Rep. Issa: U.S. deserves a downgrade in credit if spending isn’t addressed

posted at 2:00 pm on July 25, 2011 by Tina Korbe
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Goldman Sachs suggests a downgrade of U.S. credit is increasingly likely and experts continue to warn that a weakened credit rating would have significant financial repercussions in the markets, but at least one member of Congress has accepted that a downgrade might be deserved.

“Until we stop spending more, we should be downgraded,” Rep. Darrell Issa (R-Calif.), chairman of the House Committee on Oversight and Government Reform, said this morning on the Fox Business Network.

The Hill reports more details:

    The credit-rating agencies Moody’s Investors Service and Standard & Poor’s both put the nation’s triple-A credit rating on review for a downgrade this month. The agencies warned that the U.S. might lose its perfect rating if the government defaulted on its debt or failed to take steps to address the deficit.

    “If America can, in fact, pay its bills, it’s AAA. If we can’t pay our bills, it doesn’t matter what rating they give us,” Issa said. “Right now we can pay our bills, but we’re heading toward the kind of spending and debt to where someday we wouldn’t be able to pay our bills, and that’s what’s gotta change.”

    Like many Republicans, Issa also indicated he does not consider Aug. 2 the drop-dead deadline to raise the debt ceiling. “[Obama] signed funding through September months ago,” he said.

Debate continues about what effects a credit downgrade could have. Some Wall Street traders say discussion about the potentially devastating effects is “much ado about nothing,” and Reuters’ James Pethokoukis says the impact would not be “as frightening as I might have assumed.”

Pethokoukis makes the astute point that the bigger repercussions would probably be political and would hinge on whether President Barack Obama or Republicans were blamed for the downgrade. With Republicans making remarks like Issa’s, it’s hard to think how the American people could fail to see which side is serious about solving the problem. Republicans won’t be sidetracked from offering solutions by discussion of a downgrade or default. On the other hand, all Obama has really done is talk up the terror of a default, even as he proves time and time again — possibly even this past Sunday if reports are true that he turned down a bipartisan debt deal — that he cares more about his reelection effort than he does about the nation’s fiscal health.

That’s what Issa is really saying here — that all the wailing in the world won’t change the reality. A falsely pristine credit rating won’t spare the U.S. from reaping what it has sowed — too much spending — and a downgrade doesn’t mean the U.S. will lose its ability to repay its obligations overnight. It will just come as yet another stark reminder that Congress eventually must make the hard decisions politicians are oh-so-good at procrastinating.

CAD Reaches Three-Year High vs. USD

Canadian DollarThe Canadian dollar reached yesterday the highest level in three years against the US currency, before retreating today, on the speculation that growing inflation in Canada and improving global economy will prompt the central bank to resume interest rates increases.

Today’s report from Statistics Canada is expected to show an annual inflation growth by 3.6 percent in June, following the 3.7 percent increase in May. Analysts believe that rising inflation will spur policy makers to boost borrowing costs. The Bank of Canada said in statement on July 20 that “some of the considerable monetary policy stimulus currently in place will be withdrawn”. Notice, that the bank wasn’t using the word “eventually” as in previous statements. The statement also spoke about threats to growth of consumer prices:

    The three main downside risks to inflation in Canada relate to sovereign debt concerns in Europe, headwinds from the persistent strength of the Canadian dollar, and the possibility that growth in Canadian household spending could be weaker than projected.

Concerns about the problems in Europe will likely subside for some time, and that’s increase potential growth of Canada’s inflation. On the other hand, the treat from the strength of the Canadian currency is even more prominent now.

USD/CAD traded at 0.9447 as of 3:58 GMT today after opening at 0.9431 and reaching yesterday 0.9421, the lowest level since November 2007. EUR/CAD fell from 1.3603 to 1.3591 and CAD/JPY advanced from 82.94 to 83.12.

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

Earlier News About the Canadian Dollar:

    BOC Rate Statement Invigorates Loonie (2011-07-19)
    Canadian Dollar Looks More Attractive After EU Stress Tests (2011-07-15)
    Loonie Declines vs. Greenback, Remains Strong vs. Majors (2011-07-12)
    Canadian Dollar Surge on Positive Employment Data (2011-07-08)
    Canadian Dollar Falls as China Raises Interest Rates (2011-07-06)


This entry was posted on TopForexNews on Friday, July 22nd, 2011 at 3:58 am and is filed under Canadian 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.

Euro Jumps as EU Leaders Make Plan to Help Greece

EuroThe euro surged today on the speculation that the leaders of the European Union will increase the size of the rescue fund and will accept a temporary Greece’s default, reducing threat of spreading of the debt crisis to other countries of the region.

The European politicians strive to make a period of default for Greece as short as possible. The European Financial Stability Facility will support the nation. To do so, economists hope, the EFSF will increase its size and will back up Greek bonds. It should make easier for the European Central Bank to accept default.

The hopes for the plan devised at the EU summit boosted the euro, but many analysts believe that optimism will be short-lived. At the very best, the crisis in Greece will be eased, but the problems in the Eurozone are too great to be easily solved in one step.

EUR/USD jumped from 1.4214 to 1.4377 as of 18:15 GMT after falling earlier to 1.4138. EUR/JPY climbed from 111.97 to 112.89, while EUR/CHF advanced from 1.1649 to 1.1755.

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

Earlier News About the Euro:

    Is Agreement Among European Leaders Attainable? Perhaps (2011-07-19)
    Bad Monday for Euro (2011-07-18)
    Euro Recovers on US Trade Balance, Threatened By Ireland (2011-07-13)
    ECB Puts Main Interest Rate at 1.50%, EUR/USD Down (2011-07-07)
    Portugal's Credit Rating Now Junk, Euro Feels Bad (2011-07-05)


This entry was posted on TopForexNews on Thursday, July 21st, 2011 at 6:15 pm and is filed under Euro. 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.

Pawlenty campaign manager: Bachmann won’t last over the long haul

posted at 1:00 pm on July 24, 2011 by Tina Korbe
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Tim Pawlenty’s campaign manager yesterday sent out an e-mail outlining Pawlenty’s accomplishments and assuring supporters that the former Minnesota governor’s fan club will continue to grow, while enthusiasm for other candidates — most implicitly, Michele Bachmann — will fade.

“In 2008, voters elected a member of Congress with no executive experience. We can’t afford the cost of inexperience any longer, and Iowans are getting that,” Ayers wrote. “[A]s more Republican primary voters start to tune in to the race, they are finding out that the governor’s record and message will stand the test [of] a brutal campaign. Other candidates’ records (or lack thereof), and plans for the future (or lack thereof) won’t.”

Even though Ayers never mentions Bachmann by name, it’s clear she’s the primary object of his statements.

Pawlenty’s persistent picking at Bachmann has drawn so much press attention that some even questioned whether the Pawlenty campaign planted the story of Bachmann’s supposedly “incapacitating” migraines. The Washington Post’s Jennifer Rubin explains how that insinuation — and the Pawlenty campaign’s failure to completely dispense with it — continues to plague Pawlenty’s prospects:

    In essence, the campaign’s defense is that they let the press run with a story without effectively rebutting it. If that is the case, and there is no definitive proof at this point to suggest otherwise, this will only multiply concerns that Pawlenty’s campaign is not firing on all cylinders. In any event, the issue has now created another worrisome distraction for Pawlenty, who has failed to make a dent in the polls and needs to finish near the top of the pack in Ames.

Meantime, Bachmann’s own handling of the headache issue has actually served her well. This weekend, she even slipped in a witty quip about her “condition” during an Iowa appearance:

    Michele Bachmann went beyond her prepared statement about her migraines during an Iowa appearance today, making a joke about the story that dominated the 2012 coverage for much of last week:

    “This week, they were talking about me and headaches. All I want you to know is I’ve been giving a lot more headaches in Washington than I’ve been getting,” she joked to laughter and raucous applause. … “And as president of the United States, I intend to give those big power brokers a lot more headaches, because we’re going to give the country back to you.”

Pawlenty’s persevering criticisms of a competitor continue to betray insecurity. Ed eloquently defended candidates’ rights to question their competitors’ records — and I initially conceded Bachmann’s migraines to be a legitimate cause for concern (at least until her doctor settled the issue definitively) and praised T-Paw’s common-sense quote about the requirements of the presidency — but, at this point, if I were Pawlenty, I would steer as far away from any mention of Bachmann — explicit or implicit — as I could manage. He doesn’t appear to be hurting Bachmann, but he is denting the best shield he has against attacks against him: His reputation as a stand-up guy who’s running on his own merits, not money or a popular image. He’s at his best when he talks policy, not petty quibbles.

Bernie Sanders: Let’s primary Obama

posted at 12:00 pm on July 24, 2011 by Jazz Shaw

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President Obama is under attack these days from all manner of nasty conservatives who don’t care for his liberal, big spending ways. They seem to have found an unlikely ally, though, in the person of the only officially declared socialist in Congress… Bernie Sanders. (Emphasis in original.)

    SANDERS: Brian, believe me, I wish I had the answer to your question. Let me just suggest this. I think there are millions of Americans who are deeply disappointed in the president; who believe that, with regard to Social Security and a number of other issues, he said one thing as a candidate and is doing something very much else as a president; who cannot believe how weak he has been, for whatever reason, in negotiating with Republicans and there’s deep disappointment. So my suggestion is, I think one of the reasons the president has been able to move so far to the right is that there is no primary opposition to him and I think it would do this country a good deal of service if people started thinking about candidates out there to begin contrasting what is a progressive agenda as opposed to what Obama is doing. [...] So I would say to Ryan [sic] discouragement is not an option. I think it would be a good idea if President Obama faced some primary opposition.

It’s hard to say how much impact this will have, because traditionally Sanders hasn’t enjoyed a tremendous amount of influence outside his own state. But it is a sign of growing discontent with the political arm of his party. For better or worse, Obama is offering up some spending cuts which will effectively take the legs out from under most of the advertisements congressional Democrats are planning on running next year.

It’s difficult to talk about “Republicans destroying Medicare and Social Security as we know it” during the campaign if the titular leader of your party has just forced a vote on you to cut it yourself. It’s even tougher to talk about the need to “tax the rich” so everyone can “pay their fair share” if your President cuts deals to enact even bigger tax cuts than his predecessor. (Cuts which he already signed on to extending.)

Sanders can’t very well run against Obama himself in a primary since he’s not a registered Democrat. (Though, in theory, he could sign up at any time this year and still do it.) I suppose he’s expecting an actual Democrat to step up to the plate and do it for the sake of stopping Obama from running to the middle in a Clinton like move to secure a second term. Even so, given the President’s currently tanking numbers, I don’t expect a long line of Democratic leaders to step up and attempt this.

CNN poll: Perry in 2nd place?

posted at 3:10 pm on July 22, 2011 by Ed Morrissey
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CNN’s latest look at the Republican primary fight shows a big move being made by the man who hasn’t made his big move yet.  Mitt Romney remains in first place at 16%, but only within the margin of error, as a group of speculative candidates have crowded right behind him.  Texas Governor Rick Perry finishes second with 14%, and that’s not all:

    As Texas Gov. Rick Perry comes closer to jumping into the race for the White House, he’s also close to the top of a new national survey in the battle for the GOP presidential nomination.

    A CNN/ORC International Poll released Friday indicates that 14% of Republicans and independents who lean toward 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.

Right behind Perry come Sarah Palin and Rudy Giuliani, both at 13% and both within the MOE, too.  None of these close finishers have actually declared a candidacy, which means that 40% of survey respondents not only are dissatisfied with the current lineup, they’ve picked non-candidates in their stead.  That’s not good news for Romney, whose high profile from the 2007-8 campaign means that the problem isn’t a lack of familiarity with the electorate. Only 14% declare themselves “very satisfied” with the field, less than half of those who are either not very satisfied or not satisfied at all with the field (34%).

Bachmann finishes at 12%, the last candidate in double digits.  Tim Pawlenty only gets 3% of the survey respondents’ endorsement, falling behind Ron Paul, Herman Cain, and Newt Gingrich, which puts a lot of pressure on Pawlenty to score big in next month’s Ames straw poll.  Curiously, when Rick Perry gets removed from the list of choices, Bachmann scores best, picking up three points to finish tied for second with Palin at 15%.

Among independents, there are some surprising results.  Mitt Romney finishes third at 12%, where Giuliani and Perry tie for second at 14% — and Bachmann wins at 15%.  Bachmann comes in third among self-professed conservatives at 13%, with Romney beating her at 16%, but getting edged by Perry at 17%.  Among both groups, Palin comes in fourth place.   Not surprisingly, Perry wins the South handily, 21% to the 13% for Romney and, er, Giuliani? Romney and Giuliani also tie for first in the suburban demographic at 14%, with Perry close behind at 13%.

Clearly, Perry will be a force if and when he enters the race.  If he’s the last person in, he may find even wider support, because right now it appears that Republicans are still holding their breath.

Obama: It’s that gosh-darned divided government that has kept us from a budget solution, or something

posted at 1:50 pm on July 22, 2011 by Ed Morrissey
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I swear, you just can’t make this stuff up. Responding to a question at his town-hall meeting today that expressed frustration at the slow process in the debt-ceiling negotiations, Barack Obama put the blame on voters for the divided government. If Democrats had the town all to themselves, Obama says, he’d be able to spend more time this summer with his daughters:

Say, didn’t Democrats have the town to themselves in 2010? Didn’t they have an opportunity to raise the debt ceiling at that time, and pass a budget for FY2011 as well? In fact, Democrats still control the Senate in 2011. Where is their plan to deal with the issues? For that matter, where is Obama’s?

After all, the House has now passed two of their own plans, the Ryan budget plan that would have (slowly) brought the federal government’s budgets into balance, and the Cut, Cap, and Balance Act that would have forced Washington to do it a lot more quickly. Where the Democrats still have control, they have produced … nothing. Except, of course, whining about how presidenting is kinda tough.

Al Qaeda recruiting goes all Loony Toons or something

posted at 8:20 pm on July 22, 2011 by Jazz Shaw
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What’s a terrorist team to do when they can’t get anyone to take a leadership role for fear of a visit from Seal Team Six? Obviously you need to go back to the grass roots and capture the hearts and minds of the next generation. And what better way than a loveable set of cartoon characters?

    Yemen-based Al Qaeda sympathizers are in the midst of producing a children’s cartoon to recruit young Muslim viewers to join their cause and take up arms against the West, according to intelligence experts monitoring militant websites.

    Yemen-based Al Qaeda sympathizers are in the midst of producing a children’s cartoon to recruit young Muslim viewers to join their cause and take up arms against the West, according to intelligence experts monitoring militant websites.

    The British thinktank Quilliam, which aims to combat extremism, found out about the propaganda film on the password-protected Arabic-language al-Shumukh online forum Sunday. According to Quilliam, Abu al-Laith al-Yemin, a contributor to the website, wrote about the project that he is working on with several associates to teach children aboutAl Qaeda’s history and encourage them to engage in terrorist activity, Reuters reported.

Well… OK then!

Perhaps there’s simply too much of a gulf between the cultures or, possibly, I was poisoned by growing up watching Roadrunner and the coyote. But the actual human children portrayed in the cartoons of my youth didn’t end the show blowing up inside a bank. They were usually the winners, laughing at the foibles of the non-human antagonists.

Then again, maybe I’m approaching this from the wrong angle. If you wanted to convince children to blow themselves up, what better vehicle than a coyote who falls off a 500 foot cliff with a ten ton Acme anvil landing on his head who then gets up and walks away with just a few bandages and some bluebirds circling his head?

And I suppose that’s the scary part. What if it works?

Why one GOP freshman exited the House whip team

posted at 7:40 pm on July 22, 2011 by Tina Korbe
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This morning, Politico reported in its mass “Huddle” e-mail that House Republican leadership kicked one freshman Congressman — Arizona Rep. David Schweikert — off the whip team for supposedly switching his vote on an unspecified piece of legislation. Actually, a source close to Schweikert’s office says, that’s not quite accurate.

This is what the Politico e-mail said:

    HUDDLE SCOOP: FROSH KICKED OFF WHIP TEAM – Rep. David Schweikert, a freshman from Arizona, was removed from the Republican whip team — the group of lawmakers who help round up votes for the leadership — for what sources say is a violation of the first rule of the whip club. The rule: Don’t promise to vote one way and then vote the other way. Sources declined to specify which vote cost Schweikert his seat at the table, but he did vote ‘no’ on the Energy and Water Appropriations bill last Friday. Chief Deputy Whip Peter Roskam pointed Huddle to Majority Whip Kevin McCarthy’s office when asked about the episode. ‘This is a whip team family issue,” McCarthy spokeswoman Erica Elliott said.

It’s true Schweikert — ranked one of the most conservative freshmen in the House — has disagreed with leadership on various issues. And he did feel unwelcome on the whip team, the source says, but the decision to leave was ultimately his.

“He’s been pretty clear and pretty adamant that nobody can buy his vote, so he was a little frustrated with the way leadership asked him to vote on certain occasions,” the source said. “So, he decided it would be best for him to step out and leave the whip team because he couldn’t align with them in certain areas. In no way, shape or form did leadership kick him out, but they made it a pretty inhospitable environment for him to actually vote his conscience and not buy his vote on the whip team. He still supports top leadership.”

Schweikert will also still remain an involved freshman. He’s the vice chairman of the Capital Markets and Government Sponsored Enterprises Subcommittee of Financial Services and he’s been “working night and day on reforming GNCs,” as well as on efforts to reform the Dodd-Frank financial regulation legislation (itself supposedly a reform bill!).

He’s also focused on ensuring the best possible outcome of the debt negotiations. Even after the Senate failed Cut, Cap and Balance, Schweikert supports it as the House plan.

“He is focused solely on Cut, Cap and Balance,” the source said. “He hopes he can still play a role in working with leadership and other freshmen that want to get the message out that the Democrats have misled the American people and the president has no plan for the country.”

Oh my: CCB bill gets 2-1 approval among adults in CNN poll

posted at 7:20 pm on July 21, 2011 by Ed Morrissey
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Tina touched on this in the previous post, but it’s important enough to look into the numbers.  Harry Reid might consider the Cut, Cap, and Balance Act the worst piece of legislation in the history of, well, legislation, but he doesn’t get much company among American adults.  In the latest CNN poll, two-thirds of voters favor the idea of tying a raise in the debt ceiling to spending caps and a balanced budget amendment, and this isn’t a survey of conservative-leaning likely voters, either.  However, if you expect the CNN story about its own poll to highlight this result, then you obviously haven’t been reading CNN long (via Poor Richard’s News):

    Americans are hungry for a solution to the debt ceiling debate but there is a big partisan divide that isn’t going to make a solution easy to achieve, according to a new national survey.

    And a CNN/ORC International Poll also indicates that while Democrats and independent voters are open to a number of different approaches, Republicans draw the line at tax increases, and many of them oppose raising the nation’s debt ceiling under any circumstances.

    “That may create a problem for the Republican party, because most Americans think that GOP has been acting irresponsibly in the debt ceiling talks and they will blame congressional Republicans, not President Barack Obama, if no action is taken on the debt ceiling by August 2,” says CNN Polling Director Keating Holland.

One has to go thirteen paragraphs into the story to find CNN addressing this at all:

    Republicans like the “cut, cap, and balance” approach to the debt ceiling, as do Democrats and independents. Most Americans support a balanced budget amendment, and most, but not as many, think an amendment is necessary to get federal spending under control. A balanced budget amendment passed the House earlier this week, but a vote in the Senate is expected to fail.

Er, yeah.  In other words, a consensus exists across all political lines that the CCB/BBA approach would be a good idea.  When one scrolls down to the crosstab sections of the raw data, the consensus becomes very, very clear.  The CCB/BBA approach wins majorities in every single demographic — including self-described liberals.  Sixty-three percent of Democrats back the House bill.  The least supportive age demographic is 50-64YOs at 62/37; the least supportive regional demographic is the Midwest at 61/39.  Even those who express opposition to the Tea Party supports it 53/47.

In other words, it’s a clean sweep.  Simply put, there is no political demographic at all where the CCB/BBA doesn’t get majority support.  The BBA on its own does even better.  It gets 3-1 support (74/24), and except for those Tea Party opponents (56%) and self-professed liberals (61/37), doesn’t get below 70% support in any demographic.

Guess what doesn’t get much support?  The McConnell plan.  Respondents rejected the idea of letting Obama raise the debt ceiling on his own, 34/65.  Not one single demographic supports the idea, not even Democrats (40/60) or liberals (34/65).

To quote Barack Obama, the American people are sold — on the Republican plan passed in the House to deal with the debt-ceiling and spending crises.  Too bad CNN buried the lede.