CNN: Perry enters race in virtual tie with Romney, Bachmann fades

posted at 10:05 am on August 11, 2011 by Ed Morrissey
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Texas Governor Rick Perry will upend the Republican presidential primary with his entry this weekend, CNN’s latest national poll shows. He starts off in a virtual tie with Mitt Romney, 17/15, with his nearest competitors at 12%. Perhaps most surprisingly, Michele Bachmann isn’t among them — and her support gets cut almost in half with Perry’s candidacy:

According to a CNN/ORC International poll, 15 percent of Republicans and independents who lean towards the GOP pick Perry as their first choice for their party’s nomination, just two points behind former Massachusetts Gov. Mitt Romney, who’s making his second bid for the White House. Romney’s two point margin over Perry is within the survey’s sampling error.

The poll’s Thursday release comes two days before Perry gives a speech at a major conservative gathering in South Carolina where his staff has indicated he will make his intentions for a presidential run clear. Later in the day Perry travels to New Hampshire to meet with GOP lawmakers, activists, and voters. Perry’s travels Saturday come as the rest of the political spotlight will be shining on Iowa, for a crucial presidential straw poll in Ames. Perry heads to Iowa Sunday to speak at a Republican party gathering, which means he will visit three of the crucial early voting primary and caucus states this weekend.

The survey indicates that former New York City Mayor Rudy Giuliani, former Alaska Gov. Sarah Palin, and Rep. Ron Paul of Texas, who is making his third bid for the White House, are at 12 percent apiece. While both Giuliani, who ran for the presidency four years ago, and Palin, the Republican vice presidential nominee in 2008, have flirted with bids, neither has taken concrete steps towards launching a campaign.

Three weeks ago, Perry scored 14% but Giuliani, Palin, and Bachmann all scored 13% or 12%. Now Bachmann has dropped to 7%, a fall of five points and the biggest decline in the field for the period. Ron Paul has picked up four points to surpass her and join Giuliani and Palin in a three-way tie for third place.

Bachmann isn’t the only candidate trending downward, but the rest are in the second tier. Herman Cain dropped two points to 4%, while Tim Pawlenty dropped one to come in at 2%. Both of these candidates need breakout performances in Iowa, which was well known before this week. If CNN’s series is not an outlier, Bachmann may need one as well, now that Perry has come closer to tossing his hat in the ring. She has been wowing crowds in Iowa this week in advance of the debate and straw poll, so she is doing all she can on the ground, but that may not be enough — at least not this week.

Time Magazine’s Mark Halperin interviewed Perry this week about his plans:





A highlight from the transcript:

Q: You’ve talked about how all of the social issues are important and this election is going to be about what the voters care most about: economy and jobs. Is it your hope, if you become a candidate, that even voters who disagree with you on social issues will find your record and argument on jobs so compelling that they vote for you even though they did disagree with you?

A: Well, I’m pretty sure there has never been a candidate [where] all the people agree with his or her positions on the issues. And there are single-issue voters, and I understand that. I respect that. I’ve run three times in Texas and I would suggest to you, Texas is somewhat of a microcosm of the rest of the country, particularly in this first decade of the 21st century. We are very, very cosmopolitan, if you will, very urban, but we have our rural areas. We have an incredible diversity of people [who] live in this state. This is not the Texas of my father. It is a very diverse state. Running for the governorship of the state of Texas, I recognized all the diversity of thought.
So, what’s the most important thing that’s facing this country? It’s getting this economy back. I am a pro-business governor. I will be a pro-business President if this does, in fact, ensue and I’m blessed to be elected President of the United States—unabashedly [so] because the fact of the matter is, there’s nothing more important than having an environment created by government that allows for the private sector to risk its capital to know that they have a good chance of having a return on the investment. Because at that particular point in time, the men and women who are out of work today can be back employed. They can take care of their family. They can do the things they desire in their lives. And without that strong economy, America can’t be strong militarily. We can’t have, frankly a presence in the world that we need to have. It all goes back to having an economy that people are comfortable with—they can risk their capital and they’ll have a return on the investment. We don’t have that today.

Q: There are people who’ve looked up—even though you’re not yet a candidate—your record and your endorsement of Mayor Giuliani in the last campaign, some of the positions you’ve taken on immigration, etcetera, and they say Rick Perry is not actually as conservative as he says. What do you say to those people?

A: Well, you know, I stand on my record. I thought Mayor Giuliani did a wonderful job of managing a city. He was very strong militarily. He was as strong on crime as any big city Mayor has ever been. He and I were 180 degrees on social issues, but he would put strict constructionists on the Supreme Court, which dealt with those social issues. I happen to be comfortable that I was making the right decisions and that as President, when it comes to those social issues, it’s very important to have that strict constructionist view of who you put on the Supreme Court. Because they’d look at the constitution and say, you know what, that issue dealing with abortion is not in the constitution. We will put it back to the states. Now if the states want to pass an amendment and three quarters of the states want to pass an amendment to make this be a change of our United States constitution, then just follow that process. And I’m a big believer that that’s how our country should work.

Q: So if you got in, would you be the most conservative candidate in the race? Or as conservative as everybody else?

A: Yeah I don’t think there’s any doubt about that. But again, we go back to what’s the most important issue here? I mean if somebody wants to go back and find, oh here’s a little spot right here—you know, I was a democrat at one time in my life. I was 25 years old before I think I ever met a person who would admit being a Republican. So the key is, I’ve got a record. And that record, particularly when it comes to the most important issues in this campaign, which is creating the climate of America that gives incentives to job creators to risk their capital and create jobs for our citizens, I will put that up against anybody who’s running and particularly against this President we have today, whose jobs record is abysma

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Consumer Sentiment Curbs Appeal of Aussie

Australian dollarThe Australian dollar resumed its movement down after the yesterday’s gains as consumer sentiment declined this month, reducing attractiveness of the nation’s currency.

The Westpac-Melbourne Institute Consumer Sentiment index fell 3.5 percent in August from July. This declined followed the drop by 8.3 percent in July. The Aussie (the nickname of the Australian currency) also weakened as the pledge of the Federal Reserve to keep interest rates stable hasn’t reduced pessimism among Forex traders.

AUD/USD retreated from 1.0353 to 1.0343 as of 11:51 GMT after jumping to 1.0414 today. AUD/JPY fell from 79.66 to 79.15, following the advance to 80.34.

If you have any questions, comments or opinions regarding the Australian Dollar, feel free to post them using the commentary form below.

Earlier News About the Australian Dollar:

Australian Dollar Attempts Stop Decline, Fails (2011-08-09)

Eighth Session of Suffering for Aussie (2011-08-08)

AUD Down on Economic Outlook Revision (2011-08-05)

Australian Dollar Continues Its Correction on Weak Retail Sales (2011-08-03)

AUD Surges Against Everything on Higher Inflation Numbers (2011-07-27)

This entry was posted on TopForexNews on Wednesday, August 10th, 2011 at 11:51 am and is filed under Australian Dollar. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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Obama prepares for career as landlord

posted at 1:25 pm on August 11, 2011 by Jazz Shaw
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It’s an idea so beautiful in its simplicity and so perfectly targeted to cure one of our biggest national headaches that many readers will be slapping their foreheads in one of those, “I could have had a V-8″ moments. The housing market is still in the tank and the government has been forced to foreclose on countless properties which now sit vacant, generating no tax revenue. The nation’s coffers are running dry and we have to tackle our debt problem. But nobody wants to raise taxes. What to do?

Why, you kill two birds with one stone, of course! We’ll let the government go into the property rental business!

    The Obama administration may turn thousands of government-owned foreclosures into rental properties to help boost falling home prices.

    The Federal Housing Finance Agency said Wednesday it is seeking input from investors on how to rent homes owned by government-controlled mortgage companies Fannie Mae and Freddie Mac and the Federal Housing Administration.

    At the end of last month, the government owned roughly 248,000 foreclosed homes, officials said. About 70,000 of those are listed for sale. But officials expect the number of foreclosures to soar in the coming months.

What could possibly go wrong? Over at Pajamas Media, Bryan Preston suspects that even in such an obviously brilliant scheme, there might be a few wrinkles.

    [N]ot to put too fine a point on things, renting your home from the government raises all kinds of liberty questions. If they don’t like your politics, can they find a way to evict you? Can they tell you what to do (more than the government already does) in the home you’re renting from Uncle Sam? With a president hitting 51% disapproval, an IRS that’s become notorious for political audits and federal law enforcement agencies known lately more for gunrunning than crime stopping, that’s not an idle question. Would the feds allow renters to own firearms in these government homes? The majority of renters between now and 2012 are likely to be people who don’t like their landlord, but the landlord has, shall we say, serious firepower superiority. There’s a great deal to ponder here.

It’s difficult to imagine what a mess this would wind up being in court, if only on the constitutional authority questions. Preston offers an alternate suggestion of scrapping Fannie and Freddie entirely and spinning off all of those properties at open, public auctions. Granted, that would have a sudden, if short term negative impact on the real estate market, but it could conceivably hasten the process of allowing it to find its natural bottom and begin rebuilding from there in an organic fashion.

But who knows? If we let Washington handle it as proposed, there would probably be all sorts of exemptions and set-asides built into the system and you might wind up renting a mansion for fifty bucks a month. And if the house is built well enough it will provide you with a place to hide when the zombie apocalypse begins.

Cash for Bunkers?

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Impact of BoJ Intervention on Yen Wanes

Japanese yenThe Japanese yen jumped against all other most-traded currencies today as traders fled to safety of the yen, fearing the financial problems of the US and Europe.

The Japanese policy makers signaled that they may take steps to curb gains of the currency. In fact, the Bank of Japan already intervened on August 4, but the impact of the move almost waned at present. This situation isn’t unlike the one in Switzerland, where the central bank also fights with appreciation of the nation’s currency and also losing this battle.

USD/JPY fell from 77.74 to 77.04 as of 9:09 GMT today. EUR/JPY went down from 110.23 to 109.74 while it reached the low of 109.09 during the day.

If you have any questions, comments or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

Earlier News About the Japanese Yen:

    Yen Slumps on BoJ Intervention (2011-08-04)
    Yen Gains on Greece & US Debt Problems (2011-07-28)
    EU Summit Eases Need for Safety, Yen Drops (2011-07-22)
    Second Week of Gains for Yen, Will BOJ Intervene? (2011-07-16)
    Yen Declines as Chinese Economy Grows (2011-07-13)


This entry was posted on TopForexNews on Tuesday, August 9th, 2011 at 9:10 am and is filed under Japanese Yen. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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Fed statement a vote of no confidence in economy through 2013?

posted at 10:05 am on August 10, 2011 by Ed Morrissey
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The current historically-loose monetary policy will continue, according to a Federal Reserve statement last night — for two more years.  The Fed normally doesn’t offer projections with such unambiguously lengthy timelines, preferring to keep its options open.  These, however, are not normal times — nor do we have normal leadership:

    The Federal Reserve announced on Tuesday that it plans to hold the benchmark interest rate at “exceptionally low levels” through at least mid-2013, breaking from the central bank’s usual less precise timelines.

    The action — which sent the Dow Jones Industrial Average swinging wildly up and down — signals the Federal Open Market Committee sees the path to economic recovery as longer and slower than anticipated even a few months ago.

    With the Fed’s decision, the target interest rate will stay flat at between 0 and 0.25 percent for close to the next two years, if not longer.

This appears to be the Fed’s alternative to another round of quantitative easing, a currency-devaluing exercise that remains the only real tool left in the Fed’s bag these days.  So far, the pledge seems to have helped calm global markets, at least for now:

    A pledge by the Federal Reserve to keep extremely low interest rates for another couple of years has calmed investors’ jitters, sending stock markets around the world higher Wednesday.

    The Fed’s surprise announcement Tuesday that it would likely keep its Fed funds rate at near zero percent through 2013 to help the ailing U.S. economy helped Wall Street surge late in the session — the Dow Jones industrial average rallied 6 percent just in the final hour of trading, one of the biggest turnarounds ever seen.

    That continued into the Asian and European trading sessions, although traders remained nervous after the market turmoil of recent weeks, which has sent many global markets officially intobear market territory — falling 20 percent from recent peaks.

This prompts the question, though, of what the Fed does next week or next month if markets get jittery again.  A QE3 won’t make investors any happier, and the Fed has nothing else to do now that they have made a two-year commitment on monetary policy.  Adding a third year in September or October, for instance, won’t have much impact on investment in the short term.

The rather unprecedented move should have people wondering why the Fed feels it has to commit to a loose-money policy for so long.  It was almost certain that they wouldn’t tighten the money supply anyway, not with inflation risks low and the global economy on the cusp of a recession.  Any move to a tighter policy would only come after a period of torrid growth in order to hedge against inflation damaging a full recovery, and that’s obviously a long way off.

So why make this policy so explicit in terms of length?  To calm markets, to be sure, but a six-month statement would have been just as effective.  The only reason to commit to a two-year policy of ultra-loose money is because the Fed doesn’t see any real prospects for economic growth through mid-2013.  They see no real need to have the option of tightening the money supply.  Economic conditions won’t change enough for the Fed to contemplate a change of policy, or so Ben Bernanke and the Fed board appear to say.

That to me sounds like a vote of no-confidence in the American economy, and in American economic leadership.  And, like the S&P downgrade that preceded it, it’s completely understandable, too.

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Breaking: Reid appoints John Kerry, Patty Murray, and Max Baucus to Super Committee

posted at 6:05 pm on August 9, 2011 by Allahpundit
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That’s precisely what we need to reach a grand bargain. Hard-left dial tone Patty Murray and a guy who spent the past Sunday muttering in front of TV cameras about a “tea-party downgrade.” Bonus fun fact about Murray via Amanda Carpenter: She’s the head of the DSCC this election cycle, which means there ain’t no way no how no chance she’s signing off on any deal that involves even minor Medicare reform.

Not sure what to make of Baucus, though.

    Murray is expected to co-chair the committee, officially named the Joint Select Committee on Deficit Reduction, along with a still unnamed House Republican. A spokesman for Reid did not respond to a request for comment.

    Reid’s decision to tap Murray will likely be met with scrutiny, as she is also chairing the Democratic Senatorial Campaign Committee for the 2012 election cycle. But she is also a member of leadership, a senior member of the Budget Committee, and a woman on what is likely to be a male-dominated committee.

    Baucus is chairman of the powerful Senate Finance Committee with jurisdiction over many areas, including entitlement programs, that the committee is expected to examine. Kerry, meanwhile, was selected for his stature and Senate tenure.

None of the three were members of the Gang of Six, but Baucus was part of the Biden deficit group that Cantor walked away from over taxes. Could he potentially be the seventh vote for a deal on the Super Committee? He comes from a red state, he’s an institution in the Senate, and he’s not up for reelection until 2014. He’s as insulated from a tough vote as one can be. He’s also, as noted in the quote, chairman of the Finance Committee, so if he blessed a deal, that would give it added credibility in the Senate. And he’s been reasonably good on taxes, so he might side with Republicans on tax reform. The bad news? He duly wet himself over Paul Ryan’s budget and he’s earned some fans at AARP for supporting “doctor fix,” which contributes mightily to Medicare continuously running over budget. He’s probably not signing off on any serious entitlement reform, in other words, although if the GOP can come up with some revenues via tax reform, that might encourage him to join them in a modest first step. He floated that idea himself, in fact, after Biden’s group melted down, proposing new Medicare cuts in return for new revenues. Then again, Baucus was on Obama’s Deficit Commission and ended up voting no on the final plan. Of course, so did Paul Ryan.

I’ll leave you with this thought, in case you’re under the mistaken impression that anything will be accomplished by this process:

    Congress may undermine the deal that raised the U.S. debt ceiling by failing to agree on a plan to curb the deficit and then softening the impact of automatic spending cuts that would kick in to achieve the budget targets.

    That’s the view of five former directors of the Congressional Budget Office…

    While the cuts are supposed to be automatic, Congress can delay or override them if they prove too painful — defense spending would be reduced by 9.1 percent over a decade while non-defense programs would be cut 7.9 percent. That’s what lawmakers did with the 1985 Gramm-Rudman-Hollings Balanced Budget Act, the template for the trigger.

Update: Weigel sees a new “the Democrats caved again!” narrative brewing on the left over Baucus. “So the Democrats will have one of their compromisers on the committee. Unless the GOP puts up one of its compromisers — a neo-Gang of Sixer, or someone like Bob Corker — the Baucus move alone means a committee that leans right.”

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London rioter: “We’re just showing the rich people that we can do what we want”

posted at 4:45 pm on August 9, 2011 by Allahpundit
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Two clips to usher in night four of Droogfest 2011. The common thread is that in both cases you’re watching rampaging cretins behave in a quasi-civilized manner. In the first, two giggly girls chat calmly with the BBC about the “mad fun” they’re having; in the second, rioters handle a wounded boy gingerly … before proceeding to rob him. Maybe we can let the lot of them off easy with a modified version of the Ludovico technique.

If you missed it in Headlines this morning, read Brendan O’Neill’s essay on the riots as a byproduct of welfare-state decay. At the Corner, Iain Murray elaborates:

    Another left-wing friend of mine in the UK has another interesting theory — that the particular targeting of electronics and clothes shops represents an explosion of consumerism. Stay with me, because I think he has a point and I’d like to explain why. Much of the British underclass has had easy access to credit over the past decade or so — and why not, when they are on a secure income stream of state benefits — and they have spent this for the most part on TVs, video games, and “chav” fashion. That easy credit — which I should emphasize was encouraged by the loose monetary policy of Gordon Brown and Tony Blair — has now dried up, so they are looking to take for free what they previously got for nominal sums. There is more evidence for that conclusion in this BBC recording of two girls saying that the riots were about taking what they wanted, for free…

    I think what we are seeing in Britain is a conflation of two liberal dreams — that of the 1960s, in which parenting and tradition went out the window, and that of the 2000s, in which self-help was replaced by easy credit, benefits, and an all-mighty “health and safety” bureaucracy — together with the unfinished nature of the Thatcher revolution. Mrs. T enabled economic Thatcherism but was unable to finish the project of what I termed social Thatcherism, whereby a free society recognized the importance of what once were called manners.

    The result is a feral underclass without any understanding of tradition from right or left.

O’Neill ends by laying into British cops for their paralysis, a ubiquitous critique in stories about the riots after three days of window-smashing. There are a lot of reasons for that. The police have in fact held back, only now considering water cannons and plastic bullets after millions in damage. The prime minister and the mayor of London were both on vacation when the riots began and Scotland Yard’s leadership recently resigned over the phone-hacking scandal, so for several days there’s been no one in charge. The Home Secretary, who was also on vacation, is prone to saying moronic things like, “The way we police in Britain is not through use of water cannon, the way we police in Britain is through consent of communities,” even as young degenerates ransack local communities without their consent. And of course it’s comforting in a moment of chaos to focus on the failings of the police, who are, unlike the rioters (oops, I mean “protesters”), accountable to the public. Build a better force and in theory you ensure this can’t happen again. In theory:

    Business owners accused police of adopting a softly-softly approach which left their shops and businesses vulnerable to attack by baying mobs.

    While police were criticised in some quarters for being far too slow to get to riot scenes, officers were accused by shopkeepers in Hackney of standing just yards away from looters as windows were smashed and armfuls of goods were scooped up…

    Firearms units trained to use the rubber bullets are braced in case they are needed. It would be the first time ever the baton rounds have been used in British disturbances.

    Mr Kavanagh said Scotland Yard was ‘not going to throw 180 years of policing with the community away’ as the prospect of using the ammunition for the first time at a British disturbance was raised.

Imagine how bad things could get if they did that. There might be riots.

There are many ways to measure the awfulness of what’s happening but chew on these two while you watch. According to residents in Birmingham, looters are literally stealing the clothes off of people’s backs, stopping them and forcing them to strip. The Daily Mail has a too-bad-to-check photo via Twitter. Beyond that, in the Middle East and elsewhere, there’s gloating going on both by authoritarian governments, who are mocking the Brits for not liquidating all of their troublemakers on the spot, and by the victims of those authoritarian governments, who are mocking the rioters for turning their “protests” into a pretext to steal DVD players. All of which is to say, this is a complete fiasco by any yardstick.

Onto the videos. I’ve included a third (audio) clip below as a little bonus; yes, that is indeed Hulk Hogan’s voice you’re hearing. Click the image to watch.

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Palin knocks it out of the park

posted at 10:05 am on August 9, 2011 by J.E. Dyer
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Few people in the public eye have said anything useful about the recent unpleasantness with the national debt and the national credit rating.  The president hasn’t.  The vice president hasn’t.  Surprisingly few of the declared Republican candidates have.  The MSM haven’t.  They’re busy trying to make the expression “Tea Party downgrade” go viral.

Indeed, at this hour of reckoning, with the Dow plunging and markets in turmoil around the world, the MSM have achieved another playground-taunt triumph with the silly Newsweek cover featuring an unflattering photo of Michelle Bachmann.  These people seem to have no sense of proportion, no judgment, no recognition that things have become serious and the time for sophomoric media jabs is past.

Who cares how they can make Bachmann look on a magazine cover?  The tabloids demonstrate several times a year that they can make the world’s most beautiful women look like something from the back of the refrigerator, if they photograph them in bad light with a telephoto lens.  The Bachmann cover is the equivalent of a slam-book entry, about as intelligent as holding your nose and chanting “You smell!” at a classmate.  Ridicule is the cheapest thing there is – and in politics, it’s usually deployed to shift the focus from a needed debate to specious topics and emotion.  I’d call it a reversion to high school, but it would be an insult even to middle-schoolers to pin it on their age group.

Meanwhile, Marco Rubio and Paul Ryan have had good, inspiring, on-target things to say about the US fiscal crisis.  Michelle Bachmann has had good things to say.  John Bolton had an important piece making the case that national security is inextricably linked with fiscal security, a much-needed point in the context of the recent debate.

But Sarah Palin came through today with a Facebook post that strikes the right tone and is at once simple, direct, and comprehensive.  It doesn’t rail at past mistakes, nor does it come across as a raised-voice, you’ve-got-to-get-this-people communication.  Palin takes it for granted – with refreshing common sense – that we are in a crisis, its features are obvious, and the task now is to deal with it, not continue to argue whether it’s really a crisis or how big it is or whose name we can pin on it.

She makes no bones about the significance of the problem we face.  I am particularly impressed with her point that if we don’t square ourselves away, the specter hangs over us of IMF staffers showing up on our doorstep with China and France and Germany arrayed behind them, ready to throw folders on a desk and start telling us how much we can spend on cable TV and incidentals each month.  Whether things would really play out for the US as they are playing out for Greece and Ireland is a valid question, but Palin is quite correct that the pitched confrontation is on the horizon now, as it was not six weeks ago – and she has the courage to face that possibility head-on.  It’s not pleasant to mention it, but it’s the right thing to do.

The last third of Palin’s post is devoted to laying out what we need to do.  Grow the economy by releasing the regulatory clamps on it, starting with the energy sector.  Cut spending and reform entitlements.  She doesn’t pretend the latter would be easy, but she faces head-on the fact that it is inescapably necessary.  I urge you to read her post for the discussion of particulars.  It is material and convincing without being in the weeds.

The piece is positive and encouraging for its forthrightness.  There is nothing “clever” to be done in this situation; it’s all straightforward.  The US federal government has to cut spending and let the economy grow, even if that means breaking the stranglehold of unions on the public trough and overruling advocacy groups and government bureaucrats who don’t want the economy to grow.  Pretending that the federal budget is too complex to be governed by the ordinary rules of accounting – or that the US is too special to be limited by the ordinary definition of fiscal solvency – is a dodge, not a sign of insight or expertise.

Palin focuses like any good executive on the big picture.  We have to cut spending and get government out of the economy’s way so it can start pumping out revenues again.  These things are increasingly obvious to everyone, and moreover, they constitute a plan.  Talking ourselves into corners about other, tangential things isn’t even interesting any more.  It feels so wrong that it’s hard to watch anyone’s news program at the moment: no one seems to be talking about what matters.

What is interesting is how few in our national political life have put the case together, as Palin has, without temporizing or bloviating.  I haven’t heard anyone else do what she does with this post.  She acknowledges the actual, enormous scope of the problem, envisions a solution, and outlines what to do to achieve it, with encouragement that it can be done.  It is sad and a little frightening that so many Americans have become unable to see this for what it is:  leadership.  Almost everyone else is focused more narrowly, on one aspect of the problem or another, and a good few commentators don’t seem to even have the vocabulary or the mental infrastructure to address the problem itself; they can only express opinions about the impossibility of the politics surrounding it.

It is the opposite of stupid to recognize the problem’s stark and simple outlines when all around you are swinging blindfolded at piñatas.  We spend too much, and we suppress economic growth and revenues with regulation.  Palin articulates that clearly.  Her ability to reach out directly through social media, and put her case in her terms, is a net positive for our current political climate.  She remains one of the best reasons to not let the MSM dictate our ideas and preferences to us.

J.E. Dyer’s articles have appeared at The Green Room, Commentary’s “contentions,” Patheos, The Weekly Standard online, and her own blog, The Optimistic Conservative.

This post was promoted from GreenRoom to HotAir.com.
To see the comments on the original post, look here.

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Report: U.S. bracing for possible downgrade from S&P; Update: “Expecting and preparing”; Update: S&P bungles numbers? Update: Calculations off by trillions

posted at 4:59 pm on August 5, 2011 by Allahpundit
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Just a headline right now at CNBC, but stand by. Business Insider heard a rumor about this before lunch but discounted it when they couldn’t substantiate it with analysts. There must be something to it, though; it’s unthinkable that CNBC would toss this grenade without something very solid to support the story. Needless to say, the fact that news is breaking within an hour after the market closed suggests that they held it back to avoid a panic and to let investors digest it over the weekend.

A downgrade, not a default, was always the real worry during the debt-ceiling saga. Moody’s and Fitch reaffirmed the U.S. as AAA (albeit with a negative outlook) a few days ago but S&P was conspicuously silent. Negotiators on the Hill believed early on that the debt package had to reduce the deficit by $4 trillion to avoid a downgrade, but S&P’s president told a congressional committee on July 27 that it wasn’t true and that some alternate plans would be acceptable.

Updates are coming. While we wait for details, read this NYT piece from last weekend speculating that the economic fallout from a downgrade would actually be modest since, after all, treasuries are still comparatively safer than any other investment. The fact that Moody’s and Fitch disagree with S&P will soften the blow too. And frankly, if there’s anything that can force the Super Committee and Congress to get serious about entitlement reform, this may be it. Or am I just putting lipstick on a very smelly pig? We’ll know soon!

Update: A government source tells Tapper they’re “expecting and preparing” for a downgrade to either AA+ or AA. Unbelievable. Here’s the spin:

    Officials reasons given will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited.

Of course, of course. Any rather large elephants in the room missing from that litany of excuses? Here’s a hint: It rhymes with “shmentitlements.”

Update: CNBC says the downgrade could come as early as this evening. In spite of everything, I’ve never really believed that America is in decline because, well, America simply doesn’t decline. Tonight I believe it.

Update: Lots of tough talk this week from Democrats about the Super Committee, with Reid hinting that they might walk away if Republicans don’t appoint anyone willing to agree to tax hikes and Pelosi promising much harder hardball during the next round of negotiations. Let’s see what they say now.

Update: Karl from the Greenroom e-mails to remind me that S&P’s track record is a bit of a joke given that they failed to see the subprime crisis coming. True enough. Last week Zachary Karabell at the Daily Beast wondered why anyone cares what S&P thinks:

    To those who say that it’s unfair to blame the messenger—and that on the whole, these agencies are simply calling it as they see it and drawing attention to real risks—there is the pesky fact that they have a legacy of either being chronically late (the mortgage crisis) or then too eager to downgrade (overreaction to the mortgage crisis). And even if they were as good as they could be, they are still simply three companies with a few hundred unelected people making calls that drive the entire global financial system.

    There is one last glaring question: should these agencies even be rating a sovereign entity such as the United States? The dollar is now a global currency of commerce, and U.S. Treasuries are a form of safe-haven currency. It’s not as if the world is unaware of the economic issues of the U.S. The Chinese don’t need Moody’s to tell them about the risks of holding a trillion dollars of U.S. bonds. Shouldn’t the “creditworthiness” of the United States, or the viability of a European debt plan for Greece, be left to the determination of investors large and small worldwide along with the governments of those countries and their electorates? The success or failure of their plans will be evident soon enough, and subject to the thumbs up or down of the people, without the ratings agencies piling on or offering a view.

Mark Steyn has the counterargument to that:

    Nobody in Greece, Portugal, Spain, or Ireland is talking about “out years” and exciting plans for spending cuts in 2020. They’re getting on with it now — and they’re still being downgraded.

    By contrast, both U.S. political parties are playing croquet on the lawn in August 1914 — and the ratings agencies are stringing along with them. Whatever the comparisons of debt-to-GDP ratios between Greece, Ireland, and the U.S., the actual hard dollar amount involved here is of an entirely different order. The Boehner plan tells us that real fiscal discipline is impossible within the U.S. political system. At some point, the ratings guys have to call them on it — or render their system meaningless.

Right. What’s ominous about the S&P downgrade isn’t that it comes out of left field, haphazardly, but that it doesn’t. Given the long-term outlook for U.S. sovereign debt even after this week’s deal, why wouldn’t they downgrade us? Why wouldn’t anyone else? What have you seen over the past year that makes you think America’s political class is remotely equal to the task of dealing with this problem before we have a Greece on our hands?

Update: Tapper updates his post with quotes from another government official who says they’re not sure when — or even if — the downgrade will come.

Update: It goes without saying that between the downgrade and polling showing 60+% support for tax increases on the rich, the GOP will be under intense pressure during the Super Committee phase to add some new revenue to the package. That doesn’t necessarily mean tax hikes; it does necessarily mean tax reform, which might involve lower rates but many fewer loopholes. Krauthammer floats a few ideas about that today, starting with getting rid of the mortgage interest deduction.

Update: Greg Pollowitz of NRO notes that, if the downgrade happens, the U.S. will technically be a greater credit risk than Britain, Germany, and France. Given the debt contagion spreading in Europe first from Greece and now Italy and Spain, does anyone seriously believe that’s true?

Update: No idea yet if this is the truth or White House spin, but if S&P actually botched its analysis on a matter as explosive and closely watched as this, then whatever’s left of their credibility is gone for good:

    A third official says that S&P made a “serious mistake” in its analysis, “based on flawed math and assumptions,” so the Obama administration is pushing back. But even though “S&P has acknowledged its numbers are wrong, it’s unclear what they’re going to do.,” the official said.

    S&P refused to comment.

Update: You’ve got to be kidding: “S+P was set to downgrade. Obama admin. said their analysis off by ‘trillions’. Now S+P revising figures. Downgrade still poss.”

Update: Still waiting for S&P’s side of this, but if the White House was lying in accusing them of a trillion-dollar error, you’d expect vehement pushback. Instead, silence.

    Standard & Poor’s told the U.S. government Friday afternoon that it was preparing to downgrade the U.S.’s triple-A credit rating but U.S. officials notified the S&P that they had made a mathematical error that was off by “trillions,” an administration source told CNBC.

    Apparently the error was in the calculation of the U.S. debt-to-GDP ratio over time and was based on a misreading of what the correct congressional baseline was…

    An S&P spokesman declined to comment on any possible plans for a downgrade or statement later Friday.

If it’s true, they’ll never recover. They’ve barely recovered from the subprime mess as it is. Then again, it could be that their math is fine and the White House is simply challenging them on a conceptual point, much like how Dems and the GOP argued this week over what tax baseline is appropriate for the Super Committee. In that case it wouldn’t be a math error, it’d be an accounting dispute.

A question from Megan McArdle, though: Who leaked this report? She wonders if the White House might have done it “just to get people yelling at the GOP,” but if that were true, why is the White House pressing so hard to get S&P change its numbers? It’s hard to yell at the GOP when the math is wrong.

Update: The Journal describes it as a “mathematical error” and claims S&P copped to it privately:

    After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.

    S&P officials later called administration officials back to say they agreed about the mistakes, though they didn’t say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do…

    A downgrade by S&P could serve as a psychological haymaker for an American economic recovery that can’t find much traction. It could lead to the prompt downgrades of numerous companies and states, driving up their costs of borrowing. Policymakers are also feeling anxious about the hidden icebergs that the move could suddenly reveal.

Imagine if this had happened during trading hours.

Continue Reading →

Report: U.S. bracing for possible downgrade from S&P; Update: “Expecting and preparing”; Update: S&P bungles numbers? Update: Calculations off by trillions

posted at 4:59 pm on August 5, 2011 by Allahpundit

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Just a headline right now at CNBC, but stand by. Business Insider heard a rumor about this before lunch but discounted it when they couldn’t substantiate it with analysts. There must be something to it, though; it’s unthinkable that CNBC would toss this grenade without something very solid to support the story. Needless to say, the fact that news is breaking within an hour after the market closed suggests that they held it back to avoid a panic and to let investors digest it over the weekend.

A downgrade, not a default, was always the real worry during the debt-ceiling saga. Moody’s and Fitch reaffirmed the U.S. as AAA (albeit with a negative outlook) a few days ago but S&P was conspicuously silent. Negotiators on the Hill believed early on that the debt package had to reduce the deficit by $4 trillion to avoid a downgrade, but S&P’s president told a congressional committee on July 27 that it wasn’t true and that some alternate plans would be acceptable.

Updates are coming. While we wait for details, read this NYT piece from last weekend speculating that the economic fallout from a downgrade would actually be modest since, after all, treasuries are still comparatively safer than any other investment. The fact that Moody’s and Fitch disagree with S&P will soften the blow too. And frankly, if there’s anything that can force the Super Committee and Congress to get serious about entitlement reform, this may be it. Or am I just putting lipstick on a very smelly pig? We’ll know soon!

Update: A government source tells Tapper they’re “expecting and preparing” for a downgrade to either AA+ or AA. Unbelievable. Here’s the spin:

Officials reasons given will be the political confusion surrounding the process of raising the debt ceiling, and lack of confidence that the political system will be able to agree to more deficit reduction. A source says Republicans saying that they refuse to accept any tax increases as part of a larger deal will be part of the reason cited.

Of course, of course. Any rather large elephants in the room missing from that litany of excuses? Here’s a hint: It rhymes with “shmentitlements.”

Update: CNBC says the downgrade could come as early as this evening. In spite of everything, I’ve never really believed that America is in decline because, well, America simply doesn’t decline. Tonight I believe it.

Update: Lots of tough talk this week from Democrats about the Super Committee, with Reid hinting that they might walk away if Republicans don’t appoint anyone willing to agree to tax hikes and Pelosi promising much harder hardball during the next round of negotiations. Let’s see what they say now.

Update: Karl from the Greenroom e-mails to remind me that S&P’s track record is a bit of a joke given that they failed to see the subprime crisis coming. True enough. Last week Zachary Karabell at the Daily Beast wondered why anyone cares what S&P thinks:

To those who say that it’s unfair to blame the messenger—and that on the whole, these agencies are simply calling it as they see it and drawing attention to real risks—there is the pesky fact that they have a legacy of either being chronically late (the mortgage crisis) or then too eager to downgrade (overreaction to the mortgage crisis). And even if they were as good as they could be, they are still simply three companies with a few hundred unelected people making calls that drive the entire global financial system.

There is one last glaring question: should these agencies even be rating a sovereign entity such as the United States? The dollar is now a global currency of commerce, and U.S. Treasuries are a form of safe-haven currency. It’s not as if the world is unaware of the economic issues of the U.S. The Chinese don’t need Moody’s to tell them about the risks of holding a trillion dollars of U.S. bonds. Shouldn’t the “creditworthiness” of the United States, or the viability of a European debt plan for Greece, be left to the determination of investors large and small worldwide along with the governments of those countries and their electorates? The success or failure of their plans will be evident soon enough, and subject to the thumbs up or down of the people, without the ratings agencies piling on or offering a view.

Mark Steyn has the counterargument to that:

Nobody in Greece, Portugal, Spain, or Ireland is talking about “out years” and exciting plans for spending cuts in 2020. They’re getting on with it now — and they’re still being downgraded.

By contrast, both U.S. political parties are playing croquet on the lawn in August 1914 — and the ratings agencies are stringing along with them. Whatever the comparisons of debt-to-GDP ratios between Greece, Ireland, and the U.S., the actual hard dollar amount involved here is of an entirely different order. The Boehner plan tells us that real fiscal discipline is impossible within the U.S. political system. At some point, the ratings guys have to call them on it — or render their system meaningless.

Right. What’s ominous about the S&P downgrade isn’t that it comes out of left field, haphazardly, but that it doesn’t. Given the long-term outlook for U.S. sovereign debt even after this week’s deal, why wouldn’t they downgrade us? Why wouldn’t anyone else? What have you seen over the past year that makes you think America’s political class is remotely equal to the task of dealing with this problem before we have a Greece on our hands?

Update: Tapper updates his post with quotes from another government official who says they’re not sure when — or even if — the downgrade will come.

Update: It goes without saying that between the downgrade and polling showing 60+% support for tax increases on the rich, the GOP will be under intense pressure during the Super Committee phase to add some new revenue to the package. That doesn’t necessarily mean tax hikes; it does necessarily mean tax reform, which might involve lower rates but many fewer loopholes. Krauthammer floats a few ideas about that today, starting with getting rid of the mortgage interest deduction.

Update: Greg Pollowitz of NRO notes that, if the downgrade happens, the U.S. will technically be a greater credit risk than Britain, Germany, and France. Given the debt contagion spreading in Europe first from Greece and now Italy and Spain, does anyone seriously believe that’s true?

Update: No idea yet if this is the truth or White House spin, but if S&P actually botched its analysis on a matter as explosive and closely watched as this, then whatever’s left of their credibility is gone for good:

A third official says that S&P made a “serious mistake” in its analysis, “based on flawed math and assumptions,” so the Obama administration is pushing back. But even though “S&P has acknowledged its numbers are wrong, it’s unclear what they’re going to do.,” the official said.

S&P refused to comment.

Update: You’ve got to be kidding: “S+P was set to downgrade. Obama admin. said their analysis off by ‘trillions’. Now S+P revising figures. Downgrade still poss.”

Update: Still waiting for S&P’s side of this, but if the White House was lying in accusing them of a trillion-dollar error, you’d expect vehement pushback. Instead, silence.

Standard & Poor’s told the U.S. government Friday afternoon that it was preparing to downgrade the U.S.’s triple-A credit rating but U.S. officials notified the S&P that they had made a mathematical error that was off by “trillions,” an administration source told CNBC.

Apparently the error was in the calculation of the U.S. debt-to-GDP ratio over time and was based on a misreading of what the correct congressional baseline was…

An S&P spokesman declined to comment on any possible plans for a downgrade or statement later Friday.

If it’s true, they’ll never recover. They’ve barely recovered from the subprime mess as it is. Then again, it could be that their math is fine and the White House is simply challenging them on a conceptual point, much like how Dems and the GOP argued this week over what tax baseline is appropriate for the Super Committee. In that case it wouldn’t be a math error, it’d be an accounting dispute.

A question from Megan McArdle, though: Who leaked this report? She wonders if the White House might have done it “just to get people yelling at the GOP,” but if that were true, why is the White House pressing so hard to get S&P change its numbers? It’s hard to yell at the GOP when the math is wrong.

Update: The Journal describes it as a “mathematical error” and claims S&P copped to it privately:

After two hours of analysis, Treasury officials discovered that S&P officials had miscalculated future deficit projections by close to $2 trillion. It immediately notified the company of the mistakes.

S&P officials later called administration officials back to say they agreed about the mistakes, though they didn’t say whether it would affect the rating. White House officials remained waiting Friday evening to see what the company would do…

A downgrade by S&P could serve as a psychological haymaker for an American economic recovery that can’t find much traction. It could lead to the prompt downgrades of numerous companies and states, driving up their costs of borrowing. Policymakers are also feeling anxious about the hidden icebergs that the move could suddenly reveal.

Imagine if this had happened during trading hours.

Continue Reading →