US Loses AAA Credit Rating After S&P Downgrade

[yubba]

Originally Posted by vienna

Just like the valiant Captain George W., who when the ship was seriously taking on water, just waited for his relief and ran down the gangway, never looking back or acknowledgeing he should have done at least something to stop the leaks...

Just remember the last 2 years of Captain George W's tour, he had a democrat crew that did nothing about stopping the leaks, but were hell bent in making them worse, and Captain O had 2 years with his loyal crew of democrats, and what happen, they sank under his watch, you are a virtual sub driver, so tell me who's fault is it ??? the guy who left the ship or the one commanding it. The whole problem is no accountablity, not you, not me, and certainly not the one's we elect too represent us, we are so screwed.

[TorpX]

Originally Posted by Platapus

How about we wait and see what the effects of this one reporting change will make before getting upset?

S&P is only one source and they are not infallible. There is already controversy about their methodology being discussed on the news.

I think this was inevitable. Since the Fed refuses to cut spending, it was only a matter of time. What difference does the details of their methodology make? Year after year, the Gov't spends more and more (most of it unwisely), and refuses to change it's way of doing things. The deal Obama signed just sweeps the mess under the rug, so they can all start campaigning for re-election.

[mookiemookie]

Originally Posted by TorpX

I think this was inevitable. Since the Fed refuses to cut spending, it was only a matter of time. What difference does the details of their methodology make? Year after year, the Gov't spends more and more (most of it unwisely), and refuses to change it's way of doing things. The deal Obama signed just sweeps the mess under the rug, so they can all start campaigning for re-election.

The Federal Reserve doesn't control the nation's purse strings. Secondly, the methodology makes all the difference, because that's what the downgrade is based on. I find it curious that S&P arrived at a completely different set of numbers than Moody's or Fitch.

Also, why didn't they wait until the results of the debt reduction committee came in?

[Winston]

This in my opinion is a nice example of financial terrorism. Now that lending is more expensive I'll be interested to see how this will affect home owners, businesses and pensions in the U.S. Sadly I feel it will erode the middle class even more as more businesses go under unable to matian the there debts. More jobs off to China and more poor people in the US.
I fear this is the way some people might want it, goods manufactured in the developing economies while financial and banking 'industries' in the west. If you pay your workers less overseas then theoretically the population benefits from cheaper products.

However who will be left to buy these goods? Manufacturing and farming are down in the UK. 1.2% and I think *0.8% respectivly dispite the disapointing 0.2% Growth reported last fortnight. Hmm I guess the next quarter will be down to and for why? Are there any shortage of resorces? Perhaps a shortage of workers? Well no, nothing like that. Not yet anyway. So what does that leave as the culprit in the failing economies of the west. Globalization is not working and euro is falling apart as the wealth moves away from the developed economies and the smaller economies face the crunch first.

To be frank I don't think there is much anyone can realisticly do in the face of Globalization. Money and investment will move to the most efficient production environments, the developing world. Workers in developed nations will have to except lower pay and fewer rights in order to compete with that. Indeed 'tis the very definition of the word Economy, to produce goods at the lowest price.

In the past western countries would have the benefit of 'the invisible hand' keeping investment home but now with markets so internationalised... It's like investing in renewable energy while there is still coal and oil in the ground, we all know it would help toward energy independence but as long as there is more money in oil and coal we'll go on using it.

[stormrider_sp]

Originally Posted by Feuer Frei!

One of the world's leading credit rating agencies, Standard & Poor's, has downgraded the United States' top-notch AAA rating for the first time ever.
S&P cut the long-term US rating by one notch to AA+ with a negative outlook, citing concerns about budget deficits.
The agency said the deficit reduction plan passed by the US Congress on Tuesday did not go far enough.
Correspondents say the downgrade could erode investors' confidence in the world's largest economy.
It is already struggling with huge debts, unemployment of 9.1% and fears of a possible double-dip recession.
The downgrade is a major embarrassment for the administration of President Barack Obama and could raise the cost of US government borrowing.
This in turn could trickle down to higher interest rates for local governments and individuals.


However, some analysts said with debt woes across much of the developed world, US debt remained an attractive option for investors.
The other two major credit rating agencies, Moody's and Fitch, said on Friday night they had no immediate plans to follow S&P in taking the US off their lists of risk-free borrowers.


Officials in Washington told US media that the agency's sums were deeply flawed.
Unnamed sources were quoted as saying that a treasury official had spotted a $2 trillion [£1.2 trillion] mistake in the agency's analysis.
"A judgment flawed by a $2tn error speaks for itself," a US treasury department spokesman said of the S&P analysis. He did not offer any immediate explanation.
John Chambers, chairman of S&P's sovereign ratings committee, told CNN that the US could have averted a downgrade if it had resolved its congressional stalemate earlier.
"The first thing it could have done is raise the debt ceiling in a timely matter so the debate would have been avoided to begin with," he said.
International reaction to the S&P move has been mixed.
China, the world's largest holder of US debt, had "every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," said a commentary in the official Xinhua news agency.


"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," the commentary said.
However, officials in Japan, South Korea and Australia have urged a calm response to the downgrade.
The S&P announcement comes after a week of turmoil on global stock markets, partly triggered by fears over the US economy's recovery and the eurozone crisis.


S&P had threatened the downgrade if the US could not agree to cut its federal debt by at least $4tn over the next decade.
Instead, the bill passed by Congress on Tuesday plans $2.1tn in savings over 10 years.
S&P said the Republicans and Democrats had only been able to agree "relatively modest savings", which fell "well short" of what had been envisaged.
The agency also noted that the legislation delegates the lion's share of savings to a bipartisan committee, which must report back to Congress in November on where the axe should fall.
The bill - which also raises the federal debt ceiling by up to $2.4tn, from $14.3tn, over a decade - was passed on Tuesday just hours before the expiry of a deadline to raise the US borrowing limit.


SOURCE

6 August 2011 Last updated at 08:38

Maybe S&P finally discovered that the more risky and reckless an investment is, the less Aces+ it should get. It still surprises me, after all this mess, how well rated US assets still are.

[Armistead]

Originally Posted by mookiemookie

The Federal Reserve doesn't control the nation's purse strings. Secondly, the methodology makes all the difference, because that's what the downgrade is based on. I find it curious that S&P arrived at a completely different set of numbers than Moody's or Fitch.

Also, why didn't they wait until the results of the debt reduction committee came in?

I guess they waited to see if congress would get serious about spending cuts. In reality we're just cutting billions, not trillions. I highly doubt when it gets to tough cuts they will follow through.

[Subnuts]

Ah crap.

There goes our roadside assistance!

[Seth8530]

Originally Posted by Winston

This in my opinion is a nice example of financial terrorism. Now that lending is more expensive I'll be interested to see how this will affect home owners, businesses and pensions in the U.S. Sadly I feel it will erode the middle class even more as more businesses go under unable to matian the there debts. More jobs off to China and more poor people in the US.
I fear this is the way some people might want it, goods manufactured in the developing economies while financial and banking 'industries' in the west. If you pay your workers less overseas then theoretically the population benefits from cheaper products.

However who will be left to buy these goods? Manufacturing and farming are down in the UK. 1.2% and I think *0.8% respectivly dispite the disapointing 0.2% Growth reported last fortnight. Hmm I guess the next quarter will be down to and for why? Are there any shortage of resorces? Perhaps a shortage of workers? Well no, nothing like that. Not yet anyway. So what does that leave as the culprit in the failing economies of the west. Globalization is not working and euro is falling apart as the wealth moves away from the developed economies and the smaller economies face the crunch first.

To be frank I don't think there is much anyone can realisticly do in the face of Globalization. Money and investment will move to the most efficient production environments, the developing world. Workers in developed nations will have to except lower pay and fewer rights in order to compete with that. Indeed 'tis the very definition of the word Economy, to produce goods at the lowest price.

In the past western countries would have the benefit of 'the invisible hand' keeping investment home but now with markets so internationalised... It's like investing in renewable energy while there is still coal and oil in the ground, we all know it would help toward energy independence but as long as there is more money in oil and coal we'll go on using it.

Good post, So it seems that for the most part the market itself is capitalistic, to the extent that it will even get in bed with a socialistic economy and workforce just to do exactly what a capitalistic economy wants to do.

Crazy, but it does make sense... And better yet, the Irony couldnt be better.

[nikimcbee]

Three cheers for obamunism!

[yubba]

Here's to crowney capitalism, ever wonder why General Electric doesn't pay any taxes ??? {gee Wallie I don't know why,} [ it's not gee it's GE.] If you listen to the tax cheat John Kerry it's the Tea Party's fault for the down grade what a baffoon. jim john what ever

[Respenus]

At least you now know how us Eurozone members feel when one after another, our economies get downgraded, after seemingly no problems for years on end. Of course the Euro "periphery" make quite large mistakes or simply lied about its expenses, yet with the contagion spreading to "core" countries it has become obvious (well it became obvious a year ago) that the wolves are always on the hunt. After they are done with the EU, they'll come looking for someone else (looking at you USA).

As far as globalization is concerned, I am not a major fan of what it has become, but there is only so much that can be done by the companies to cut costs (outsourcing) before they hit a wall. Soon, they will run out of countries with lax labour and environmental to take refuge in.

The major question for me is, why do we then the consumers come back to their products. For the same reasons why loans were so widespread before the crisis and are its root. The "disease" goes far deeper than mere globalization. Just look at what is going on in China and India with their growing middle class and rich individuals. Even in countries that have nothing, the basic human nature remains in full force. Greed and self-interest rule supreme. That's why I've stopped worrying about the global economy right now. I've become convinced of the power of the self-interest of the elites. In order for them to survive, they'll need to stop this madness. In order for them to retain power (formal or no) they'll have to give in to the demands of the people working hard for their daily bread. I'm more concerned about the high possibility that either part of that equation fails and that the powerful go into lockdown, taking everyone else with them. Still optimistic though . Can't imagine any other alternative to optimism right now. Perhaps decisive action?

[yubba]

I can't wait for the food riots that ought to be interesting.

[mookiemookie]

Originally Posted by yubba

I can't wait for the food riots that ought to be interesting.

[yubba]

that's what it's going to be like then, marsian law, then something else that I can't spell or remember, and then, an then

[Rockstar]

Originally Posted by yubba

that's what it's going to be like then, marsian law, then something else that I can't spell or remember, and then, an then

marsain law? martians!? MARTIANS ARE INVADING!? THE MARTIANS ARE COMING HEAD FER THE HILLS!



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