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View Full Version : US credit rating downgraded by S&P


kvrdave
08-05-11, 10:18 PM
http://www.washingtonpost.com/business/economy/sandp-considering-first-downgrade-of-us-credit-rating/20

Standard & Poor’s announced Friday night that it has downgraded the United States credit rating for the first time, dealing a huge symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bi-partisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings later on.

The decision came after a day of furious back-and-forth between the Obama administration and S&P. Government officials fought back hard, arguing that S&P made a flawed analysis of the potential for political agreement and had mathematical errors in its initial report, which was submitted to the Treasury earlier in the day. The company had overstated the U.S. deficit over 10 years by $2 trillion, officials said.

“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesperson said Friday.

The downgrade will push the global financial markets into uncharted territory after a volatile week fueled by concerns over a worsening debt crisis in Europe and a faltering economy in the United States.

The AAA rating has made the U.S. Treasury bond one of the world’s safest investments — and has helped the nation borrow at extraordinarily cheap rates to finance its government operations, including two wars and an expensive social safety net for retirees.

Treasury bonds have also been a stalwart of stability amid the economic upheaval of the past few years. The nation has had a AAA rating for 70 years.

Analysts say that, over time, the downgrade could push up borrowing costs for the U.S. government, costing taxpayers tens of billions of dollars a year. It could also drive up interest rates for consumers and companies seeking mortgages, credit cards and business loans.

A downgrade could also have a cascading series of effects on states and localities, including nearly all of those in the Washington metro area. These governments could lose their AAA credit ratings as well, potentially raising the cost of borrowing for schools, roads and parks.

But the exact impact of the downgrade won’t be known until at least Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the initial effect on the markets may be modest because they have been anticipating an S&P downgrade for weeks.

Federal officials are also examining the impact of a downgrade in large but esoteric financial markets where U.S. government bonds serve an extremely important function. They were generally confident that markets would hold up, but were closely monitoring the situation. Regulators said that the downgrade would not affect how banking rules treat Treasury bonds — as risk-free assets.

The ratings action immediately fueled partisan wrangling Friday night. Allies to Obama said it underscored his call for a “grand bargain” that would trim $4 trillion from the federal budget involving a mix of tax revenues and spending cuts.

Republicans criticized Obama’s handling of the economy.

“Standard & Poor’s rating downgrade is a deeply troubling indicator of our country’s decline under President Obama,” said Republican presidential candidate Mitt Romney.

S&P has angered government officials with aggressive warnings over the past few months of a potential downgrade. Those warnings, so far, have not worried government bond markets.

What’s more, the two other major credit rating companies, Moody’s Investors Service and Fitch Ratings, have said they would preserve the nation’s AAA rating for now.

S&P’s downgrade was as much a political critique as a financial conclusion. It is based on a view that American political leaders would be unable to come up with at least $4 trillion in savings, which is needed to bring the nation’s debt to a manageable level over the next decade.

The debt deal swung earlier this week proposed spending cuts in two phases. Democrats and Republicans agreed to the first round, worth nearly $1 trillion. But a Congressional committee must decide the remaining $1.2 trillion to $1.5 trillion — and S&P questioned whether that would ever happen.

S&P added that it expects that the upper income Bush-era tax cuts will continue, despite vows from Obama to end the breaks next year.

“The majority of Republicans in Congress continue to resist any measure that would raise revenues,” the firm said.

S&P’s downgrade served as an indictment of the gridlock that sent the nation to the edge of defaulting on its debt obligations. It is also striking in part because it reflects the tremendous power of a small group of financial analysts employed by a New York company — part of McGraw-Hill. In Europe, political leaders have taken aim at credit rating companies when they cut the ratings of governments struggling with heavy debt burdens.

S&P said the nation could suffer additional downgrades later on if the nation’s debt burden grows worse. “A new political consensus might (or might not) emerge after the 2012 election, but we believe that by then, the government debt burden will likely be higher,” the firm said.

The company said the United States’ financial position was diverging from that of other AAA countries, including Canada, France, Germany and the United Kingdom. The firm made clear there is little likelihood of the United States regaining its AAA rating in coming years.

Countries with a AA+ rating include New Zealand and Belgium. Among those countries with a AA rating, one notch lower, are Bermuda, Spain, and Qatar.

Staff writers Neil Irwin and Cezary Podkul contributed to this report

© The Washington Post Company

This seems big enough to need it's own thread. What do you think will happen? CC interest rates going up? Student loan rates going up? Unable to sell our debt at a decent rate?

Maybe nothing will happen. The market decides, and it was only one agency...though it was a biggie. But maybe people decide we are still the best bet in town.

And does this surprise you? It does me a little. I know they said that we needed 4 trillion in deficit reduction over 10 years to avoid this, but I didn't think they actually had the balls to downgrade us. We ended up with around 2.1 trillion in deficit reduction and the majority of it occurs a few years out.

S&P also mentions that it is partly because of the contentious climate in DC. What are your thoughts on that?

Oh, and screw you all as I head out to Vegas for a few days trying to stimulate the economy. Gone Monday through Thursday.

Strevlac
08-05-11, 10:39 PM
Time to buy US T-bills?

DVD Polizei
08-05-11, 11:44 PM
About time. Somebody has a pair to call it like it is. And it isn't Congress. Dems and Reps would tell you everything will be just fine one hour and the next hour on their special cable networks...tell you the world is going to end.

If I had a lot of cash, I'd put it elsewhere too. It's like the US has BPD. Unstable. Unpredictable. Terribly political with no guarantees.

wmansir
08-06-11, 12:26 AM
I don't think this will have a large impact immediately. It's only one agency and all the agencies lost clout after the sub-prime meltdown. Plus it's only a downgrade to AA+, which is a lot better than the hit we would have taken from a default.

I haven't read the report yet, but based on the last one I'm not that surprised, even though the admin went into a full court press to stop this from happening. In their last report/warning S&P didn't just say a $4T plan was needed, I think they said a $4T plan was needed just to get the odds of renewing the AAA to 50/50.

The fact is the WH has been spinning the downgrade issue when it came to the debt ceiling debate. They spun it as if the biggest threat to our rating was from default while the agencies have said all along that default was unlikely and the biggest threat was not taking action on the deficit itself. S&P specifically said in regards to the debt limit debate that they were concerned that even with the issue being forced and receiving more political attention than it has in many years, that Washington would kick the can again. If that were to happen (and it largely did), then they did not see Washington having the political will to make another attempt until at least 2013, which would put any credible corrective action back at least 3 years.

Speaking of spin, I noticed the WaPo's story is following the WH talking point regarding the report stating that Republicans refuse to raise revenue, but just like the WH they omit that S&P also criticize the Dems for refusing to enact entitlement reform. I've seen at least that much reported else where. From what I recall in the previous report they took a neutral position on the revenue vs cuts issue, stressing the final number and not the means to achieve it. Presumably they did so again, but are being selectively quoted. I also notice the WaPo is following the WH's lead in downplaying S&P as a politically motivated fringe agency.

Th0r S1mpson
08-06-11, 12:30 AM
It was encouraging that they pointed out the ramifications of the political squabbling. Now that bastard John Boehner will realize that playing with fire isn't always a good idea because there are consequences and will humbly be more bipartisan and do the perfectly reasonable things that Obama wants instead.

JasonF
08-06-11, 12:44 AM
What do you think will happen?

In my opinion, the ratings agencies proved they don't know shit from shinola during the subprime crisis, and this is a purely political move on their part. In the end, I think not much will happen. I don't think the ratings agencies provide much information with respect to U.S. Treasuries that the market doesn't already know and have priced in. There are probably some people contractually required to invest in AAA securities, and if the contracts specify S&P must be the ratings agency, then they'll have to shift out of treasuries. Beyond that, probably not much, particularly if the other two agencies don't follow suit.

That said, I suspect the markets will be down over the weekend and on Monday, and this will get the blame.

Oh, and screw you all as I head out to Vegas for a few days trying to stimulate the economy. Gone Monday through Thursday.

Good luck and have fun!

JasonF
08-06-11, 12:48 AM
It was encouraging that they pointed out the ramifications of the political squabbling. Now that bastard John Boehner will realize that playing with fire isn't always a good idea because there are consequences and will humbly be more bipartisan and do the perfectly reasonable things that Obama wants instead.

Boehner: I got 98 percent of what I wanted

By Scott Pelley

(CBS News)

CBS Evening News anchor Scott Pelley sat down with Speaker of the House John Boehner in his office at the Capitol on Monday.

With a brutal partisan fight over the debt ceiling drawing to an apparent close, Boehner said he understands why so many Americans are angry with what's happening in Washington.

The following is a transcript of that interview:

Boehner: We've got divided government in Washington. We've got big issues confronting us. We have a very open process and society. And as a result, we have healthy debates about how to move forward. This has certainly been a long, healthy debate.

Pelley: Give us a little bit of insight. How did the grand bargain fail? What was the breaking point? How did you tell the president you were walking away?

Boehner: It really boiled down to two issues. President was insisting on more taxes. President never got serious about the kind of spending cuts that were necessary in order to get America back on a sound fiscal footing.

Pelley: You don't think he negotiated in good faith?

Boehner: No, I do believe the president was negotiating in good faith. We had a lot of productive conversations, a lot of tense conversations. But it became pretty clear to me that I wasn't going to be for higher taxes, and the president wasn't going to cut spending as he should.

Pelley: What did you say to each other?

Boehner: I told the president I'm not going there. I can't do that.

Pelley: If this super committee that you talk about recommends raising revenue, can you support that?

Boehner: We'll see what it does. But I'm confident their focus will be on reducing expenditures coming out of Washington.

Pelley: Can you image Republicans backing increased taxes?

Boehner: I think that would be a stretch. It doesn't seem likely to me that that would be recommended, much less supported, but I've been surprised before.

Pelley: You were unable to get your own caucus behind your bill a few days ago. Do you intend to remain Speaker of the House?

Boehner: I do. When you look at this final agreement that we came to with the white House, I got 98 percent of what I wanted. I'm pretty happy.

Pelley: Folks at home have been watching the acrimony, name calling, finger pointing. And I wonder whether the Congress has lost something, an ability to talk to each other, to settle down and make agreements?

Boehner: Well, there's the public noise and then there's the private discussion. Some of the most liberal members of Congress are great friends of mind. But the American people don't see the cooperation that exists off camera that really are the glue that holds this place together.

Pelley: Are you saying it's not as bad as it looks?

Boehner: It's not as bad as it looks.

http://www.cbsnews.com/stories/2011/08/01/eveningnews/main20086598.shtml

Yeah, mean old Obama never compromises and never meets the Republicans halfway. -ohbfrank-

kvrdave
08-06-11, 12:49 AM
I don't think this will have a large impact immediately. It's only one agency and all the agencies lost clout after the sub-prime meltdown. Plus it's only a downgrade to AA+, which is a lot better than the hit we would have taken from a default.

I haven't read the report yet, but based on the last one I'm not that surprised, even though the admin went into a full court press to stop this from happening. In their last report/warning S&P didn't just say a $4T plan was needed, I think they said a $4T plan was needed just to get the odds of renewing the AAA to 50/50.

The fact is the WH has been spinning the downgrade issue when it came to the debt ceiling debate. They spun it as if the biggest threat to our rating was from default while the agencies have said all along that default was unlikely and the biggest threat was not taking action on the deficit itself. S&P specifically said in regards to the debt limit debate that they were concerned that even with the issue being forced and receiving more political attention than it has in many years, that Washington would kick the can again. If that were to happen (and it largely did), then they did not see Washington having the political will to make another attempt until at least 2013, which would put any credible corrective action back at least 3 years.

Speaking of spin, I noticed the WaPo's story is following the WH talking point regarding the report stating that Republicans refuse to raise revenue, but just like the WH they omit that S&P also criticize the Dems for refusing to enact entitlement reform. I've seen at least that much reported else where. From what I recall in the previous report they took a neutral position on the revenue vs cuts issue, stressing the final number and not the means to achieve it. Presumably they did so again, but are being selectively quoted. I also notice the WaPo is following the WH's lead in downplaying S&P as a politically motivated fringe agency.


I don't believe we would have defaulted unless we chose to. Revenue was enough to pay debts, it was all the entitlements and other constant funding that could also have been defaulted on. Default was used as a boogeyman to scare people, though so was the idea that SS checks would not go out.

But otherwise I agree. S&P seemed to be politically neutral as to how the budget should be constructed, though both will likely use this against the other side. The Tea Bastards will likely use this to show that they were right in that no real cuts were made, etc.

What may be most interesting is the idea that the "Super Congress" won't be able to strike a deal (I think that is likely) and the automatic triggered cuts look to be "bad" for both sides. Obamacare will get some decent cuts http://www.politico.com/news/stories/0811/60634.html as would defense http://www.thetowntalk.com/article/20110803/NEWS01/108030327/-Super-committee-will-recommend-spending-cuts-trigger-automatic-reductions

But, the likliest scenario is that they don't get resolution and those cuts are slated for 2013, so the can is again kicked down the road. After a new election, all bets are off.

focker
08-06-11, 03:29 AM
http://www.cbsnews.com/stories/2011/08/01/eveningnews/main20086598.shtml

Yeah, mean old Obama never compromises and never meets the Republicans halfway. -ohbfrank-

If this deal was 98% of what Boehner wanted, he clearly doesn't want the right things. Time for him to go.

RoyalTea
08-06-11, 05:05 AM
gotta love that the S&P told congress what it needed to do to avoid a downgrade. Congress only got halfway to what the S&P said, and was downgraded.

Now, it's the fault of the Republicans for not giving Obama the clean debt ceiling rise for which he asked.

classicman2
08-06-11, 07:15 AM
In my opinion, the ratings agencies proved they don't know shit from shinola during the subprime crisis, and this is a purely political move on their part. In the end, I think not much will happen. I don't think the ratings agencies provide much information with respect to U.S. Treasuries that the market doesn't already know and have priced in. There are probably some people contractually required to invest in AAA securities, and if the contracts specify S&P must be the ratings agency, then they'll have to shift out of treasuries. Beyond that, probably not much, particularly if the other two agencies don't follow suit.

That said, I suspect the markets will be down over the weekend and on Monday, and this will get the blame.



Good luck and have fun!

I would appreciate it if you would get my permission before using my expressions - 'don't know shit from shinola.' :)

btw: I do agree that the credit rating agencies probably do play a little politics.

Jason
08-06-11, 08:39 AM
I don't think this will have a large impact immediately. It's only one agency and all the agencies lost clout after the sub-prime meltdown. Plus it's only a downgrade to AA+, which is a lot better than the hit we would have taken from a default.


I'm sure the talk radio crowd and 24 hour TV pundits will take the same reasoned, logical stand.

Or more likely, it'll be "ZOMG!!1! iTS teh OBAMAGEDDON!"

Look for at least one teabagger to go on TV and start talking impeachment.

kvrdave
08-06-11, 12:00 PM
In my opinion, the ratings agencies proved they don't know shit from shinola during the subprime crisis, and this is a purely political move on their part. In the end, I think not much will happen. I don't think the ratings agencies provide much information with respect to U.S. Treasuries that the market doesn't already know and have priced in. There are probably some people contractually required to invest in AAA securities, and if the contracts specify S&P must be the ratings agency, then they'll have to shift out of treasuries. Beyond that, probably not much, particularly if the other two agencies don't follow suit.


Interesting quandry. If that actually happens, it will also show that the politicians don't know shit from shinola since they foretold of disaster if we were downgraded. Who then should I believe? :lol:

Sean O'Hara
08-06-11, 12:19 PM
http://www.cbsnews.com/stories/2011/08/01/eveningnews/main20086598.shtml

Yeah, mean old Obama never compromises and never meets the Republicans halfway. -ohbfrank-

You can surely differentiate spin from reality. Boehner is trying to placate the Tea Party by playing up how great the deal is and how he totally got what he wanted.

This fiasco was a giant clusterfuck with plenty of blame for both sides. Only the most blind of partisans would argue that there were any good guys in the mess.

JasonF
08-06-11, 01:08 PM
You can surely differentiate spin from reality. Boehner is trying to placate the Tea Party by playing up how great the deal is and how he totally got what he wanted.

This fiasco was a giant clusterfuck with plenty of blame for both sides. Only the most blind of partisans would argue that there were any good guys in the mess.

I'm not talking about who is the good guy and who is the bad guy. I'm talking about the fact that we are, by and large, following the GOP's plan for what the nation's fiscal policy should look like.

Bill Needle
08-06-11, 01:28 PM
I'm not talking about who is the good guy and who is the bad guy. I'm talking about the fact that we are, by and large, following the GOP's plan for what the nation's fiscal policy should look like.

:lol:

I pray Obama (or any Democrat) tries to run on that.

dvd-4-life
08-06-11, 01:53 PM
gotta love that the S&P told congress what it needed to do to avoid a downgrade. Congress only got halfway to what the S&P said, and was downgraded.

Now, it's the fault of the Republicans for not giving Obama the clean debt ceiling rise for which he asked.

I was reading another article that states that China wants the USA to cut military spending and social welfare program spending.

The borrower is the slave to the lender. Don't know whats going to happen if no one lends the USA money.

Anubis2005X
08-06-11, 02:10 PM
I was reading another article that states that China wants the USA to cut military spending and social welfare program spending.

The borrower is the slave to the lender. Don't know whats going to happen if no one lends the USA money.

USA: "Yes, master..."

*Shudder...

kvrdave
08-06-11, 02:14 PM
I was reading another article that states that China wants the USA to cut military spending and social welfare program spending.

The borrower is the slave to the lender. Don't know whats going to happen if no one lends the USA money.

We buy our own debt and print more money. Even though China claims to be the biggest holder of our debt, they aren't. We are.

But yeah, when demand dries up, it will be a problem.

eXcentris
08-06-11, 02:26 PM
"International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country." (Xinhua)

China and other nations have been asking for a new global reserve (index based on a basket of) currency for a while now. This downgrade will give this demand a push and I think it will happen within the next few years.

Dave99
08-06-11, 02:27 PM
I was reading another article that states that China wants the USA to cut military spending and social welfare program spending.

The borrower is the slave to the lender. Don't know whats going to happen if no one lends the USA money.

When you owe the bank a thousand dollars, you have a problem. When you owe the bank a billion dollars, the bank has a problem.

Expand that a couple orders of magnitude, and what china wants has little bearing on anything.

X
08-06-11, 02:33 PM
When you owe the bank a thousand dollars, you have a problem. When you owe the bank a billion dollars, the bank has a problem.

Expand that a couple orders of magnitude, and what china wants has little bearing on anything.Exactly. In addition, what are they going to do, stop financing our purchase of their goods?

kvrdave
08-06-11, 02:35 PM
China and other nations have been asking for a new global reserve (index based on a basket of) currency for a while now. This downgrade will give this demand a push and I think it will happen within the next few years.

I've read a fair amount on this, and the main problem seems to be the amount of time they speculate it would take to set up, etc. Most say 5 to 10 years. I honestly have no idea why anything like this would take that long to get set up, but obviously I don't know all the complexities. The problem there is that shit could blow up before it could be put in place.

DVD Polizei
08-06-11, 09:06 PM
Trivial Information (which could spawn some really supercool debates):

Singapore has a AAA rating.

eXcentris
08-07-11, 02:25 AM
So does the Isle of Man. :)

focker
08-07-11, 02:57 AM
Look for at least one teabagger to go on TV and start talking impeachment.

He's not calling for impeachment, but he does want heads to roll:



Sen. Rand Paul today issued a statement calling for the resignation of U.S. Treasury Secretary Timothy Geithner from his cabinet post, effective immediately, for his gross mismanagement of federal economic policy and for his role in the first-ever downgrade of United States debt.

“Secretary Geithner assured everyone that raising the debt ceiling without a plan to balance the budget would not result in a downgrade to our debt,” Sen. Paul said. “He was clearly wrong. Our debt has been downgraded for the first time in history, and now American taxpayers will have to suffer the consequences”

This is not the first time Secretary Geithner and his team have failed to correctly diagnose or manage an economic problem. During his tenure at the Federal Reserve and as Treasury Secretary, Secretary Geithner has had a direct role in the failure of the Fed to diagnose and act on the housing crisis. He presided over bank bailouts, auto bailouts and failed trillion-dollar stimulus plans.

Last year, he announced to the American people “welcome to the recovery,” when in fact the our economic crisis has continued. He has contributed not only to the first-ever debt downgrade, but is on the record as clearly disputing it could ever happen.

“There is plenty of blame to go around. Both parties have contributed to our $14 trillion debt. But it is hard to say this crisis wasn’t predictable, because it was. House and Senate conservatives clearly predicted this, and also offered the only solution that could have prevented our downgrade with our Cut Cap and Balance plan,” Sen. Paul continued. “We must rescue our finances through a Balanced Budget Amendment, and we must do it soon. We must cut spending immediately. And we must get new leadership, and put in place people who have seen problems coming and offered credible solutions, rather than those who continue to misdiagnose and mismanage our economy.”


http://reason.com/blog#article_151452

I agree with him.

Jason
08-07-11, 09:00 AM
And Mike Huckabee wants to replace Geithner with Donald Trump. (http://politicalticker.blogs.cnn.com/2011/08/06/huckabee-trump-should-replace-geithner/?eref=ib_politicalticker) Tell me again why Huckabee was ever considered even remotely electable?

And I agree Geithner should go. He had his chance and he failed. Next.

dork
08-07-11, 09:48 AM
So these fucking idiots like Paul, Bachmann, etc. who wanted us to go into default are now calling for Geithner's resignation for his "role" in the downgrade?

Remind me why we can't call their slavering followers "teatards" again?

crazyronin
08-07-11, 10:18 AM
So these fucking idiots like Paul, Bachmann, etc. who wanted us to go into default are now calling for Geithner's resignation for his "role" in the downgrade?

Remind me why we can't call their slavering followers "teatards" again?

When you get downgraded even after doing things a fucking idiot said would avoid a downgrade, maybe it is time fir the fucking idiot to go.

That's just fucking crazy talk.

kvrdave
08-07-11, 10:24 AM
So these fucking idiots like Paul, Bachmann, etc. who wanted us to go into default are now calling for Geithner's resignation for his "role" in the downgrade?

Remind me why we can't call their slavering followers "teatards" again?

Hmmmm, I've looked around and don't see any place where any of them say they wanted us to default. Perhaps you could share a link. I would guess that they would say that they tried to do what they could to prevent a downgrade but that they were in the minority and ended up with a deal that was pushed through with a fairly equal number of Democrats and Republicans that actually did end up in a downgrade. They fought against that plan. But that doesn't mean they wanted a default.

Oh hell, you know all that. All the Douchecrats know it, at least.

Nick Danger
08-07-11, 10:34 AM
It might be worthwhile to read what S&P actually said, instead of quoting the spinmeisters.

Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s “AAA” sovereign credit rating Friday in a move that could send shock waves through global. The following is a press release from Standard & Poor’s:

– We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

– We have also removed both the short- and long-term ratings from CreditWatch negative.

– The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

– More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

– Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

– The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

TORONTO (Standard & Poor’s) Aug. 5, 2011–Standard & Poor’s Ratings Services said today that it lowered its long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’. Standard & Poor’s also said that the outlook on the long-term rating is negative. At the same time, Standard & Poor’s affirmed its ‘A-1+’ short-term rating on the U.S. In addition, Standard & Poor’s removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.

The transfer and convertibility (T&C) assessment of the U.S.–our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service–remains ‘AAA’.

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see “Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government’s other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government’s debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year’s wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a ‘AAA’ rating and with ‘AAA’ rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions,” June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government’s ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population’s demographics and other age-related spending drivers closer at hand (see “Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now,” June 21, 2011).

Standard & Poor’s takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.’s finances on a sustainable footing.

The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

The act further provides that if Congress does not enact the committee’s recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO’s latest “Alternate Fiscal Scenario” of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO’s “Alternate Fiscal Scenario” assumes a continuation of recent Congressional action overriding existing law.

We view the act’s measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario–which we consider to be consistent with a ‘AA+’ long-term rating and a negative outlook–we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act’s revised policy settings.

Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

Our revised upside scenario–which, other things being equal, we view as consistent with the outlook on the ‘AA+’ long-term rating being revised to stable–retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

Our revised downside scenario–which, other things being equal, we view as being consistent with a possible further downgrade to a ‘AA’ long-term rating–features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

When comparing the U.S. to sovereigns with ‘AAA’ long-term ratings that we view as relevant peers–Canada, France, Germany, and the U.K.–we also observe, based on our base case scenarios for each, that the trajectory of the U.S.’s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

Standard & Poor’s transfer T&C assessment of the U.S. remains ‘AAA’. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers’ access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction–independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners–lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government’s debt dynamics, the long-term rating could stabilize at ‘AA+’.

On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

They're saying that there's a lot of work still to be done, and the performance of the last few months makes it doubtful that the government can get their act together and do it. If they haven't made significant progress in two years, S&P might have to downgrade again.

Supermallet
08-07-11, 01:07 PM
How can anyone take this seriously when this is the same company that gave AAA ratings to bonds filled with toxic assets?

crazyronin
08-07-11, 01:30 PM
bBecause the private bond rating and Sovereign rating are two different divisions? :shrug:

kvrdave
08-07-11, 02:10 PM
How can anyone take this seriously when this is the same company that gave AAA ratings to bonds filled with toxic assets?

What choice do you have? Ignore all rating firms completely? How then will you distinguish one from another?

I would say that you can decide not to take them seriously, but it only really matters if you can manage to get everyone else to not take them seriously. If the market has no diminished confidence in us, it won't matter a bit. If the market sees some logic in their reasoning, it will matter.

Jason
08-07-11, 02:45 PM
How can anyone take this seriously when this is the same company that gave AAA ratings to bonds filled with toxic assets?

Well, why did anyone take our previous AAA rating seriously?

General Zod
08-07-11, 04:47 PM
When you get downgraded even after doing things a fucking idiot said would avoid a downgrade, maybe it is time fir the fucking idiot to go.
Not to mention in April Geither said there was 'No chance' of US downgrade.

When you've got someone who obviously is clueless you need to get rid of him. Then again I don't see a huge call to remove Obama so I guess people like clueless in charge.

Supermallet
08-07-11, 05:19 PM
Well, why did anyone take our previous AAA rating seriously?

Overwhelming shows of force?

PopcornTreeCt
08-07-11, 06:03 PM
In regards to Boehner stating he got 98% of what he wanted, why would anyone publicly come out and accept 98% responsibility of a plan that sucks?

DVD Polizei
08-07-11, 06:11 PM
It might be worthwhile to read what S&P actually said, instead of quoting the spinmeisters.


http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563

They're saying that there's a lot of work still to be done, and the performance of the last few months makes it doubtful that the government can get their act together and do it. If they haven't made significant progress in two years, S&P might have to downgrade again.

I'm gonna have to downgrade your DVD Talk Credit Rating to B+.

No bolding for that long sucker? No loans for you! :mad:

Bill Needle
08-08-11, 12:57 AM
Not to mention in April Geither said there was 'No chance' of US downgrade.

When you've got someone who obviously is clueless you need to get rid of him. Then again I don't see a huge call to remove Obama so I guess people like clueless in charge.
Watch soon for Obama to blame Bush for handing over an unsustainably high credit rating.

Dr Mabuse
08-08-11, 04:19 AM
It's amusing to see the people who were saying 'no way we'll be downgraded' from both 'sides' now trying to rationalize how the downgrade doesn't really matter.

orangecrush
08-08-11, 08:38 AM
I was reading another article that states that China wants the USA to cut military spending and social welfare program spending.

The borrower is the slave to the lender. Don't know whats going to happen if no one lends the USA money.We supply close to 60% of the AAA governement issued debt to the world. No other country is even close to how much we supply. Also, US citizens and corporations are the largest holders of our debt.

orangecrush
08-08-11, 08:42 AM
China and other nations have been asking for a new global reserve (index based on a basket of) currency for a while now. This downgrade will give this demand a push and I think it will happen within the next few years.What currency would be a better option? The Euro is no more stable than the dollar and nobody believes China's financials. We are the least bad option by miles. That can change obviously, but I don’t think it will happen any time soon.

orangecrush
08-08-11, 08:49 AM
What choice do you have? Ignore all rating firms completely? How then will you distinguish one from another?If you are an institutional investor and you rely on the credit rating letters to determine the quality of a debt offering, you should be fired. There is a reason the CFA tests have a lot of accounting.

orangecrush
08-08-11, 08:51 AM
Well, why did anyone take our previous AAA rating seriously?Lack of default for over 200 years?

CRM114
08-08-11, 09:04 AM
Heckuva job, Tea Party. :up:

classicman2
08-08-11, 09:08 AM
You sound like the senior senator from MA. ;)

Adam Tyner
08-08-11, 09:09 AM
Heckuva job, Tea Party. :up:As much of a mess as they caused, to be fair, no other group/party/whatever would've come close to meeting S&P's requirements for maintaining a AAA rating either.

shadowhawk2020
08-08-11, 09:15 AM
If we had raised the limit without strings months ago (like we always had in the past) and then worked on a plan to reduce the debt without the threat of a default, would we still have been downgraded?

CRM114
08-08-11, 09:29 AM
No. The downgrade was as much an admonishment of the Keystone Kops behavior than anything.

Troy Stiffler
08-08-11, 09:36 AM
Well guys, time to hunker down and pay our bills.

First round of dirt cookies are on me.

<iframe width="560" height="349" src="http://www.youtube.com/embed/s3337cj4sJQ" frameborder="0" allowfullscreen></iframe>

Th0r S1mpson
08-08-11, 10:09 AM
Fannie and Freddie downgraded now as well.

I'm starting to think I picked a really good time to refinance. Or a really bad one. We'll see how the closing goes on Wednesday.

mosquitobite
08-08-11, 10:21 AM
No. The downgrade was as much an admonishment of the Keystone Kops behavior than anything.

You must be reading a different S&P brief than the one I did.

And I forget, couldn't the Democrats have done this on their own in the 2 yrs they had all three branches? I mean, if taxes being raised would have fixed all this mess, they should have done the responsible thing for this country and done so, no?

But you guys just keep on blaming the tea party. I'm confident there will be more of them in 2012 if you do! :D

CRM114
08-08-11, 10:48 AM
Just because they are Democrats doesn't mean they don't want to be be re-elected.

I blame the American people for allowing this country to decay in the name of "lower taxes." Especially the richest ones.

clappj
08-08-11, 10:51 AM
I blame the American people for allowing this country to decay in the name of "lower taxes."

At least you're now willing to place some of the blame for this mess on yourself.
That's a start.

shadowhawk2020
08-08-11, 10:57 AM
You must be reading a different S&P brief than the one I did.

And I forget, couldn't the Democrats have done this on their own in the 2 yrs they had all three branches? I mean, if taxes being raised would have fixed all this mess, they should have done the responsible thing for this country and done so, no?

But you guys just keep on blaming the tea party. I'm confident there will be more of them in 2012 if you do! :D

I don't blame the tea party any more than I blame the other republicans, or the democrats. The S&P downgrade from what I read was partially due to their belief that no one at the top in this country was behaving like adults.

The fact is when a budget was passed we agreed to pay money that would put us over the debt ceiling. Then to threaten to not pay the bills you already agreed to pay was a terrible move.

If Democrats wanted to raise taxes, they should have done it before they agreed to extend the cuts. If tea party members/republicans wanted to cut spending, they should have done it before agreeing to a budget.

JasonF
08-08-11, 11:02 AM
Democrats didn't "want" to raise taxes. The original position of the Democrats was for a clean vote. The Republicans took the position that they would only vote for a debt ceiling increase if it were ocupled wit hdeficit reduction. At that point, Democrats said they would go along with that, but wanted the deficit reduction to be a mix of tax increases and spending cuts. That wasn't good enough for the Republicans either.

And as you point out, these are the same Republicans who just a few short months ago agreed to the appropriation bill that made raising the debt ceiling a necessity.

Lemdog
08-08-11, 11:57 AM
At least you're now willing to place some of the blame for this mess on yourself.
That's a start.

:lol:

classicman2
08-08-11, 12:02 PM
The president will speak on this subject, and I'm sure on others, shortly.

General Zod
08-08-11, 12:10 PM
The president will speak on this subject, and I'm sure on others, shortly.

I'm sure he will blame Republicans, Tea Party, Bush, etc.. everyone but himself ad his party. Because the democrats just sat by over the last few years watching and letting everyone else call the shots - and now look what happened!!

I'm sure he'll call this the tea party downgrade and call for more taxes. Unfortunately for him nobody believes what he says anymore or thinks it will help.

Th0r S1mpson
08-08-11, 12:23 PM
I'm sure he will tell everyone not to panic, that despite the downgrade there are a lot of things to be hopeful about.

He will also say that both parties must "come together," and that this panel they created must come up with a "comprehensive reform plan" or something.

crazyronin
08-08-11, 12:23 PM
Did everyone mark off the "I inherited this mess" square on your TOTUS bingo cards?

Th0r S1mpson
08-08-11, 12:26 PM
Did everyone mark off the "I inherited this mess" square on your TOTUS bingo cards?

Was he talking about his ears and the mole on his face?

classicman2
08-08-11, 12:44 PM
I'm sure he will tell everyone not to panic, that despite the downgrade there are a lot of things to be hopeful about.

He will also say that both parties must "come together," and that this panel they created must come up with a "comprehensive reform plan" or something.

I believe he will be concilatory. Not just because, IMO, it's the wise political thing to do, but because he is going to comment on the tragic death of some 32 American special forces. Remember, the nation (and the president) were proud of the Seals & the country just a short time ago. I don't believe he wants to minimize that with a purely political statement on the downgrade.

CRM114
08-08-11, 12:54 PM
At least you're now willing to place some of the blame for this mess on yourself.
That's a start.

On all of us. But there are some of us that don't bitch every time a tax increase comes along that will help pay the bills.

Bill Needle
08-08-11, 12:54 PM
You must be reading a different S&P brief than the one I did.

And I forget, couldn't the Democrats have done this on their own in the 2 yrs they had all three branches? I mean, if taxes being raised would have fixed all this mess, they should have done the responsible thing for this country and done so, no?

But you guys just keep on blaming the tea party. I'm confident there will be more of them in 2012 if you do! :D

$4.8 trillion of the $14.5 trillion in debt (1/3) was accumulated during the recent 4 year stretch the Democrats controlled the house and senate, and fully 1/4 of the $14.5 trillion was incurred in the two years they controlled the presidency as well. Yep, those darn tea partiers weren't even in office yet and they were already screwing things up.

CRM114
08-08-11, 12:57 PM
I believe he will be concilatory. Not just because, IMO, it's the wise political thing to do, but because he is going to comment on the tragic death of some 32 American special forces. Remember, the nation (and the president) were proud of the Seals & the country just a short time ago. I don't believe he wants to minimize that with a purely political statement on the downgrade.

:up:

CRM114
08-08-11, 12:59 PM
$4.8 trillion of the $14.5 trillion in debt (1/3) was accumulated during the recent 4 year stretch the Democrats controlled the house and senate, and fully 1/4 of the $14.5 trillion was incurred in the two years they controlled the presidency as well. Yep, those darn tea partiers weren't even in office yet and they were already screwing things up.

What was the debt in 2000?

classicman2
08-08-11, 01:07 PM
I just heard the president's remarks on television. This was Obama at his best.

He said exactly what I thought he would say. ;)

classicman2
08-08-11, 01:10 PM
Now the chairman of the RNC is doing exactly what he shouldn't do - he's blaming the president for everything.

Some smart Repub, and there are some, should take him to woodshed, and show him how the cow ate the cabbage.

Th0r S1mpson
08-08-11, 01:12 PM
DJI down 419 points right now. Fun times.

CRM114
08-08-11, 01:25 PM
Might have to pick up some more AAPL.

Venusian
08-08-11, 01:30 PM
Might have to pick up some more AAPL.

i bought into the market friday. bad idea :(

mbs
08-08-11, 01:36 PM
i bought into the market friday. bad idea :(

Well, you can buy more and cost average once we're under 10,000 again. I'll say this, the FOMC statement tomorrow (and the market's reaction) should be interesting... Looking at today's activity, I assume we're going to get QE3 (which I would suggest would be bad, bad, bad long term).

crazyronin
08-08-11, 02:01 PM
Might have to pick up some more AAPL.

Damn fanbois! :grunt:





















;)

Mabuse
08-08-11, 02:31 PM
What are people complaining about? Obama has finally delivered the Change he promised.

Th0r S1mpson
08-08-11, 02:42 PM
Wow. Ugly day.

Question: I have a Roth IRA split into 3 mutual funds.

If I execute an order after hours, will I get in at the closing price?

I'm not going to do so today, just wondering how that works.

CRM114
08-08-11, 02:43 PM
I think the order just sits there until the next day?

CRM114
08-08-11, 02:44 PM
-558.81

Heckuva job, Tea Party!

Artman
08-08-11, 03:19 PM
Saw my first "ONE term" bumper sticker yesterday... I think we'll be seeing a lot more of those. Change indeed...

mcnabb
08-08-11, 03:35 PM
-558.81

Heckuva job, Tea Party!

Statements like this is the whole problem in Washington. I hate to break it to you but EVERYONE is to blame for this problem. The debt has been a problem for years but these spineless republicans and democrats have not wanted to seriously tackle these problems. For you to blame one specific party (or part of the republican party) tells me you dont get it and you are part of the problem and nothing will get done if the finger pointing continues.

Superboy
08-08-11, 03:37 PM
We should really be blaming ourselves, not our politicians. They're only doing what we want them to do.

We wanted a President who would compromise, so we got one, but we have a Congress that represents the schizoid mentality of our society at large: we want to keep our entitlements, but we don't want higher taxes. I don't see how that's anyone else's fault but our own.

Th0r S1mpson
08-08-11, 03:42 PM
We wanted a President who would compromise, so we got one,

I don't recall Obama running on a campaign of compromise.

JasonF
08-08-11, 03:57 PM
I don't recall Obama running on a campaign of compromise.

You weren't paying attention then. From the time he first came on the national stage with his whole "We worship God in blue states and have gay friends in red states" speech, through his "I'm going to change the partisan tone in Washington" message in the 2008 campaign, he's been all about trying to find what we have in common and building off of that.

logrus9
08-08-11, 04:00 PM
-558.81

Heckuva job, Tea Party!

535 members of Congress, 80 or so are Tea Party members, guess it shows how ineffective the other 455 are.

mcnabb
08-08-11, 04:01 PM
I will continue to tell people that you will have to massively raise taxes to fund these programs essentially creating a socialist state. You will have to raise taxes on the rich, the middle class, and getting rid of the earned income tax credit so the lower class can start paying taxes too. But by doing this you will stunt growth in the long term, and you will never be able to sustain this generation after generation.

The only way to solve this problem is to MASSIVELY reform the entitlement programs (Social Security, Medicare, etc, MASSIVELY pair down defense (meaning we need to get our asses out of Iraq and Afghanistan). We need to change the way many government workers get a pension, when working stiffs like us who work in the private sector have to pay for our retirements through 401K and RothIRA. I could go on an on as to the wasteful spending in Washington..... This country is bankrupt and people think if we tinker here and tinker there we can fix.

We need to change the way people think about government, and understand that we can't fund these entitlements anymore and something has to give. It would be like one of us here buying a million dollar house and not being able to make the mortgage payments, but saying, "Well, don't worry if I cut back on my cable bill by getting rid of HBO, don't make any long distance calls, dont water my lawn as much, and stop eating out, I can make these mortgage payments!" No, unless you're a millionaire, YOU WILL NEVER AFFORD IT!

Th0r S1mpson
08-08-11, 04:02 PM
You weren't paying attention then. From the time he first came on the national stage with his whole "We worship God in blue states and have gay friends in red states" speech, through his "I'm going to change the partisan tone in Washington" message in the 2008 campaign, he's been all about trying to find what we have in common and building off of that.

One does not "change the partisan tone" in Washington by compromising with those engaging in rank partisanship.

If the only change Obama was promising was more for the other side, I don't think many people would have bought in.

PopcornTreeCt
08-08-11, 04:10 PM
Wow. Ugly day.

Question: I have a Roth IRA split into 3 mutual funds.

If I execute an order after hours, will I get in at the closing price?

I'm not going to do so today, just wondering how that works.

Depending on your broker, I believe you can set a price you want to buy/sell at and your order won't be processed unless that price is met. I did this in regular stocks but I haven't tried it yet with my IRA. I have 4 mutual funds and going to weather the storm.

fujishig
08-08-11, 04:13 PM
We need to change the way many government workers get a pension, when working stiffs like us who work in the private sector have to pay for our retirements through 401K and RothIRA. I could go on an on as to the wasteful spending in Washington..... This country is bankrupt and people think if we tinker here and tinker there we can fix.



I thought federal pensions were largely a thing of the past? Most of the contention I've seen over public pensions are state and local govts...

mcnabb
08-08-11, 04:20 PM
I thought federal pensions were largely a thing of the past? Most of the contention I've seen over public pensions are state and local govts...

In March, Sen Burr and Sen Coburn, both republicans introduced a bill to end federal pensions for every new government employee (if you read the bill there is more to it as I am generalizing), but of course the democratic senate will not pass it and Obama won't sign it.

General Zod
08-08-11, 04:40 PM
535 members of Congress, 80 or so are Tea Party members, guess it shows how ineffective the other 455 are.

Considering that some prominent members of the Democratic party called the Tea Party "irrelevant" and predicted the movement would simply vanish after the election I find it amusing that they are now all the blame for America's woes! :lol:

RoyalTea
08-08-11, 04:47 PM
Considering that some prominent members of the Democratic party called the Tea Party "irrelevant" and predicted the movement would simply vanish after the election I find it amusing that they are now all the blame for America's woes! :lol:

kinda like how GWB was both a functional retard and an evil genius.

DeputyDave
08-08-11, 05:48 PM
-558.81

Heckuva job, Tea Party!

Seriously? Care to explain that?

Th0r S1mpson
08-08-11, 05:55 PM
The Tea Party wouldn't let Obama raise taxes on the rich like he wants to, resulting in the S&P downgrade, resulting in the stock market drop, resulting in CRM114 simultaneously pooping his pants and raising his eyebrows.

PopcornTreeCt
08-08-11, 05:57 PM
Lost another $500+ today. Awesome.

logrus9
08-08-11, 06:42 PM
Considering that some prominent members of the Democratic party called the Tea Party "irrelevant" and predicted the movement would simply vanish after the election I find it amusing that they are now all the blame for America's woes! :lol:

it's even funnier to listen to them say "the downgrade doesn't matter because the S&P is irrelevant they gave AAA ratings to the sub prime securities" in the next breath they say it's a "tea party downgrade"

Basically the tea party did something that doesn't matter but we're going to piss and moan until we can manufacture some outrage.-screwy-

al_bundy
08-08-11, 07:23 PM
-558.81

Heckuva job, Tea Party!

Thank you

Bill Needle
08-08-11, 09:43 PM
The Tea Party wouldn't let Obama raise taxes on the rich like he wants to, resulting in the S&P downgrade, resulting in the stock market drop, resulting in CRM114 simultaneously pooping his pants and raising his eyebrows.

But you see, what those Tea Partiers don't understand is that pilfering another $500 billion per year (or more, much more) off the top of the economy right now is exactly what would cure all that ails it. Never mind that confiscating all income over $200,000 last year would have still left a more than $1 trillion deficit, clearly not enough taxes being paid is the problem. (And also never mind that no one would bother to earn more than $200,000 again.)

And to think that none of this current epic financial fail includes the lead-pipe-cinch disaster that will be Obamacare. What a shame that hasn't kicked in yet so Obama could simultaneously hurl the blame for Obamacare at the Tea Party and save a future presser or two. Had I written that six months ago I would have been kidding.

Nesbit
08-08-11, 09:53 PM
And also never mind that no one would bother to earn more than $200,000 again

Before Bush most people would just stop working once they reached the 200k mark.

Th0r S1mpson
08-08-11, 10:50 PM
Before Bush most people would just stop working once they reached the 200k mark.

He was talking about all income over 200k, not the tax structure before Bush.

Nick Danger
08-08-11, 11:00 PM
The latest New York Times/ABC News poll showed that 14% of people approve of Congress. I didn't see if the follow-up question was asked whether people approved of their own congressman. I'd bet that most people are reasonably happy with the way their own representative voted.

There's no incentive to negotiate like an adult if the result will be that you'll be challenged by an very well-funded member of the extreme wing of your own party in the next election.

Look at this thread. Half the posts are blaming the other party for the debacle.

The S&P press release said that they don't care what mix of cuts and taxes get the job done. That's not the reason for the downgrade. They don't see the people in office getting anything done.

DVD Polizei
08-08-11, 11:26 PM
How can anyone take this seriously when this is the same company that gave AAA ratings to bonds filled with toxic assets?

It worked until they changed their minds. That's the problem with future's trading. The entire House can come crumbling down if only a few people decide they don't wanna play the same game as everyone else. S&P just got fed up (no pun intended mostly) with having nothing coming to a real, solidified resolution.

I think if anything, this is indicative of how worthless our leaders really are. If anything, We, the Public, should be physically tossing them out of their offices, stringing them up, and getting new public servants. Anything less than this will only mean another repeat of today.

RoyalTea
08-09-11, 09:56 AM
+230.87

Heckuva job, Tea Party!

General Zod
08-09-11, 11:34 AM
:lol:

Nice to see the market back up today. Obama can help by staying shutting the hell up.

Pharoh
08-09-11, 11:41 AM
It never ceases to amaze me how so many intelligent people get so mixed up regarding this issue. Perhaps it is only politics, but I doubt that. I am referring to people like Rep. Frank who are continuing to utter statements that the US will never fail to pay its debts, and therefore should not have been downgraded. I personally disagree with the downgrade as well, but it had nothing to do with whether or not we will or won't pay our debts. That is immaterial.

JasonF
08-09-11, 01:16 PM
What do you think should be driving our creditworthiness besides the likelihood that we will or will not repay our debts?

Th0r S1mpson
08-09-11, 01:23 PM
What do you think should be driving our creditworthiness besides the likelihood that we will or will not repay our debts?

Our creditworthiness should be measured by angle of Obama's bow.

<img src="http://www.infiniteunknown.net/wp-content/uploads/2011/01/obama-bows-to-japanese-emperor.jpg">

Th0r S1mpson
08-09-11, 01:47 PM
Market dropping again. Fed interest rate news, but is there a Tea Party gathering somewhere? Someone needs to break that up before they ruin us all.

Pharoh
08-09-11, 02:00 PM
What do you think should be driving our creditworthiness besides the likelihood that we will or will not repay our debts?

The value of our repayment. Which is what all of the agencies are eventually going to downgrade the US on, if they do.

starman9000
08-09-11, 02:16 PM
Stocks are up, take that Obama and your Tea Party followers.

X
08-09-11, 02:37 PM
The value of our repayment. Which is what all of the agencies are eventually going to downgrade the US on, if they do.Exactly. There's no chance we won't repay (unless we do the one-time default I've been thinking for 30 years that we would ultimately need), it's just what we repay with. Like worthless pieces of pretty paper.

JasonF
08-09-11, 02:42 PM
Oh, not this inflation nonsense again. But if that's what's driving S&P, you can't just downgrade treasuries -- you also have to downgrade every instrument denominated in dollars (or any denominated in any currency pegged to dollars).

Pharoh
08-09-11, 02:49 PM
Oh, not this inflation nonsense again. But if that's what's driving S&P, you can't just downgrade treasuries -- you also have to downgrade every instrument denominated in dollars (or any denominated in any currency pegged to dollars).

Of course you, (they), can. They did.



And once again for the record; I don't believe we are close to serious inflation, let alone hyperinflation. Nor do I agree with S&P.

X
08-09-11, 02:52 PM
Oh, not this inflation nonsense again. But if that's what's driving S&P, you can't just downgrade treasuries -- you also have to downgrade every instrument denominated in dollars (or any denominated in any currency pegged to dollars).Treasury bonds aren't the same as "every instrument denominated in dollars".

Th0r S1mpson
08-09-11, 03:02 PM
DJI ends UP more than 400 for the day. Crazy times.

General Zod
08-09-11, 03:05 PM
DJI ends UP more than 400 for the day. Crazy times.

Wow what a wild day. I'm glad to see things are going in the right direction! Thanks again, Tea Party!!

CRM114
08-09-11, 03:14 PM
Statements like this is the whole problem in Washington. I hate to break it to you but EVERYONE is to blame for this problem. The debt has been a problem for years but these spineless republicans and democrats have not wanted to seriously tackle these problems. For you to blame one specific party (or part of the republican party) tells me you dont get it and you are part of the problem and nothing will get done if the finger pointing continues.

That statement tells me YOU don't get it. The debt ceiling, the debt, and the S&P downgrade are discrete events. The squabbling in Washington, primarily driven by the Tea Party agenda, is what caused S&P to pull a political punch (that they have an awful lot of balls pulling BTW).

CRM114
08-09-11, 03:16 PM
We should really be blaming ourselves, not our politicians. They're only doing what we want them to do.

We wanted a President who would compromise, so we got one, but we have a Congress that represents the schizoid mentality of our society at large: we want to keep our entitlements, but we don't want higher taxes. I don't see how that's anyone else's fault but our own.

Excellent assessment.

CRM114
08-09-11, 03:21 PM
But you see, what those Tea Partiers don't understand is that pilfering another $500 billion per year (or more, much more) off the top of the economy right now is exactly what would cure all that ails it. Never mind that confiscating all income over $200,000 last year would have still left a more than $1 trillion deficit, clearly not enough taxes being paid is the problem. (And also never mind that no one would bother to earn more than $200,000 again.)

And to think that none of this current epic financial fail includes the lead-pipe-cinch disaster that will be Obamacare. What a shame that hasn't kicked in yet so Obama could simultaneously hurl the blame for Obamacare at the Tea Party and save a future presser or two. Had I written that six months ago I would have been kidding.

IF you think the richest segment would pay those taxes by not buying something else, you don't know any rich people.

mcnabb
08-09-11, 03:25 PM
That statement tells me YOU don't get it. The debt ceiling, the debt, and the S&P downgrade are discrete events. The squabbling in Washington, primarily driven by the Tea Party agenda, is what caused S&P to pull a political punch (that they have an awful lot of balls pulling BTW).

Thats right and President Obama and the democrats have been vigilant about the deficit and debt since they took office right? Can you show me one budget Obama submitted during his term that got our fiscal house in order? Alot of democrats want MORE spending as they feel they didn't go far enough with the stimulus from 2009. This debt has been a problem for years and NONE of these guys addressed this issue, so it isn' just the tea party's fault.

I don't know why I continue to argue with partisans like you who have one narrow view that 'the dems are right and the republicans are wrong.' Sometimes you have to look objectively at politics!

Mabuse
08-09-11, 03:25 PM
I love how now we're getting these chest thumping "Amerkin" comments toward S&P. "They've got a lot of balls." "How dare they." "Get out of politics you rotten raters."

People are acting like the S&P is Armond White and he gave a bad review to the latest Pixar film.

Superboy
08-09-11, 03:29 PM
One does not "change the partisan tone" in Washington by compromising with those engaging in rank partisanship.


Actually, that's exactly what compromise works, and that's exactly how the partisan tone in Washington has to change.

The health care legislation, the wall street reform bill, the stimulus, don't ask don't tell, and DOMA didn't happen for free. Democrats had to pay a price for all that.

Even Reagan was a master of compromise. He was a hard-line Republican, but he approved IRCA and tax increases. And back then, before the Republican Revolution, it was the Democrats who constantly engaged in rank partisanship.

mcnabb
08-09-11, 03:36 PM
Actually, that's exactly what compromise works, and that's exactly how the partisan tone in Washington has to change.

The health care legislation, the wall street reform bill, the stimulus, don't ask don't tell, and DOMA didn't happen for free. Democrats had to pay a price for all that.

Even Reagan was a master of compromise. He was a hard-line Republican, but he approved IRCA and tax increases. And back then, before the Republican Revolution, it was the Democrats who constantly engaged in rank partisanship.

Another suprisingly successful time of compromise was the late 90's when the Republicans controlled all of Congress and President Clinton worked well with them.

They got a Welfare Reform Bill, Capital Gains Cut, NAFTA (in a democratic congress in 1993, but more republicans voted for the bill), and they both able to achieve a balance budget too.

I would take Clinton/Republican Senate/House anyday over Obama/Dem Senate/Republican House.

Pharoh
08-09-11, 04:12 PM
That statement tells me YOU don't get it. The debt ceiling, the debt, and the S&P downgrade are discrete events. The squabbling in Washington, primarily driven by the Tea Party agenda, is what caused S&P to pull a political punch (that they have an awful lot of balls pulling BTW).

You are wrong.

RoyalTea
08-09-11, 04:17 PM
S&P: we're going to downgrade your credit rating if you don't trim $4 Trillion from the budget over the next ten years.

Congress: Well, we just trimmed $2 trillion of the budget over the next ten years, giving you 50% of what you asked for. Are you still going to downgrade us?

S&P: YES

Liberals: This downgrade would have been avoided if the Republicans had just agreed to a clean hike in the debt ceiling months ago without any conditions or stipulations.

JasonF
08-09-11, 04:32 PM
Treasury bonds aren't the same as "every instrument denominated in dollars".

OK, then I really don't understand what you think is driving the downgrade. We all agree that there is zero chance of a U.S. default. If you think our money will be worthless -- presumably due to inflation -- then, the money used to pay people who have treasuries will not be more worthless than the money used to pay people who have bonds from Applie or Wal-Mart. So what is driving this downgrade?

Venusian
08-09-11, 04:50 PM
S&P said the downgraded because of the debt and because the atmosphere in Washington made it look like there won't be a real chance to fix the debt. Correct?

So why is the left only looking at half of that and the right only looking at the other half?

JasonF
08-09-11, 05:04 PM
S&P said the downgraded because of the debt and because the atmosphere in Washington made it look like there won't be a real chance to fix the debt. Correct?

So why is the left only looking at half of that and the right only looking at the other half?

Which half do you think the left is ignoring? The left proposed significant reductions in the deficit. The problem -- they included tax increases.

Venusian
08-09-11, 05:06 PM
Which half do you think the left is ignoring? The left proposed significant reductions in the deficit. The problem -- they included tax increases.

I think the left is ignoring the debt.

The right proposed significant reductions in the deficit also, they did not include tax increases and were rejected by the left. If the right rejecting tax increases means the deadlock in D.C. is their fault, how is the left demanding tax increases not the same thing?



disclaimer: i support some tax increases.

RoyalTea
08-09-11, 05:08 PM
Which half do you think the left is ignoring? The left proposed significant reductions in the deficit. The problem -- they included tax increases.
Making private jet owners depreciate their assets over 7 years instead of 5 years wasn't going to make much of a difference.

Venusian
08-09-11, 05:12 PM
Making private jet owners depreciate their assets over 7 years instead of 5 years wasn't going to make much of a difference.

that doesn't matter. if the right says that a million here a million there add up in spending, then the same can be said about the revenue side

RoyalTea
08-09-11, 05:17 PM
that doesn't matter. if the right says that a million here a million there add up in spending, then the same can be said about the revenue side

But Obama said he wouldn't raise taxes on anyone making under $250K. If you raised the marginal tax rate to 100% of all income above $250K, you cannot balance the budget.

The budget can be balanced by cuts alone. The budget cannot be balanced by taxing the rich alone.

Th0r S1mpson
08-09-11, 05:35 PM
The budget cannot be balanced by taxing the rich alone.

Then maybe the rich need some fees too!

Bill Needle
08-09-11, 06:08 PM
...you don't know any rich people.

You have found the flaw in my argument. ;)

Then again, perhaps soon enough none of us will.

Pharoh
08-09-11, 06:30 PM
OK, then I really don't understand what you think is driving the downgrade. We all agree that there is zero chance of a U.S. default. If you think our money will be worthless -- presumably due to inflation -- then, the money used to pay people who have treasuries will not be more worthless than the money used to pay people who have bonds from Applie or Wal-Mart. So what is driving this downgrade?



Many have made the precise argument that Microsoft, Exxon, et. al. should indeed lose their ratings.

But who said S&P, and all of the other raters, were always consistent?


I honestly don't know what you then think is really driving the downgrade. We all know, including the raters, that the US will pay its debts, barring any silly shenanigans like the debt ceiling boondoggle, which was never a real issue. So clearly the long term debt, including all of the unfunded liabilities at all levels of government, is the driving force. And if we will pay our debts, then why else downgrade? You don't really believe the nonsense about the political squabbling, do you? Or do you think Mr. Sharma and the others at S&P have it in for the US or President Obama?

Venusian
08-09-11, 06:35 PM
But Obama said he wouldn't raise taxes on anyone making under $250K. If you raised the marginal tax rate to 100% of all income above $250K, you cannot balance the budget.

The budget can be balanced by cuts alone. The budget cannot be balanced by taxing the rich alone.

No one proposed a fix with just tax increases. Every suggestion I saw had spending cuts

Bill Needle
08-09-11, 06:46 PM
But Obama said he wouldn't raise taxes on anyone making under $250K. If you raised the marginal tax rate to 100% of all income above $250K, you cannot balance the budget.

Sure can't. In fact it is not even remotely close, more than $1 trillion short this year. The idea that somehow if we would just tax the rich back to economic health (with a few token spending cuts from the military) is not only demagogic, it is impossible.

The budget can be balanced by cuts alone. The budget cannot be balanced by taxing the rich alone.

Even the Chicoms are trying to tell us that. That's like the fat guy at the buffet looking at you with disgust as you make yet another trip to the dessert bar.

Bill Needle
08-09-11, 06:53 PM
I honestly don't know what you then think is really driving the downgrade. We all know, including the raters, that the US will pay its debts, barring any silly shenanigans like the debt ceiling boondoggle, which was never a real issue. So clearly the long term debt, including all of the unfunded liabilities at all levels of government, is the driving force. And if we will pay our debts, then why else downgrade? You don't really believe the nonsense about the political squabbling, do you? Or do you think Mr. Sharma and the others at S&P have it in for the US or President Obama?

Maybe it has something to do with mandatory expenditures (not counting discretionary spending such as the military, etc) on track to exceed total revenues in 10 years give or take.

Jason
08-09-11, 07:03 PM
Called it!

Impeach Obama, says Michael Burgess
(http://www.politico.com/news/stories/0811/60949.html)

Impeaching President Barack Obama “needs to happen,” Rep. Michael Burgess (R-Texas) told a local tea party group, the Fort Worth Star-Telegram reported Tuesday.

Burgess spoke, the paper said, in response to an attendee’s suggestion that the GOP-controlled House use impeachment to stop Obama from “pushing his agenda.”

“It needs to happen, and I agree with you it would tie things up,” Burgess reportedly responded. “No question about that.”

When the Star-Telegram’s reporter asked Burgess about the comment, he said the House needs to do what it can to stop the president.

“We need to tie things up,” Burgess said. “The longer we allow the damage to continue unchecked, the worse things are going to be for us.”

Wonder if this will gain any traction?

JasonF
08-09-11, 07:05 PM
Or do you think Mr. Sharma and the others at S&P have it in for the US or President Obama?

I don't think they have it in for the US or President Obama. I do think they have a political agenda, and I think they are acting in furtherance of that agenda rather than basing their downgrade on economic fundamentals.

But really, you need look no further than the market's reaction to the downgrade, which was to get out of every other investment and flock to the safety of .... U.S. treasuries.

Pharoh
08-09-11, 07:26 PM
I don't think they have it in for the US or President Obama. I do think they have a political agenda, and I think they are acting in furtherance of that agenda rather than basing their downgrade on economic fundamentals.

But really, you need look no further than the market's reaction to the downgrade, which was to get out of every other investment and flock to the safety of .... U.S. treasuries.

This is the mistake. They may have had an agenda, but they were largely basing their decision on economic fundamentals, fundamentals that are saying, to them, that the only way out will be through inflation.

As for the market, all reasonable people knew that Treasuries would do well this week, and that interest rates would go down. That was almost as sure as a bet as the Swiss Franc, which has been a veritable money press.

We'll see what happens longer term though, and whether you and I are wrong, or S&P is wrong.

Pharoh
08-09-11, 07:28 PM
Maybe it has something to do with mandatory expenditures (not counting discretionary spending such as the military, etc) on track to exceed total revenues in 10 years give or take.

Yes, but as I said, we will pay even those liabilities. To many, it is just a question of how much those payments will be worth.

DVD Polizei
08-09-11, 07:35 PM
This was well-played. The Fed had no choice but to keep interest rates low. Nice. :up:

And some are calling for Obama's impeachment? I almost fell over in my chair.

Actually, it's the same chair when Dems wanted Bush impeached.

RoyalTea
08-09-11, 08:02 PM
No one proposed a fix with just tax increases. Every suggestion I saw had spending cuts

Of course. But when one side says we need to focus on cutting spending and the other side says we need to focus on raising revenue, is it even possible to balance the budget with an equal amount of spending cuts and higher taxes without also raising taxes on everybody?

But the Democrats don't want to raise taxes on everybody, if the call for raising taxes on the wealthy, they can try to make it sound like the reason we can't balance the budget is because rich people aren't paying taxes on their private jets.

mosquitobite
08-09-11, 09:08 PM
And don't forget oil and taxing all those profits! I'm sure they'll just accept lower profits...you know...as opposed to raising prices on those of us at the pump to keep the margins!

focker
08-09-11, 09:15 PM
No one proposed a fix with just tax increases. Every suggestion I saw had spending cuts

I would argue that no one proposed actual budget cuts. Even the various plans 'cutting' $4 trillion over ten years were only making cuts when compared with a projected increase in the debt of $10 trillion over that same ten years. If we're going to try to chip away at the debt, we might actually have to consider spending less money each year, rather than more. If we slowly shrink spending and allow some growth to occur, eventually we can get into small surpluses and actually start paying down the debt. A crazy concept, I know.

CRM114
08-10-11, 08:26 AM
Thats right and President Obama and the democrats have been vigilant about the deficit and debt since they took office right? Can you show me one budget Obama submitted during his term that got our fiscal house in order? Alot of democrats want MORE spending as they feel they didn't go far enough with the stimulus from 2009. This debt has been a problem for years and NONE of these guys addressed this issue, so it isn' just the tea party's fault.

I don't know why I continue to argue with partisans like you who have one narrow view that 'the dems are right and the republicans are wrong.' Sometimes you have to look objectively at politics!

I can't believe you can write that last sentence after writing that first paragraph. It is amazing how partisan conservatives can bitch about deficit spending while completely ignoring the enormous recession it was meant to help counteract. -ohbfrank-

CRM114
08-10-11, 08:28 AM
I love how now we're getting these chest thumping "Amerkin" comments toward S&P. "They've got a lot of balls." "How dare they." "Get out of politics you rotten raters."

People are acting like the S&P is Armond White and he gave a bad review to the latest Pixar film.

No, people are reacting to S&P's lurid track record preceding the banking meltdown of 2008. Thus, they have a lot of fucking balls.

CRM114
08-10-11, 08:29 AM
Another suprisingly successful time of compromise was the late 90's when the Republicans controlled all of Congress and President Clinton worked well with them.

They got a Welfare Reform Bill, Capital Gains Cut, NAFTA (in a democratic congress in 1993, but more republicans voted for the bill), and they both able to achieve a balance budget too.

I would take Clinton/Republican Senate/House anyday over Obama/Dem Senate/Republican House.

So compromise is when the Repubs get what they want? :lol:

CRM114
08-10-11, 08:30 AM
You are wrong.

:lol: Thanks.

CRM114
08-10-11, 08:33 AM
S&P: we're going to downgrade your credit rating if you don't trim $4 Trillion from the budget over the next ten years.

Congress: Well, we just trimmed $2 trillion of the budget over the next ten years, giving you 50% of what you asked for. Are you still going to downgrade us?

S&P: YES

Liberals: This downgrade would have been avoided if the Republicans had just agreed to a clean hike in the debt ceiling months ago without any conditions or stipulations.

S&P, the same people who gave Lehman Brothers an A rating one month before their collapse.

orangecrush
08-10-11, 08:53 AM
S&P, the same people who gave Lehman Brothers an A rating one month before their collapse.To be fair to S&P, none of the rating agencies had any idea how to value credit default swaps, nor did many of the companies trading in them. It is a good thing congress took measures to make sure we can't be brought down by such manipulation in the future. Oh, wait. They didn't do that at all.

kefrank
08-10-11, 08:56 AM
I think this opinion piece has a pretty accurate take:
http://www.cnn.com/2011/OPINION/08/09/lemmon.washington.downgrade/

In particular:
The president may be calling for unity, but so far the only thing Democrats and Republicans can agree on is that S&P's decision to question America's creditworthiness proves the rightness of their own positions. And with both parties finding vindication in S&P's words, the country is apt to see each return to its side of the ring to continue the fight re-energized.
and...
S&P had it right when it said "the differences between political parties have proven to be extraordinarily difficult to bridge." But what it did not predict was that the translation of its own verdict would now exacerbate the dividing line that separates Democratic and Republican worldviews.

Pharoh
08-10-11, 09:13 AM
To be fair to S&P, none of the rating agencies had any idea how to value credit default swaps, nor did many of the companies trading in them. It is a good thing congress took measures to make sure we can't be brought down by such manipulation in the future. Oh, wait. They didn't do that at all.

It is funny how we can't believe in S&P now because they were so wrong on subprime, yet we can believe Moody's and Fitch now even though they were just as wrong then.

:hscratch:

CRM114
08-10-11, 09:17 AM
Who said we can believe any of them?

Pharoh
08-10-11, 09:25 AM
Who said we can believe any of them?

Many have, even if not in this thread.

But if we can't believe any of them, how do you know what the credit worthiness of the US is? Should we just take your or the Administration's word for it?

Pharoh
08-10-11, 09:26 AM
:lol: Thanks.

You are welcome.


Just please don't believe any of the silly nonsense regarding the political bickering as a reason for the downgrade.

orangecrush
08-10-11, 09:27 AM
It is funny how we can't believe in S&P now because they were so wrong on subprime, yet we can believe Moody's and Fitch now even though they were just as wrong then.

:hscratch:I don't think there are many who have faith in any of the rating agencies at all. I think a lot of the institutional investors have known for a long time that their ratings were suspect on a number of bonds, but just don't care.

CRM114
08-10-11, 09:30 AM
You are welcome.


Just please don't believe any of the silly nonsense regarding the political bickering as a reason for the downgrade.

S&P believed the US would at some point in the future not raise the debt ceiling and could default. They entered into politics and made a decision based on politics. The US certainly is no closer to defaulting now than they have ever been in my lifetime.

CRM114
08-10-11, 09:31 AM
Many have, even if not in this thread.

But if we can't believe any of them, how do you know what the credit worthiness of the US is? Should we just take your or the Administration's word for it?

You need S&P to tell you the credit worthiness of the US?

RoyalTea
08-10-11, 09:42 AM
S&P believed the US would at some point in the future not raise the debt ceiling and could default. They entered into politics and made a decision based on politics. The US certainly is no closer to defaulting now than they have ever been in my lifetime.

True or false?

S&P said that even a higher debt ceiling could still precede a downgrade if the US didn't reduce the deficit by $4 trillion over the next decade.

CRM114
08-10-11, 09:50 AM
True or false?

S&P rated Lehman Bros 'A' one month before their collapse.

(The point is S&P's characterizations are meaningless at this point. Wall St firm in good shape. Sovereign nation run by socialists, bad shape.)

RoyalTea
08-10-11, 09:56 AM
True or false?

S&P rated Lehman Bros 'A' one month before their collapse.

(The point is S&P's characterizations are meaningless at this point. Wall St firm in good shape. Sovereign nation run by socialists, bad shape.)

Answer my question.

CRM114
08-10-11, 10:03 AM
Who gives a shit what they said after they miscalculated our debt by 2 trilion dollars and had to be corrected by the US Treasury? Certainly not the investors who continued to buy US bonds AFTER S&P's ludicrous political downgrade.


This wasn't about the debt.


"The political brinkmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy."


These guys are clowns. It's like something new happened here other than the Tea Party posturing in public.

Lemdog
08-10-11, 10:08 AM
Who gives a shit what they said after they miscalculated our debt by 2 trilion dollars and had to be corrected by the US Treasury? Certainly not the investors who continued to buy US bonds AFTER S&P's ludicrous political downgrade.


This wasn't about the debt.

Political downgrade? I didn't get the memo that we changed its name. I thought we were still calling it the Tea Party downgrade. :lol:

RoyalTea
08-10-11, 10:13 AM
Who gives a shit what they said after they miscalculated our debt by 2 trilion dollars and had to be corrected by the US Treasury? Certainly not the investors who continued to buy US bonds AFTER S&P's ludicrous political downgrade.

The S&P said they'd downgrade if we didn't do x. We didn't come close to doing x and you think we were politically blindsided. Funny.

CRM114
08-10-11, 10:26 AM
But that's not what they said after the fact. The jokers running the show said the USA would default sometime in the future which has never happened and will never happen. Investors realize this.

RoyalTea
08-10-11, 10:35 AM
But that's not what they said after the fact. The jokers running the show said the USA would default sometime in the future which has never happened and will never happen. Investors realize this.

Never happened? You sure about that?

JasonF
08-10-11, 01:11 PM
Many have, even if not in this thread.

But if we can't believe any of them, how do you know what the credit worthiness of the US is? Should we just take your or the Administration's word for it?

You don't think that if Moody's, S&P & Fitch all disappeared tomorrow, the market would have any less information than they do today about what a U.S. treasury is worth?

I see the value ratings agencies can bring to difficult-to-research or lightly traded instruments (leaving aside whether any of the ratings agencies actually do provide that value in practice). But I find it extremely hard to believe that any intelligent investor looked at the downgrade and said "This gives me information about U.S. Treasuries that I didn't have before!"

Mabuse
08-10-11, 01:35 PM
JasonF I totally agree with that. Ratings on municipal bonds or private securities can be helpful but the idea of a rating on US Bonds is a bit silly. There is so much transparancy and reporting and documentation about every facet of the US economy that a rating on our debt really isn't neccessary. Every aspect of our economy is monitored and taken into account constantly.

CRM114
08-10-11, 01:56 PM
Not to mention that a single person, based in London, can negatively impact the world's largest economy with his silly pronouncements.

orangecrush
08-10-11, 02:05 PM
Not to mention that a single person, based in London, can negatively impact the world's largest economy with his silly pronouncements.The Fed chairman can do that (if they happen to be in London at the time).

Sean O'Hara
08-10-11, 02:25 PM
But I find it extremely hard to believe that any intelligent investor looked at the downgrade and said "This gives me information about U.S. Treasuries that I didn't have before!"

The economy is based upon magic -- money, stocks, bonds, etc. only have value as long as people believe they do. If someone with sufficient juju says, "This doesn't have value," it doesn't have value. Standard and Poors has that much juju. If you think they're wrong, you need to work on your own juju.

CRM114
08-10-11, 02:47 PM
The Fed chairman can do that (if they happen to be in London at the time).

But the Fed chairman is American and is a bit more credible when it comes to commenting on American politics.

CRM114
08-10-11, 02:50 PM
The economy is based upon magic -- money, stocks, bonds, etc. only have value as long as people believe they do. If someone with sufficient juju says, "This doesn't have value," it doesn't have value. Standard and Poors has that much juju. If you think they're wrong, you need to work on your own juju.

And their juju, at least on this subject, was characterized by just as many people buying US treasuries as before their statement. The thing their ridiculous pronouncements caused was massive instability in the stock market.

RoyalTea
08-10-11, 03:01 PM
And their juju, at least on this subject, was characterized by just as many people buying US treasuries as before their statement. The thing their ridiculous pronouncements caused was massive instability in the stock market.

What role do you think Italy & Spain had on the stock market on Monday?

CRM114
08-10-11, 03:17 PM
They certainly added to the trouble cause by the assclown at S&P.

X
08-10-11, 04:02 PM
Market dropping again. Fed interest rate news, but is there a Tea Party gathering somewhere? Someone needs to break that up before they ruin us all.From what's been happening in the European markets I can only assume there must be a European Tea Party.

Thanks a lot, European Tea Party! :mad:

Sean O'Hara
08-10-11, 04:08 PM
But the Fed chairman is American and is a bit more credible when it comes to commenting on American politics.

Heaven forfend that foreigners have any opinion on America. It's not like they can have expertise that's at all applicable to us.

And their juju, at least on this subject, was characterized by just as many people buying US treasuries as before their statement. The thing their ridiculous pronouncements caused was massive instability in the stock market.

Yes. And?

DVD Polizei
08-10-11, 09:20 PM
I'm starting the Coffee Party. We're made of disgruntled Dems & Reps.

JasonF
08-10-11, 10:17 PM
I'm starting the Coffee Party. We're made of disgruntled Dems & Reps.

You're about a year and a half too late.

http://en.wikipedia.org/wiki/Coffee_Party

Burnt Thru
08-11-11, 02:59 AM
From what's been happening in the European markets I can only assume there must be a European Tea Party.

Thanks a lot, European Tea Party! :mad:
Nah, we have the Greeks (and Irish). Irish coffee.. mmm.. sounds good right about now!

BTW there are now fears that the French economy may be downgraded due to the exposure of their banks to the crisis in Greece. Many of the banks lost 20% of their value yesterday! This is a long way from being over I fear..

Pharoh
08-11-11, 01:52 PM
Pretty poor 30 yr auction today. A bid/cover of 2.08. a tail of 11bps and only 12% indirect participation.

It is only one day, but not good.

Pharoh
08-11-11, 06:38 PM
Who gives a shit what they said after they miscalculated our debt by 2 trilion dollars and had to be corrected by the US Treasury? Certainly not the investors who continued to buy US bonds AFTER S&P's ludicrous political downgrade.


This wasn't about the debt.



These guys are clowns. It's like something new happened here other than the Tea Party posturing in public.

Just one last time; yes it was. See my above post.

CRM114
08-12-11, 09:06 AM
S&P mentioned politics in the reason for their downgrade. You can feel free to have your interpretation and believe the US would default in the future.

Adam Tyner
08-12-11, 09:17 AM
S&P mentioned politics in the reason for their downgrade.They also mentioned the debt! Their rationale wasn't that immediate threat of defaulting but the unsustainability of it all.

CRM114
08-12-11, 11:09 AM
In the pre-downgrade warning. Their downgrade itself contained hyperbole about the potential for a future default given the political climate.

mosquitobite
08-12-11, 11:21 AM
The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Yeah, no mention of debt or its unsustainability.

kvrdave
08-12-11, 11:42 AM
S&P mentioned politics in the reason for their downgrade. You can feel free to have your interpretation and believe the US would default in the future.

They mentioned more than just one reason. You can feel free to focus on the single reason among those given to help you believe that Obama is still great, and everyone is just picking on him. You have become just like all the Palin supporters. :lol:

Pharoh
08-12-11, 11:51 AM
S&P mentioned politics in the reason for their downgrade. You can feel free to have your interpretation and believe the US would default in the future.

They mentioned more than just one reason. You can feel free to focus on the single reason among those given to help you believe that Obama is still great, and everyone is just picking on him. You have become just like all the Palin supporters. :lol:

More importantly, you can choose the ignore the reality of the situation. I don't care about some silly pronouncement made after the fact. You apparently do. I would advise you do not focus on that. The facts are the long term worry, the only worry, is that, through inflation, holders of our long term debt will be paid back considerably less than they are owed. That is precisely what the market said yesterday.

Personally I believe we have plenty of time and resources to change that trajectory, but that was S&P's fear. Believe what you want though.

CRM114
08-12-11, 01:08 PM
Yeah, no mention of debt or its unsustainability.

Who said anything about there being "no mention?" I was simply pointing to the important part in their assessment:

"The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed."

Saying basically, that they cannot predict whether we will default or not (which is bullshit) so therefore we will inject ourselves into the debate.

CRM114
08-12-11, 01:09 PM
They mentioned more than just one reason. You can feel free to focus on the single reason among those given to help you believe that Obama is still great, and everyone is just picking on him. You have become just like all the Palin supporters. :lol:

Where did I mention Obama? Can someone actually stay on topic?

CRM114
08-12-11, 01:14 PM
Personally I believe we have plenty of time and resources to change that trajectory, but that was S&P's fear. Believe what you want though.

Yes, any rational person believes what you do. Unfortunately, S&P isn't rating with rationality.

K&AJones
09-14-12, 04:41 PM
Time to relive this thread thanks to Obama's Money Man Bernanke throwing the whole country under the bus to save "The One"...

BUS Credit Rating Cut by Egan-Jones ... Again]

Ratings firm Egan-Jones cut its credit rating on the U.S. government to "AA-" from "AA," citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country's credit quality.

In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.'s real gross domestic product, but reduces the value of the dollar.

http://www.cnbc.com/id/49037337

Dr Mabuse
09-19-12, 01:02 PM
Moody's has said they will cut the US rating by the end of 2012 if there is not a significant change in the way we are handling things. Namely, that we start a real trend of getting the debt down as a % of GDP.

This virtually guarantees Moody's will downgrade the US rating.