General Question

silverfly's avatar

Moody's downgrades Italy and Spain - do you care?

Asked by silverfly (4025 points ) October 7th, 2011

It seems to be a lot of drama to me, but perhaps it’s a big deal. What do you think?

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27 Answers

Blackberry's avatar

Not really, but that sucks.

Tropical_Willie's avatar

Yes that too bad. I will not be lending either of them any money.

CWOTUS's avatar

The dominoes are falling. You may not care today, but someday… these will be “the good old days”.

wundayatta's avatar

The global economy affects us more than most people realize. Of course, we affect them, too. These are all signs of a global recession. The US can not pull itself out of it’s recession without also other nations working on their own recessions. I care, but no more than I can about the protests and the Fed’s decisions and who wins the Phillies-Cards game tonight. In fact, probably a good deal less.

saint's avatar

The more global money gets soaked up covering bad debt, the less money to buy goods and services, some provided by you and me. That means less demand. That means fewer jobs (maybe yours and mine) and fewer ventures into wealth creation. Which means less money and so on. Which means printing money without the backing of wealth, which means your money becomes increasingly worthless, which means it does not buy much which means less demand and so on.
I would be a little worried if I were you.

incendiary_dan's avatar

Ditto to what @CWOTUS said. It’ll affect lots of economic activity for years, if not decades.

silverfly's avatar

@saint Agreed, but what can you do? I can’t end the FED by myself. Keynes is losing the war though as our dollar fades into oblivion.

Jeruba's avatar

@saint, you sound knowledgeable, or at least logical. Do you think the safest haven is in hi-tech, which was supposed to save everything and which we are foisting on the Third World as fast as we can? Or will things be best in the long run for those who make or work with something real: food and wood and metal and stone, not anything “virtual” that coverts energy directly into currency and funnels it into the narrowest possible range of pockets?

silverfly's avatar

@Jeruba I think the market should decide the direction. If hi tech turns out to be a good solution, it will naturally occur, but it can’t just be forced upon people… obviously.

Jeruba's avatar

I remain wary of anything that plugs in. When we really come to the crunch, who’s going to put bit production ahead of food production? and who’s going to spend grocery money on DSL?

silverfly's avatar

For sure… computers aren’t going to feed us. I’m learning about gardening and keeping food so I can be more self sufficient – something I think we could all benefit from. I think we’re too reliant on government to save us.

saint's avatar

@Jeruba It’s too late for us to do anything at the moment except get ready to go to work harder than we ever have. The value of this moment is to teach people in the future that they can not have what they can not pay for.

Jeruba's avatar

@saint, are you a student of history?

silverfly's avatar

@saint Damn good answer! :) So simple, so powerful. I love it.

saint's avatar

@Jeruba No. I but I have a career, and I work day to day. And I pay taxes so that others do not have to work.

Jeruba's avatar

So do many others, @saint, but without your perspective.

saint's avatar

@Jeruba Is that a typical Fluther put-down, or do we see things with at least minimal similarity? I only ask because I like the avatar, so perhaps you chose it because there is something about you that I like as well.

silverfly's avatar

My grandpa said to me once as a cruel joke, “work and save so that someday you can divide with those who didn’t.”

CWOTUS's avatar

Hers are not at all typical, @saint. What she says she generally seems to mean.

CWOTUS's avatar

But getting back to the topic… the problem is exactly how @saint described it: using good money to attempt to cover up, paper over, delay and “prevent” failure… which will not be prevented, ultimately. It was a much more astute comment than we normally see here, that “you can’t have what you can’t pay for”. I’ve been trying to say it for years, but without that elegance. And I mean that, too.

ml3269's avatar

Perhaps something new and better will grow out of that cirsis… the capitalism is still crashing, for 3 years right now… but it shows us in Europe that we have to grow together faster and to get even more away from nationalist/regionalistic thinking. I am not a christian democratic, but I agree with the german Bundeskanzler Angela Merkel who claimed just for “more Europe”.
The world is changing… nothing more, nothing less.

Jeruba's avatar

@saint, ”Is that a typical Fluther put-down

Is what a typical Fluther put-down? My remark to you? There’s no put-down anywhere in my remarks to you. I don’t know what you might have taken that way. I’m also not sure what you’re calling “typical.” Do you believe I’m in the habit of putting people down?

Boogabooga1's avatar

Moodys will soon be downgraded themselves.

They do not fully comprehend the strength, integrity and awareness of these countries they are trying to conquer through peaceful economic scandal.

The bankrupt citizens of all these countries wont succumb to their masterplan for WW3 and ultimate control, but will come in unity & force to knock down the doors of the Oligarchs!

Response moderated (Spam)
mattbrowne's avatar

We Europeans seem to be too stupid to create our own rating agency and downgrade the US several levels based on the US debt situation. Moody’s doing their Wall Street pals a favor so that they can earn million dollar bonuses making money with speculations against European countries. What a farce.

The Occupy Wall Street movement is very encouraging. This madness has to end.

Jeruba's avatar

@saint, I was hoping you might clarify. As far as I’m concerned, I complimented you twice, and I’m sorry if that didn’t come across.

wundayatta's avatar

There is always the question of whether countries should be allowed to go bankrupt. What happens when they go bankrupt is that the companies or countries that have lent money to them take a hit in their profits. Sometimes the hit is so big that they are in danger of going bankrupt.

When a bank goes bankrupt, any other bank that is sufficiently strong can pick up that other bank at firesale prices. But also the new combined bank is gunshy. They won’t lend out money hardly at all. They all wait for an upturn in the economy.

Of course, since no one can get capital to invest, the upturn does not come, and more firms go bankrupt. The cycle spirals down.

We are all interconnected, economically-speaking, in this world of our. It doesn’t matter whether we bail out countries and banks or we let them go bankrupt. As long as there is no confidence in the economy, no one will spend or invest.

The key is confidence. That has to be turned around. People have to believe things will get better, and much though I hate to admit it, Obama can not do that. Unfortunately, I don’t see a Republican candidate that can bring around “a new day in America,” either. This is one recession/depression that is going to linger and linger until slowly we pay off our debts and we can gain enough confidence to grow. I think you are right, @saint, that we will have to work harder.

However, if we allow countries and firms to go bankrupt, there will be less debt to pay off, so perhaps we won’t have to work as hard—as long as we are in a place where we didn’t have as much debt. What bankruptcy does, it seems to me, is to complete a subsidy of the people who went bankrupt.

A country going bankrupt is different from a family. The family loses the house and the bank account, but the country can’t lose the assets. They are fixed in place, for the most part. Perhaps there are factories that can be gutted and sold elsewhere, but there is only so much of that that can happen.

Mostly the factories will be sold to new owners very cheaply and then they should go back to work, hiring people and starting the recovery. If we let countries and companies go bankrupt, perhaps we could get to a recovery faster. Unfortunately, the big companies own too much of government to allow that to happen. They have paid the government officials to bail them out, so they don’t lose their huge profits.

The ironic thing is that if the Republican take over, the government will be even less inclined to allow bankruptcies, I suspect. Not that any government would allow it. Maybe Ron Paul. I dunno. Seems to me we need a pro-capitalism, pro-socialism government that will support people, but will not subsidize corporate mistakes.

People say they don’t want to subsidize the laziness of others. But why do they want to subsidize the incompetence of business? Oh well. There’s a lack of consistency everywhere.

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