Why I Hate Mondays: Dealing Ourselves into Oblivion, Sinking the Economy Further

July 31st, 2011 - by: danny

In case you missed my analysis predicting that a deal would be passed, here it is.

Monday Blog, Final Edition:The Deal And What It Will Do To US

And so it came to pass on July 31 2011 that the United States of America took a giant step backwards. Official BS still to come. (And it is coming with the President kissing the GOP and vice versus. So predictable. So disgraceful!)

We have all been dealt a bad deal involving two TRILLLION in cuts. We are cutting ourselves and condemning ourselves. Until now, cutting has been a psychiatric problem for individuals who inflict bodily harm on themselves. Now its become a political problem on a massive scale.

The Washington Post does some math: “

“WE (SIC) HAVE A DEAL

“Assuming no hiccups in the House — and that might be a big assumption — we’ve got a deal. The deficit-reduction side includes $1 trillion in cuts now, $1.5 trillion (or more) in deficit reduction later, and a vote on a balanced budget amendment. Meanwhile, it raises the debt ceiling by $900 billion immediately, and either $1.5 trillion (if the second deficit reduction package or a balanced budget amendment passes) or $1.2 trillion (if neither pass) later. Either way, the Treasury should have plenty of borrowing authority to get us to 2013. “

Yet it’s bad and badder than you think. It’s now up to Congress to ratify this disaster that will incapacitate the government just as the economy needs government help, assuring a continued downward cycle. A small group of Taliban jihadis with suicide belts could not do worse damage.

The financial crisis was caused by the white collar crimesters on Wall Street, crimes that he government did not stop or prosecute. Now the government has ratified the new gangster/bankster political order with measures that will hurt who knows how many millions, cause more job loss, and fail to stop the ship from sinking,

Notes The New York Times in a most genteel manner:

“The nation’s political leaders agreed on Sunday to spend and invest less money in the American economy, a step that economists said risks the reversal of a faltering recovery, in the hope of improving the nation’s long-term prosperity…

“Last week brought the disconcerting news that the economy grew no faster than the population during the first six months of the year, in part because of spending cuts by state and local governments. Now the federal government is cutting

Here’s how The Guardian in England played it:

Dick Durbin in Huffington Post:: Debt Deal Will Be The Death Of Keynesian Economics

WASHINGTON — The Republicans are killing Keynesian economics with their attempt to cut spending as the economy rebounds from a recession….

So far, Nancy Pelosi has not promised support. But Congress is being ordered to move quickly on the deal according to the AP report.

Boston Globe: The agreement must pass both chambers of Congress, a prospect that still is uncertain. Party leaders planned to speak to rank-and-file lawmakers today and bring the measure up for a vote as soon as possible. House consideration is likely today.

What Obama Said:

Likely Impact

The outline of a deal would complete an about-face in the government’s role from post-recession spending to cuts.

Winners and Losers: The Times Meets Few Compromises It Cannot Rationalize

A full victory lap was not expected — or, perhaps, deserved — by those on either side of the debate, which has consumed the capital, unnerved the financial markets and infuriated Americans.

Now read Robert Reich and weep at the extent of the stupidity and gamesmanship in high places:

The headline: “Anyone Who Thinks The Debt Deal Is A Victory For America Understands Neither Economics Nor Politics”

Daily Beast Sees Tea Party Party: Tea Partiers did not have to face a parallel leftist wave or bargain over a war on terror.

While the details of the debt-ceiling deal remain fuzzy, this much is clear: Barack Obama may be president, but the Tea Party is now running Washington.

How did this happen? Simple: This is what American politics looks like when there’s no left-wing movement and no war.

Let’s start with the first point. Liberals are furious that President Obama agreed to massive spending cuts, and the promise of more, without any increase in revenue. They should be: Given how much the Bush tax cuts have contributed to the deficit (and how little they’ve spurred economic growth), it’s mind-boggling that they’ve apparently escaped this deficit-reduction deal unscathed.”

The Daily Beast says the Tea Party was a winner—and the left which I have been upbraiding for its failure to engage in the fight for economic justice a clear loser. No surprise there.

Here’s my chronology from last night when this shameful accord was reached.

At 9:01 PM, The NY Times reported:

News Alert: Congressional Leaders Have Agreement Framework Deal on Debt; Will Present Deal to Party Members on Monday

President Obama spoke moments later at the White House, telling reporters that “the leaders of both parties in both chambers have reached an agreement that will reduce the deficit and avoid a default.”

“My message to the world tonight is that this nation and this Congress are moving forward and we are moving forward together,” Senator Harry Reid of Nevada said from the floor of the Senate.

Senator Mitch McConnell of Kentucky, the Republican leader, said, “There is now a framework to review that will ensure significant cuts in Washington’s spending.”

The announcement came even as House Speaker John A. Boehner was holding a conference call with his Republican members.

The Washington Post reported; Senate Majority Leader Harry M. Reid said Sunday evening that all congressional leaders had agreed to a compromise plan to lift the debt ceiling. “We’re moving forward together,” Reid said. Immediately afterward, Minority Leader Mitch McConnell declared “there is now a framework” for a deal. (Boehner endorsed it too.)

Earlier: The Senate voted down Harry Reid’s already compromised debt deal bill, The House had dumped it earlier. At the White House the lights were on as marathon bargaining went down to the wire. There was a big rush. The Deadline was fast approaching. Wall Street was waiting. The tears are yet to come.

In some sporting contests, they stop the clock but not in this one:

CLG reported:

Liberal Democratic leader says won’t back US debt deal 31 Jul 2011

Representative Raul Grijalva, who heads a group of liberal Democrats in the House of Representatives, said on Sunday that he would not back an emerging debt-ceiling deal surrender crafted by Republican and DemocRATic leaders. “This deal trades peoples’ livelihoods for the votes of a few unappeasable right-wing radicals, and I will not support it,” Grijalva said in a statement. Grijalva heads the 74-member Congressional Progressive Caucus. [Exactly! ‘

Scr*w you, Obama, and your Wall Street/GOP overlords, six ways to Sunday! Invoke the 14th Amendment and be done with it! MSNBC interview (no link) with Kathy Hochul, D-NY, in a heavily *Republican* district people were asking why the wealthy did not pay their fair share, and that they DID NOT want Medicare or Social Security touched. (Hopefully, they don't want Medicaid touched, either.) This was a GOP district/phone town hall w. 6,000 callers on a Saturday afternoon! Obama, you f*cked us on the public option, the Bush (now Bush/Obusha) tax cuts for the wealthy - not to mention the Patriot Act, Guantanamo Bay, Bagram -- and a thousand other lies, obfuscations and betrayals. --Lori Price]

Obama’s base: We’ve been “thrown under the bus” 31 Jul 2011

Even without a debt-limit deal completed, liberal lawmakers and activist groups are already lining up against the outlines of the agreement, saying President Obama and congressional Democrats are risking Social Security while squandering a chance to force tax increases. “Today we, and everyone we have worked to speak for and fight for, were thrown under the bus,” Rep. Raul Grijalva, an Arizona Democrat who is co-chairman of the Congressional Progressive Caucus, said Sunday as top senators began to describe the deal they are trying to strike with Mr. Obama.

Bernie Sanders issues Statement:

“The Republicans have been absolutely determined to make certain that the rich and large corporations not contribute one penny for deficit reduction, and that all of the sacrifice comes from the middle class and working families in terms of cuts in Social Security, Medicare, Medicaid, LIHEAP, community health centers, education, Head Start, nutrition, MILC, affordable housing and many other vitally important programs.

“I cannot support legislation like the Reid proposal which balances the budget on the backs of struggling Americans while not requiring one penny of sacrifice from the wealthiest people in our country. That is not only grotesquely immoral, it is bad economic policy.”

From IAVA: Iraq and Afghanistan Veterans Association

Some IAVA members have told us their VA checks for August have arrived. Meanwhile, Admiral Mullen told troops in Afghanistan yesterday that August 15th would be the first DoD payday jeopardized. But we have yet to get assurances from Washington that troops and veterans are a top priority in the debt talks, or real answers about how a potential default will ultimately affect military pay, GI Bill benefits, disability payments and more.

Last week, IAVA sat down with the White House to voice the concerns of Iraq and Afghanistan veterans and their families. We also testified before Congress and met with both Republican and Democratic leaders, urging them to find a solution that would protect our troops and vets.

Conspiracy Theory of the Hour: Yikes!

“The debt limit negotiations are not what they appear to be. The negotiations are being used as a diversion to cover up a devious plan to push the USA into a default. Americans are being ‘played like a fiddle,’ while great treason is taking place behind the scenes.

A select number of US Senators are in collusion with Barack Obama to bring about an intentional economic default, declare Martial Law, and then bring about a dissolution of the Senate and House of Representatives. This plan has been engineered and ordered by the New World Order Elite who put Obama into power.”

Moving on….

LETTERS

Denis Rioual writes from Sebastopol Ca.

These are all just simptoms, whether its bank bailouts or climate
change or deregulation and watering down of regulations that protect
citizens the conversation never gets to campaign reform which is what
is desparitly needed to take back this beautiful country of OURS.
campaign reform is something you never hear anybody talk about, but it
would solve all these issues and more. let tax dollars pay for
elections then we can say “what’s YOUR corporate lobbyist doing
talking to MY legislator”. there is nothing wrong with capitalism or
corporations but how can they be allowed to interfere with a
government in any way shape or form. they harness us like cattle and
have milked us dry and they want more. corporations somehow have the
same rights as individuals but they live forever and have years to
alter policies, not fair or right. the conversation any conversation
should ALWAYS be brought back to campaign reform until everybody hears
it, and maybe then if we can separation from corporate and state, WE
THE PEOPLE will have a country.

Thanx for your good work.

Andy Zap writes:

I agree that it is Kabuki Theatre, although not necessarily for all the reasons you enumerated. The real snow job will come when they regale us with stories of hypothetical budget cuts projected into the distant future. I promise you that not one will actually materialize. Politicians derive power from spending (our) money. The function of government is to sustain itself and to expand whenever possible. We are Greece waiting to happen.

Doc Hilliard writes

The Donkey-in-Chief (DIC, a.k.a. DIChead) wants only new taxes and a new credit card and brays a lot in front of the cameras, but contributes nothing useful toward anything positive for American citizen taxpayers. He has just got to go ASAP.

View From Europe from Gijs Graafland of the Planck Foundation:

Last week both Italy and Austria have skipped a planned government bond action (as they were uncertain of the success of it).

http://www.reuters.com/article/2011/07/25/markets-bonds-austria-idUSVIE00364620110725

“Italy’s decision to cancel a mid-August bond auction, citing “large cash availability and the limited borrowing requirement” may ease pressure on Italian yields next month.” (Wall Street Journal)

http://online.wsj.com/article/SB10001424053111903999904576469632414841072.html

Governmental funding will derail sooner or later. Not for only the so called PIGS or ClubMed nations, but for all nations. As governments structural spend more than they earn, they’re depending on the cash flow delivered by their bond auctions. Declining market demand/trust will deliver first severe higher rates on the bonds, that will turn into a buyers strike. As it will no longer possible to roll-over their debts, the liquidity of governments will decline severely. Some of them get to the point that they will have to chose no longer to serve the existing debts by interest/amortization payments, but spend the tax revenues on other budget items.

If only one single nation will make this choice, governmental bonds will loose their build-in guarantees (which were not based on actual income, but based on easy funding by debt increase) and become very unfavorable. They will get the same valuation and imago as the CDOs got, when those fell over the cliff in 2007/2008. The domino effect takes care of the rest. Only those with very low debt/GDP ratios will have some access to the capital market.

The result of this will have huge impact: Almost all governments will have just/only access their nett tax income available for both spending and debt service, and not a dime more, as funding will can’t deliver artificial budget extension anymore. Relations of the payment officials of the governments will be paid on time, others will have to wait for ever. To make things more complicated: their tax revenues will fall, as pension funds and other financials will fail as huge parts of their asset portfolios are getting sour and they will go on what’s euphoric called a bank holiday.

Governmental budgets will shrink/contract instantly, not by any political agenda or dogma, but just by the lack of available cash. This will influence nations severely as large parts of their economies are feed by the governmental funding. Governments will have to make dramatic choices with huge impact on people. The pressure on governments will be huge. The temptation no longer service the debt (by interest payments and amortization) will become huge and many nations will stop to service their debts. This will destroy the last standing governmental funding and the governmental bond market worldwide will come to a complete standstill.”

And back in the USSA: Hahaha….

Andy Borowitz: WASHINGTON (The Borowitz Report) – In an historic eleventh-hour bipartisan accord, the United States’ debt ceiling was raised Sunday night before the Tea Party understood what it was.?

?In an effort to gain as many Tea Party votes as possible, the debt ceiling bill was drafted entirely in one-syllable words, congressional aides said.??But even as the final agreement was being put to bed, Senate Minority Leader Mitch McConnell (R-KY) urged his Republican colleagues not to rest on their laurels: “Now, let us begin the hard work of creating the next crisis.”

This Just In: Al Jazeera To Become Available on New York Cable

To all of our Muslim friends and colleagues, Ramadan Kareem!

Your comments and disgust about the debt deal to dissector@mediachannel.org

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