Wednesday, July 27, 2011

Debt "Crisis": The Damage Is Already Done

From an article on the Huffington Post:
The United States will lose its top-notch AAA credit rating from at least one major rating agency, according to a Reuters poll that also found wrangling over the debt ceiling has already damaged the economy.

A small majority of economists -- 30 out of 53 -- surveyed over the past two days said the United States will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's or Fitch.

Respondents saw a 20 percent chance of a new recession over the next year, a prospect that some economists say has been compounded by the acrimonious political fight over what is normally a procedural legislative vote on the debt.


Economists still see the probability of an outright default on U.S. Treasury bonds as remote -- 5 percent on median. But the average forecast was 13 percent, and estimates ranged from no chance at all to a 65 percent chance.

Downgrade and default would have vastly different consequences. A ratings cut might raise the risk of recession by hurting confidence, but might allow financial markets to muddle through the next few months without incident. A default, however, would send shockwaves through the global financial system that could kick-start a new financial crisis, say analysts.
This is a "hidden tax" that will hit every America and it was brought to you by the "no new taxes!" Republican party.

So... in reality the Republicans are against new taxes for the rich, but have no objection to heaping hidden taxes on the bottom 99% of society as well as dismantling government programs that help the bottom 90%. The Republicans are truly the lackeys of the ultra-rich and their agenda to turn the US into a serf-master society. (And they are well on their way. The disparity between rich and poor is already the highest among developed countries in America, the world health care is in America, the public infrastructure in the US is the worst, etc.)

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