US Credit Rating Downgraded by S&P

dazedandconfused

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The problem is, we need EVERY part of government to submit a plan to deal with this mess. Tell agencys we are cutting your budget by XX percent. How are you going to do it? Those defending no changes to medicare and social security and increase taxes, how are you going to do it? For those that refuse to raise taxes (and remember, Grover Norquist said letting the Bush tax cuts would not be a breach of his pledge), how are we going to do it? Changes in the tax code we obviously need, but someone propose changes.

The problem is, what the public says (and there is a lot of grumbling towards Congress and the Presiden) and what it does is often two different things. Remember people in the public complaining about the presses continued Clinton reporting during the scandel but yet tabloids experienced record sales?
 

D_Percy_Prettywillie

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I doubt that fear of an immediate default is the only reason for the credit rating downgrade.

The dysfunctional behavior of Congress is probably the main reason for the credit downgrade. That behavior does not bode well for the economic future of the U.S.


Exactly. It's not that they think we're not capable of paying back what we owe due to lack of means. It's more that we seem less likely of agreeing on how and that because an effective plan can't be had in the current political climate, it won't get done. A car with a full tank of gas can go just about anywhere. If the driver and passenger stop the car and bicker at every single intersection, it's very unlikely the car will arrive at its destination in a timely fashion.

This is a mess created by Washington. As much as I'd like to say "All politicians are to blame for it" that isn't how I feel anymore. The democrats came to the table with a balanced approached- let's cut spending and let's get some revenue enhancements. The republicans wouldn't have it. Even closing loop holes in the tax code was taken off the table after the Tea Party lambasted the Speaker for seemingly cooperating with the White House. They got 98% of what they wanted and still wouldn't vote for it in a lot of cases.

I don't have faith in Congress to agree on a plan for ordering breakfast let alone get any actual governing done. The downgrade by S&P, while seemingly hasty, neither surprises me nor does it seem unreasonable.






JSZ
 

dandelion

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I got the impression it was a tea party objective to have no rise in the borrowing limit and no rise in taxes. I also got the impression that to achieve this under the rules, all they had to do was refuse everything. So they did. American government in action as designed. If i take what seems to be a reasonable view, that the democrats took a more balanced view, believing a range of measures was necessary, then it would be hypocritical of them to be equally obstinate and refuse to allow what cuts they themselves thought was necessary simply from bloody mindedness.

So the appearance of giving in reflects the democrats realistic approach to what had to be done. If this website was typical I think they would win the next election with a landslide because of this. But I doubt it is.
 

vince

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Yeah, the recession is so bad in America, my sister got a pre-declined credit card in the mail.
 
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deleted15807

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I doubt that fear of an immediate default is the only reason for the credit rating downgrade.

It was a political statement S&P was making more than anything else. With Michelle Bachmann and other Tea Party wackos running around being very cavalier about defaulting what choice do you have? When someone says 'hey we might default' unless we get our way, how can you rate that debt AAA?

Further:

No Chance of Default, US Can Print Money: Greenspan
 

Thedrewbert

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Fool me once, shame on you, fool me twice, shame on me? You honestly reckon there is absolutely no chance of a US default? The congress has a policy designed to lead to default. Never increase the debt ceiling and never increase taxes. With a policy like that default becomes an interesting option to deal with the debt. The choice becomes pay granny's pension and the soldiers, or pay the interest bill. Which would you do?

The president making speeches that never mind what anyone says, the US is still an AAA class country? Ok. I am the worlds top brain surgeon. I could build you a spaceship to go to the nearest planet with life on for half the cost of the shuttle and I can make free electricity from water. The world is saved.

I didn't say the rating was wrong. In fact, given the nature of the TeaParty hacks in Congress, I think that S&P was rather generous with the rating they did give us. I just think that S&P is being selective and disingenuous with their ratings for political and financial reasons. basically, they haven't cleaned up their act.
 
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deleted15807

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Printing money is an option. It won't get you AAA.
 

D_Percy_Prettywillie

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I do think, to some extent, the reaction to this downgrade and the significance that S&P actually has is a bit... inflated.

The Isle of Man has a AAA rating for crying out loud. And if you look even briefly into S&P's record over the last decade and the things they've claimed were "gold standard" that weren't? Its starts to paint a picture- these bastards are responsible for this mess in the first place.




JSZ
 

pinspotter10

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Printing money is an option. It won't get you AAA.

Agreeing with Sargon ... I thought that either declared or possibly undeclared is that high inflation would destroy the AAA credit rating just as much as not paying it back. Which is worse, getting 90 cents on a whole dollar or being paid back with a dollar that's only worth 50 cents?

So - bottom line is it's not only whether the USA actually defaults, but also whether high inflation may take hold.
 

Jason

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Printing money is an option. It won't get you AAA.

The credit rating agencies are measuring chance of default. Printing money reduces the chance of default and therefore would tend to improve the credit rating.

Of course QE has many problems - but it is sometimes the only solution. I expect that the USA will be forced into several rounds of QE, with all the inflationary problems this will cause. It will also be forced into more co-operation with central banks. The result will be a new look to the US economy and a more collaborative overseas economic policy.
 

D_Bob_Crotchitch

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The Federal Reserve has been printing money nonstop. It is keeping interest rates super low to prevent the economy from collapsing like it should have done. Banks buy government securities at zero interest. They make a profit on the point spread, and are still writing off hundreds of billions in bad credit loans. Eventually, all the extra printed money will cause inflation. If the FR raises rates to curb inflation, it could choke the last gasp of air out of the economy.
 
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deleted15807

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The credit rating agencies are measuring chance of default. Printing money reduces the chance of default and therefore would tend to improve the credit rating.

Not really. You can't print your way out of debt and into an AAA credit rating. If that's all it took every country would fire up the printing press. Yes the risk of inflation is there but puff your debts are gone.