News Stories

[ArchmageXin]

Originally Posted by willx

Not happening, bub:

Since he hate national healthcare so much, shouldn't he refund the People's Greater Socialist Canada for subsiding his birth with their tax dollars?

[Yu Ominae]

An editorial suggesting that the American dollar is in danger unless the US government gets it act together.

All great empires – from the Greek, to the Roman, the Spanish and the British – have at their heart a dominant means of exchange which is very much part of their political and social hegemony. Once upon a time, it was Roman coinage which was the world’s pre-eminent currency. In more recent times it was the British pound. Today, it’s the U.S. dollar to which international investors flock as a safe haven for their money. Highly liquid and apparently reliable – until recently at least – nothing else comes even remotely close to the greenback’s dominant position in the international monetary system.

Reneging on its debt obligations would make the U.S. the first major Western government to default since Nazi Germany 80 years ago. Keep reading.

That this position – what Giscard d’Estaing referred to as America’s “exorbitant privilege” – could so casually be put at risk by politicians on Capitol Hill is an extraordinary spectacle that may be indicative of a great power already seriously on the wane.

With the pound, the fall from grace was swift. Britain emerged from the devastation of the First World War an irreparably damaged economic and military power, with crushing debts and a deeply impaired manufacturing sector.

The dollar was able quickly to usurp the pound’s position. Final defeat for sterling came with Britain’s decision to leave the gold standard in 1931 – an economically sensible decision but a psychological turning point for sterling from which it never recovered.

Lack of any credible alternative means it won’t happen so quickly with the dollar. For all the progress of the last 30 years, China for now remains a much smaller economy than the U.S. and in any case is nowhere near ready financially to assume such a role. As for the euro, the dollar needn’t trouble itself much about this one-time pretender to the throne.

Yet rarely before has international dissatisfaction with the dollar’s role as reserve currency to the world been as great as it is now. The most visible anger comes from China, with more than US$3 trillion of dollar foreign exchange reserves, US$1.3 trillion of them held in U.S. Treasuries. For ordinary Chinese, it has come as a revelation to discover they own so much American debt. That they own it in a country which because of political brinkmanship may actually default has provoked understandable fury.

“It is perhaps a good time for the befuddled world to start considering building a de-Americanised world”, China’s official government news agency has said.

A steady erosion of trust which began with the financial crisis five years ago has reached apparent breaking point with the pantomime antics on Capitol Hill. The search for long-term alternatives to the dollar is on as never before. Regrettably, there aren’t any, or not for the time being in any case. Everyone can only look on in horror as the US commits apparent economic suicide.

Such is the dollar’s dominance that, to begin with at least, investors might simply have to take default on the chin. More than 60% of global foreign exchange reserves are held in U.S. dollars, which also account for more than 80% of global foreign exchange trading.

So important is dollar liquidity in global trade that if, for instance, you wanted to sell Singapore dollars and buy South African rand, your forex dealer would first typically buy U.S. dollars with your Singapore dollars and then use them to buy the South African rand. The dollar is the middle currency in the vast bulk of international transactions.

By the same token, U.S. Treasuries are the very backbone of the global financial system. They are the supposed “risk-free asset” against which everything else is benchmarked, and as such are the collateral of choice in a huge array of financial market transactions. The dollar is also the currency used to price most commodities, from oil to gold.

The dollar’s hegemony is all pervasive. This has given the greenback a degree of leverage unmatched by any other reserve currency in history. If China starts to sell dollar assets, it will only weaken the dollar, undermining Chinese exports and reducing the value of its remaining portfolio of dollar assets.

I’d been part of the received wisdom that any act of U.S. default would set off a devastating chain reaction of bankruptcies that would provoke a second global financial crisis. But David Bloom, chief currency strategist at HSBC, has convinced me that dollar hegemony might perversely act in the opposite way, at least initially.

Unlike a generalised credit event, where all instruments default at the same time, the U.S. would initially engage in a series of little, self contained defaults, or “selective defaults”, whose individual impact would probably not be that great.

Each bond has a life and coupon of its own. The missed coupon payment might therefore be regarded as not so bad – especially as this is a case of “won’t pay”, rather than “can’t pay”.

Markets see such defaults differently, with missed payments expected to be made up eventually once a political resolution is found. It’s also very likely that the Federal Reserve would attempt to counter the damage in financial markets with more QE, buying up the Treasuries that investors dumped.

Furthermore, the financial uncertainty created by default would likely drive investors towards past safe havens of choice – in particular, US dollar assets. Alternative safe havens, such as Japan and Switzerland, have been rendered defunct by central bank money printing. Ironically, emerging markets are likely be more damaged by default than the US itself, with further capital flight.

Such is the degree of “exorbitant privilege” enjoyed by the dollar that it might therefore be the first currency in history to see an asset price rally on the back of a default. However, if there were repeated selective defaults, a second, less benign phase would eventually set in. Spooked markets would begin to sell off the dollar.

The consequent stronger euro and pound would have powerfully deflationary consequences for Europe. Internal demand in the US would also collapse as a result of the wrenching fiscal squeeze that would result from federal government attempts to match expenditures with tax revenues.

Dollar hegemony has long been a destabilising force at the centre of the international monetary system; it’s a major part of the sharp build-up in global current account imbalances and cross border capital flows that have been at the heart of so many of the problems in the world economy. The unprecedented accumulation of dollar foreign exchange reserves has in turn caused new challenges for the US, making it more difficult to maintain fiscal and financial stability within its own borders.

Policies that may or may not be good for the U.S. are in all probability bad for everyone else. Loose monetary policy in the U.S. since the crisis began has induced unwanted demand and asset bubbles elsewhere in the world.

Serious alternatives to the dollar, such as a global reserve currency, are still a long way off, but the latest shenanigans on Capitol Hill have given the search for them renewed and added momentum.

The U.S. is wrecklessly throwing away its future.

[SaintessHeart]

Originally Posted by ArchmageXin

Since he hate national healthcare so much, shouldn't he refund the People's Greater Socialist Canada for subsiding his birth with their tax dollars?

Speaking of which, that supports the fact that Canucks are really nice people - they didn't ask for refund from his estate for that case. Or all the illnesses he had caught in his entire life.

[Archon_Wing]

Originally Posted by Urzu 7

You know what is crazy with a lot of right wingers (both common citizens and politicians)? Just absolutely crazy? A lot of them think that health care reform from Obama is more controversial and more maddening than the two wars from Bush...where we invaded two countries, brought civil war to those countries; which left hundreds of thousands of Iraqis and Afghans dead (not that these same right wingers give any shit about that...), thousands of American troops dead, and trillions of dollars spent. But of course to these right wingers, Bush is a good guy because he is an Evangelical Christian who opposes marriage equality, and of course Obama, the guy that made a push to give health care to about 50 million Americans, is a no-good Muslim terrorist jerk-bag.

It's okay to spend trillions in wars and occupation against alleged threats and imaginary WMDs and also to bailout failing big companies but god forbid people who actually live here recieve "entitlements". Of course this is the same country that has some of the highest incarceration rates in the world thanks to an obsessive drug war (hey look, even more government, and which party stresses it more?)

When the GOP and teabangers claim they support less government, there's not a hint of truth. All they want is more government control over you while less with them. The hypocrisy here is they abused this bureaucracy to stop everything from working and cause this current crisis. Less government my ass.

But it's not really fair to just label GOP as right-wingers. Arguably the US has two parties that are almost together on whatever line you wish to draw; just one happens to make marginally more sense. Of course anything else gets you labeled a socialist commie, but whatever people want to believe-- it's no wonder why our politics appears to be such a joke compared to elsewhere-- our spectrum is entirely 2-d.

In before "Well, at least you don't live in Iran!"

[GDB]

Originally Posted by Archon_Wing

But it's not really fair to just label GOP as right-wingers. Arguably the US has two right-wing parties; just one happens to make marginally more sense. Of course anything else gets you labeled a socialist commie, but whatever people want to believe-- it's no wonder why our politics appears to be such a joke compared to elsewhere-- our spectrum is entirely 2-d.

Personally, that's why I use "GOP" to refer to the current crazies, and "Republicans" to refer to the non-crazy right-wingers. When I was a kid, they aren't batshit crazy, and no one called them the GOP. They might have had the name in stock as an alias, but no one referred to them as such. Cut to the past 10 years or so, they're crazy, and they go by the "GOP". Thus, I can only correlate it as such.

Also, I love how they were so against... everything, since it meant more spending, but then Mitch McConnel tacked a $3 billion ordinance to the passage yesterday for improving locks on a dam. The reasoning? If it wasn't done, it'd cost tax payers $167 million. Apparently 167 > 3000.

[Xellos-_^]

Originally Posted by ArchmageXin

Since he hate national healthcare so much, shouldn't he refund the People's Greater Socialist Canada for subsiding his birth with their tax dollars?

See, ted Cruz is Canada's fault.

[Ithekro]

Both parties seem to be spending most of their time trying to make the other party look bad. Regardless if whatever it is could be useful, even to their own party. If the other party can be made to look good, even as a lesser level than your own, scrap it and pin the blame on the other party.

[SaintessHeart]

Well Dagong just put down US's rating. Looks like they are encouraging people to shed US Treasury bonds.

That should loosen up the payouts to bondholders in the long run.

[SeijiSensei]

Originally Posted by risingstar3110

Shouldn't the Republican Party try harder in 2012 election through? Their voters couldn't make the number for the election (whether on tax, Obamacare, whatever), and now they still demand thing to go their way anyway? That does not sound legit and surely undermined the democratic election...

They tried pretty hard to rig the system in the states where they controlled the reapportionment process after the 2010 election. Even though I can only attribute a margin of perhaps 10-12 seats to clear gerrymandering effects, the concentration of Democrats in urban areas makes it easy to construct districts with high proportions of urban Democrats surrounded by more mixed suburban and rural districts with smaller Republican majorities. (Compare the results for the House races in Pennsylvania with those for the Presidency and Senate in 2012 by using the drop-down box on this map from the New York Times. There's a lot more blue on the maps for the statewide elections than for the Congressional election.)

This morning I tabulated the top-twenty most vulnerable Republicans who voted against last night's resolution to reopen the government and extend the debt ceiling. All but one represent districts carried by Mitt Romney in 2012. Eight of them are newcomers and might be the most vulnerable. The Democrats would need to win about seventeen seats to take control of the House of Representatives in 2015. That's possible but highly unlikely since the President's party usually loses seats in the off-years.

Originally Posted by Roger Rambo

I've never felt comfortable with the fact that so much of the welfare debate always seems to get characterized as being people in the city. It always sounds like a code word for ethnic minorities.

Back when I taught political science, I had a colleague who focused on welfare policies. One of the first things he told his class every year was that "most blacks are not poor, and most poor are not black." That was true in 1975, and it is true today. However as a political issue, racism lies at the root of much of the opposition to welfare in all its forms. Mitt Romney's comment about the 47% included students and retirees, but most people understood that he was really talking about "those people."

Ronald Reagan introduced the term "welfare queen" to our political vocabulary. The phrase connotes a large, overweight black woman driving a Cadillac that she paid for by scamming welfare. Welfare in the US today is much more stringently controlled than it was in 1976, but you wouldn't know it from listening to right-wing Republicans representing largely white districts. While the focus in Reagan's day was on the program known as Aid to Families with Dependent Children, the target now is the Supplemental Nutrition Assistance Program, better known as "Food Stamps." As that article from the Arkansas Times notes, the two most vitriolic opponents of SNAP in that state represent homogeneously white districts that nonetheless have between a quarter and a third of their residents on Food Stamps.

[Xellos-_^]

Originally Posted by SeijiSensei

As the article from the Arkansas Times notes, the two most vitriolic opponents of SNAP in that state represent homogeneously white districts that nonetheless have between a quarter and a third of their residents on Food Stamps.

and those Whites on Welfare do not think the Republicans are talking about them, when Republicans talk about moochers, its those "other people".

[SaintessHeart]

Speaking about welfare queens, I think the social perception tends to be the same in first-world countries- the minorities are treated as poor AND lazy as compared to the majority race.

There is a oft privately-held perception in my society that Malays are lazy, Indians are dirty and Chinese are the most hardworking (by the Chinese of course), which I think that it is simply the product of jealousy that the minorities get "preferential treatment" since anyone receiving welfare in their community gets spotlighted by politicians at an attempt at "image boosting", and also that aid is rolled out by a case-by-case basis to the end that bureaucracy overtakes case assessments that makes some deserving people think they are being vilified.

Of course, we aren't as vocal as you Americans about it on either side, for or against. We just nod and continue our businesses while try to push aside that notion for other more important things at hand, i.e salary stagnation, slowing economy, etc.

Here is a good article written earlier this year by CNBC that takes a small look into the idea of welfare queen.

[Anh_Minh]

Well, vicious circle. Minorities find it harder to get jobs -> they're unemployed -> they're poor, on welfare -> they're thought of as lazy -> go back to case 1.

[AnimeFan188]

MPAA Claims Victory as File-Sharing Service IsoHunt Shuts Down:

"The operator of the popular file-sharing service isoHunt, which the courts have
declared a massive copyright scofflaw, is shutting down to settle a long-running
lawsuit from the Motion Picture Association of America, according to court records
lodged today."

See:

http://www.wired.com/threatlevel/201...hunt-shutters/

[Neki Ecko]

Originally Posted by Xellos-_^

and those Whites on Welfare do not think the Republicans are talking when talking about moochers, its those "other people".

I have to agreed with you on that. Plus is those same folks is at those Tea Party event. Double Standard much.

Here is the biggest problem that GOP is going to have in the near future. They are going to be the minority soon (could be a couple of years or soon). With the way they have been operating, it is going to be very hard for them to complete for the White House. Mostly everybody except those who fall in rank with the GOP already say that they were the ones that cause this mess and voters do not forget about stuff like that.

[GDB]

They're already the minority. They've just gerrymandered properly enough to not lose seats because of it.

[Jinto]

Originally Posted by Neki Ecko

... and voters do not forget about stuff like that.

I'ld like to disagree. Voters in general terms are the most forgiving lot you can imagine. Or lets say, they always focus on the last 3 mishaps... whichever party did them is the new bad party. Its like fashion, some people have their style and won't change it easily, others follow the latest trends (those typically decide the elections).

[Anh_Minh]

Originally Posted by SaintessHeart

Here is a good article written earlier this year by CNBC that takes a small look into the idea of welfare queen.

... It's a Cyanide and Happiness video. Did you mean to do that?

[Neki Ecko]

Originally Posted by Jinto

I'ld like to disagree. Voters in general terms are the most forgiving lot you can imagine. Or lets say, they always focus on the last 3 mishaps... whichever party did them is the new bad party. Its like fashion, some people have their style and won't change it easily, others follow the latest trends (those typically decide the elections).

I would believe that in certain cases but when start dealing with loss of money then we getting into uncharted terrorities. There is some folks at my work is not GS and they will not get back any back pay for this shutdown and there is others that might not have enough to pay their rent or bills. Those people will remember what happened.

[Arturia Polaris]

Sad news.

Cheers

[ganbaru]

Obama To GOP: 'Go Out There And Win An Election' If You Want To Stop Obamacare (VIDEO)
http://talkingpointsmemo.com/livewir...ealth-care-law

APNewsBreak: New charges in Blackwater shootings
http://hosted.ap.org/dynamic/stories...10-17-16-56-40