Buddy Can You Spare a Dime?

Obama, Can You Spare a Dime?

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Something for a weekend.  A variant on the song of the First Great Depression, Buddy Can You Spare a Dime.  It seemed timely in regard to the terrible economic news that came out this week:

1.  AA- -Credit rating firm reduced the United States Credit Rating to AA-.  Here is why

Egan-Jones said it believes the Fed’s third round of quantitative easing,  which sent stock prices surging on Thursday, “will hurt the U.S. economy and, by  extension, credit quality.”

The firm said that while the program should boost equity markets, issuing  additional currency and depressing interest rates through purchasing  mortgage-backed securities will hurt the value of the U.S. dollar and cause a  painful increase in commodity prices.

“In our opinion, QE3 will be detrimental to credit quality for the U.S.,” Egan-Jones said.

At the same time, Egan-Jones warned that the cost to finance U.S. debt will “slowly rise” as the global economy rebounds and the Fed scales back on its  purchases of Treasury securities.

The ratio of U.S. debt to gross domestic product soared to 104% in recent  months from 66% in 2006 and will likely increase to 110% in a year, the firm  said. By comparison, Spain’s debt-to-GDP stands at 68.5%.

2.  Median Income-Under Obama Median income per household has fallen to $50,054.00.   When adjusted for inflation this is the lowest median income per household since 1995.

3.  Industrial Production-Down-US industrial production fell 1.2% in August pointing to a slowing economy.

4.  Unemployment-Fed analysts estimate that unemployment will not reach 7% until 2014. →']);" class="more-link">Continue reading

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