AAA and going down

[Todd]

Norway. We have a debt at 50% of BNP (like Switzerland), but larger assets so we're net lenders, not borrowers.

You're not describing assets, but rather the current account surplus.  There's a big difference.  It's possible to have a huge debt load and a current account surplus.  Look at Japan.

[The new erato]

Having an MBA (though practicing in other areas) I'm certainly aware of the problems setting up a national balance of payments, but I was just quoting this:

http://www.easyforexnews.net/wp-content/uploads/2011/06/301838.pdf

But my translation of terms may be imprecise, I'm not working in this field and am certainly not up to date in terms of English terminology. 

[Todd]

but I was just quoting this:

The operative quote is: "However, if we take into account net debt to GDP, which the IMF calculates as gross debt minus financial assets corresponding to debt instruments[.]"
Assets corresponding to debt instruments is not the same as assets.  It's a narrow slice, and it's misleading to speak of Norway's assets in a more general way.  Such a statement must be qualified.

Norway is in an enviable position.  It's also a small economy with rather fewer obligations than some other nations.  It's a nice goal to have such solid finances.

[Todd]

Obama's new job: credit rating guru in chief. 

[eyeresist]

From the brief coverage given to this on Australian news, I gather S&P are accused by some of basically being unpatriotic? Weird state of affairs. Maybe all financial organisations should be stationed offshore, like the old UK pirate radio stations.

[Todd]

From the brief coverage given to this on Australian news, I gather S&P are accused by some of basically being unpatriotic?

First I've heard of that, but I may just rely on the wrong sources.  I give kudos to S&P for the downgrade, because they did so even facing an intense amount of pressure from the Treasury tied to the changes coming from Dodd Frank.  It would have been easier to just go along with the other two big agencies and hope Uncle Sam plays nice going forward.  Wait, there wouldn't be any arm twisting as it pertains to enforcement provisions of a new law, what am I thinking?

[Bogey]

Well, S&P did not want to get embarrassed again after the economy tanked last time while they swallowed their whistle.  In short, their wanted to show that they were not being bought off and remained independent in their decision making....still a more of a political maneuver than anything else, IMO.

[knight66]

The BBC radio correspondent last night suggested that S&P's reputation for reliability is suspect; as it has made both technical errors in calculations and mistakes of judgement in the past. He implied that their influence is reducing.....but I wonder what the evidence is for that; apart from the increasing price of US bonds which suggests people feel the US is a safe place to put money.

I get the impression there are contradictory forces at work and the stock markets want two opposite things at the same time. Reducing debt now prevents expansion of the economy, they want both of these things and can't have them simultaneously.

Mike

[Todd]

The BBC radio correspondent last night suggested that S&P's reputation for reliability is suspect; as it has made both technical errors in calculations and mistakes of judgement in the past.

The ratings agencies, and not just the three main ones, were part of the 2008 crisis in that they issued high ratings (all the way up to AAA) for various securities that in fact turned out to be risky.  Hence being stripped of privileges in Dodd Frank. 

[Bogey]

The BBC radio correspondent last night suggested that S&P's reputation for reliability is suspect; as it has made both technical errors in calculations and mistakes of judgement in the past. He implied that their influence is reducing.....but I wonder what the evidence is for that; apart from the increasing price of US bonds which suggests people feel the US is a safe place to put money.

I get the impression there are contradictory forces at work and the stock markets want two opposite things at the same time. Reducing debt now prevents expansion of the economy, they want both of these things and can't have them simultaneously.

Mike

I believe I heard the same report, Mike.

[drogulus]

     S&P lowered the rating for U.S. debt so people sell stocks and flee into Treasury bills. That's worth a smile at least. I understand this as relative safety. Even downgraded, U.S. debt is the safest place to put money relative to everything else. It also shows that the level of intrinsic economic risk (risk if everyone behaves normally) of default is very low. We are not bankrupt, or nearly bankrupt, or in any other way approaching a level of debt that causes a problem for repayment provided the political class does what it ordinarily does in a crisis, which is pass a set of compromise measures to get past the immediate problem and allow revenue and expenditure curves to cross at some time in the (no doubt fictional) future. That's fine. There are no permanent fixes, only better and worse temporary ones. The downgrade was IMO an entirely justified condemnation of the incompetence, malice and general idiocy of elements of the political class.

     Incompetence: President Obama and his team, who didn't make a strong effort to counter the rising tide of economic freakery that has inundated this country. Could he have? I think so.

     Malice: Senator Mitch McConnell. He said destroying Obama was the most important thing, he meant it, and he may have succeeded. How proud he must be!

     Idiocy: Tea Partyists lived down to their rep as world class ignorami* and cargo cultists.

     _{* ...not a word, but it should be.}

[Todd]

Malice: Senator Mitch McConnell. He said destroying Obama was the most important thing, he meant it, and he may have succeeded. How proud he must be!

It's good to have goals.

[kishnevi]

     S&P lowered the rating for U.S. debt so people sell stocks and flee into Treasury bills. That's worth a smile at least. I understand this as relative safety. Even downgraded, U.S. debt is the safest place to put money relative to everything else. It also shows that the level of intrinsic economic risk (risk if everyone behaves normally) of default is very low. We are not bankrupt, or nearly bankrupt, or in any other way approaching a level of debt that causes a problem for repayment provided the political class does what it ordinarily does in a crisis, which is pass a set of compromise measures to get past the immediate problem and allow revenue and expenditure curves to cross at some time in the (no doubt fictional) future. That's fine. There are no permanent fixes, only better and worse temporary ones. The downgrade was IMO an entirely justified condemnation of the incompetence, malice and general idiocy of elements of the political class.

     Incompetence: President Obama and his team, who didn't make a strong effort to counter the rising tide of economic freakery that has inundated this country. Could he have? I think so.

     Malice: Senator Mitch McConnell. He said destroying Obama was the most important thing, he meant it, and he may have succeeded. How proud he must be!

     Idiocy: Tea Partyists lived down to their rep as world class ignorami* and cargo cultists.

     _{* ...not a word, but it should be.}

I've always understood the plural to be ignoramuses.  Although the word shouldn't have a plural form, because it is one already--the plural form of a Latin verb meaning, roughly, "we do not know" or "we are ignorant of",  which was in suitable circumstances the jury's verdict at an inquest or trial, back in the days when a jury's prime function was to serve as witnesses or representatives of the local community giving information to the trial court--originally juries provided the evidence, or even were the evidence.

A knowledge of Anglo American legal history over the last thousand years or so will provide all one needs to understand how silly the "strict constructionist"/"originalist" theory of constitutional law favored by the Tea Party actually is.

[Todd]

A knowledge of Anglo American legal history over the last thousand years or so will provide all one needs to understand how silly the "strict constructionist"/"originalist" theory of constitutional law favored by the Tea Party actually is.

They like it because it sounds serious.  And conservative.  No, wait, Conservative.  A fun game I like to play with such people, or anyone who starts spouting about the Constitution, is to ask how many articles are in the Constitution.  I've done it several times, and every time the person I ask has started prattling about the Bill of Rights, etc.  They seem so displeased when asked such a question.  (This only works in person, of course.)  Another favorite question is to ask such a person what he or she thinks is the most important Supreme Court decision.  Looks of confusion abound. 

[kishnevi]

They like it because it sounds serious.  And conservative.  No, wait, Conservative.  A fun game I like to play with such people, or anyone who starts spouting about the Constitution, is to ask how many articles are in the Constitution.  I've done it several times, and every time the person I ask has started prattling about the Bill of Rights, etc.  They seem so displeased when asked such a question.  (This only works in person, of course.)  Another favorite question is to ask such a person what he or she thinks is the most important Supreme Court decision.  Looks of confusion abound.

What most of them don't realize is that the Constitution of 1787 was essentially a slow motion coup organized by the portion of the Founding Fathers who felt we needed a bigger, more centralized national government and weaker state government.

And then there are those folks who argue that while (for instance) it's the height of tyranny for the federal government to mandate certain things, it's perfectly proper and reasonable for a state government to mandate the same things--that while the federal government has strictly limited powers, state governments have unlimited powers.

And of course the same folks who are against Big Government are usually the same folks who are zealously in favor of a Big Military.

[Todd]

Who needs to negotiate when you can simply blow the fuck out of them?

Hear, hear!

[Lethevich]

And of course the same folks who are against Big Government are usually the same folks who are zealously in favor of a Big Military.

It's strange how omniprescent this wooly thinking is - various UK parties have had similar views.

[kishnevi]

It's strange how omniprescent this wooly thinking is - various UK parties have had similar views.

The same fuzziness is present on the other side of the aisle, when you come down to it:  the folks who support Big Government domestically are the same folks who vehemently protest anything that reminds them of Big Military.  If you don't mind the government sticking its nose into everything at home, why should you mind the government sticking its nose into everything abroad?  (And vice versa.)

Me, being a libertarian,  am against government sticking its nose into almost anything, at home or abroad.

[Lethevich]

Me, being a libertarian,  am against government sticking its nose into almost anything, at home or abroad.

Being a moderate in most matters, I'm f*cked in general

[springrite]

Being a moderate in most matters, I'm f*cked in general

Hear! Hear!