News

Standard and Poor’s: there may be more downgrades

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From CNBC.

Excerpt:

Standard & Poor’s may downgrade the long-term credit rating of the U.S. once again in less than three months after sending shockwaves through the bond and stock markets by stripping the nation of its top notch triple-A rating last week, according to an emergency Sunday night conference call for clients of Bank of America Merrill Lynch.

“We do expect further downgrades,” said Ethan Harris, North American economist, on the call. “We doubt the newly appointed bipartisan commission will come up with a credible long-term deficit reduction plan. Hence by November or December we would not be surprised to see S&P downgrade the debt again from AA-plus to AA.”

Harris said that the U.S. should have avoided the downgrade in the first place by meeting S&P’s demands of a $4 trillion deficit cut and a “demonstrating a sensible budget process.” What they got instead was a “deficit cut of $2.1 trillion and a budget process that’s been extremely chaotic,” said Harris.

[…]”If a disorderly Treasury market leads to the Fed embarking on QE3, repercussions for the dollar will be catastrophic,” said David Woo, head of global rates and currencies research, on the call. “Investors will be quick to conclude that U.S. monetary policy has been subjugated by fiscal policy and the Fed’s independence would be placed seriously into question.”

In other news, Estonia has actually received a recent debt rating UPGRADE:

In the midst of a world embroiled in economic turmoil, a few nations have managed to do surprisingly well—among them, Estonia. After near economic collapse during the 2008–2009 financial crisis, the country has managed to successfully bounce backwith substantial GDP growth, a vibrant trade environment, and a notable budget surplus.

During the first quarter of this year, Estonia had the highest rate of growth in the EU and the biggest drop in unemployment. In July, its credit rating was raised by Fitch to A+, a reflection of substantial economic growth.

But how did Estonia get here? Estonia possesses a flexible, open economy and investment climate that encourages competition and economic growth. It remains one of the world’s freest economies, according to The Heritage Foundation’s Index of Economic Freedom. However, prudent fiscal policies have played the largest role in Estonia’s impressive economic performance, particularly in recent years. Still, the path to fiscal conservatism was not easy; it required a lot of rigorous, painful cutback involving 9 percent of GDP in fiscal adjustments and large cuts to nominal wages.

Notice that Estonia’s economic policies are tea party conservative policies, not socialist policies.

Meanwhile, the White House has yet to respond to our first credit downgrade.

Videos

Are the poor getting richer in America?

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From Bill Whittle.

Here’s a write up of the video from Hot Air.

Excerpt:

Have the rich gotten richer? Indeed they have, Bill Whittle says in his latest Afterburner — but so have the poor. As wealth expands, living standards rise, and Whittle shows just exactly how it did over the last 40 years in the US. In fact, he argues that the better comparison is not between the rich and the poor in this country, but between the American poor and the average citizen in Europe, Asia, and Africa…

The ultimate arguments are this: what exactly does “poor” mean, and what is the best way to alleviate poverty? If poor in the US is defined such that 97.7% of those households have televisions, 98% have refrigerators, almost 40% have computers, and 78% have air conditioning, then we’re defining “poverty” rather loosely — and that’s the point. The Left wants the definition as wide as possible in order to keep more Americans on public-subsidy rolls, which then incentivizes them to support larger and more intrusive government.

What is the best way to alleviate real poverty?  The data Whittle presents shows that a dynamic economy based on private property and capital choice lifts the living standard for everyone.  Europe went in the nanny-state direction, and now their average qualifies as our poor, at least by living-standard metrics.  That’s something to keep in mind while we debate the nature of safety nets, government spending, and fiscal reform.

Addendum: The data here comes from the Heritage Foundation, so be sure to check it out.

This could be useful when getting into debates with leftists.

News

New study: reducing government regulation creates jobs

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From the Washington Examiner.

Excerpt:

According to the Phoenix study, “even a small 5% reduction in the regulatory budget (about $2.8 billion) would result in about $75 billion in expanded private-sector GDP each year, with an increase in employment by 1.2 million jobs annually. On average, eliminating the job of a single regulator grows the American economy by $6.2 million and nearly 100 private sector jobs annually.” The reverse is true as well, according to Phoenix, which said “each million dollar increase in the regulatory budget costs the economy 420 private sector jobs.”

“Our statistical analysis of historical data indicates that federal expenditures on regulatory activity have a significant impact on the size of the private-sector economy and private-sector employment,” says Dr. George S. Ford, chief economist at the Phoenix Center. “While the entire federal budget must be cut to address the deficit problem, the evidence indicates that reductions in the overall federal regulatory budget may substantially impact the growth of economic output and employment.”

It’s hard to imagine any way of making it clearer: Whatever merits it may otherwise have, the federal regulatory bureaucracy is a tremendous drag on the economy, diverting and destroying the very precious investment capital that is essential to generating the growth that creates jobs that pay the taxes that fund the government. This provides an important insight into why federal offices like the Environmental Protection Agency do not consider the effect of proposed regulations on the ability of the economy to generate jobs.

If you want job creators to create jobs, ask the job creators what is stopping them from creating jobs. At the top of their list will be government regulations.