We saved $647 million in interest costs (over the life of the securities) AFTER S&P's downgrade.

Of course... We lose far more in tax revenue at the same time (and millions of jobs).

http://www.thomasandfriends.com/usa/Thomas.mvc/Home">link

If investors flee the market to treasury notes, it will drive the interest down, but it will destroy a lot of capital and evaporate many jobs, thus lowering revenue.

:banghead:

customers.

NO company is going to add workers or expand unless it has enough sales to warrant such moves. Although consumer expenditures were up in July, they aren't enough to encourage employers to add workers.

Investment doesn't drive adding jobs, sales do. http://www.nypost.com/p/news/business/hoarding_cash_Yzfk2c8aK1wAPrZCRdEVnJ">U.S. Firms sitting on a $2 Trillion cash hoard

BTW, with $2 Trillion you could hire 13 million people @ $50,000 a year for three years.


Lower interest rates makes it more attractive to borrow money (e.g. for expansion). But no businessman in his right mind is going to expand, or even just add workers, unless he has enough sales to warrant such a move. Of course, with large hoards of cash businesses don't need to even consider borrowing to add people.

Companies have been buying back their stock. This is a sure sign of a sick economy. It means business is so lack-luster that businesses see no reason to expand and have a cash hoard, so it makes sense to buy back your stock. THis has the benefit of supporting the stock price. But it would be better if there were enough sales to make hiring additional workers or to expand, a reasoable action on the part of businesses.

Businesses need buying customers. Until people have some money in hand to spend businesses will see no need to add personnel.

The recent deal Obama had extorted out of him, to preclude a U.S. default, also has huge cuts in Government spending which will contract the economy more. THis doesn't give businesses great hopes that sales are going to improve much. In fact this portends a decline in business activity.

Reich wing school of economics. Lending to govt "destroys capital" and "evaporates jobs". Nice try

if you look narrowly, only at treasury's direct borrowing costs, then yes, the treasury will save money because they can now borrow at a lower interest rate.

however, the REASON why treasury rates are lower is because the downgrade also meant a downgrade on the economy and a downgrade on thousands of municipal and state bonds as well. because of the fiscal stupidity in washington and sucky economy, the federal government can expect a need to spend MORE money due to guarantees on riskier municipal and state bonds, and as a political reality, more bailouts in terms of state and local aid.

overall, the downgrade (or more accurately, the austerity/debt ceiling deal and the politics surrounding it) will COST the federal government far more than it saves.

I would rather these conditions did not exist at all. But George W., wasn't taking my calls a few years ago when something could have done to prevent the TRICKLE DOWN DISASTER.

...but, given the situation we are in, I pointed out that with interest rates so low, we could refinance all the public debt and save about $200 Billion per yr on finance costs. Might as well take advantage of low rates while you've got them.

Would I prefer that we didn't have such low rates if it meant we could have a healthy growing economy and we were not in this REPUBLICAN DYSTOPIA??? --- FUCK YES!