, and it's not going to go away.
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RoyLatham
Posts: 4,488
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8/9/2011 1:37:46 PM
Posted: 5 years ago
At 8/9/2011 12:39:24 PM, Ore_Ele wrote:
That's actually not how Obama got elected. Remember how pissed his supporters where that he didn't let the Bush tax cuts expire? And that there were no tax increases with debt ceiling deal?

The ultra-left did not elect Obama. They will reliably vote for any Democrat, just as the right will reliably vote for the Republican. The right wing was not at all satisfied with McCain, but they voted for him. Independents elected Obama, based upon empty promises of hope and change. The left always want more taxes on the "rich," never mind that they are already paying nearly all the taxes. That's belief in the principle that benefits can be increased without limit and somebody else will pay for them. It's a fundamental premise of the Left.


Heck many of his supporters supported cutting waste from Medicare before Ads were run all around saying that he was cutting benefits (when he was just cutting waste).

It's a great example of belief in the magic of someone else paying. Obama cut $500 billion from Medicare, but cut it from payment to providers, not benefits to recipients. The nonsense is that the providers will magically become more efficient as a result.

What you've described is actually how most of Congress got elected. Though they tend to get elected based on nothing but "no taxes" or "no benefit cuts" or some single simply stupid thing, and they just plant their feet and obstruct to any real changes.

Most of Congress was elected based on promises of something for nothing. But don't be silly, the Democrats never made a single legislative proposal until the final compromise deal that accomplished next to nothing. The Republican proposals would have actually solved the debt problem. One Democrat said, "The Tea Partiers are terrorists. They won't let us spend any money." Yup, that's it.

The recent debt ceiling fiasco is the perfect example. Republicans want to place all the blame on Obama, even though they weren't even able to put a bill together that would pass the republican dominated house until the 11th hour, and that was just for show to be able to say that they did something.

The Ryan budget, which would have raised the debt ceiling, was passed months ago. Later, two bills passed the House, Cut, Cap, and Balance was passed relatively early, but Democrats in the Senate refused to even debate it. The second House bill was a watered-down compromise, where the Senate had to just vote on a Balance Budget Aendment, not pass it. Democrats wouldn't debate that either. The grand total of legislation proposed by Democrats was zero, unless you count the Obama budget that failed 97-0 in the Senate.

We also find that the reason given by S&P for why we had the downgrade was because of pathetic way congress can't work together and the first thing that congress does, is blame each other (democrats blame the tea party, republicans blame Obama, la de da).

Obama should have responded with a bold initiative to solve the debt problem, cutting entitlements, cutting government regulation that is killing the economy (regulation costs $2 trillion, total taxes are about $2.2 trillion), and unleashing domestic oil production (we have $300 trillion worth of carbon waiting). Instead, he gave his standard campaign speech.

Is it any wonder why congress has such low approvals? With both sides saying that they represent the people and so have no need to comprimise and nothing ends up happening.

Yes, people are very upset that they haven't achieved unending benefits at no cost to them. They will stay upset.

This continues until financial collapse is at hand. The demographics of entitlements is well determined, since we know the ages of the population. Within ten years, 90% of the Federal budget will be consumed by Social Security, Medicare, and interest on the national debt alone. Obamacare will step up entitlement spending sharply. Hence, with present policies financial collapse is certain. That's the issue behind the debt crisis, and it's not going to go away.

Like I said.
Ore_Ele
Posts: 25,980
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8/9/2011 2:27:08 PM
Posted: 5 years ago
At 8/9/2011 1:37:46 PM, RoyLatham wrote:
At 8/9/2011 12:39:24 PM, Ore_Ele wrote:
That's actually not how Obama got elected. Remember how pissed his supporters where that he didn't let the Bush tax cuts expire? And that there were no tax increases with debt ceiling deal?

The ultra-left did not elect Obama. They will reliably vote for any Democrat, just as the right will reliably vote for the Republican. The right wing was not at all satisfied with McCain, but they voted for him. Independents elected Obama, based upon empty promises of hope and change. The left always want more taxes on the "rich," never mind that they are already paying nearly all the taxes. That's belief in the principle that benefits can be increased without limit and somebody else will pay for them. It's a fundamental premise of the Left.

Who said anything about the ultra-left? The country isn't divided up as right-indepentent-ultra left. You really have 5 groups of voters.

1) Those that will always vote Democrat
2) Those that will always vote Republican
3) Those that will either vote Democrat or stay home
4) Those that will either vote Republican or stay home
5) Those that may vote either party or stay home

Working those 5 groups (well, 3 of the 5), targeting them to get the most out of them is how elections are won. Obama successfully got many of the people in group 3 to come out and vote, while successfully getting many of group 4 to stay home (since they didn't like McCain), and thanks to the economy, he got most of group 5. But most of what Obama did was targeting group 3.

The "Left" only want more taxes on the rich because their taxes have been cut so much over the years. You're also grossly generalizing and misrepresenting the left by suggesting that they want limitless benefits.



Heck many of his supporters supported cutting waste from Medicare before Ads were run all around saying that he was cutting benefits (when he was just cutting waste).

It's a great example of belief in the magic of someone else paying. Obama cut $500 billion from Medicare, but cut it from payment to providers, not benefits to recipients. The nonsense is that the providers will magically become more efficient as a result.

Prehaps that was misworded on my part. The cuts to medicare were in parts deemed "ineffective and wasteful" and the overall quality of medicare would not decrease from those cuts.

Providers do not "magically" become more efficient. It's simply business, you cut your business with inefficient customers and vendors (in this case, providers), and move your business to other more efficient providers. That creates demand for efficiency in the market (in order to obtain that business, which, shockly is what businesses are about).

If Company A charges $60,000 for the same services provided by Company B at $40,000. Switching companies saves $20,000 of wasted money. Nothing magic about it.

What you've described is actually how most of Congress got elected. Though they tend to get elected based on nothing but "no taxes" or "no benefit cuts" or some single simply stupid thing, and they just plant their feet and obstruct to any real changes.

Most of Congress was elected based on promises of something for nothing. But don't be silly, the Democrats never made a single legislative proposal until the final compromise deal that accomplished next to nothing. The Republican proposals would have actually solved the debt problem. One Democrat said, "The Tea Partiers are terrorists. They won't let us spend any money." Yup, that's it.

Solved the debt problem, because would have had a greater disasterous effect on the economy.


The recent debt ceiling fiasco is the perfect example. Republicans want to place all the blame on Obama, even though they weren't even able to put a bill together that would pass the republican dominated house until the 11th hour, and that was just for show to be able to say that they did something.

The Ryan budget, which would have raised the debt ceiling, was passed months ago. Later, two bills passed the House, Cut, Cap, and Balance was passed relatively early, but Democrats in the Senate refused to even debate it. The second House bill was a watered-down compromise, where the Senate had to just vote on a Balance Budget Aendment, not pass it. Democrats wouldn't debate that either. The grand total of legislation proposed by Democrats was zero, unless you count the Obama budget that failed 97-0 in the Senate.

The Ryan Budget was a joke. The Tax cuts it proposed were comical and would only balance the government by massive spending cuts, which would deepen the economic problems were are already in. As for debating the CCB bill, what is the point, other than wasting time? It's not like that was the first time they had seen it, or that they weren't all going over it during the same time frame as the House.


We also find that the reason given by S&P for why we had the downgrade was because of pathetic way congress can't work together and the first thing that congress does, is blame each other (democrats blame the tea party, republicans blame Obama, la de da).

Obama should have responded with a bold initiative to solve the debt problem, cutting entitlements, cutting government regulation that is killing the economy (regulation costs $2 trillion, total taxes are about $2.2 trillion), and unleashing domestic oil production (we have $300 trillion worth of carbon waiting). Instead, he gave his standard campaign speech.

Despite the fact that it wouldn't matter, he should have. But ultimately, the power of spending is in Congress, not the president. He could have set any initiative that he wanted, but when Congress knowns that it holds the budget cards, it doesn't matter. All Obama can do is talk and pound his fist about it.

Personally, I'm disappointed that he caved and didn't allow the Bush tax cuts to expire the first time around.


Is it any wonder why congress has such low approvals? With both sides saying that they represent the people and so have no need to comprimise and nothing ends up happening.

Yes, people are very upset that they haven't achieved unending benefits at no cost to them. They will stay upset.

That's not what people want. You'd be hard pressed to find any number of people that want unlimited unemployment benefits raised to $700 a week (about $35k a year).


This continues until financial collapse is at hand. The demographics of entitlements is well determined, since we know the ages of the population. Within ten years, 90% of the Federal budget will be consumed by Social Security, Medicare, and interest on the national debt alone. Obamacare will step up entitlement spending sharply. Hence, with present policies financial collapse is certain. That's the issue behind the debt crisis, and it's not going to go away.

Like I said.

That was ignored because of vast speculation of it.
"Wanting Red Rhino Pill to have gender"