America's arrogant attitude on austerity, "not on our watch," just pass it along to the grandchildren

CNBC and every other media outlet is giddy with Black Friday shopping results, as citizens of Ireland are facing significant austerity measures as a trade off from their banking industry and government bailout.

While CNBC shares satellite images of cars parked in a retail mall lot, our neighbors in Ireland are experiencing thousands of public-sector jobs, rising taxes, cutting welfare and retirement benefits, and decreasing the minimum wage. Specifically, Ireland will be cutting 25,000 public sector jobs (10% of current workforce). Ireland accepts $113 billion bailout package 

The Irish are also faced with tax increases. One Dublin newspaper, the Irish Independent, estimated that the cost of the measures for a typical middle-class family earning $67,000 a year would be about $5,800 a year.

An older man placed blame for the crisis on the Cowen government, for failing to rein in the runaway property speculation that left Ireland’s banks with a mountain of bad debt now borne by the taxpayers. “The government has robbed us,” he said. “They’ve destroyed the country that we’ve built up over a number of years. They’ve just destroyed it.” Demonstrators in Ireland Protest Austerity Plan

While Ireland readies 25,000 public sector job cuts along with cutting retirement benefits and reducing minimum wages, President Obama announced today his plan to freeze federal government wages for 2 years which will allegedly save $2 billion during the current fiscal year.

The United States has an unprecedented $14 trillion of debt which does not include the unfunded social security and Medicare obligations nor the off balance sheet losses of Fannie and Freddie. Our grandchildren are faced with shouldering the greatest amount of debt on their shoulders of any generation and our President proposes a pay freeze.

In addition, congress is back in session to begin their horse trading on extending the Bush tax cuts. Did I mention job cuts, tax increases and a reduction of existing government programs and minimum wages in Ireland?

The arrogance and irresponsibility of America regarding fiscal responsibility is detestable. How dare the prior and current generation continue their self centered, consumptive and selfish way of life at the expense of our grandchildren. Our elected "representatives" continue to display their fiscal ineptness and many in America will stand in line for hours at the crack of dawn to purchase an electronic gadget.

What will it take for America to take action on behalf of grandchildren so the grandkids are not standing in line for hours at the crack of dawn for a loaf of bread?

Morgan Stanley Says Government Defaults Inevitable

By Matthew Brown
Aug. 25 (Bloomberg) -- Investors will face defaults on government bonds given the burden of aging populations and the difficulty of securing more tax revenue, according to Morgan Stanley.

“Governments will impose a loss on some of their stakeholders,” Arnaud Mares, an executive director at Morgan Stanley in London, wrote in a research report today. “The question is not whether they will renege on their promises, but rather upon which of their promises they will renege, and what form this default will take.” The sovereign-debt crisis is global “and it is not over,” the report said.

Borrowing costs for so-called peripheral euro-region nations such as Greece and Ireland surged today, resuming their ascent on concern that governments won’t be able to narrow their budget deficits. Standard and Poor’s downgraded Ireland’s credit rating yesterday on concern about the rising costs to support nationalized banks.

Mares said debt as a percentage of gross domestic product is a false indicator of an economy’s health given it doesn’t reflect governments’ available revenue and is “backward- looking.” While the U.S. government’s debt is 53 percent of GDP, one of the lowest ratios among developed nations, its debt as a percentage of revenue is 358 percent, one of the highest, the report said. Conversely, Italy has one of the highest debt- to-GDP ratios, at 116 percent, yet has a debt-to-revenue ratio of 188, Mares said.

Double Dip

“Outright sovereign default in large advanced economies remains an extremely unlikely outcome, in our view,” the report said. “But current yields and break-even inflation rates provide very little protection against the credible threat of financial oppression in any form it might take.”

Mares once worked at the U.K.’s Debt Management Office and is a former senior vice-president at credit-rating company Moody’s Investors Service.

“Note that a double-dip recession would not invalidate this conclusion,” Mares’ report said. “It would cause yet further damage to the governments’ power to tax, pushing them further in negative equity and therefore increasing the risks that debt holders suffer a larger loss eventually.”

Investors’ concern that the U.S. may fall back into recession has grown in recent weeks as U.S. economic data missed economists’ estimates. A Citigroup Inc. index of U.S. economic data surprises fell to minus 59 last week, the least since January 2009.

Grandpa 

Morgan Stanley knows  a thing or two about walking away from an obligation.

Dec. 17 (Bloomberg) -- Morgan Stanley, the securities firm that spent more than $8 billion on commercial property in 2007, plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.

The bank has been negotiating an “orderly transfer” of the towers since earlier this year, Alyson Barnes, a Morgan Stanley spokeswoman, said yesterday in a telephone interview. AREA Property Partners will take over the buildings. Barnes declined to say when the transfer will occur.

“This isn’t a default or foreclosure situation,” Barnes said. “We are going to give them the properties to get out of the loan obligation.”  Link to Bloomberg Article

Standard and Poor's cuts Ireland's rating...European Stock Markets in the morning...TIMBER!

The European's have Standard and Poor's to thank for the hit they are about to take when their markets commence trading. Naturally, the U.S. Equity market will blow it off as Tim Geithner has stated on numerous occasions that our rating would NEVER DROP!

By Wallace Witkowski SAN FRANCISCO (MarketWatch) -- Standard and Poor's said late Tuesday it downgraded Ireland's long-term sovereign credit rating to AA- from AA because of the high cost to prop up that country's financial sector. The outlook is negative.

"The downgrade reflects our opinion that the rising budgetary cost of supporting the Irish financial sector will further weaken the government's fiscal flexibility over the medium term," said Trevor Cullinan, an S and P credit analyst, in a statement.