Markets: Dow Below 11,000; Nasdaq, S&P Lose 5% After Obama Addresses Downgrade (Yahoo)
Whoops!
Hasn't the time come for President Obama to stop thinking that people will believe something just because he says it on camera? That worked as a candidate - not as President. It is doubtful that even most Republicans and conservatives expected him to end up Jimmy Carter-esque in quality, but right now it's looking that that will be the company he keeps as far as Presidents go. That's rather sad for someone who - regardless of one's feelings about him - came in as someone with incredible oratory skills, polish, and who showed quickly that his views on defense could shift as his understanding of it grew with the office. Liberals certainly expected better of him (in different ways), but nobody of any stripe expected a Presidency this poor.
(It is perhaps just as sad that there is no current Republican candidate that one can point to and say "That would be a huge upgrade!")
I did, but I'm really not happy about being able to say "I told you so", now. I would rather have been proven wrong on every point!
ReplyDeleteEzzie.....are you only saying this because he is black?
ReplyDeleteso, he caused the downgrade?
ReplyDeletei was reading the actual downgrade and its said, "we dont like president obama so we are cutting our rating"
now that the market has snapped back...what? he is not a bad president?
the market is up about 50% since he took office. that says a lot
I'm not entirely sure what the cause and effect you're alleging is here. It's not as if the market was fine and dandy and then apropos of nothing he got up to speak about how the market was fine and dandy and investors everywhere, watching this, called their brokers in a panic, and yelled "go short!, he's using the present participle!"
ReplyDeleteAnd for the record, I don't think he's a failure as a president. He's done a lot of important things, but in the long run, domestic affairs is not something the president has that much control of, anyway. I'm personally much more annoyed that we're doubling down in Afghanistan, but I'm me.
>but nobody of any stripe expected a Presidency this poor.
Well, except the people who think he's a Muslim radical hellbent on slowly destroying America. Unless they thought it would go slower.
Huh? I didn't say he "caused", but that it was relatively silly to be insisting that the markets "agree" with him a) because that's just silly in general and b) because they didn't. People clearly sold off on the downgrade, contrary to what he was claiming. It was just odd, really.
ReplyDeleteKSil - It's about about 27% since he took office, or 23% since he won, which means... what, exactly? It's also down a large chunk in the past 12 months.
He's a bad President because he has taken a horrible economic approach, pushed through a terrible, costly health care plan, put in a mind-blowing and incredibly unsuccessful stimulus package, and hasn't addressed any long-term spending concerns while adding even larger ones.
VP - What important things has he done? Unless you believe that health care for incrementally more is worth mortgaging the entire economic future of the country on, I fail to see how that could be true. (And for the record, I like the doubling down in Afghanistan.)
Well, except the people who think he's a Muslim radical hellbent on slowly destroying America. Unless they thought it would go slower.
Well, I think those people thought we'd have a Caliphate by now. Some of them probably think we have one. But I'm not worried about them.
>Huh? I didn't say he "caused", but that it was relatively silly to be insisting that the markets "agree" with him a) because that's just silly in general and b) because they didn't.
ReplyDeleteI happened to watch his remarks live, and it was clearly in the context of S&P's downgrade. The downgrade is a signal by S&P which means that American debt is no longer the safest or as safe as it once was. Obama was saying that it was still the best debt there is, and completely 100% trustworthy, and that the markets agreed with him. Which is, in fact, true. Bond markets are still willing to lend money to the government at negative interest rates. http://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield
So:
(a) In what sense is it silly?
(b) In what sense did the markets not agree?
(c) Should he have gone up there and lied, and said that American debt is not trustworthy? What exactly would you want him to say?
(c)
>VP - What important things has he done? Unless you believe that health care for incrementally more is worth mortgaging the entire economic future of the country on, I fail to see how that could be true.
ReplyDeleteFrom a liberal perspective, that's huge. Right away that's the biggest liberal accomplishment since the Johnson Administration. Plus Dodd-Frank, the end to DADT, and the hopeful withdrawals from Iraq and Afghanistan, if they actually happen.
I thought you might point to that.
ReplyDeleteFirstly, I think people are somewhat surprised that Treasuries have gone *up* with this, though after re-thinking it makes sense. There are articles all over which ask that exact question and give much more clear explanations of why this is (and I'm not referring to political sites - I read these after a friend first asked me at Eicha last night if I had a good reason for why Treasuries went up vs. everything else).
But to put it simply - it's still safer to buy Treasuries than anything, simply because the US Govt. is still a safe bet up until the end of the US as we know it, and that will be true unless we're no longer a superpower, basically. It still doesn't help that we are no longer AS safe a bet even if we are still the safEST bet.
a) I think it's clear what he meant, which was to imply that nothing changed - but it clearly has.
b) How did they agree?
c) American debt is not as trustworthy as it once was, which is why it will now cost the US more to borrow.
He should have said that while obviously it hurts to be viewed by some (and not all, he could have waited for Moody's) as being more of a concern than it has been, these are issues which the country/he is working hard to address and will continue to work to address. Most of his speech was fine and basically said this. He could have put the S&P statement into context which is basically questioning not whether the US can come out of it, but whether they will take the right steps to do so. He could have said "and of course we will", whether anyone thinks that's true or not would likely depend on which side of the aisle they're on, but there's nothing wrong with thinking so.
From a liberal perspective, that's huge. Right away that's the biggest liberal accomplishment since the Johnson Administration. Plus Dodd-Frank, the end to DADT, and the hopeful withdrawals from Iraq and Afghanistan, if they actually happen.
ReplyDeleteThat's fine and honest, at least. But ultimately the former two (though the second is less him) will show him to have been a President without foresight, and the latter won't happen most likely which will keep him from the very bottom.
DADT is fine, assuming the military agrees (I'm not sure, but I think they didn't, though they weren't horrified).
>It still doesn't help that we are no longer AS safe a bet even if we are still the safEST bet.
ReplyDeleteThis makes very little sense. The whole point of a rating system is to assign rankings of relative risk. When S&P says the US is no longer AAA but AA+ that means it is a less safe bet than the remaining AAA countries, e.g. Canada or Liechtenstein. The whole point of it is its very relativity.
If, in fact, it turns out that the United States is still considered a safer bet than those countries, in that bond markets are actually still willing to lend money to the US government at ridiculously low levels - lower in fact, than the day before, then nothing has in fact changed. Or, if something has changed, it is that our trustworthiness has increased! It is not harder for the US govt to buy debt. The fact that people are competing to lend us money at cheaper rates is the greatest disproof to that idea I can think of.
So, the answer to (a) is that nothing in fact changed. Obviously, he'd rather not have the whole rating headache, but as far as - is the US's debt less trustworthy or less marketable - nothing has changed for the worse.
>(b) - How did they agree?
The bond markets, which are the relevant markets in the inquiry of whether government debt is safe, agreed by offering the US even better rates than they did the day before, and the day before that. As the world goes down the toilet, the safer a bet American debt seems to be.
>(c) American debt is not as trustworthy as it once was, which is why it will now cost the US more to borrow.
Right, except that it doesn't.
Your version of his speech is basically what he said, as you say. Your only problem with him is that he says that American debt is just as trustworthy as it was the day before? Which it is, according to the people who actually buy debt? Okay.
>That's fine and honest, at least. But ultimately the former two (though the second is less him) will show him to have been a President without foresight, and the latter won't happen most likely which will keep him from the very bottom.
ReplyDeleteWhich only goes to show that we are opposites of each other. You are mirror universe Vox. To a certain extent, I'm not sure what the point of me disagreeing with you even is - to each other, we have bizarro values and bizarro first principles.
Not really, actually - if you agree that universal health is demonstrably more costly, but worth having anyway, that's much more in line with me (except I think it's not worth having at those costs). Many liberals believe that UHC is no more costly, which is shocking considering that until Obama was running, nobody that I'm aware of ever thought that to be true, while now it's accepted in those circles as fact.
ReplyDeleteTo be more clear - I think a worthwhile debate could be had over "at what cost is it worth getting UHC". I think that when people try to disguise it as being "more cost-effective", they're being either delusional or they're lying.
ReplyDeleteRe: Downgrade -
ReplyDeleteFirstly, you ignored (likely unknowingly?) that the S&P simultaneously downgraded the OCC, DTCC and all the other clearinghouses. (Also, CME already required more Treasury backing a month ago.) That means you're just at much as risk vs. Treasuries getting any other bonds as you were on Friday.
Plus, I'm with Paulson on this over the long-term (quoting extra that would favor your POV as well) -
"“While the players in Washington certainly haven’t performed at AAA level, I would certainly take U.S. Treasuries over other AAA sovereigns any day,” Mr. Paulson told me.
Yes, there has been much hue and cry over S.&P.’s cut in the credit rating of the United States. But the credit rating downgrade almost seems like a bad joke considering what happened in the bond market: Treasuries rallied as yields fell on Monday to their lowest levels since 2009. In other words, investors felt Treasuries were a safer — yes, safer — bet after S.&P. downgraded them than they were before. (What does that say about S.& P.’s credibility in the bond market?)
The downgrade may point up the enormous challenges facing the country — persistent unemployment and the possibility of slower economic growth is a hard truth that may ultimately force the cost of borrowing to rise for the nation over the long term."
>That means you're just at much as risk vs. Treasuries getting any other bonds as you were on Friday.
ReplyDeleteCan you elaborate further? I don't understand.
>Firstly, you ignored (likely unknowingly?) that the S&P simultaneously downgraded the OCC, DTCC and all the other clearinghouses.
Because they're backed with treasuries. If the treasuries are in fact just as valuable (contra S&P) as they always were, what's the difference?
Besides which, Obama was talking davka about government debt. The Dow also went down, but he wasn't talking about that.
>The downgrade may point up the enormous challenges facing the country — persistent unemployment and the possibility of slower economic growth is a hard truth that may ultimately force the cost of borrowing to rise for the nation over the long term."
And I don't disagree. But this has to be divorced from both the S&P's downgrade and the President's statement. All Paulson is saying is that slow economic growth and persistent unemployment may lead to higher borrowing costs. Well, duh. Also, if the United States sinks into the sea, that "may" also affect borrowing costs. But it's backwards to have the S&P say something is less valuable, then have the President say it is just as valuable, then have the people who actually buy the things say they're just as valuable, and then criticize the President for saying they're still just as valuable because who knows, if things don't work out a few years down the road they may not be as valuable! You should be making fun of the market - they're the ones buying the debt.
Additionally, it seems weird to say something is not worth the price the free market puts on it because later on down the road the free market might value it less. As to the narrow question of whether US debt is worth less today than it was yesterday, the President was perfectly right to say, no, it's worth the same. In a few years? Who knows? But he's not the president of Future America.
>Many liberals believe that UHC is no more costly, which is shocking considering that until Obama was running, nobody that I'm aware of ever thought that to be true, while now it's accepted in those circles as fact.
ReplyDeleteDepends what we're talking about, maybe. Certainly UHC vs. no health care at all will always be more expensive. But UHC can be more efficient, and thus less costly than just relying on private care.
Certainly some system of universal health care can be more expensive than what we do now. But the Canadians have UHC, and they spend less per capita than we do, both in total, and by the government. So, yes, UHC can be cheaper than what we're doing. Remember, we already do have government health care, it's just for the old and the poor. And Congressmen.
Then, there's Obamacare which isn't really UHC. The people doing all the insuring and all the medical stuff are not the government. The government is just (a) more closely regulating the insurance market, (b) requiring everyone to buy insurance, and (c) requiring insurance companies to insure everyone. This not really UHC in the way most people think. Most liberals think of this as a stepping-stone. The great irony is that liberals went with this because they thought it was less revolutionary and more acceptable to conservatives, and it turns out that (a) conservatives don't care and (b) it may be unconstitutional, whereas true UHC would be constitutional.
Too lazy to continue the whole conversation (forgot about it and just getting back now), but interesting note about the constitutionality.
ReplyDeleteWhat's a good site to get per capita spending when it comes to health care, particularly broken out by private/govt. and by ages/illnesses?
I'd note that Canadian healthcare has numerous QoL issues, such as bed waits. My family who lived in Canada hated it, and moved away.
ReplyDelete>I'd note that Canadian healthcare has numerous QoL issues, such as bed waits. My family who lived in Canada hated it, and moved away.
ReplyDeleteI'm actually a Canadian ex-pat, and from my (and my family's) experience, it's pretty good. I think people place far too much emphasis on isolated anecdotes. for the vast majority of people for the vast majority of things, it works fine. Thank G-d, we're relatively healthy, ba"h, but on the few occassions my family has had to make use of American healthcare (vacations) we've been less than impressed, especially with the cost. Tens of thousands of dollars over a three day stay is kind of wacked.
Here's a chart demonstrating the overemphasis on anecdotes. It shows that the vast majority of Canadians choose to pursue health care in Canada.
http://philebersole.wordpress.com/2011/01/14/chart-of-canadian-health-care-migrants/
I would just point out, also, that the Canadian UHC by no means precludes Canadians from getting health care from the private market, especially in the USA. Historically, Canada frowns on privatised health care, (although that's lessening)but there's no reason that American UHC would have to kill private health care. If you want to spend more money, go ahead.
An additional question, is that
you have to ask yourself, there are QoL issues, in comparison to what? It goes without saying that American health care has substantial QoL issues of its own.
But that's just it - why risk those isolated incidents and pay more in taxes for it? Where are the stats on Americans going to Canada vs. the reverse?
ReplyDeleteTens of thousands of dollars over a three day stay is kind of wacked.
Well, no, if that's what it costs.
>But that's just it - why risk those isolated incidents and pay more in taxes for it?
ReplyDeleteWell, because they’re really really very very isolated. We could construct a scenario where for some hypothetical wealthy person it would, ex post, make more sense to have not paid the higher taxes and gone with only private care. But that would be a very rare set of circumstances indeed, and correspondingly, would be a silly way for the government to assess whether to tax the masses to pay for UHC. Even for this hypothetical wealthy person with the ex post condition, he doesn’t exist in the future, but in the present. Putting him behind a Rawlsian veil of ignorance, he has no reason to think this exceedingly rare confluence of events will happen to him. So, even for him, he should go with the higher taxes, rather than the roulette wheel of fate, and hope he gets stuck with that rare medical case where UHC is lacking, and he’ll have to supplement his care with private financing, and feel at least vindicated. But for 99% of people 99% of the time, it’s a no brainer. And that’s how you make policy.
>Where are the stats on Americans going to Canada vs. the reverse?
Why would Americans go to Canada? They don’t get free healthcare. The fact that Americans don’t go to Canada for healthcare is irrelevant. If you let them opt in to Canadian healthcare by paying what Canadians pay, I’m sure millions would.
>Well, no, if that's what it costs.
It doesn’t cost the Government of Ontario $30,000 to house an old lady for three days. For the same reason that it wouldn’t cost her that much if she had American insurance, for the same reason that it wouldn’t cost that much for her employer’s health care provider if they had an American health care plan, for the same reason it doesn’t cost that much for an insurance company. Americans pay more for practically everything health-related. Most of this, I think, has to do with the poor bargaining strength of the individual. Ontario, like a very very very large employer, has much stronger bargaining power to drive down costs, because it represents literally millions of consumers. My grandmother in the USA has no such power. They push on her the costs of indigent people who can’t pay for emergency room services and the like. Even people with insurance are overcharged to supplement the costs of people who can’t pay. This is without all the waste of the current system.
>Why would Americans go to Canada? They don’t get free healthcare.
ReplyDeleteCan't someone pay privately if they chose?
The market, like anybody, would appreciate a practical economic plan from our chief executive. Obama's only plans, though, are for vacations and campaigns. It's not as if he lacks the staff to organize for planning, it's that he's clueless about the demands of his job.
ReplyDeleteOr has he made the calculation that his inaction and divisive approach will serve his goal of making America a second-class power?
>Can't someone pay privately if they chose?
ReplyDeleteWhat, an American? I guess. But why would an American travel to Canada to pay for the same healthcare he would get at home? I mean, I'm sure there are people in Maine, or Montana or Alaska (I think Sarah Palin did this) who do this. But, typically your closest HCP is in your town, in your country.
All I can tell you is i(personally) have heard of numerous stories, where there is UHC (such as in Canad and Israel), where patients needing surgery were told to come back, as there were no emergency room beds. I have many relatives and friends in Israel who were in labor for days, due to lack of nurses, or rooms, in the hospital. I love when people say yeah I move to Israel, it's FREE healthcare. It ain't free, it's coming out of your taxes!
ReplyDeleteFortuitously appropriate links:
ReplyDeletehttp://thinkprogress.org/yglesias/2011/08/10/293197/negative-real-yields/
http://d-squareddigest.blogspot.com/2011/08/and-another-thing.html
http://www.economist.com/blogs/democracyinamerica/2011/08/jobs-bill
"But that's just it - why risk those isolated incidents and pay more in taxes for it? Where are the stats on Americans going to Canada vs. the reverse?"
ReplyDeleteThis is only part of the story, but check out the wikipedia page on "medical tourism" and see that there are way, way more Americans who go abroad for cheaper medical procedures than people who come to America for higher-quality procedures.
VP - I think a comment I wrote got lost. I'll write a post instead, I think.
ReplyDeleteAnon - But that's just it, I think: People go abroad because the basics are cheaper abroad... but people come here for higher quality procedures because the progress is greater here. Sure, we can make the simpler stuff cheaper... if we cut out R&D and stopped increasing the potential quality of healthcare.
I think this is the same notion with everything: Yes, if we didn't continue to grow and innovate, we could do what we're doing now better. But we'd never do better than that - we'd stagnate.