S&P Downgrades US!

Discussion in 'Business & Economics' started by madanthonywayne, Aug 6, 2011.

  1. madanthonywayne Morning in America Registered Senior Member

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    12,461
    Standard and Poors announced Friday night that they were downgrading US debt from AAA to AA+.

    Standard & Poor’s announced Friday night that it has downgraded the U.S. credit rating for the first time, dealing a symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

    Lowering the nation’s rating to one notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.

    “It’s always possible the rating will come back, but we don’t think it’s coming back anytime soon,” said David Beers, head of S&P’s sovereign debt rating unit.

    The decision came after a day of furious back-and-forth debate between the Obama administration and S&P. Government officials fought back hard, arguing that S&P’s analysis of the potential for political agreement was flawed and that its initial report, which was flagged by the Treasury earlier in the day, contained mathematical errors. The company had overstated the U.S. deficit over 10 years by $2 trillion.

    “A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesman said Friday.

    The downgrade to AA+ will push the global financial markets into uncharted territory after a volatile week fueled by concerns over a worsening debt crisis in Europe and a faltering economy in the United States.​
    So, what now?
     
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  3. joepistole Deacon Blues Valued Senior Member

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    Thank you Tea Party! I agree with the S&P assessment. Since Republicans took over the House, it has become increasingly apparent that the US is now subject to intense and potentially disasterous political and economic instability. That should have been very clear to any observer for more than an a year now.

    This is less about the numbers than it is about our current political environment. We have a segement in Congress (Republicans/Tea Party) who will not raise taxes and who have no qualms about taking the nation into default as demonstrated by their recent temper tantrums (raising the debt ceiling).

    The Teabaggers are taking the nation down the path to becoming a third world nation. This is just the second installment. The first installment was the gross fiscal mismanagement of George II and his merry band of Republicans. The nation will have another chance to redeem itself in the elctions of 2012. We will have to see what path the nation chooses.
     
    Last edited: Aug 6, 2011
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  5. Repo Man Valued Senior Member

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    "So, what now?"

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  7. joepistole Deacon Blues Valued Senior Member

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    We might get there Repo, if the nation does not wake up.
     
  8. madanthonywayne Morning in America Registered Senior Member

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    Indeed. We are waking up. Let's just hope we can hold things together thru 2012 so that we can get someone competent in office. Someone with at least some semblance of leadership experience. Someone with a basic familiarity with the private sector. Someone willing to take responsibility for the job. Someone who will do more than offer up excuses and blame. Someone who will not waste his first two years in office pushing thru a healthcare "reform" nobody wanted while the economy continued to go to shit.
     
  9. keith1 Guest

    Go back to sleep, mad. You're dreaming.
    Time for the world to shake into one government land.
    And we'll be keeping the healthcare reform...the wealthy will need the bandages...
     
  10. Gustav Banned Banned

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    12,575
    /eek
     
  11. adam2314 Registered Senior Member

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    409
    So what now !!!.. You ask..

    Time for a reality check.

    Why should any Government spend more than it is receiving ??

    Sure there is such a thing as time payment..

    For Governments.. Only for long term Capital works.. Dams.. Bridges.. Roads.. etc.. Maximum 30 years..

    Private ??.. Minimum 50% upfront.. Yes that includes your House ..
    Car.. Washing machine.. Swimming pool.. And Plasma TV.. Maximum time for repayment. 2 years . Property 15 years..

    If you are not willing to bust a gut getting 50% deposit ... You do not want it or need it enough !!.

    Credit is far to easy .. Sucking ( Yes SUCKING ) off the naive of this world..

    Credit cards in this country are charging 19-23 %

    Are the Credit Card Companies making 19-23 % profit... Less admin costs ???

    NO !!.. Those charges are to cover losses..

    They are still making bloody good profits.. At the expense of the honest..

    Rein them in !!!..
     
  12. jmpet Valued Senior Member

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    1,891
    I agree American dollars should get an AA+ rating and not a AAA rating. QE1 and QE2 sufficiently devalued the dollar and this band-aid of a debt celing increase- all while not raising taxes (and therefore have no chance of paying it back) was the final nail.

    Now where's the Republicans in this forum to tell me I am wrong? Because I want to hear YOUR ideas of how to get back to a AAA.
     
  13. cosmictraveler Be kind to yourself always. Valued Senior Member

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    They should have downgraded it even more because it is living way beyond its means in many aspects so I feel they were kind to only give it this rating. I think it will go lower as time goes by and the dollar becomes weaker due to to many dollars being produced with nothing but debt backing them up.

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  14. adam2314 Registered Senior Member

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    Hey !.. Billy T.. Am I able to sue you because you said that melt down will arrive about Fall 2014 ??..

    Or do we join hands and make a fortune of this Hiccup ??
     
  15. Michael 歌舞伎 Valued Senior Member

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    20,285
    I heard Benny Boy mutter QE3.

    Who wants to take bets on when the government starts leaking rumors of a QE3 being a sure thing? I'm thinking the 15th of August. Why? I don't know, but I like the combination of 8/15, it sounds like QE3 to me.....


    PS: Don't tell Joe about the downgrade. He's 98% sure Obama is Baby Jesus
    incarnate and the BJ Morgan Mount Olympus (or wherever Baby JC was from

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    You know, Löwenbräu .... damn fine biru

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  16. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    Tea Party:
    Yay! We won!
     
  17. Tiassa Let us not launch the boat ... Valued Senior Member

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    37,884
    The political question

    Former Secretary of Labor Robert Reich, last month, on the credit rating agencies:

    Now I don't mean to be impertinent, but as long as America pays its debts on time, who is Standard & Poor's to tell America how much debt it has to shed and by when?

    Until the eve of Wall Street's collapse in late 2007, S&P gave triple-A ratings to what turned out to be some of the Street's riskiest packages of mortgage-backed securities.

    Had S&P done its job, we wouldn't have had the debt and housing bubbles to begin with. That means taxpayers wouldn't have had to bail out Wall Street. We probably wouldn't have had a Great Recession. Millions of Americans wouldn't be jobless and collecting unemployment benefits. There'd be no need for the stimulus that saved 3 million other jobs. And far more tax revenue would have been pouring into the Treasury.

    In other words, had S&P done its job, the federal budget deficit would likely be far smaller than it is today -- and S&P wouldn't be threatening the United States with a downgrade if we didn't come up with a plan for shrinking it.

    And why has S&P decided to get into public policy now anyway? Where was it when President George W. Bush turned a $5 trillion budget surplus bequeathed to him by Bill Clinton into a gaping deficit?

    Here's some free advice to Standard & Poor's: Stick to what you know.

    To the one, there is inevitably going to be talk of the politics of this decision. To the other, if Reich has a point, how is there not a reasonably serious political aspect to consider?
    ____________________

    Notes:

    Reich, Robert. "Downgrading the credit agencies". Marketplace. July 27, 2011. Marketplace.PublicRadio.org. August 6, 2011. http://marketplace.publicradio.org/...m-downgrading-the-credit-agencies-commentary/
     
  18. Captain Kremmen All aboard, me Hearties! Valued Senior Member

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    12,738
    When I was at school, A was very good.
    And B was good.

    What happened?
     
  19. CptBork Valued Senior Member

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    6,460
    The next logical step is to privatize police and fire services, followed by the military. I recommend partitioning the army along state lines before the sale rather than after, to maximize market capitalization. You could also replace school teachers with arcade games, thereby generating revenue while keeping the kids occupied.

    Tax loopholes. How the feck do the wealthy expect to stay wealthy when no one's paying for the infrastructure that keeps them rich?
     
    Last edited: Aug 6, 2011
  20. joepistole Deacon Blues Valued Senior Member

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    No you are not. You are the reason we received the downgrade. If you pay attention to what Standard and Poors said, they said the little episode in Congress where the Tea Partiers threatened not to raise the debt ceiling was the reason for the downgrade.

    If you paid attention, which you did not, the S&P singled out the actions of the Republican Party. They did not mention anything about healthcare reform. In no small part because healthcare reform saves the nation money.
     
  21. River Ape Valued Senior Member

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    1,152
    When I was in the hardware store, AAA was a battery.
    Hope the US in rechargeable!

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  22. joepistole Deacon Blues Valued Senior Member

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    Did you not read post number 2? Apparently not. Did you not read the part about the reason for the downgrade? Apparently not. Did you not hear the Chairman of S&P explain the reason for the downgrade? Apparently not. He said it was the actions of the Tea Partiers, threatening not to pay the nations bills that pushed it over, that was the final factor.

    The reason for the down grade is political instability. The reason is that little Tea Party tantrum where they threatened not to pay the nations bills. And who said this would happen? And who said this was alll a groundless threat? Oh that is right, you Tea Partiers/Republicans. The stockmarket held together through the debt ceiling crisis - a crisis induced by the Teabaggers/Republicans - until it became clear that Republican House Speaker Boehner could not control his caucus. He could not get them to pass a clean increase in the debt ceiling nor could he get them to go for the big deal, the 4 trillion dollar deal.

    This is the deal. The United States need long term responsible fiscal management. It needs to do four things:

    1) Grow the economy, that means making investments that keep the economy growing.
    a) Infrastructure Investments
    b) Making industry more competitve
    aa) Reduce costs of doing business in this country (reduce healthcare costs)
    bb) Reasonable regulation (patent reform, banking regulation - we have done well on banking regulation and our banks are in much better shape than they are in places like Europe.
    c) Stimulus

    * Growing the economy is the single best thing the US government can do to solve it's fiscal and debt problems.

    2) Stop the wasteful spending
    a) Funding of foriegn wars
    b) Subsidizing of industries like big oil and healthcare (the US needs to make the US healthcare industry competitive bringing our healthcare costs and outcomes in line with those of other industrial countries, other industrial countries have lower costs and better outcomes than we have here in the US.
    c) Bring federal pensions in line with private industry
    d) Bring the long term projected deficits under control
    - e.g. Eliminate the non compete clauses from Medicare Part D, allowing the government to purchase drugs at lower rates just like the Veterans Admin is able to do (This an industry giveaway given to special interests courtesy of the Republican Party, law passed in 2003 and went into effect in 2006 and something Democrats).

    3) Raise taxes on the wealthiest in the nation (those earning over 250K per year). Bring them into line with what they were under Clinton or Reagan at the very least.

    4) We need our political leaders (i.e. Tea Party/Republican) to start acting like responsible adults, being honest about the issues that face the nation and start leading instead of playing to the basest and most ill informed in their political party. Threatening to not pay the nation's bills unless you get whatever you want is not, is not, under any condition a resonsible behavior. Republican/Tea Party leaders need to man up and start being honest with their membership. They need to stop the crazy talk. While the crazy talk may make great political demagoguery, they won't be able to lead the nation with that kind of gargbage if they do get political power - wittness what we just went throught witht he debt ceiling and resulting credit downgrade.

    Now here is the problem, of the four things listed above, Republicans have fought actively against all of them. And given our system of checks and balances, Republican control of the House can throw a monkey wrench in the wheels of our government. And they have (e.g. debt ceiling). The number one priority Republicans/Teabaggers seem to have is to gain power at any and all costs. They seem to have no interest in the health and well being of the nation, none whatsoever.

    So now the nation is in real crisis. To get out of it, President Obama needs to find new untried mechanisms to stimulate the economy. To make things worse, Congress has locked itself into a self destruct button come a few months from now with these new super committees they set up. So it is a sad state indeed. But this should not have caught any savy investor with their pants down, because this has been obvious ofr a very long time.

    Unfortunately, I think the only real hope The United States has in next November. If the nation wants to restore prosperity and get back on the path to economic growth, they need to kick out the Republicans in the House.

    One can argue that Obama has not been a great leader. And they certianly could make a case for that. He has not been a bold out front leader. But then again, can you find anyone on the national scene who would have been better? Would John McCain have been better? Would Romney better, how about Bachmann? Who could better fight the insanity of the American right wing and it's media mouthpieces (Fox News, Clear Channel, limbaugh, levin, et al.).

    The fact is of all the candidates and potential candidates for POTUS, Obama is the best there is at this point in time. He appears to be honest, knowledgeable, and he does get things done.
     
    Last edited: Aug 6, 2011
  23. CptBork Valued Senior Member

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    6,460
    Are you looking for someone who actually delivers on all that, or just someone who talks a good game and gives Fox News the impression that they can potentially deliver on it? The Republican field is exceptionally weak this time around, although it hasn't been particularly strong in decades- I guess until a few months ago there was Donald Trump with the history of bankruptcy, mafia ties, reality TV stupidity and general tackiness. There's also soccer mom Sarah Palin, who knows less about her own country than Vladimir Putin.

    So you're asserting that Obama did absolutely nothing in the last two years other than push healthcare reform, and that no one in America wants said reform? Is this supposed to be the honest basis for a discussion or debate on fixing a country that almost fricking defaulted on its debt?
     

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