Putin calls USA a parasite on the world economy!

[Misha]

It seems industrialized countries are in a race to devalue their currency (e. g, monetize their debt).  Even the Swiss joined the race.

And Japan enters the fray...

[Muzh]

My intern and I agree that the rest of the world is not going to be caught with their pants down again. We have this high suspicion the Wall Street was betting of default and that's the reason for the sell off, they'll have to eat their bets.
 
Don't ask me to go MBA on you guys, it's just a hunch.

[SMS60]

The stock market is tanking at the moment

[CanadaMan]

Allow me to clarify myself.

It seems that I may have offended some Americans here.

When I said that I agree with Putin, I was thinking in terms of the intent of what he was saying, not his literal proclamation of the USA being a parasite.

Had the USA politicians got off their duffs a week or two earlier to vote in a revised debt ceiling, the run-up sell-off to Aug 2 and probably the carnage that has followed would not have taken place.

I repeat, it was completely unnecessary.

[Gator]

Had the USA politicians got off their duffs a week or two earlier to vote in a revised debt ceiling, the run-up sell-off to Aug 2 and probably the carnage that has followed would not have taken place.

Disagree.  The US raised the possibility of default, yet never defaulted. 
 
The reason for the market downturn is the fact that the global economy is slowing.  It had been slowing long before the debt debate in Congress.  Europeans have been in an austerity program for some time now.  The Asia market is tightening.   The US was the last country trying to stimulate its economy.     Our stimulus program will be curtailed because of US concern with mounting debt.  There are many companies whose revenues are tied to government spending.   Investors have rushed to cash - sold equities. 
 
Based on recent corporate earnings, the market is oversold unless we are headed for a double dip recession.  Then again maybe the market has simply and quickly reset itself to the correct level.
 

 
I repeat, it was completely unnecessary.

 

I agree as we should have curtailed spending 10 years ago.

[CanadaMan]

 
The reason for the market downturn is the fact that the global economy is slowing.  It had been slowing long before the debt debate in Congress.  Europeans have been in an austerity program for some time now.

Waiting until the last minute (literally) to pass the bill
put the US debt issue on the front burner, in the spotlight, and under a microscope.

People who normally wouldn't know a debt ceiling from a basement ceiling were talking about it at the dinner table.

Passing the bill with plenty of time to spare (a week or two in advance of the deadline) would have kept the issue off the radar screen for many people.

Of course the global economy is slowing. It's plain to see.
But it's also plain to see the cause and effect of this recent debt ceiling raise and the poor way it was handled.

[GQBlues]

...The reason for the market downturn is the fact that the global economy is slowing.  It had been slowing long before the debt debate in Congress.  Europeans have been in an austerity program for some time now.  The Asia market is tightening.   The US was the last country trying to stimulate its economy....

 
Agree. The market is fidgeting. It's to be expected. Consumer report showed all indicators that people had stopped spending thereby giving a pretty dismal quarter report. Unemployment is on an upsurge and hiring had slowed to a stop.
 

Based on recent corporate earnings, the market is oversold unless we are headed for a double dip recession.  Then again maybe the market has simply and quickly reset itself to the correct level.

I disagree with this. I don't believe we ever got out of the last one. All the feel good, colorful speeches just aren't cutting it. We need a proactive leadership in DC instead of hype and a whole lot of smoke.

[TheTraveler]

...the wealthy paying 1.7% of their income on social insurance and complaining about it, it should be embarrassing.

To steer the conversation back to the website theme... I'm fairly certain that the average russian woman (or any woman, really) is going to be turned off by guys who complain about 'the wealthy'.  Women generally dig wealthy.

[oldernotwiser]

To steer the conversation back to the website theme... I'm fairly certain that the average russian woman (or any woman, really) is going to be turned off by guys who complain about 'the wealthy'.  Women generally dig wealthy.

Totally disagree, on a couple of levels.  First of all, it is not a complaint against the wealthy, it is the idea of what is fair or equitable for the wealthy to pay to support a system that provides them with the lifestyle that they enjoy, the remark was more in the line of why would someone with so much, view paying so little as a burden.  I do believe in the idea of a meritocracy where those who work hard should be rewarded, so not opposed to wealthy, I guess if you view that as complaining against the wealthy so be it.
Secondly-- in my opinion as I am not a women-- not all women are turned on by wealth so to speak, and there are many who might make the same comment I made.  And truly, I would be turned off by any women who made wealth a top priority in choosing a mate no matter how much money I have or how pretty they are.

[oldernotwiser]

http://curiouscapitalist.blogs.time.com/2011/08/04/why-wall-street-hates-the-debt-deal/?hpt=hp_t1
 
Posted the above link, food for thought.  In it one of the comments made was that tremendous inequity in the level of wealth caused the recession.  The current debt deal would only make the problem worse, reason for the recent stock sell off. 

I agree in part, more likely though, the recent stock sell off caused by massive movement of money by "job creators" the wealthy to what appears to them safer havens.
Not all of the wealthy are opposed to higher taxes, or tax reform.  Warren Buffet has come out and made comments about how his secretary pays a higher tax percentage than him.  Reminds me in some ways of the what I was told growing up in school about Henry Ford wanting to pay his workers enough so they could buy the cars they were manufacturing.

[Gator]

Posted the above link, food for thought.  In it one of the comments made was that tremendous inequity in the level of wealth caused the recession.

I read your article and I did not see that comment.  IMO unqualified lending, leveraging and CDSs caused the recession. 
 
 
Again you repeat your point about punishing the rich with more taxes.  Again, it will not solve the fiscal problem. 
 
Geez!  Such talk is similar to a senior citizen who took care of his health and is living well into the 80s and now telling him:  "Hey old fellow, you are taking more than your share of the retirement pot.  You have already had a better life than most.  Enough - it is time for you to go.  We are taking your pension and using it to fund expensive medical care for people who abused their health so that they can 'live' an extra six months."
 
You are older and wiser and hopefully healthy.  Are you ready to give up your SS payments to help medicare and medicaid?   [To clarify, I am not accusing you of being in the 80s. ]

[Vincenzo]

And truly, I would be turned off by any women who made wealth a top priority in choosing a mate no matter how much money I have or how pretty they are.

Do you know any Russian woman who wants to marry a loser without money?

Try to tell Russian women your ideas about stealing moneys from the rich and making them poor.
Their mothers will be angry and ask daughters never deal with the commies. They remember what happened when Soviet people had no incentive to work and produce any goods.

[Misha]

Try to tell Russian women your ideas about stealing moneys from the rich and making them poor. Their mothers will be angry and ask daughters never deal with the commies. They remember what happened when Soviet people had no incentive to work and produce any goods.

Actually, Vince, unless you dating one of the new rich in Russia, the odds are much better that the mother and the grandmother will we nostalgic and will look upon Soviet times fondly and will remember the 90s as a hellish period where the "rich" "stole" all of Russia's wealth, leaving them in abject poverty 

[BC]

I read your article and I did not see that comment.  IMO unqualified lending, leveraging and CDSs caused the recession. 
 

Here's my take.

Through a long period of time the ever increasing trade deficits were fought with an artificially low dollar that was produced with a large amount of USD being force fed into the economy.  To keep the dollar 'cheap', interest rates were down requiring the banks to circulate even more money and taking more risks to do so to make a living.  The costs of conflict and security were a boom for a limited number of industries but bad for the government.  Even lower interest rates kept increasing the national debt somewhat in check.. something like refinancing your home to buy a car and thinking you got a good deal since the interest rates were lower... hey! I got a free car! just by accepting a variable interest rate loan!... this overheated the economy and increased the risk..  anyone could buy a home.. or get a real credit card.. or store card.. or gas card.. used to be a fat wallet had lots of cash but no more.. it's all plastic instead.

The housing boom was a result of government financial policy and a nation that could not compete with the Japan and China as far as manufacturing was concerned.  Manufacturing consisted of producing the wrapping around burgers and domestic companies producing their salad shooters overseas instead and routing their support hotlines to India.  The only market for a salad shooter is the US..... no one else in the world uses them.  The US economy was, and still is basically consuming itself...

Even the postal system is now going broke since the gazillions of cheap credit card offers with guaranteed acceptance dwindled to zilch..

When the payback time came, everyone was sold short and could not come up with the cash to service..  things spiraled down from there.

Think of an airplane with icing problems.... the lift was just not there and it stalled..  Now the pilots are struggling to find a soft spot to try and land.

It was thought that the US economy could be a perpetual motion machine.. It was sold to government as such but in the end just did not pan out.  Business got a double dip boom claiming to be 'too big to bust'... cars, airlines, finance were and still are the winners.

I think the lesson to be learned is that just like religion, business and politics don't mix well either, especially when one is always trying to steer (and steal from) the other.

Bottom line, the house of cards crumbled and it's time to suck it in.  There are some crunches still ahead.. whiplash from overseas and consumer credit card debt.  I think we're looking at a triple and not double dip depression..  Maybe even quadruple dip when one considers state debts..

http://www.stateline.org/live/details/story?contentId=436547&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+StatelineorgRss-Headlines+%28Stateline.org+RSS+-+Headlines%29

http://www.usdebtclock.org/state-debt-clocks/state-of-california-debt-clock.html

Folks now look at Greece, Spain, Portugal, Italy.. but in essence they are now states..  I wonder if the Fed will have to step in and save California, or Nevada, or Illinois.. or or or...

How many trillions are tied up in state debt that seems not to be included in the national debt? 

Oh well, there is a good side... everyone seems to be going down together so it keeps the overall scene somewhat relative even if the ride is quite bumpy.

Russians are like us Italians in the south.. they can get by fairly well with what they have.. capitalizing on the fact that personal debt is not a major factor.  The house has been passed down for generations.. the car falling apart but still gets you there, ingredients are cheap but food good, the wine and vodka cheap.  Not too bad after all.

[Misha]

Russians are like us Italians in the south.. they can get by fairly well with what they have.. capitalizing on the fact that personal debt is not a major factor.  The house has been passed down for generations.. the car falling apart but still gets you there, ingredients are cheap but food good, the wine and vodka cheap.  Not too bad after all.

Not sure about that. Sure, Russians when push comes to shove can plant potatoes and distill some home brew, but if the American economy tanks, so will the price of oil and the Russian state will quickly go into debt. It will be the 1990s all over again, but this time with an even bigger bureaucracy and more money needed to keep aging oil fields flowing... Remember, the Russian state needs oil at $120 a barrel to balance its budget.

[BC]

Not sure about that. Sure, Russians when push comes to shove can plant potatoes and distill some home brew, but if the American economy tanks, so will the price of oil and the Russian state will quickly go into debt. It will be the 1990s all over again, but this time with an even bigger bureaucracy and more money needed to keep aging oil fields flowing... Remember, the Russian state needs oil at $120 a barrel to balance its budget.

It's much easier to live with a little bit less than having to drastically downgrade an inflated lifestyle.  Here I can go to a store and be a few dimes or even a euro short and it's no biggie.. you can't imagine how many times I've heard the words 'Next time.." one would think otherwise for an economically depressed area.  I go buy seafood on Sundays and get a couple oysters on the half shell as a little reward.  Albeit we're pretty good customers at the stores here in town but I've seen others handled the same way.  Quite honestly I think the financial stresses may end up productive in many ways, sort of like getting back to basics and saving for the 'wants' in life instead of filling out another credit card application that promises to give even more while consolidating debt from your previous cards.  May even drive families back together again to 'fill the pot'.  Yes, a long stretch but one thing is sure.. the current problems are not going to go away fast.

IIRC Putin stated a year or so ago that oil in the 80 to 90 dollar range was quite acceptable.. have things changed that much in a short time?  I can imagine though that the RU political machine will allow for rapid and effective changes to meet their challenges ahead.. certainly nothing like the recent 11th hour political mess in the US..  It really was disturbing to see how powerless the President actually is with all those checks and balances.

[Misha]

Yes, it keeps going up. When Putin came to power I believe it was $30 a barrel.

[BC]

Yes, it keeps going up. When Putin came to power I believe it was $30 a barrel.

Isn't Russia's national debt only a few percent of the US?  Even figuring RU population at a little less than half the US, even on a GDP basis not bad at all or?

[Gator]

 
A European raises his head in these times and points his finger at the US?!
 
BC,
 
Basic economics teaches us that problems will occur when monetary and fiscal policies are not complementary.  So you are partly correct.
 
Yes, trade imbalances contributed to the problem, yet the core of the problem was reckless lending practices.  Money was plentiful and  cheap (your argument) and financial institutions worked overtime to lend it to anyone.  In my early working years I could buy a house only with a 20% down payment, and the mortgage was limited to a maximum of 2x my annual salary.    Such covenants would have constrained  lending in the past decade, so lending institutions relaxed their covenants, even lending to sub-prime homebuyers.  Someone with no cash could buy a home and end up with cash in their pocket.  What a deal!   The lending institutions then bundled and sold the mortgages as derivatives so they could lend more. 
 
Surprise!    Many new owners could not pay the mortgage, and the house of cards crumbled. 
 
I will say something good about Obama.  His Treasury Secretary Geithner did require US banks to rebuild their balance sheet by building reserves.   America was pulling itself out of the economic downturn, albeit at a snail's pace.  QEI and QEII were debatable as were the stimulus initiatives. Yet, we were limping along.   
 
Meanwhile we discover that some European economies did what America did, and its banks do not have a solid balance sheet. The fiscal policies of some nation's are even worse than  here in the US.    So you are now Putin's "parasite."  Europe can not point its fingers at us, but instead must look into the mirror.  It is your turn to play it out.  To deal with the crisis, I understand the Italian parliament is working overtime in August instead of heading to a seaside holiday.  When did that last happen? 
 
I have faith that we (US and Europe) will resolve this and not head into a depression.  While some nations and states have bad balance sheets, many major corporations are sitting on cash.  Such can help with reinvestment, etc. if our recovery can continue.  Tightening of fiscal policies may not be enough.  It is possible but not likely that Europe and America may simply monetize the debt by simultaneously devaluing their currencies.  Bond holders will scream, particularly China, but what can they do given their economy depends upon selling stuff to us.   
 
You mention Russia.  Russia is not a major creditor, yet dictatorships with an economy based upon a single commodity never fare well (study Latin America history).     
 
Meanwhile many are expecting the US credit to be downgraded soon.  That will set off another shock wave.
 
I would suggest to RW that they focus on men from Canada and Australia, yet even those two economies are not immune from global problems. 

[Vincenzo]

Actually, Vince, unless you dating one of the new rich in Russia, the odds are much better that the mother and the grandmother will we nostalgic and will look upon Soviet times fondly and will remember the 90s as a hellish period where the "rich" "stole" all of Russia's wealth, leaving them in abject poverty 

I haven't dated any girl living in poverty. Actually, many of them live pretty decently.
Streets are full of cars, dinner tables are full of food, outfits are nice, computers are everywhere. People travel everywhere, theaters and movies are full...

Certainly, most Russians live modestly, cook and grow vegetables themselves.

The "rich" "stealers" don't feel comfortable under Putin. Some have been expelled, some stay in prison like the Yukos boss.

[Gator]

Actually, Vince, unless you dating one of the new rich in Russia, the odds are much better that the mother and the grandmother will we nostalgic and will look upon Soviet times fondly and will remember the 90s as a hellish period where the "rich" "stole" all of Russia's wealth, leaving them in abject poverty 

Was it the "rich" or more the "connected"  (with backing from outside sources to pay for the refrigerators bartered to ex-commie workers for their stock)?   They became "rich" after completing the largest transition of wealth in the history of the world.   I always wonder who were the outside sources, and how did they profit at the end.

[Vincenzo]

Remember, the Russian state needs oil at $120 a barrel to balance its budget.

China and India and European countries need more and more oil and gas.
If the USA needs Russian oil, it must export something to Russia with the label "Made in USA".

[OlgaH]

Below is a good article on the situation in Russia today regarding social system in Russia
Google translation
http://translate.google.com/translate?hl=en&sl=ru&u=http://www.ng.ru/economics/2011-07-20/4_socialka.html&ei=hog8Tpa7D8OatwfdoI30Ag&sa=X&oi=translate&ct=result&resnum=1&ved=0CCQQ7gEwAA&prev=/search%3Fq%3D%25D0%259D%25D0%25B5%25D0%25BF%25D0%25BE%25D1%2581%25D0%25B8%25D0%25BB%25D1%258C%25D0%25BD%25D0%25B0%25D1%258F%2B%25D1%2581%25D0%25BE%25D1%2586%25D0%25B8%25D0%25B0%25D0%25BB%25D0%25BA%25D0%25B0%26hl%3Den%26biw%3D1115%26bih%3D561%26prmd%3Divns

Social security "eats" so much money from Russian budget. To keep up with the budget the Russian government is planing a new tax reform particularly on the property tax. Russian small businesses are already  burdened with taxation (and of course bureaucracy and corruption) and many small businesses are closing...

[OlgaH]

The "rich" "stealers" don't feel comfortable under Putin. Some have been expelled, some stay in prison like the Yukos boss.

Vincenzo, they always have been doing just fine under Putin following the main rule "share and don't cross the path" 

[acctBill]

Standard and Poor's agrees with Putin.  S&P has downgraded US debt from the highest rating of AAA to AA+, down one notch.   

http://finance.yahoo.com/news/SampP-downgrades-US-credit-apf-2107320979.html