Moody’s downgrades Japan’s sovereign debt rating

From :


Moody’s Cuts Japan’s Credit Rating

By WILLIAM SPOSATO

TOKYO—Moody’s Investors Service downgraded Japan’s debt rating Wednesday, but assigned it a stable outlook and said there was little chance of a crisis in the country’s debt market any time soon.

The announcement, which came less than a week before the ruling party is due to select the sixth prime minister in the past five years, puts fresh pressure on political leaders to repair the country’s finances—by some measures the worst in the industrialized world.

Moody’s said it was cutting Japan’s government bond rating to Aa3 from Aa2, citing “large budget deficits and the build-up in Japanese government debt since the 2009 global recession.” It kept the outlook on the new rating as stable.

The move puts the Moody’s rating on par with that of other major ratings companies. Standard & Poor’s and Fitch Ratings both rate Japan’s sovereign local currency debt double-A-minus, but with a negative outlook.

Like the U.S., Japan is facing increasing criticism over its financial situation. But Japan’s finances are in far worse shape, with nearly half of the annual central government budget financed by bond issuance, and gross debt now equal to more than 200% of gross domestic product.

More at the link. While the article noted that Japan’s sovereign debt is more than twice it’s GDP, a much higher ratio than the US’ 75% of GDP, more than 95% of Japan’s debt is held domestically, with major banks and insurers among the main holders, while 46% of the US’ sovereign debt is held by foreigners. That means while Japan’s government faces a much more serious problem in attempting to repay its debt, as it does repay, almost all of those payments go back into the Japanese economy. The United States should have less problem repaying our debt, but as we make debt service payments, far too much leaves our shores. And while Japan is financing almost half of its government spending through credit, we’re doing so to the tune of 40%.

Translation: while Japan’s circumstances are different from our own, the decision by Moody’s to downgrade Japan’s sovereign debt — and both Standard & Poor’s and Fitch’s had previously downgraded Japan’s credit rating — sure makes S&P’s decision to downgrade the United States’ sovereign debt seem reasonable.

Why? Perhaps it’s a less than quantifiable point, but while both the United States and Japan have never missed a payment, neither nation shows the least inclination to stop borrowing and start paying off its debts.

An explanation of Moody’s rankings:

Long-Term Obligation Ratings
Moody’s long-term ratings are opinions of the relative credit risk of financial obligations with an original maturity of one year or more. They address the possibility that a financial obligation will not be honored as promised. Such ratings use Moody’s Global Scale and reflect both the likelihood of default and any financial loss suffered in the event of default.

A Marine

This was a very important story to me, on the front page of The Philadelphia Inquirer:


From mourner to Marine


By Tom Infield, Philadelphia Inquirer Staff Writer

MARINE CORPS AIR STATION NEW RIVER, N.C. – When her Marine boyfriend died in a helicopter crash off the Horn of Africa in 2006, Lesley Reed was lost.

Then a 21-year-old college dropout working at a Target store in Jacksonville, N.C., she had met her handsome sergeant, Jimmy Fordyce, of Newtown Square, Pa., through her brother, also a Marine. The two had been together six months when Fordyce left for his third overseas tour. He planned, when he got back, to quit the service. They’d move to Philadelphia. He’d get a job; she’d go back to school.

Then he was killed.

“I didn’t have any reason to get up in the morning,” Reed said. “I had no reason to live anymore. There was nothing for me to do.”

After a loved one dies, everyone must find a way to cope. Reed immersed herself in Fordyce’s memory — by joining the Marines herself.

To her delight — and the astonishment of his parents, with whom she is close — this 5-foot-3, brown-eyed woman, with her dark hair now in a proper military bun, has been reliving Fordyce’s Marine Corps experience.

He worked on Super Stallion helicopters, so she asked to work on them, too.

Much more at the link. And here’s an interview with SGT Reed:

SGT Fordyce had been deployed with HMH-464, Marine Heavy Helicopter Squadron 464, Marine Corps Air Station New River, to Djibouti, a terrorist crossroads between the Horn of Africa and the Middle East. And that was where he died, when two CH-53E Super Stallion helicopters collided. There’s a lot in the Inquirer original, but the story is important to me because it looks like SPC Pico will be deployed to that Marine Corps Base in Djibouti sometime around December.

The inquirer article notes that SGT Reed serves not only as an avionics technician for the CH-53Es, but is an aerial observer in flight, and is stationed at the .50 caliber machine gun behind the pilot’s seat when in a combat zone; the article does not say that SGT Reed has had combat duty.

SPC Pico would be pretty unlikely to see combat duty in Djibouti. If that’s where she is deployed — four members of her unit, the 476th Engineering Detachment, left for Afghanistan at the end of July, and the rest are expecting Djibouti — she’ll be working as part of an Army surveying team on the Marine base.

I honor SGT Reed, for turning her grief into something great, and for her service to our country. And I’ll cross-post this on Truth Before Dishonor, where Mr Hitchcock will probably reply, very briefly, Semper Fi!
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Cross posted on Truth Before Dishonor

The housing market and the editors of The New York Times

Once again, the editors of prove that they do not understand the problem:


Editorial: Homeowners Need Help


Published: August 21, 2011

Neither Congress, nor federal regulators, nor state or federal prosecutors have yet to conduct a thorough investigation into the mortgage bubble and financial bust. We welcomed the news that the Justice Department is investigating allegations that Standard & Poor’s purposely overrated toxic mortgage securities in the years before the bust. We hope the investigative circle will widen.

Translation: Standard & Poor’s downgrades the United States sovereign credit rating, so they will be criminally investigated. Got it!

But a lot more needs to be done to address the continuing damage from the mortgage debacle.

Tens of millions of Americans are being crushed by the overhang of mortgage debt. And Congress and the White House have yet to figure out that the economy will not recover until housing recovers — and that won’t happen without a robust effort to curb foreclosures by modifying troubled mortgage loans.

You can follow the link to read the whole thing, but it’s a case study in the editors not understanding the problem!

The editors note that sales of existing homes fell by 3.5% in July 2011 (over July 2010), and housing prices have declined 4.4% in that time. More, overall housing prices have declined by a third, with an equity loss of $6.6 trillion in five years. 3.5 million homes are in some stage of foreclosure and another six million homes have already been lost; 14.6 million homeowners owe more on their homes than what they are now worth.

What the editors want is for the banks and mortgage companies to reduce owed principle, to refloat those people who are “underwater.” That would sure be nice for those people who bought more home than they could really afford, taking money for those of us who borrowed responsibly and are paying our mortgages on time, every month — my mortgage payment is automatically deducted from my checking account on the 10th of the month — but it doesn’t address the problem the editors defined, of lagging home sales and the impact of that on the residential construction industry.

That problem is not the result of people not being able to afford the homes that they already own. Indeed, foreclosures and evictions and declining housing prices ought to help the housing market: people still need places to live, and a foreclosed home in which the previous owners have been evicted is a home that is now available for sale. That increases the supply of housing, and has contributed to bringing down housing prices to make them more affordable. Yeah, it sucks to be one of the families that can’t pay its mortgage, but that doesn’t hurt housing sales.

The real problem is the lack of demand for housing on the low end of the market. That lack of demand is caused by two things: uncertainty about people keeping their jobs, and greatly tightened credit restrictions, compounded by the number of houses in foreclosure. The federal government tried to address part of the problem with the $8,000 first-time homebuyer tax credit: if you are not a current homeowner, and have not been for at least three years, Uncle Sam will give you an $8,000 tax credit if you buy a home.

The trouble with that is that, if someone actually needs that tax credit to buy a house, then he can’t afford the house in the first place, and shouldn’t be buying it. The people who benefit from this are those who can afford to buy a house without the tax credit; they get an unwarranted $8,000 present from the government.

The problem of tightened credit is not a problem at all: it is a return to rationality! It’s absolutely true that many mortgages were written for borrowers who really should never have been given mortgages, at least not for the amount they borrowed. But the glut of foreclosed and in foreclosure homes means that mortgage lenders have to be even more cautious: since the home itself is the collateral for the loan, if the mortgage lenders cannot have a reasonable expectation of being able to sell the home at a price which covers their costs if the borrower cannot pay, it’s only natural that they’d be more cautious in lending money for homes.

The editors’ proposed solution — lowering the amount of principle owed on existing “underwater” mortgages — might help a little bit with the reticence of mortgage lenders to see the home as sufficient collateral for the loan, but it will not and should not have any impact on whether lenders see mortgage loan applicants as good credit risks.

The housing market in the United States depends on population growth and homeowners upgrading to better homes. But it is the problems that first-time homeowners face which hurts everything else up the ladder. In my profession, I’ve seen plenty of excellent homes, now at real bargain prices, go unsold not because people don’t want to buy them, but because they are afraid that if they do buy the better house, they’ll be unable to sell their smaller home.

Local anecdote: I know of an absolutely perfect house, a large, 100-year-old home, with period interiors and original woodwork, that would have sold for $350,000 five years ago, right next to the high school. Now the owner, a retired lady whose children have all moved away and for whom a large four bedroom home is simply too much, has dropped the price to $205,000, and has had several people who wanted to buy the house, but all of them have backed out because they were afraid that they couldn’t sell the homes they already owned.

I pick up the local (free) real estate magazines every month; there are homes advertised in there which have been on the market for at least two years.

The solution to the problems of the housing market boils down to one thing: economic growth which stabilizes and improves the job market. Until people begin to have confidence again that they’ll be able to keep their jobs and pay their bills, the first home market is going to be depressed, and until that changes, the depressing effects will be felt throughout the entire housing market.

President Obama is coming up with yet another job growth proposal, one which will, if passed, be just as ineffective as all of the other job growth proposals he has made. But even if some new stimulus plan is passed, and even if it does create some new jobs, they will be, by definition, temporary jobs, jobs which would be likely to disappear after such stimulus plan was over . . . and that means they wouldn’t be the type of jobs on which someone could reasonably anticipate being able to pay for a 30-year mortgage!

It will be painful, and painful for me, since this is my industry, but the real solution is the natural, not stimulated, growth of the economy. That will produce businesses and jobs which are based upon the natural demands of the public, rather than the guesswork of the well-meaning lawmakers and bureaucrats, guesswork which is inevitably wrong. This will take time, and there will be people hurting as the economy adjusts naturally, but given that the attempts to artificially stimulate the economy have been no more successful, there’s no reason to not be patient.

Push ups

Gretchen Carlson, of Fox News’ morning show, Fox & friends, knocked out 12 — that’s what I counted, though the story says twenty — push-ups after a story about how

Well, just remember: our female soldiers all do real push-ups, too, and they have to pass an Army Physical Fitness Test, which includes push-ups, twice a year. That’s SPC Pico, far right, on Family Day at the end of Basic Combat Training at Fort Jackson, showing off in her barracks. (Sorry the pic is so crappy.)

Not quite too late, and certainly not too little.

If President Obama was weeks late in acting — a delay which has cost a great deal in blood and treasure — at least he did the right thing:

Heavy Fighting Reported in Tripoli; Rebels Encircle City

By and
Published: August 20, 2011

ZAWIYAH, Libya — For the first time in months, witnesses in Tripoli reported heavy fighting across the capital late Saturday night, even as rebel forces claimed to have encircled the city by taking major towns to its east, west and south.

Rebel leaders in Tunis and eastern Libya hailed the beginning of a new uprising in the capital against Col. Muammar el-Qaddafi’s rule. And after months of rebel offenses that crumbled or stalled despite heavy support from a NATO airstrike campaign, it was the first time since the uprising began in February that the rebels threatened Colonel Qaddafi’s ultimate stronghold.

“We are coordinating the attacks inside, and our forces from outside are ready to enter Tripoli,” said Anwar Fekini, a rebel leader from the mountainous region in western Libya, speaking by telephone from Tunis. “If you can call any mobile number in Tripoli, you will hear in the background the beautiful sound of the bullets of freedom.”

Phone calls to several Tripoli residents from different neighborhoods confirmed widespread gunfire and explosions. And there were reports of frequent NATO jet overflights and airstrikes — a common accompaniment to the drumbeat of the rebel advance in the past week.

Much more at the link. But this is from on February 21st:

Qaddafi’s Grip Falters as His Forces Take On Protesters

The New York Times

A conference hall in Tripoli, Libya, was among the government buildings still smoldering in the capital on Monday.

By DAVID D. KIRKPATRICK and MONA EL-NAGGAR

CAIRO — The faltering government of the Libyan strongman, Col. Muammar el-Qaddafi, struck back at mounting protests against his 40-year rule as security forces and militiamen backed by helicopters and warplanes besieged parts of the capital on Monday, according to witnesses and news reports from Tripoli.

By Monday night, witnesses said, the streets of Tripoli were thick with special forces loyal to Colonel Qaddafi as well as mercenaries. Roving the streets in trucks, they shot freely as planes dropped what witnesses described as “small bombs” and helicopters fired on protesters.

Hundreds of Qaddafi supporters took over the central Green Square in the capital after truckloads of militiamen arrived and opened fire on protesters, scattering them. Residents said they now feared even emerging from their houses.

More at the link. If you choose to read the Times story, you’ll see that there were reports that Colonel Qaddafi had been flying in mercenaries for ten days at that point, and that it was the mercenaries he was using to kill the protestors. His son, Seif al-Islam el-Qaddafi, had threatened Libyans with “rivers of blood” if they turned away from his father, and events demonstrated that he was completely serious.

And President Obama had all of the “excuse” he needed to take action then: Ibrahim O. Dabbashi, then Libya’s Deputy Permanent Representative to the United Nations, asked the United Nations, on February 21st, to impose a no-fly zone to prevent Colonel Qaddafi from bringing in more mercenary troops or using aircraft to attack the rebels.

Had President Obama taken action at that point, the rebels might have won quickly and fairly easily; Colonel Qaddafi might have been dead or gone by March, with rebel forces holding Bengazi and parts of Tripoli. At least one person suggested that Leadership does not mean dilly-dallying around until you have passed the point where you can actually do something.

Now, I was wrong on one point: I had thought that President Obama’s delay in action would result in imposing a no fly zone too late for it to do any good, because Colonel Qaddafi’s forces had, by then, turned the tide and had the rebels on the run. The United States, and NATO, wound up having to do a lot more than just impose a no-fly zone, engaging in a serious bombing campaign against Colonel Qaddafi’s forces on the ground, but it’s now looking like the rebels have regained the upper hand, and the Qaddafi regime may finally fall . . . five months, and uncounted lives, after it should have fallen.

But, in the end, it looks like President Obama did the right thing, even if he did it far too late: it appears that Colonel Qaddafi will fall, and some sort of freedom will come to Libya. It’s just too bad that it’s going to have cost so much more than was necessary.

The Travails Of Grandparenthood

Let me set the stage a little. We moved. We moved to a piece of countryside with three families living inside a fenced-in piece of land. My german shepherd dog is tethered to a tree via a cable sturdy enough not to snap due to her strength. My dog is tethered because we don’t want her to leave the area and she hasn’t been trained to stay within confines. Okay, that’s good enough.

My daughter left town for the week-end, leaving me with my grandson. No problem. I’ve handled the situation before.

My daughter’s BFF, a single mother of a 4-year-old girl, called me up asking if I’d babysit her daughter while she spent the evening out enjoying the company of other adults. No problem. I’ve handled an evening with a 4-year-old and a toddler before. Piece o’ cake, piece o’ pie. I can handle managed chaos for a few hours.

Well, the girl wanted to play outside for a while. No problemo. We go out front, where my dog is tethered to a tree beside the fence, so the kids can have some outdoor fun.

Fun.

But Mister Murphy comes to the front yard, toting his Law.

The neighbor’s four dogs rush the fence and start running up and down the fence, barking like there’s no tomorrow.

My dog, tethered by a sturdy cable to the tree, joins in, running up and down the fence, barking like there’s no tomorrow.

Joshua runs into my dog’s area (the area my dog can reach while tethered by a cable to the tree).

The four-year-old girl gets in front of me, trying to strike up a conversation with me. (It’s all a planned distraction, I’m sure.)

Having no ability to get to my grandson while my dog, tethered by a 20-foot cable, is running wildly up and down a piece of fenceline, I decided to yell at my dog to try to still her.

Hearing my yell, my dog stopped running up and down the fence line and instead chose to run toward me (while I was well out of range).

Joshua, my 17-month-old grandson, was well within my dog’s area.

As my dog ran toward me with no hope of ever coming close to reaching me, the cable reached up and snagged Joshua, sending him flying face first into the very hard ground.

Now Joshua has road-rash on his face and I have a story to tell. And my daughter, Joshua’s mother, hasn’t heard the story or seen the road-rash.

Anyone want to tell my daughter the story while I take a month-long vacation?
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Cross-Post