Tuesday, July 26, 2011

The Latest Political Trick in Washington: Extortion

Here is an interview with Yves Smith, the pen name of Susan Webber who blogs Naked Capitalism and is the Principal of Aurora Advisors, Inc., a management consulting firm.

Notice how she identifies that Obama is a crypto Republican because he wants to cut entitlements. The Democratic Party has a traitor in its midst and his name is Obama.

Notice the wisdom of "steering into the skid", i.e. federal spending has to step in and support purchasing while the private sector is de-leveraging. This is what all honest economists know. But Obama and the Republicans refuse to recognize this fact.

And here is a bit from a post by Robert Reich pointing out that the Republicans aren't the only extortionists:
All of America’s big credit-rating agencies — Moody’s, Fitch, and Standard & Poor’s — have warned they might cut America’s credit rating if a deal isn’t reached soon to raise the debt ceiling. This isn’t surprising. A borrower that won’t pay its bills is bound to face a lower credit rating.

But Standard & Poor’s has gone a step further: It’s warned it might lower the nation’s credit rating even if Democrats and Republicans make a deal to raise the debt ceiling. Standard & Poor’s insists any deal must also contain a credible, bipartisan plan to reduce the nation’s long-term budget deficit by $4 trillion — something neither Harry Reid’s nor John Boehner’s plans do.

If Standard & Poor’s downgrades America’s debt, the other two big credit-raters are likely to follow. The result: You’ll be paying higher interest on your variable-rate mortgage, your auto loan, your credit card loans, and every other penny you borrow. And many of the securities you own that you consider especially safe – Treasury bills and other highly-rated bonds – will be worth less.

In other words, Standard & Poor’s is threatening that if the ten-year budget deficit isn’t cut by $4 trillion in a credible and bipartisan way, you’ll pay more – even if the debt ceiling is lifted next week.

With Republicans in the majority in the House, there’s no way to lop $4 trillion of the budget without harming Social Security, Medicare, and Medicaid, as well as education, Pell grants, healthcare, highways and bridges, and everything else the middle class and poor rely on.

And you thought Republicans were the only extortionists around.
He then goes on in the post to point out that these credit rating agencies were enablers of the 2008 financial crash, so they are in no position to "rate" anything.
Put another way: If Standard & Poor’s had been doing the job it was supposed to be doing between 2000 and 2008, the federal budget wouldn’t be in a crisis — and Standard & Poor’s wouldn’t be threatening the United States with a downgrade if we didn’t come up with a credible plan for lopping $4 trillion off it.

So why has Standard & Poor’s decided now’s the time to crack down on the federal budget — when it gave free passes to Wall Street’s risky securities and George W. Bush’s giant tax cuts for the wealthy, thereby contributing to the very crisis its now demanding be addressed?

Could it have anything to do with the fact that the Street pays Standard & Poor’s bills?
Sadly, money sits like a spider at the centre of the web. It is Wall Street money that has bought Obama's allegiance and that of the Republican party and even a sizeable contingent of the Democrats. This is the same "smart money" that caused a $7 trillion meltdown in the US economy. The finance industry which caused the crisis is behind the lobbying and political money that has bought the politicians who are rigidly committed to "no new taxes" and "cut entitlements", in short, give us money to make whole our mistakes, but take money out of the pockets of the bottom 99% of the population. That is political extortion on an unimaginable scale!

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