US Loses AAA Credit Rating After S&P Downgrade

Feuer Frei! · 08-06-11, 04:04 AM

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

kraznyi_oktjabr · 08-06-11, 04:19 AM

Magnificent. This is not yet disaster but will prevent some funds from investing to U.S. debt (including one where I have a stake).

Btw Feuer, could you include "Note: x month xxxx last updated xx

x GMT" into BBC article posts? They have sometimes tendency to update their articles quite often.

WTH what that smiley does there?

Feuer Frei! · 08-06-11, 05:21 AM

Quote:

Originally Posted by kraznyi_oktjabr

Btw Feuer, could you include "Note: x month xxxx last updated xx

x GMT" into BBC article posts?

Done.

kraznyi_oktjabr · 08-06-11, 05:41 AM

Quote:

Originally Posted by Feuer Frei!

Done.

Thank you!

mookiemookie · 08-06-11, 06:56 AM

Monday will be an interesting time to watch the markets. Buckle your seatbelts.

yubba · 08-06-11, 07:36 AM

How do like that for a Birthday present, Mister President. What's that I smell, well it's not the remnets of beer and pickled eggs nite at the Roxie, more like tar and feathers.

kraznyi_oktjabr · 08-06-11, 07:58 AM

Quote:

Originally Posted by yubba

How do like that for a Birthday present, Mister President. What's that I smell, well it's not the remnets of beer and pickled eggs nite at the Roxie, more like tar and feathers.

Well... if I remember correctly Standard & Poor's have criticized both sides in Congress.

Inability to make compromises to seriously cut deficit (including stubborn opposition to revenue increases and stubborn opposition to wellfare/healthcare/military/etc. spending) won't make friends in credit rating agencies.

yubba · 08-06-11, 09:07 AM

Well he's the leader, and like any good captain he should go down with his ship, the USS Unsubstainable. We don't need to compromise with communist ideas, they don't work anywhere else in the world, and why would you think they would work here, we need to cut the wasteful spending, cut the regulations and let capitalism work, government needs to live within it's means just like the rest of us.

Feuer Frei! · 08-06-11, 09:10 AM

Quote:

Originally Posted by yubba

and like any good captain he should go down with his ship, the USS Unsubstainable.

STEED · 08-06-11, 09:10 AM

You only got a slap from S&P, Moody's and fitch have left you on AAA.

Platapus · 08-06-11, 09:48 AM

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.

Seth8530 · 08-06-11, 11:56 AM

Of course their is controversy, i bet the white house is on full fledged damage control.. This could have awful effects down the road for all of us, Americans and non Americans alike.

The question is, who else is gona follow their lead?

Armistead · 08-06-11, 12:12 PM

Only billions at first, we'll have to see where the other cuts come into play.

yubba · 08-06-11, 05:25 PM

Quote:

Originally Posted by Seth8530

Of course their is controversy, i bet the white house is on full fledged damage control.. This could have awful effects down the road for all of us, Americans and non Americans alike.

The question is, who else is gona follow their lead?

The gun shop next door has been busy all day, I like where I live It's location, location.

vienna · 08-06-11, 05:50 PM

Quote:

Well he's the leader, and like any good captain he should go down with his ship,...

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...

08-06-11, 04:04 AM	#1
Feuer Frei! Navy Seal Join Date: Sep 2009 Location: Valhalla Posts: 5,295 Downloads: 141 Uploads: 17	US Loses AAA Credit Rating After S&P Downgrade 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 __________________ "History is the lies that the victors agree on"- Napoleon LINK TO MY SH 3 MODS Last edited by Feuer Frei!; 08-06-11 at 05:20 AM.

08-06-11, 04:19 AM	#2
kraznyi_oktjabr Sea Lord Join Date: Mar 2010 Location: Republiken Finland Posts: 1,803 Downloads: 8 Uploads: 0	Magnificent. This is not yet disaster but will prevent some funds from investing to U.S. debt (including one where I have a stake). Btw Feuer, could you include "Note: x month xxxx last updated xxx GMT" into BBC article posts? They have sometimes tendency to update their articles quite often. WTH what that smiley does there? __________________ You talk to God, you're religious. God talks to you, you're psychotic. - Dr. House

08-06-11, 06:56 AM	#5
mookiemookie Navy Seal Join Date: Nov 2005 Location: Houston, TX Posts: 9,404 Downloads: 105 Uploads: 1	Monday will be an interesting time to watch the markets. Buckle your seatbelts. __________________ They don’t think it be like it is, but it do. Want more U-boat Kaleun portraits for your SH3 Commander Profiles? Download the SH3 Commander Portrait Pack here.

08-06-11, 09:07 AM	#8
yubba Admiral Join Date: Sep 2009 Location: in a neighborhood near you Posts: 2,478 Downloads: 293 Uploads: 2	Well he's the leader, and like any good captain he should go down with his ship, the USS Unsubstainable. We don't need to compromise with communist ideas, they don't work anywhere else in the world, and why would you think they would work here, we need to cut the wasteful spending, cut the regulations and let capitalism work, government needs to live within it's means just like the rest of us. Last edited by yubba; 08-06-11 at 09:18 AM.

08-06-11, 09:10 AM	#10
STEED Lucky Jack Join Date: Jan 2006 Location: Down Town UK Posts: 27,695 Downloads: 89 Uploads: 48	You only got a slap from S&P, Moody's and fitch have left you on AAA. __________________ Dr Who rest in peace 1963-2017. To borrow Davros saying...I NAME YOU CHIBNALL THE DESTROYER OF DR WHO YOU KILLED IT!

08-06-11, 07:36 AM	#6
yubba Admiral Join Date: Sep 2009 Location: in a neighborhood near you Posts: 2,478 Downloads: 293 Uploads: 2	How do like that for a Birthday present, Mister President. What's that I smell, well it's not the remnets of beer and pickled eggs nite at the Roxie, more like tar and feathers.

08-06-11, 09:48 AM	#11
Platapus Fleet Admiral Join Date: Oct 2006 Posts: 19,362 Downloads: 63 Uploads: 0	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. __________________ abusus non tollit usum - A right should NOT be withheld from people on the basis that some tend to abuse that right.

08-06-11, 11:56 AM	#12
Seth8530 Captain Join Date: Jan 2007 Location: Tennessee Posts: 546 Downloads: 17 Uploads: 0	Of course their is controversy, i bet the white house is on full fledged damage control.. This could have awful effects down the road for all of us, Americans and non Americans alike. The question is, who else is gona follow their lead? __________________

08-06-11, 12:12 PM	#13
Armistead Rear Admiral Join Date: Dec 2008 Location: on the Dan Posts: 10,880 Downloads: 364 Uploads: 0	Only billions at first, we'll have to see where the other cuts come into play.