credit rating

[steve dave]

way to hold the line freakos

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

From April, when the S&P told the World that if the U.S. didn't get its spending under control it would downgrade the credit rating.  Obama's response, plead with the S&P not to do it.  Wonderful example of leadership

http://www.huffingtonpost.com/2011/04/20/obama-standard-and-poors-federal-deficit_n_851381.html


Then when they do nothing to reduce the deficit, there's this:

Officials at the Treasury Department fought the downgrade until virtually the last minute. Administration sources familiar with discussions said the S&P analysis was fundamentally flawed. They spoke on condition of anonymity because they weren't authorized to discuss the matter publicly.

Nice to now they're actually trying to solve the problem.

[06wildcat]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

[Panjandrum]

From April, when the S&P told the World that if the U.S. didn't get its spending under control it would downgrade the credit rating.  Obama's response, plead with the S&P not to do it.  Wonderful example of leadership

The S&P report also said that we needed to raise revenues as well.  They criticized the notion that the debt could be tackled solely by cuts.

[I_have_purplewood]

This really isn't that big of deal. There's going to be more bullcrap spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

Isn't that big of a deal? Just wait and see what happens.  Not only will the stock market implode but this will trigger a massive crap storm to the credit markets. 

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

From April, when the S&P told the World that if the U.S. didn't get its spending under control it would downgrade the credit rating.  Obama's response, plead with the S&P not to do it.  Wonderful example of leadership

The S&P report also said that we needed to raise revenues as well.  They criticized the notion that the debt could be tackled solely by cuts.

No it didn't.  You guys need to stop lying to yourselves.

“Notably, there was no call in the S&P note for closing the deficit with tax increases … We hope this neutrality reflects some recognition of the way countries like Greece, pressed to cut spending while raising taxes, descend into an endless downward growth spiral. That's how a nation's outlook becomes truly ‘negative.’

http://online.wsj.com/article/SB10001424052748704004004576270970186305348.html?mod=WSJ_Opinion_LEADTop#printMode

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

To say this isn't a big deal is beyond stupid.  You have a neutral party saying the government is less likely to repay its debt than yesterday.  It goes on to say that the outlook is negative that those prospects will improve in the near term.

[chum1]

good.  we've been spending too much.  less borrowing means less spending.

[Kat Kid]

Is S&P the same credit rating agency that just got clowned by Goldman Sachs on credit default swaps?

[06wildcat]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

To say this isn't a big deal is beyond stupid.  You have a neutral party saying the government is less likely to repay its debt than yesterday.  It goes on to say that the outlook is negative that those prospects will improve in the near term.

And there are two more neutral parties that haven't downgraded U.S. debt. Sure there may be a few individual investors that leave treasuries, but institutional investors and sovereign wealth funds aren't going anywhere, there's simply nowhere else to park that much money for so little risk.

Also, no company, mutual fund, sovereign wealth fund etc. uses S&P or any ratings agency. The risk analysis is done in house. S&P has been dead set on downgrading U.S. debt for at least a month, largely for political reasons. Something made painfully obvious when it originally downgraded the debt, was alerted to a $2 trillion error and proceeded to downgrade the debt.

10-year treasuries were yielding 2.56 percent on Friday, it's very doubtful that's going to hit 3 percent anytime soon, which is still well below the near 5 percent yield in 2007 and historical norm of 3.5 to 5 percent.

And I'll reiterate, there's a truly free market that prices a French default as 3 times more likely than a U.S. default, yet France still has an AAA rating and is not on a credit watch.

[EMAWmeister]

good.  we've been spending too much.  less borrowing means less spending.

you would think so.

[I_have_purplewood]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

To say this isn't a big deal is beyond stupid.  You have a neutral party saying the government is less likely to repay its debt than yesterday.  It goes on to say that the outlook is negative that those prospects will improve in the near term.

And there are two more neutral parties that haven't downgraded U.S. debt. Sure there may be a few individual investors that leave treasuries, but institutional investors and sovereign wealth funds aren't going anywhere, there's simply nowhere else to park that much money for so little risk.

Also, no company, mutual fund, sovereign wealth fund etc. uses S&P or any ratings agency. The risk analysis is done in house. S&P has been dead set on downgrading U.S. debt for at least a month, largely for political reasons. Something made painfully obvious when it originally downgraded the debt, was alerted to a $2 trillion error and proceeded to downgrade the debt.

10-year treasuries were yielding 2.56 percent on Friday, it's very doubtful that's going to hit 3 percent anytime soon, which is still well below the near 5 percent yield in 2007 and historical norm of 3.5 to 5 percent.

And I'll reiterate, there's a truly free market that prices a French default as 3 times more likely than a U.S. default, yet France still has an AAA rating and is not on a credit watch.
[/quote

OMZG! 

There's an ETF that shorts the 20 year treasury (TBF).  Was trading at around 38-38.5 on Friday I think.  Don't buy it if you think there will be a continued rally in bonds or if you think Institutional Investors some of whom have to have AAA paper in their portfolio and won't have to swap (did that make sense?)??  Otherwise you can thank me later.  There might be an up tic in Treasuries come next week but it won't last.

[_33]

Maybe the USA should have gone to freecreditreport.com 

[wiley]

Maybe the USA should have gone to freecreditreport.com 

They would've forgotten to cancel the 15 dollar monitoring service and went even deeper in debt.

[06wildcat]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

To say this isn't a big deal is beyond stupid.  You have a neutral party saying the government is less likely to repay its debt than yesterday.  It goes on to say that the outlook is negative that those prospects will improve in the near term.

And there are two more neutral parties that haven't downgraded U.S. debt. Sure there may be a few individual investors that leave treasuries, but institutional investors and sovereign wealth funds aren't going anywhere, there's simply nowhere else to park that much money for so little risk.

Also, no company, mutual fund, sovereign wealth fund etc. uses S&P or any ratings agency. The risk analysis is done in house. S&P has been dead set on downgrading U.S. debt for at least a month, largely for political reasons. Something made painfully obvious when it originally downgraded the debt, was alerted to a $2 trillion error and proceeded to downgrade the debt.

10-year treasuries were yielding 2.56 percent on Friday, it's very doubtful that's going to hit 3 percent anytime soon, which is still well below the near 5 percent yield in 2007 and historical norm of 3.5 to 5 percent.

And I'll reiterate, there's a truly free market that prices a French default as 3 times more likely than a U.S. default, yet France still has an AAA rating and is not on a credit watch.
[/quote

OMZG!  

There's an ETF that shorts the 20 year treasury (TBF).  Was trading at around 38-38.5 on Friday I think.  Don't buy it if you think there will be a continued rally in bonds or if you think Institutional Investors some of whom have to have AAA paper in their portfolio and won't have to swap (did that make sense?)??  Otherwise you can thank me later.  There might be an up tic in Treasuries come next week but it won't last.

Again, the current ratings of US debt are AAA, AAA and AA+ And if history is any guide on what happens to a country losing AAA status (from all three agencies), not much is going to happen. crap, Japan currently has a lower yield on its debt than the U.S. despite being AA+.

[I_have_purplewood]

This really isn't that big of deal. There's going to be more bullshit spouted on both sides because of this and it means absolute crap. Institutional investors don't give a crap about an S&P rating and most countries have few places to turn other than treasuries for a safe investment.

As Nate Silver pointed out last night, France is still rated AAA, but default swaps are three times more expensive. Essentially the market believes France is three times more likely to default than the U.S.

To say this isn't a big deal is beyond stupid.  You have a neutral party saying the government is less likely to repay its debt than yesterday.  It goes on to say that the outlook is negative that those prospects will improve in the near term.

And there are two more neutral parties that haven't downgraded U.S. debt. Sure there may be a few individual investors that leave treasuries, but institutional investors and sovereign wealth funds aren't going anywhere, there's simply nowhere else to park that much money for so little risk.

Also, no company, mutual fund, sovereign wealth fund etc. uses S&P or any ratings agency. The risk analysis is done in house. S&P has been dead set on downgrading U.S. debt for at least a month, largely for political reasons. Something made painfully obvious when it originally downgraded the debt, was alerted to a $2 trillion error and proceeded to downgrade the debt.

10-year treasuries were yielding 2.56 percent on Friday, it's very doubtful that's going to hit 3 percent anytime soon, which is still well below the near 5 percent yield in 2007 and historical norm of 3.5 to 5 percent.

And I'll reiterate, there's a truly free market that prices a French default as 3 times more likely than a U.S. default, yet France still has an AAA rating and is not on a credit watch.
[/quote

OMZG!  

There's an ETF that shorts the 20 year treasury (TBF).  Was trading at around 38-38.5 on Friday I think.  Don't buy it if you think there will be a continued rally in bonds or if you think Institutional Investors some of whom have to have AAA paper in their portfolio and won't have to swap (did that make sense?)??  Otherwise you can thank me later.  There might be an up tic in Treasuries come next week but it won't last.

Again, the current ratings of US debt are AAA, AAA and AA+ And if history is any guide on what happens to a country losing AAA status (from all three agencies), not much is going to happen. crap, Japan currently has a lower yield on its debt than the U.S. despite being AA+.

OZMG! 

History as a guide?  Wtf are you talking about?  When was the last time the U.S. didin't have a AAA rating?

And please tell me you aren't comparing the U.S. to Japan or France?  Do you know what the Japan economy has been like for the last 10 years?  Also, those are the current ratings dumbass.  Expect at least another to follow soon.  People are not going to expect shitty yields for more risk that they will have to take especially if we double dip or go into a depression (don't think either will happen btw).  If you don't have any knowledge about how the bond market works please shut the eff up. 

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

                                     AA+


Outlook:  NEGATIVE

:slowclap:

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

Dems butthurt over debt rating.

Instead of dealing with the problem they meddle with S&P (Enron esque), then lie, then demagogue S&P.   

O/U on when someone in the democrat party will call the S&P racist?

S&P officials defend US credit downgrade

WASHINGTON (AP) -- Standard & Poor's says it downgraded the U.S. government's credit rating because it believes the U.S. will keep having problems getting its finances under control.

S&P officials on Saturday defended their decision to drop the government's rating to AA+ from the top rating, AAA. The Obama administration called the move a hasty decision based on wrong calculations about the federal budget. It had tried to head off the downgrade before it was announced late Friday.

But S&P said it was the months of haggling in Congress over budget cuts that led it to downgrade the U.S. rating. The ratings agency was dissatisfied with the deal lawmakers reached last weekend. And it isn't confident that the government will do much better in the future, even as the U.S. budget deficit grows.

David Beers, global head of sovereign ratings at S&P, said the agency was concerned about the "degree of uncertainty around the political policy process. The nature of the debate and the difficulty in framing a political consensus ... that was the key consideration."

S&P was looking for $4 trillion in budget cuts over 10 years. The deal that passed Congress on Tuesday would bring $2.1 trillion to $2.4 trillion in cuts over that time.

Another concern was that lawmakers and the administration might fail to make those cuts because Democrats and Republicans are divided over how to implement them. Republicans are refusing to raise taxes in any deficit-cutting deal while Democrats are fighting to protect giant entitlement programs such as Social Security and Medicare.

S&P so far is the only one of the three largest credit rating agencies to downgrade U.S. debt. Moody's Investor Service and Fitch Ratings have both issued warnings of possible downgrades but for now have retained their AAA ratings.

The rating agencies were sharply criticized after the 2008 financial crisis. They were accused of contributing to the crisis because they didn't warn about the dangers of subprime mortgages. When those mortgages went bad, investors lost billions of dollars and banks that held those securities had to be bailed out by the government.

Ratings agencies assign ratings on bonds and other forms of debt so investors can judge how likely an issuer -- like governments, corporations and non-profit groups -- will be to pay the debt back.

Asked when the United States might regain its AAA credit rating, Beers said S&P would take a look at any budget agreements that achieve bigger deficit savings. But the history of other countries such as Canada and Australia who saw cuts in their credit ratings, shows that it can take years to win back the higher ratings.

Administration sources, who briefed reporters on condition of anonymity because of the sensitivity of the debt issue, said the administration was surprised by the timing of the announcement, coming just a few days after the debt agreement had been signed into law.

Treasury officials were notified by S&P of the imminent downgrade early Friday afternoon and spent the next several hours arguing with S&P. The administration contended that S&P acknowledged at one point making a $2 trillion error in their computations of deficits over the next decade.

But S&P officials said the difference reflected the use of different assumptions about how much spending and taxes will come to over the next decade. The S&P officials said they decided to use the administration's assumptions since the $2 trillion difference in the deficit numbers was not going to change the company's downgrade decision.

In a Treasury blog posting Saturday, John Bellows, the Treasury's acting assistant secretary for economic policy, said he was amazed by that decision.

"S&P did not believe a mistake of this magnitude was significant enough to warrant reconsidering their judgment or even significant enough to warrant another day to carefully re-evaluate their analysis," Bellows wrote.

S&P officials said their decision hadn't been rushed. They noted that S&P had been warning about a potential downgrade since April.

Some critics, the debacle of 2008 still in mind, raised questions about S&P's actions now.

"I find it interesting to see S&P so vigilant now in downgrading the U.S. credit rating," Sen. Bernie Sanders, I-Vt., said Saturday. "Where were they four years ago?"

Standard & Poor's roots go back to the 1860s. One of its founders, Henry Varnum Poor, was a publisher of financial information about the nation's railroads. His company, then called Poor's Publishing, merged in 1941 with Standard Statistics Inc., another provider of financial information.

S&P's website said both founding firms warned clients well before the 1929 stock market crash that they should sell their stocks.

The company has been owned by publisher McGraw-Hill Cos. since 1966.

[Dugout DickStone]

Celebrating this because you dislike Obama is just dumb.  eff S&P.   

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

More finger pointing from the "leadership"

White House adviser blames tea party for downgrade

WASHINGTON (AP) — A top White House adviser is blaming the downgrade of the U.S. credit rating on tea party Republicans, whom he says were unwilling to compromise on how to reduce the federal debt.

The adviser to President Barack Obama, David Axelrod, tells CBS' "Face the Nation" on Sunday that the decision by the Standard & Poor's credit agency to downgrade the U.S. from AAA to AA+ for the first time was strongly influenced by weeks of standoff between Democrats and Republicans over the debt.

Axelrod calls the action, in his words, "a tea party downgrade" and says it's clearly on the backs of lawmakers who were willing to see the country default to get their way.

Axelrod also criticized GOP presidential candidates for not speaking up in favor of compromise.

So the Tea Party, who didn't get their way, who were the only ones who wanted what the S&P said we needed to do, is who caused this???  We've reached an all time low in this country with this ridiculous administration.

The only explanation for a statement like this, is that he thinks so little of the American people that he actually thinks he can get away with such an asinine and outrageous statement.  Well, he's probably right. 

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

He probably told his accountant the same thing right for before he illegally evaded personal income taxes

Geitner then goes on to recognize that congress has the power to tax and spend.  Haven't heard a dem use that ever, wonder why?

Geithner: S&P showed terrible judgment

WASHINGTON (AP) -- The credit rating agency Standard & Poor's showed "terrible judgment" in lowering the U.S. government's credit rating, Treasury Secretary Timothy Geithner said Sunday.

"They've handled themselves very poorly. And they've shown a stunning lack of knowledge about the basic U.S. fiscal budget math," Geithner said in his first public comments about the credit rating decision.

Interviewed on CNBC, Geither said that U.S. Treasury securities were just as safe now as they were before S&P announced its downgrade. He predicted that China and investors would remain strong purchasers of U.S. government debt.

Republicans have blamed President Barack Obama for the first-ever downgrade of the government's credit rating.

But Geithner said Congress owns the credit rating because the Constitution gives Congress the power to tax and spend.

Late Friday, S&P announced it was lowering its rating for U.S. debt one notch from AAA to AA+.

The other two major credit rating agencies, Moody's Investor service and Fitch Ratings, have not lowered their AAA ratings, although they have warned of a possible downgrade if more is not done to deal with soaring federal deficits.

The rating agencies were sharply criticized after the 2008 financial crisis for continuing to give top ratings securities backed by subprime mortgages. When the mortgages went bad, investors lost billions of dollars and the resulting financial crisis sent the country into a deeper recession.

Geithner alluded to those problems in his interview Sunday, saying about the credit agencies: "Look at the quality of judgments they've made in the past."

The administration has also accused S&P of a $2 trillion error in its estimate of the size of the deficits over the next decade because the agency made a fundamental error in interpreting budget projections of the Congressional Budget Office.

S&P officials say they changed the part of the draft press release where Treasury said it discovered the mistake but that this did not alter their basic assessment.

S&P said the political "brinksmanship" on display in the prolonged battle over the raising the nation's borrowing limit underscored a deep divide between the political parties that raised concerns over the ability of Congress to come up with a credible plan to deal with the long-term deficit problem.

S&P had been warning for months of a possible downgrade and said that a credible plan would need to achieve $4 trillion in deficit reduction. The plan that Congress passed last week seeks to achieve between $2.1 trillion and $2.4 trillion in deficit cuts.

Geithner refused to forecast whether the credit downgrade would result in higher interest rates for the government, businesses and consumers.

But he said, "I think everyone can be confident around the world, that Treasuries are the ... most liquid, the strongest place to put your money at a time like this."

He said he had "absolutely no concern" that China, the largest foreign holder of U.S. government debt, would stop buying that debt.

"They've been very strong and I'm sure they'll be strong investors in the U.S. going forward as will investors around the world," he said.

A critical editorial by China's state-run news agency on Saturday said that the United States must "cure its addiction to debts."

[hemmy]

Celebrating this because you dislike Obama is just dumb.  eff S&P.   

Arguing it because you like Obama is just dumb.

[Fake Sugar Dick (WARNING, NOT THE REAL SUGAR DICK!)]

Celebrating this because you dislike Obama is just dumb.  eff S&P.   

Arguing it because you like Obama is just dumb.

Not seeing much celebration in this thread.  Seeing a lot of, "this doesn't matter :stubbornlittleboy:" though.

[AzCat]

... institutional investors and sovereign wealth funds aren't going anywhere, there's simply nowhere else to park that much money for so little risk.

True but only for a few more years.  If, and it's still a big if, Europe gets its fiscal house in order there will be viable alternatives.  Should that happen and the US still refuse to undertake structural entitlement reforms we'll lose our present status as the safe haven of choice rather quickly.

S&P has been dead set on downgrading U.S. debt for at least a month, largely for political reasons.

False.  S&P is a donk playground with nearly 3/4 of its political campaign contributions going to Democrats.  All of the US ratings agencies lean left as judged by their contributions but S&P leans the farthest.  They trapped themselves by demanding a $4T deal (which was political & intended as cover for Obama to demand tax increases) for the US to avoid a downgrade, what little credibility they have left would have been shot if they hadn't followed through when Obama called their bluff.  

Plus: it's the spending stupid:



Bush II was a profligate spender and wildly irresponsible but Obama is upping the public debt of the US at a rate more than 4x faster than did Bush II.

And I'll reiterate, there's a truly free market that prices a French default as 3 times more likely than a U.S. default, yet France still has an AAA rating and is not on a credit watch.

France must, at least in theory, adhere to the 3% of GDP target set by the EU.  They're above that now but their annual deficit has been coming down more quickly than anyone forecast and even French socialists believe they're on track to run a surplus and begin retiring public debt by 2014.

Ditto Japan although the picture there is more bleak: even with the post-tsunami reconstruction spending binge they believe they're on track to balance their budget by around 2020.  

Compare & contrast that to the US where we're headed in a direction that will see entitlement spending consume the entire federal budget in a few short years absent massive structural changes to those programs.   Not only do we not have a credible plan to balance our budget, Democrats refuse to even discuss changes to the programs that will, by themselves, destroy us if left unchecked.  

That said the downgrade was indeed a joke but only because everyone on the planet with a couple of brain cells left to rub together already understood, and has for some time, that the US is definitely going over a financial cliff and that there will never be sufficient political will here to stop it before it happens.  

[06wildcat]

The euro is going to have to die for Europe to get it's fiscal house in order. Until that happens, France really doesn't have much say in how much longer it will be carrying PIGS

Also huge lol at calling Japan's outlook merely bleak. This is a country that has a debt of 225 percent of GDP. So that balanced budget by 2020 must really be easing investors' fears of only having 250 or 300 percent debt to GDP.

The U.S. government could literally borrow the money to give every citizen $5,000 tomorrow and still have less debt to GDP than Japan.

And it's a spending an revenue problem, stupid. I know it's hard to fathom that in socialist America we have certain safety nets, and in times of recession those safety nets are used much more heavily than in the boom times so government expenditures grow while revenues decrease leading to massive deficits.

This is why "Reagan proved deficits don't matter," is a load of bullshit. This relies on the same mentality that bankers had in lending to anyone with a pulse. I would entirely agree with the statement if there was some magical way to guarantee 4 percent growth a year, then there's no problem borrowing an extra 3-3.5 percent.

To solve this problem taxes have to be raised, spending must be cut and both must be done in a responsible manner.