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Offline ZANDOLIE

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S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« on: August 05, 2011, 09:37:42 PM »
From CNN.com

S&P downgrades U.S. credit rating

By Charles Riley @CNNMoney August 5, 2011: 10:46 PM ET

NEW YORK (CNNMoney) -- Credit rating agency Standard & Poor's on Friday downgraded the credit rating of the United States, stripping the world's largest economy of its prized AAA status.

In July, S&P placed the United States' rating on "CreditWatch with negative implications" as the debt ceiling debate devolved into partisan bickering.

To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a "credible" plan to tackle the nation's long-term debt.

In its report Friday, S&P ruled that the U.S. fell short: "The downgrade reflects our opinion that the ... 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."

S&P also cited dysfunctional policymaking in Washington as a factor in the downgrade. "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."

A Treasury Department spokesman pushed back on the rating change, saying that S&P's analysis was flawed.

A source familiar with the matter said S&P initially miscalculated the growth trajectory of the nation's debt, and then went ahead with its downgrade anyway.

The source also said S&P didn't give enough credit for the debt-ceiling compromise, which paved the way for more than $2 trillion in spending cuts over the next 10 years.

However, one of S&P's explicit criticisms of the compromise was that it didn't address the biggest drivers of the nation's debt -- Social Security and Medicare -- and didn't allow for additional tax revenue. ("What's wrong with the debt ceiling deal?")

John Chambers, Head of Sovereign Ratings for S&P, told CNN that though S&P didn't have a specific target in mind, the total debt reduction package was not sufficient. Chambers also noted that the plan did not take steps in the near term to boost economic growth.


The safest bets are stamped AAA. That's where U.S. debt has stood for years. Moody's first assigned the United States a AAA rating in 1917. The country's new S&P rating is AA+ -- still strong, but not the highest.

The downgrade puts the U.S. debt rating on par with that of Belgium, but below countries like the United Kingdom and Australia.

In the days after lawmakers managed to strike a debt-ceiling deal, the two other major rating agencies have both said the deficit reduction actions taken by Congress were a step in the right direction.

On Tuesday, Moody's said the United States will keep its sterling AAA credit rating, but lowered its outlook on U.S. debt to "negative."

Even after a downgrade, the United States will likely still be able to pay its bills for years to come and remains a good credit risk.

A downgrade really just amounts to one agency's opinion. Federal Reserve Chairman Ben Bernanke articulated that view in April when S&P placed the United States on credit watch. "S&P's action didn't really tell us anything," Bernanke said. "Everybody who reads the newspaper knows that the United States has a very serious long-term fiscal problem."

Investors have limited options for making safe investments, and Treasuries are effectively as liquid as cash. And other big countries have been downgraded and were still able to borrow at low rates.

At the same time, some experts warn that a downgrade could gum up the banking system and ripple out onto Main Street. Treasuries are used as collateral in many transactions between financial institutions and grease the skids of lending.

Shortly after the downgrade, the Federal Reserve, FDIC and other bank regulators moved to blunt the affect of the action on the banking system. In a joint release, the agencies said they would continue to treat Treasuries and other securities issued by government-sponsored entities (such as Fannie Mae and Freddie Mac) the same as before they were downgraded. Treasuries are often used as collateral for short-term lending among banks and other financial institutions.

Consumers and investors could feel the impact of a downgrade. Interest rates on bonds could rise, and rates on mortgages and other types of loans along with them.

Government-backed agencies like Fannie Mae and Freddie Mac may also be downgraded. It's also possible that some state and local governments could also face a downgrade.

And investment decisions would become complicated for large institutional investors that are required to hold highly-rated securities.
« Last Edit: August 05, 2011, 09:40:53 PM by ZANDOLIE »
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Offline ribbit

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #1 on: August 05, 2011, 09:53:32 PM »
amazing how this analysis paint all around but not on de abysmal leadershit from dis smiling fool in de white house. he laughing it up with oprah and jay-z on his 50th while de market tanking.

hopefully dis will hasten de departure of geithner.

Offline Bakes

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #2 on: August 05, 2011, 10:03:00 PM »
amazing how this analysis paint all around but not on de abysmal leadershit from dis smiling fool in de white house. he laughing it up with oprah and jay-z on his 50th while de market tanking.

hopefully dis will hasten de departure of geithner.

Quote
However, one of S&P's explicit criticisms of the compromise was that it didn't address the biggest drivers of the nation's debt -- Social Security and Medicare -- and didn't allow for additional tax revenue. ("What's wrong with the debt ceiling deal?")

The President can do very little to change Social Security and Medicare on his own... he certainly pushed hard for tax increases but the Republicans and Teabaggers among them would have none of it.  But somehow you conveniently look past all of that to pin the blame on Obama.  You either having a difficult time understanding the issue, or a difficult time concealing your obvious bias against him.
« Last Edit: August 05, 2011, 10:04:36 PM by Bakes »

Offline ribbit

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #3 on: August 05, 2011, 10:23:18 PM »
amazing how this analysis paint all around but not on de abysmal leadershit from dis smiling fool in de white house. he laughing it up with oprah and jay-z on his 50th while de market tanking.

hopefully dis will hasten de departure of geithner.

Quote
However, one of S&P's explicit criticisms of the compromise was that it didn't address the biggest drivers of the nation's debt -- Social Security and Medicare -- and didn't allow for additional tax revenue. ("What's wrong with the debt ceiling deal?")

The President can do very little to change Social Security and Medicare on his own... he certainly pushed hard for tax increases but the Republicans and Teabaggers among them would have none of it.  But somehow you conveniently look past all of that to pin the blame on Obama.  You either having a difficult time understanding the issue, or a difficult time concealing your obvious bias against him.

or neither. the point is plain enough. the analysis completely misses the dimension of leadership in this debate. so have you.

Offline Bakes

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #4 on: August 05, 2011, 10:53:52 PM »
or neither. the point is plain enough. the analysis completely misses the dimension of leadership in this debate. so have you.

Clearly your appreciation of what constitutes "leadership" involves either a parallel universe interpretation, or a heavy amount of experimental drugs.  No amount of "leadership" was going to budge an intractable Republican House majority from their impractical demands... most who have analyzed the situation rightly savage the Republicans for holding the country hostage, you however remain true to form in your bizarre criticism of Obama.  Not that I'm surprised really.

Offline JDB

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #5 on: August 06, 2011, 06:38:40 AM »
Ribbit your bias doesn't allow you to begin to comprehend what you reading.

S&P was clear in stating that the drivers of debt entitlements and revenue were not included. Neither party wants to give up those things unilaterally and the "leadership" failure was in their inability to compromise and give them up collectively.

The only proposal that addressed the S&P concerns was the 4T proposal by Obama which was rejected out of hand because 25% of the savings was from revenue.

But S&P is not wrong to not single out Obama. The debt is a long term problem Obama will be gone in 1 or 5 years but the system that prevents the US from getting big things done will persist. This was coming for a long while because of the actual debt level but this "debate" brought into stark contrast the inability of the US system to fix big problems. It showed that you can have a party that controls 1/3 of government threaten oblivion to achieve political goals. Before that there was a Republican Minority in the Senate that was stopping any legislation they wanted.

But let's really look at what happened.

Republicans say no clean debt bill, we need to tackle the debt. As a strongarm tactic they decide to hamstring a bill to deal with past spending.

They make US debt the centre of the Universe with the all the scrutiny and panic that accompanies it including people pulling their money out of the markets. People already start pulling back spending because even the man on the street now thinking about an impending economic armageddon.

Republicans have been crying about financial uncertainty for the past 2 years, yet they introduce the greatest uncertainty of their own volition when discussing Bowles SImpson woulf have been a more finessed approach.

Well alright its worth the aggro it if we get a comprehensive deal right?, let's negotiate...

"We not willing to negotiate, do what we say or no deal" - Is that leadership? You could lead your team-mates, workers or family with such disdain and get any results?


But here is the real kicker that will let S&P know that the situation is bleak.

The deal as constituted is a nothing deal. It is backloaded to 2010 and it is cuts to projected spending increases, like the military that should not be happening anyway. And the two trillion is a fraction of the new debt that the US will incur even at current spending. Added to fact that future congresses will probably just overule it with new legislation.

Despite the nothing deal you have Republicans breaking they hand patting themselves on the back saying how much they have achieved. Boehner has been crowing about how he get 98%  of what he wanted (a true measure of how much the Republicans were willing to negotiate), McConnell is the new great statesman on US politics.

S&P has seen that the US system has become too polarized to make the sweeping policy changes that you see in Britain last year or in Germany a decade ago. Neither party whether right or left can unilaterally implement a plan, whether good or bad. This has nothing to do with the qualities of Obama and more the reaction of the Republican party to him. Obama is as centrist as you could get and still be called a democrat.

One of my multiple criticisms of Obama is that he did not let all the tax cuts expire. I understand that he was concerned about the fledgling recovery at the time and Republicans were holding unemployment insurance extension as a hostage but his capitulation to a Republican minority was bad. Especially as he was touting the deal as this grand achievement and playing into the tax cuts myth. If the deficit was bad and needed sacrifice then better everybody sacrifice than nobody. That was him playing politics trying to preserve his no taxes on the middle class pledge.

The fact is the recession will roll for a long time, easily 5 - 6 years, whether it dip this year or next year it will dip again, precipitously. Failure to extend unemployment ins. would have been painful but it would not have been his action. In any case, even if he did, the Republicans would have threatened a government shutdown in spring and still threatened the debt ceiling, just as they will threaten shutdown in fall.

S&P can't ignore this type of brinksmanship and none of it comes from Obama. Look at how legislation gets passed now, always midnight deals, deadline votes with no debate, healthcare, debt ceiling. That is a result of a system that has calcified over time.

To paraphrase Mr. T in "Rocky III". What is your prediction for the US economic future? ..."Pain"
« Last Edit: August 06, 2011, 06:43:11 AM by JDB »
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Offline elan

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #6 on: August 06, 2011, 11:09:23 AM »
amazing how this analysis paint all around but not on de abysmal leadershit from dis smiling fool in de white house. he laughing it up with oprah and jay-z on his 50th while de market tanking.

hopefully dis will hasten de departure of geithner.

You hadda be dumb as rocks to make that statement. Reminds me of the Faux news crew who spew a lot of garbage and nothing to substantiate their claims eventually finishing up with some trivial matter such as a birthday celebration.
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Offline ZANDOLIE

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #7 on: August 06, 2011, 12:35:25 PM »
Ribbit I'm not a die hard fan of the President but a child could see Republican 'opposition' was mere grandcharge and catering to the base. There was never a choice, not this rounds anyway.


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Offline Bakes

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #8 on: August 06, 2011, 08:50:18 PM »
This entire thing was planned two and a half years ago...


The Origins of the Debt Showdown

Offline Preacher

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #9 on: August 07, 2011, 01:30:18 AM »
The S&P Credit rating is part of the same system that is annihilating the middle class in America.  Separating further and further the haves from the have nots.  Get this in allyuh head if it is not blatantly obvious already.  America is owned by the banks and foreign interest. They have us on our hands and knees without consent.  2 major events that has promised to stall the nation if X didn't happen.  1. 700 Billion unaccounted dollars to the banks.  Unable to be contested by any court.  They run that like the TTFF.  :)  2. We need more money to raise the debt limit, again to benefit of banks.  It is a Wall Street Government and it has been for a while.  The S&P Credit rating will support the position of the banks, so what you seeing a simply a show of power.   One of my clients is a Top Gun Navy Pilot running for the US Senate, he put's it simply.  "The Government is no longer working for the people, the people are working for the Government." 

Here are some Quotes from past Presidents about Bankers having their way with government.

"Whoever controls the volume of money in any country is absolute master of all industry and commerce."
-James A. Garfield, President of the United States

"A great industrial nation is controlled by it's system of credit. Our system of credit is concentrated in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the world--no longer a government of free opinion, no longer a government by conviction and vote of the majority, but a government by the opinion and duress of small groups of dominant men."
-President Woodrow Wilson

"History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and it's issuance."
-James Madison

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs."
-Thomas Jefferson

“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the bankers in the rear. Of the two, the one at my rear is my greatest foe.”
-Abraham Lincoln

"Give me control of a nation's money and I care not who makes it's laws"
-Mayer Amschel Bauer Rothschild
« Last Edit: August 07, 2011, 03:15:30 AM by Preacher »
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Offline Bakes

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #10 on: August 07, 2011, 09:42:18 AM »
The S&P Credit rating is part of the same system that is annihilating the middle class in America.  Separating further and further the haves from the have nots.

How so? 

Quote
The S&P Credit rating will support the position of the banks, so what you seeing a simply a show of power.   

How does lowering the credit rating of the US "support the position of the banks"?

Offline Preacher

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #11 on: August 07, 2011, 06:55:55 PM »
The answer to both questions is that the only people it hurts is the middle class.  All the repercussions are going to roll off on the middle class not the rich.  That S&P new rating is a reaction to not getting the 4 Trillion they wanted.   No private banking institution should be dictating to government interest rates and be given the power to print money.  The Federal Reserve is a privately own world bank and they own America.  Their motivation is purely private and not in the best interest of the American people.  Where u think the US getting the 4 Trill from?   Then who's paying the dept?  You and I brother.  It's another money scam that again violates the rights of the people who can actually do something; the middle class.  Look these bankers write it in plain English to their big share holders.  "America is no longer a Democracy but it is a Plutonomy and we are the 1%." 

These banks boast in their writings that 1% of the population controls the other 95%.  AND THEY WANT IT THAT WAY.
That's against everything America stands for, you read the quotes. 

Two memorable government stalls in 4-5years.  All with major money coming from the pockets of the American people, middle class.
« Last Edit: August 07, 2011, 08:37:42 PM by Preacher »
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Offline asylumseeker

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #12 on: August 08, 2011, 08:48:44 AM »
Naturally, no one gave much of a hoot about sovereign ratings previously? When Barbados was going through its issues with S&P was anyone paying attention? :devil:

Ours is decent.

http://www.jmmb.com/attachments/Trinidad_Update_June_29_2011.pdf

http://www.finance.gov.tt/content/sp010111.pdf

 

Offline ribbit

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #13 on: August 08, 2011, 12:43:08 PM »
One of my multiple criticisms of Obama is that he did not let all the tax cuts expire. I understand that he was concerned about the fledgling recovery at the time and Republicans were holding unemployment insurance extension as a hostage but his capitulation to a Republican minority was bad. Especially as he was touting the deal as this grand achievement and playing into the tax cuts myth. If the deficit was bad and needed sacrifice then better everybody sacrifice than nobody. That was him playing politics trying to preserve his no taxes on the middle class pledge.

this is de so-called "leadership" to which i was referring. de markets see how dis man have no spine.


S&P can't ignore this type of brinksmanship and none of it comes from Obama. Look at how legislation gets passed now, always midnight deals, deadline votes with no debate, healthcare, debt ceiling. That is a result of a system that has calcified over time.

i disagree with this assessment. de prez played a significant role in sowing de seeds for de tea party. by spending a year on a healthcare bill that the majority of the electorate did not want (factoid: healthcare was ranked as priority #6 by pew at the time, behind jobs and debt reduction) he put himself in their target sights. now he wants to cry de tea party doh like him? steups. so de system been working for centuries and only now it calcified? nah, de problem is about policy.

like i asked you before in another thread, JDB, do you still believe in de vision of de Democrats? in what they are trying to achieve?

Offline Bakes

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #14 on: August 08, 2011, 01:26:03 PM »
The answer to both questions is that the only people it hurts is the middle class.  All the repercussions are going to roll off on the middle class not the rich.  That S&P new rating is a reaction to not getting the 4 Trillion they wanted.   No private banking institution should be dictating to government interest rates and be given the power to print money.  The Federal Reserve is a privately own world bank and they own America.  Their motivation is purely private and not in the best interest of the American people.  Where u think the US getting the 4 Trill from?   Then who's paying the dept?  You and I brother.  It's another money scam that again violates the rights of the people who can actually do something; the middle class.  Look these bankers write it in plain English to their big share holders.  "America is no longer a Democracy but it is a Plutonomy and we are the 1%." 

These banks boast in their writings that 1% of the population controls the other 95%.  AND THEY WANT IT THAT WAY.
That's against everything America stands for, you read the quotes. 

Two memorable government stalls in 4-5years.  All with major money coming from the pockets of the American people, middle class.

Who's the "they" you talking about... S&P?

People misrepresent the role and powers of the Fed all the time... the 12 regional banks that comprise the Federal Reserve are public entities, not private.  So the Federal Reserve Bank of NY for instance, is a government bank whose purpose is to regulate all the commercial banks in its region, as well as to implement government policy handed down by the Board of the Fed.

The Chairman of the Board is a presidential appointee and the true nature of the Fed is that it is a quasi-public organization with leadership decisions being made by a board of governors that is also appointed by the President.

The Fed was established by, and today continues to be governed by the Federal Reserve Act... in other words, they are accountable to the government.  It is only private to the extent that there are private banks among the advisors and stakeholders and their input also influences policy decisions that are made (otherwise why have them as "advisors" if not to help guide policy?).

Much of the debt is privately owned it's true... in the form of Treasury bonds sold... and much of it is foreign-owned.  So I disagree with your argument that this 4 Trillion was somehow going into the hands of private banks in cahoots with S&P.

Offline Deeks

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #15 on: August 09, 2011, 06:38:52 AM »
Banking and Finance 101!!!

Offline Deeks

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Re: S&P Downgrades US Credit Rating: Slams Political Gamesmanship
« Reply #16 on: August 09, 2011, 06:47:51 AM »
I read all the thing about the Prez. capitulated to the Repub. True. !!! Quite true. But the Prez. coucou get cooked after the mid term elections. Those who wanted a socalled liberal agenda watch the tea party voters elected a substantial among of congressman to stifle the Prez. agenda. The tea party would not budge. They already hated Obama. They have always vow to make him a one term Prez. The lesson to be learned is get your arse up and go and vote in the mid-term election for the Prez. to continue his agenda. He cannot provide miracles by talking. Allyuh have to go and vote. It happened to Clinton, but unlike now, the economy was in much better shape and we were riding on the tech bubble. So don't sit on your arse!!! Go and vote.

 

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