The Cyprus Bailout includes the Confiscation of People’s Personal Savings

Posted by PITHOCRATES - March 17th, 2013

Week in Review

President Obama isn’t worried about the deficit.  Or the debt.  Neither are Democrats.  Who see no problem with increasing federal spending even more.  Probably because there are Nobel Prize winning economists like Paul Krugman saying deficit spending is a good thing. Because what can possible go wrong with spending money you don’t have?  No doubt the very same things they were saying in Greece.  Italy.  And Cyprus (see Analysis: Cyprus bank levy risks dangerous euro zone precedent by Mike Peacock posted 3/17/2013 on Reuters).

A hit imposed on Cypriot bank depositors by the euro zone has shocked and alarmed politicians and bankers who fear the currency bloc has set a precedent that will unnerve investors and citizens alike.

After all-night Friday talks, euro finance ministers agreed a 10 billion euro ($13 billion) bailout for the stricken Mediterranean island and said since so much of its debt was rooted in its banks, that sector would have to bear a large part of the burden.

In a radical departure from previous aid packages – and one that gave rise to incredulity and anger across Cyprus – the ministers are forcing the nation’s savers to pay up to 10 percent of their deposits to raise almost 6 billion euros…

The decision sent Cypriots scurrying to the cash points, most of which were emptied within hours. Most have been unable to access their bank accounts since Saturday morning, a move unlikely to engender calm…

A Cypriot bank holiday on Monday will limit any immediate reaction. The deposit levy – set at 9.9 percent on bank deposits exceeding 100,000 euros and 6.7 percent on anything below that – will be imposed on Tuesday, if voted through in parliament…

“I understand that electorates in Germany and northern Europe demand some sacrifice. However, when you accept a solution that basically expropriates 10 percent of deposits, you set a dangerous precedent,” Vladimir Dlouhy, former Czech economy minister and now international advisor for Goldman Sachs told Reuters in Berlin. “If we get into deeper trouble, God help us, they may try to take 50 percent.”

Ouch.  That’s what can go wrong with too much government spending.  And too much debt.  The government will just seize your money.  Scary.  Hearing stuff like this makes you pay a little more attention to that idea someone floated about the government expropriating 401(k) retirement accounts.  Taking our retirement money.  But being magnanimous enough about it to give us something valuable in return.  A promise to pay us a fixed retirement benefit.  Something as reliable and solvent as Social Security.  Preferably like it used to be.  Before they began forecasting it was going bankrupt.

So this is the downside to spending money you don’t have.  Bank runs.  As people pull their money out of our banks before the government can seize it.  Causing banks to fail.  Crashing the economy into a depression.  Just like all those bank failures in the Thirties caused the Great Depression.  But other than this there is little to worry about spending money you don’t have.

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The Taxpayers to lose Billions on the GM Bailout and likely will have to bail GM out Again

Posted by PITHOCRATES - December 22nd, 2012

Week in Review

GM could have filed bankruptcy.  Like many companies do.  They reorganize.  Fix the problems that caused them to go bankrupt.  Then they emerge leaner and meaner.  And are able to compete in the market that bankrupted them before their reorganization.  That’s the usual path.  GM did not take it.  Why?  Because the thing that bankrupted GM was its high union costs.  Especially their legacy costs.  Paying pension and health care costs for more retirees than they have active workers.

Had they gone through a normal bankruptcy they would have made GM competitive again.  Which meant doing something to those costly union contracts.  But as the UAW is a valuable resource for the Democrat Party President Obama swept in and protected the UAW.  Giving them the money they needed to fund those pension plans.  Without fixing their competiveness problem.  Meaning they will likely need another bailout (see GM to benefit from tax break for years by David Shepardson posted 12/20/2012 on The Detroit News).

The Treasury Department’s decision to begin its exit from General Motors Co., despite low stock prices, means U.S. taxpayers are almost certain to incur large losses on the $49.5 billion bailout of the Detroit automaker.

At current stock prices, the government stands to lose nearly $13 billion.

To break even, it would need to sell its remaining 300 million shares for about $70 each. The Treasury will sell its remaining shares over the next 15 months, likely in a series of small sales, and that could stem some of the losses.

Unlike the 1980 Chrysler bailout, the Obama administration didn’t require GM to repay all of its government funds. Instead, the government swapped about $42 billion for a 61 percent equity stake in the automaker.

Former auto czar Steve Rattner said the government made the decision because it didn’t want the new GM to be carrying crushing debt. Instead, it gave GM billions of dollars after its bankruptcy to operate.

GM also got other financial benefits. For example, it has legally avoided paying federal income taxes since exiting bankruptcy, even though it has earned $16 billion in profits.

And GM likely will pay no income taxes for many years, because Treasury rulings let GM use $18 billion in losses from the “old GM” left behind in bankruptcy to offset profits.

Interesting.  We’re going to raise taxes on small business owners (those S corporations and LLCs who earn more than $250,000 in business profits that pass through to their personal tax returns) because those who can afford to pay a little more should.  But a company earning $16 billion (yes, that’s billion with a ‘B’) in profits doesn’t have to pay any income taxes.  Why?  Small business owners create far more jobs than GM does.  So why does GM get preferential treatment?  Because small businesses aren’t unionized.  And don’t pay union dues that feed back to the Democrat Party.

When the Carter administration bailed out Chrysler they at least got all of our money back.  They made no gifts of taxpayer money.  If that wasn’t bad enough our gift to GM didn’t fix their competitiveness problem.  So that when GM once again pays income taxes they will be right back where they were before.  Starved of cash.  And unable to fund their pension plans.

Had GM gone through a normal bankruptcy they would already be back in business.  Competitive.  And paying income taxes.  Without the taxpayers picking up the tab.  President Obama didn’t save GM.  He saved the UAW.  Who will eventually destroy GM with their legacy costs.

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U.S. Tax Dollars being Invested to Create Jobs in China

Posted by PITHOCRATES - December 1st, 2012

Week in Review

The U.S. government bailed out GM.  Instead of letting them go through a normal bankruptcy proceeding that would make GM competitive again so they could sell cars in the U.S. again.  Instead, the government gave GM taxpayer money to fund their pension and retiree health care costs.  Which will do nothing to improve their competitiveness.  Or create new jobs in the U.S.  So what will that massive government investment do for GM?  Allow them to expand and create jobs…in China (see GM Chinese venture to build $1 billion plant in Chongqing by Ben Klayman posted 11/28/2012 on Reuters).

General Motors Co (GM.N) and its Chinese joint-venture partners said on Wednesday they plan to build a $1 billion auto assembly plant in the city of Chongqing as the GM group bids to remain the leader in the world’s largest auto market…

Earlier this month, GM and its Chinese partners opened a plant in the southern city of Liuzhou for its low-cost Baojun brand. That plant will also eventually have an annual production capacity of 400,000 vehicles…

In September, GM opened a large vehicle test track west of Shanghai. GM and its partners invested $252 million to build what officials called the country’s largest proving ground.

In addition to Liuzhou, the joint venture currently operates a plant in Qingdao. GM and SAIC, through a different joint venture, also have a plant in Shanghai, and several more in northeast China.

This is not helping the U.S. economy.  Building plants and creating jobs in China.  All this is doing is allowing GM to make money like Wall Street makes money.  By investing money.  And getting a return on their Chinese investments.  Government Motors, I mean, General Motors is doing the very thing the Democrats hammered Mitt Romney for doing during the 2012 election.  Creating jobs in China.  The only difference, of course, is that Romney didn’t use U.S. tax money to create any of his jobs.

So the government bailout of General Motors didn’t help anyone but the UAW whose high costs were making them uncompetitive (the source of all of GM’s problems).  And the Chinese.  It didn’t create any new jobs in America.  And it didn’t help GM become more competitive.  Forcing them to rely on their Chinese job growth because their cost structure just won’t let them sell more cars or add more jobs in the United States.

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The Chevy Volt is too Expensive unless you want to Drive in the Carpool Lane Alone

Posted by PITHOCRATES - September 9th, 2012

Week in Review

The government rarely runs anything well.  Because few politicians have any business experience.  Which explains why the more they intervene into the private sector economy the more the economy suffers.  Case in point GM.  GM was losing money because they couldn’t sell cars at a high enough price to pay their bills.  Especially their retiree pension and health care costs.  Instead of allowing GM to go through the bankruptcy process to fix their problems so they could sell cars at prices that would pay their bills the government bailed out the UAW.  And did not fix their underlying problem.  What caused all of their problems in the first place.  High labor and retiree costs.  So it’s no surprise that GM did not emerge leaner and meaner from bankruptcy.  Like the airlines typically do.  Instead they left the problems in place.  And told GM to build the Chevy Volt (see The Chevy Volt: Dead or alive? by Brooke Crothers posted 9/3/2012 on CNET News).

Depending on who you believe, the Volt is either alive and kickin’ or in its death throes.

The most recent news about GM’s plug-in hybrid gives fodder to both sides. On the upside, GM said on Wednesday that it already has sold more than 2,500 Volts this month. That would be a monthly record, bringing the global total this year to about 13,000, according to reports.

But critics quickly jumped on another piece of news: GM’s suspension of Volt production for four weeks.

Dying or not this is not good news for the Volt.  Very few are buying these cars.  And those who do are not buying them because they are great cars.  They’re buying them to make a statement.  Or for some other reason.  And that is the problem for the Volt.  When a vehicle is selling well you hear the rank and file complaining about all of the overtime they have to work.  To keep up with demand.  While demanding their factories add another shift.  But when you’re only selling 13,000 a year (just over 1,000 a month) you can shut down for four weeks.  And no one will even notice.

But the completely electric Nissan Leaf has not fared well either. It has a goal of 20,000 units this year, which the Detroit News says is increasingly unlikely.

Another problem GM faces is competition. It’s no longer the only plug-in hybrid on the block. Ford has its C-Max Energi plug-in hybrid ($32,950) and Toyota is now selling a Prius plug-in hybrid ($32,000)…

GM says one in three Volts are now sold in California. And there are reasons for an uptick in Golden State sales. The Volt earlier this year finally qualified for the California provision that allows environmentally friendly cars to use restricted carpool lanes whether they’re carrying passengers or not.

And the Chevy Volt sells for $40,000.  People just aren’t demanding these cars.  Because they’re expensive, small cars.  And the people that are buying the most Volts are in California.  Just so they can drive in the carpool lanes.  Where commuters will pay almost any price to avoid that awful Californian gridlock.  Especially if you don’t have to drag along another body with you.

The federal government poured a lot of money into the Chevy Volt when they bailed out the UAW pension fund (aka the auto bailout).  This was the car of the future.  Because President Obama said so.  And proclaimed the new GM would sell a million Volts a year.  And GM would use the proceeds from these sales to repay the taxpayers.  Not only have they grossly missed the president’s sales target.  The government interference in the company (by making them build a car that no one demanded) has caused the stock price to fall.  While the government still owns a substantial amount of shares.  Pushing any repayment of the taxpayers’ money further out in the future.  If there is any repayment at all.

It just may not be time for the plug-in hybrid.  Based on these sales numbers.  So it probably wasn’t wise to make it such a big part of GM’s turnaround plan.  Or to pour so much taxpayer money into it.  Worse, GM is not positioned any better to compete in the market place.  Which is why their plug-in hybrid is the most costly one in the market place.  And will be for the foreseeable future.  Until they have a true bankruptcy reorganization.

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President Obama’s GM Bailout Bailed Out the UAW not GM

Posted by PITHOCRATES - August 19th, 2012

Week in Review

GM got into trouble because they couldn’t sell cars competitively.  Because they had higher labor costs than the foreign competitors taking their market share.  And they simply couldn’t sell enough cars at their high prices to pay their labor costs.  Which led them to bankruptcy.  But President Obama saved GM.  By bailing them out.  And putting them on the road to prosperity.  Or did he (see Morning Bell: Taxpayers’ Auto Bailout Losses Mounting by Amy Payne posted 8/14/2012 on The Foundry)?

Taxpayers will lose even more on the auto bailout than previously thought, as the Treasury has just revised its estimate upward to $25 billion. This may still underestimate the losses to come—yet President Obama plans to tout the auto bailout as a key accomplishment of his Administration…

Heritage labor expert James Sherk and co-author Todd Zywicki found that all of the taxpayer losses occurred because the Administration manipulated bankruptcy law to shelter the United Auto Workers’ (UAW) compensation. None of the losses were necessary to preserve jobs, and taxpayers spent billions to prop up the compensation of some of the most highly paid workers in America. They write:

We estimate that the Administration redistributed $26.5 billion more to the UAW than it would have received had it been treated as it usually would in bankruptcy proceedings.…Thus, the entire loss to the taxpayers from the auto bailout comes from the funds diverted to the UAW.

The union workers, who were making more than $70 an hour in wages and benefits, received preferential treatment when their companies had to restructure. GM and Chrysler owed billions to a trust fund they had created to provide UAW members with gold-plated retiree health benefits—and taxpayers ended up paying right into that fund. That doesn’t happen in a normal bankruptcy.

Even Stephen Rattner, President Obama’s “car czar,” has admitted that “We should have asked the UAW to do a bit more. We did not ask any UAW member to take a cut in their pay.” As a result, even after the reorganization, GM still has higher labor costs ($56 an hour) than any of its foreign-based competitors.

So this wasn’t so much a bailout of GM as it was a bailout for the UAW.  Lovely.  More debt for the rest of us so a privileged few can live better than we can.  And to add insult to injury this didn’t even fix GM’s original problem.  Their high labor costs.  Which prevents them from selling their cars competitively.  So the bailout did nothing to help GM.  Which means they’ll probably need another bailout later.  Or special treatment from the government.  Such as a pass on paying their federal income taxes.  So the American taxpayer is not benefitting at all from the GM bailout.  Unless he or she is a member of the UAW.

So in other words, the GM bailout basically screwed the American taxpayer.  So the president could reward a political ally.  That will repay his kindness in campaign contributions.  And votes.  Which he desperately needs because his stewardship of the economy is worse than Jimmy Carter’s.

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The US and UK are pressuring Germany to print Euros and guarantee Greek Debt

Posted by PITHOCRATES - May 20th, 2012

Week in Review

Greece is in a world of hurt.  Their government spends too much money.  And their people answer calls for austerity with riots.  They simply refuse to address the problem that got them where they are.  Too much spending.  If they continue to reject austerity measures to bring their spending in line with their ability to pay for it they’re going to be cut off from future loans.  And broomed out of the Eurozone.  That won’t be pretty.  Because if others don’t prop them up they simply won’t be able to service their debt.  They will default on their sovereign debt obligations.  And the banks who have loaned large sums of Euros to them will struggle to recover from these losses.  Many of them simply won’t be able to.  Once the banks start failing the contagion will spread throughout Europe.  And the world.  Bringing on a worldwide recession.  That could easily slide into a depression.  And all of this because of excessive government spending.  There’s a lesson to learn here.  STOP SPENDING SO MUCH.  But no one ever learns this lesson.  Especially when Keynesians are running the government.

They’re talking about your typical Keynesian solutions.  More of the same that got Greece into the trouble they’re in.  Quantitative easing.  Printing money.  To stimulate these troubled economies with…wait for it…more government spending.  As if they can fix their debt troubles with higher consumer prices.  Which is what you get when you print more money.  Especially when the supply of money grows at a rate greater than its economy grows.  So prices will rise while the value of the Euro will fall.  It’ll make their exports cheaper.  But it’ll also make the value of all those outstanding sovereign Euro bonds worth less.  Those bonds all those banks are holding.  Giving them a negative return on their investment.  Pushing these banks closer to insolvency.

And it doesn’t end there.  The strongest economy in the Eurozone is Germany.  They know a thing or two about inflation thanks to the hyperinflation in Weimar Germany that gave the world Adolf Hitler.  So the Germans have governed responsibly.  By living within their means.  And their people have been paying a lot of taxes to pay for all of those Eurozone bailouts.  A nation that has truly gone above and beyond.  Their reward for responsible governing and selfless sacrifice?  They’re asking the German taxpayer to assume the Greek debt (see David Cameron and Barack Obama lead charge to save the eurozone by James Kirkup posted 5/19/2012 on The Telegraph).

Angela Merkel of Germany came under intense pressure to do more to support the struggling currency by putting German economic credibility behind the debts of weaker economies like Greece…

There is growing agreement among G8 leaders that the answer to the eurozone crisis is for members of the single currency to “mutualise” their debts, meaning strong members like Germany partly guarantee the debts of weaker ones like Greece.

Mrs Merkel has resisted any such plans, reluctant to ask German taxpayers – who already resent the bill for helping other eurozone countries – to underwrite the budgets of indebted southern Europeans…

That’s fair.  Except to the Germans, of course.  The problem is if the Greeks don’t reduce their government spending the underlying problem will remain.  Excessive spending.  Which means they will need bailout after bailout.  One or two or three just won’t do it.  And it will delay the inevitable.  And take more people with them when this Keynesian house of cards implodes.

Giving people benefits is easy.  People love you for your generosity.  Taking benefits away is very, very difficult.  People will hate you.  The longer you wait to start the more difficult it will be to cut these benefits.  And the more the people will hate you.  Which is why it is so difficult to govern responsibly.  Because politicians find it is easier to buy votes with generous benefits than it is win votes with good ideology.  This is why governments everywhere embrace the failed policies of Keynesian economics.  Because it gives legitimacy for the easy way of winning elections.  Buying votes with excessive government spending.

And this is the ultimate problem in the Eurozone.  Keynesian economics.  For if governments did not deficit spend or ‘stimulate’ their economies with monetary policy there would be no Eurozone sovereign debt crisis.  Being debt free makes everything easier.  Because you don’t have to borrow.  Service your debt.  Or roll it over.  You have none of those headaches when you live within your means.  Just look at the Germans.

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The End of the Euro is Fast Approaching

Posted by PITHOCRATES - May 12th, 2012

Week in Review

This is the end.  Beautiful friend.  This is the end.  My only friend, the end.  Of our elaborate plans, the end.  Of everything that stands, the end.  No safety or surprise, the end.  I’ll never look into your eyes…again. 

Of course, Jim Morrison wasn’t writing about the Euro when he wrote The End.  And the Doors didn’t sing much about public finance.  But whenever a love affair ends it is painful.  Whether it be with your significant other.  Or a common currency that was going to change the economic order of the world.  Especially when foolishly rushing in mistaking desire for love.  The warning signs were there.  The lying.  And the cheating.  Fudging their numbers to meet the requirements of the Maastricht Treaty.  But what love can ever last when based on a lie (see Fitch Warns Euro Zone of Downgrades If Greeks Exit by Reuters posted 5/11/2012 on CNBC)?

Credit rating agency Fitch put the whole of the euro zone on notice on Friday that were Greece to leave the currency bloc as a result of its current crisis, the remaining countries could find their sovereign ratings at risk…

It said those countries were France, Italy, Spain, Cyprus Ireland, Portugal, Slovenia and Belgium…

The leaders of Greece’s once-dominant political parties were making a last push on Friday to avert a new election, which a poll showed would give victory to a radical leftist and doom an EU bailout — its second — agreed in March.

The majority of Greeks want to stay in the euro zone but voted last Sunday for parties that reject the severe terms of a bailout negotiated with foreign lenders.

European leaders say Greece will be ejected from the common currency [EUR=X  1.2914  —  UNCH  (0)   ] if it turns its back on the package of tax hikes and wage cuts.

Well, then, goodbye Euro.

You can’t stay in the Euro if you need a Euro bailout but reject the terms of that bailout.  For if you’re in need of a bailout you really can’t dictate the terms of that bailout.  That usually falls to the party who has the financial wherewithal to bail you out.  And that’s not Greece.  So sad considering so much of Western Civilization came from Athens.

So what will it take to learn that an ever expanding welfare state does not work?  How many more nations must fall?  All of Europe?  Will that be enough for the United States to learn the folly of their current economic policies?  Probably not.  They will follow Europe.  Who will follow Greece.  Buying votes with welfare spending.  Until they cross the point of no return.  Where the people will reject austerity.  And responsible governing.  Because their government taught them to.  Always assuming that the day of reckoning will come in some other generation.  Not in the current one.  But the day of reckoning has arrived.  Greece cannot borrow enough money to meet their spending requirements.  For when a government spends more than they can borrow it’s time to cut your spending.  They fudged their debt and deficit numbers to join the Euro.  And their numbers have only grown worse ever since.  And no amount of Keynesian math or class warfare can change that. 

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Ireland needs an EU Bailout but doesn’t like the Austerity attached to it and may reject the New Spending Rules

Posted by PITHOCRATES - March 3rd, 2012

Week in Review

Just when you thought the Euro was safe again (see Future of the euro again thrown into doubt after Irish announce referendum on new EU cash rules by Jason Groves posted 2/29/2012 on the Daily Mail).

Efforts to prop up the euro were again thrown into doubt last night after Ireland announced plans for a referendum on whether to accept new European spending rules…

Public anger over austerity measures is running high in Ireland and many observers were last night predicting a ‘No’ vote. That would not prevent the strict budget controls coming into force, but would leave Ireland  unable to access future EU bailouts…

Ireland has twice rejected plans for EU reform in referendums, only for the votes to be overturned under intense pressure from Brussels.

Eurosceptics in Ireland are expected to use the latest referendum to highlight Ireland’s dire economic problems, which have required a £70 billion bailout from the EU and International Monetary Fund.

Ireland giving away control over its own destiny to others due to intense pressure from an outside power?  My, how times have changed.  Once it took an occupying army to wrest their sovereignty away.  Now all you have to do is to get a nation to spend itself into debt and they will eventually hand you the keys to the kingdom.  Will they do it again?  Time will tell.

Again, the problem with the Eurozone is the lack of a political union.  But getting a political union of countries having such long and rich histories is not easy.  For if it were they’d already have done it.  But they haven’t.  And probably never will.  Unless countries step forward and agree to surrender their culture and identity.  And give control over their destiny to a distant central power.  Something that just doesn’t happen.  At least, not so far in the history of this world.  Where the trend seems to be definitely in the other direction.  Where autonomous regions of countries yearn for their independence from the countries suffocating their culture and identity.

This is the risk of excessive government spending.  You spend too much and you either ask for help.  Or wreak havoc on your nation by destroying its financial institutions with bankruptcy.  Neither is good.  But one is less desirable than the other.  Better still would be never putting yourself in between these two choices in the first place.  And the path there is that dreaded ‘A’ word.  Austerity.  For this we know for certain.  If Ireland had no debt Brussels wouldn’t be dictating terms to them.

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Private Bondholders asked to lose 53.5% of their Holdings in new Greek Bailout Agreement

Posted by PITHOCRATES - February 26th, 2012

Week in Review

Be thankful you don’t have any Greek bonds.  If you do you have nothing to be thankful about (see Greece submits its debt cut offer posted 2/24/2012 on BBC News).

Under the proposed debt swap, banks and other private creditors are being asked to take a 53.5% loss on their Greek bonds.

Ouch.  If you had your retirement savings invested in Greek bonds you won’t be able to retire as planned.  Imagine that.  Say you had saved $250,000 and put it into some of the safest investments out there.  Government debt.  Because unlike private corporations they have the power to tax.  And will always be able to repay their debt.  Until now, that is.  Instead of getting your $250,000 back you’ll only get $116,750 back.  That’s a worse hit than homeowners took during the subprime mortgage crisis.  Even though their mortgages are underwater at least they have a chance of getting their lost value back.  Not these Greek bond holders.  Once this deal goes through they lose their money forever.  And 53.5% is a lot to lose.

Will this solve their problems?  Not unless they severely cut their government spending.  And with Greeks in the streets rioting that will be easier said than done.  Which means they will continue to spend.  Run deficits.  And borrow money.  Putting them right back on the road they’re trying to get off.  And just who is going to take a chance on buying Greek bonds when the current bondholders just lost 53.5% of their holdings?  Here’s a clue.  It won’t be as many who bought them before the 53.5% write-down.

This will not likely end the Eurozone debt crisis.

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Standard & Poor lowers the Credit Rating for Nine European Countries

Posted by PITHOCRATES - January 15th, 2012

Week in Review

Interest rates are subject to the laws of supply and demand.  The more questionable a borrower looks to be able to repay the loan the higher the interest rate.  Because there is a low supply of people willing to loan to such risky borrowers.  So they have to offer higher rates to get people to take a greater risk.

When S&P took away America’s AAA rating this did not happen, though.  Not because America was immune to the laws of supply and demand in the bond market.  But because Europe had even bigger problems.  And they just got worse (see S&P cuts credit ratings for France, Italy, Spain by JAMEY KEATEN posted 1/14/2012 on Yahoo! News).

Standard & Poor’s swept the debt-ridden European continent with punishing credit downgrades Friday, stripping France of its coveted AAA status and dropping Italy even lower. Germany retained its top-notch rating, but Portugal’s debt was consigned to junk.

In all, S&P, which took away the United States’ AAA rating last summer, lowered the ratings of nine countries, complicating Europe’s efforts to find a way out of a debt crisis that still threatens to cause worldwide economic harm.

Austria also lost its AAA status, Italy and Spain fell by two notches, and S&P also cut ratings on Malta, Cyprus, Slovakia and Slovenia.

Some are arguing that this won’t impact the Eurozone bailout.  Because of the austerity measures the troubled countries have taken.  But it doesn’t help.  It just pushes the final resolution of the Eurozone debt crisis further out.  And probably makes it more unpleasant.

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