Um, wow. Someone at Standard and Poor has got some nuts.
A downgrade on U.S.A. sovereign debt would be...
kinda bad, if I may understate it somewhat.--RG
NEW YORK (Reuters) – Standard & Poor's threatened on Monday to downgrade the United States' prized AAA credit rating unless the Obama administration and Congress find a way to slash the yawning federal budget deficit within two years.
S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, slapped a negative outlook on the country's top-notch credit rating and said there's at least a one-in-three chance that it could eventually cut it.
A downgrade, which would leave Germany and France with a higher rating, would erode the status of the United States as the world's most powerful economy and the dollar's role as the dominant global currency.
If investors start demanding higher returns for holding riskier U.S. debt, the rise in bond yields would crank up borrowing costs for consumers and businesses. That would threaten to hurt the economy as it recovers from the worst recession since World War II.
"This new warning highlights the need for the U.S. to take better control of its fiscal destiny if it is to avoid higher borrowing costs and maintain its central role at the core of the global economy," said Mohamed El-Erian, chief executive at PIMCO, which oversees $1.2 trillion in assets and has a short position on U.S. government debt.
Major U.S. stock indexes fell than 1 percent on the day. Longer-dated government bond prices initially fell but recovered in afternoon trade, while the dollar rose....
http://news.yahoo.com/s/nm/us_ratings_usa_sp
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This is probably a good thing, if somewhat unlikely at the moment. (stress on the last part)
Good because it adds some urgency to the negotiations on the 2012 budget, that might provide some poltical cover for the teahadists to allow some modest tax increases, and Dems to modify the social safety nets.
Last edited by RandomGuy; 04-18-2011 at 05:10 PM. Reason: trying to get the "right" nuclear bomb picture first one was waaay to big
The threat of the downgrade is certainly deserved. We're on an unsustainable course and our two political factions still haven't shown any sign whatsoever of being able to work together like adults.
The shot across the bow has been fired. Hopefully our elected leaders get the message.
Cue the "raising taxes won't help our debt!" chant.
2 bull wars, Repug tax cuts, conservatives' deregulation of finance, the criminal Banksters' Great Depression, etc, etc, will do that to a country.
For years, the ratings agencies criminally LIED when stamping toxic as AAA and defrauded investors who trusted the agencies' ratings.
NOW the ratings want to (accommodate the VRWC and) tell the truth about US rating to provoke another financial shock for capitalism to exploit?
I'm sure Wall St has all its bets placed on the ratings' agencies downgrading US.
Lest we forget how the Repugs/VWRC got us into this mess:
http://www.cbpp.org/cms/index.cfm?fa=view&id=3036
Last edited by boutons_deux; 04-18-2011 at 06:08 PM.
Jokes on them. We can't even pay off the interest now.
I read somewhere over the weekend that both debt rating agencies were trying to get the politicians to stop threatening not to raise the debt ceiling...telling Boehner specifically that he can't just threaten that sort of thing without engendering real financial panic worldwide.
I think this is, as CG says, 'the shot across the bow'.
It's time for these politicians to exhibit the character and courage they claim to possess every election and increase tax collections and cut spending.
"It's time for these politicians to exhibit the character and courage"
you really are a naive jerk.
DC is nothing but money grubbing corruption, there isn't any character or courage, if there ever was any.
Cynicism mistaken for naivety, part mmmmmccccxxxxiv.
Oh, and "GFY."
Name the Repugs and Dems (it will take both) who have character and courage (and legislative power) to increase tax collections.
else, GFY
Last edited by boutons_deux; 04-19-2011 at 05:14 AM.
Nothing gets by you.
S&P is based out of the USA, so it'll kindly be reminded by its government to keep the AAA rating.
Coburn and Levin threatened both ratings agencies with referral to DOJ last week, S&P just reminded Congress it still has an arrow left in its quiver.
S&P will eventually lose the pissing contest but is capable of significant mischief. Withdrawing the threat of criminal referral is the likely price of withdrawing the threat to the US credit rating.
I'll admit, I find the fact that a rating agency is threatening the US government unsettling.
Similar to what I felt when PIMCO announced it was getting out of US Treasuries.
Why? They're just cutting out the middleman
Portends ill for the country IMO.
So you can't name the Repugs and Dems of courage and character (and legislative votes) to raise taxes?
I'm cynical? You're a bull ter of fantasies.
I'm not so sure S&P will lose. After all, the criticisms of the ratings agencies are over how loose they were with favorable ratings. Seems like S&P has a ready made retort to Congress of "we're just doing what you told us to".
The status quo needs to be unsettled.
Zero Sum defeatism is easier than thinking for boutonski.
If not completely obliterated.
Yes, but it needs to happen rather than fleeing from the truth.
It cracks me up everything you bring in that propaganda.Lest we forget how the Repugs/VWRC got us into this mess:
Just how much merit does "based on CBO estimates" have?
There has been talk on conservative radio for some time now that this would have to happen. I believe it will if we cannot get a serious reduction in deficit spending, and soon. Won't have another budget outline for some time, so we need more tax payers entering the job market.
Anyone see that happening any time soon?
Ready retort of the government: we'll prosecute.
Sure. Still feels creepy tho, and there are possible downsides.
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