S&P Downgrades US Debt for First Time

[IntExp]

In a move that will surely send shockwaves across the world and in the economic health of this country, Standrad & Poor's has downgraded the U.S. Debt's credit rating from it's pristine AAA rating to AA-plus for its long-term debt, which is one notch below the top rating of triple-A.

 

Here is the article from the NY Times

 

S.&P. Downgrades U.S. Long-Term Debt

 

WASHINGTON — Standard & Poor’s removed the United States government from its list of risk-free borrowers on Friday night, citing concern about the rising burden of the federal debt.

 

The nation’s rating was reduced to AA-plus for its long-term debt, one notch below the top rating of triple-A.

 

S.& P., one of the three major agencies that assign grades the credit of companies and governments, had threatened the downgrade if the government did not act to reduce the federal debt by at least $4 trillion over the next decade. Earlier this week, Congress instead passed a plan to reduce the debt by at least $2.1 trillion.

 

Treasury Department officials said that the S.& P. announcement was delayed after Treasury found a serious mathematical error in a draft of the downgrade announcement, which was provided to the government Friday afternoon. The officials said that S.& P. inadvertently added $2 trillion to its projection of the federal debt, significantly overstating the problem confronting the government.

 

Treasury said that S.& P. conceded the problem after about an hour of discussion.

 

The other rating agencies, Moody’s and Fitch, have said they have no immediate plan to downgrade the country’s credit rating, giving the government more time to make progress on debt reduction. The split verdict limits the impact of the S.& P. downgrade as many consequences would be set off only by a reduction by two agencies.

 

The company did not return a call for comment.

 

The lowering of the country’s rating could rattle confidence and raise borrowing costs for the government and consumers, impeding the already fragile recovery.

 

Even so, some White House strategists and independent analysts have concluded that the economic impact would be modest, despite the embarrassing blow to the global financial standing of the United States.

 

The announcement by S.& P. came after a week of turmoil on Wall Street not seen since the days of the financial crisis. After plunging around 5 percent on Thursday, stocks bounced up and down Friday and closed relatively flat.

 

Even with the rating agencies split, S.& P.’s downgrade could become an election-year liability for President Obama. Fair or not, critics are likely to point to it as evidence of his failure to get the government’s finances under control.

 

There is also a financial cost. The federal government makes about $250 billion in interest payments a year. So even a small increase in the rates demanded by investors in United States debt could add tens of billions of dollars to those payments.

 

In addition, the credit rating agencies have said that a downgrade of government debt would probably be followed by downgrades of other entities backed by the government. For example, the said, Fannie Mae and Freddie Mac, the government-controlled mortgage companies, would be downgraded, raising rates on home mortgage loans for borrowers.

 

Dozens of counties and even a handful of states — including Maryland, Virginia, and New Mexico — might also be downgraded because of their local economies’ strong ties to Washington.

 

The United States has maintained the highest credit rating for decades. S.&P. first designated it AAA in 1941, reflecting a steadfast belief that the richest nation in the world would not default on its debt payments. The rating was also bolstered by the role of the dollar as the world’s leading currency, ensuring that demand for American debt securities would remain strong in spite of burgeoning deficits.

 

But the recent turmoil, in which the government came to the brink of default in a showdown between Democrats and Republicans, has shaken that confidence. Although there is little doubt about the United States government’s ability to pay back its debts, the political stalemate over the recent negotiations raised questions about Washington’s willingness to pay.

 

The credit rating agencies also face competing pressures as they evaluate America’s credit rating.

 

On the one hand, they have been trying to restore their credibility after missteps leading up to the financial crisis. A Congressional panel called them “essential cogs in the wheel of financial destruction,” after their wildly optimistic models led them to give top-flight reviews to complex mortgage securities that later collapsed. A downgrade of United States debt could show they are willing to take harsh action, even if it was not profitable or popular.

 

On the other hand, the rating agencies are aware of the intense government scrutiny that a ratings downgrade would bring. They have already faced criticism from European officials after they lowered the ratings on the debt of Greece and several other countries in the run-up to several bailouts. Now, they are likely to see the political heated turned up in Washington as well.

 

S.& P. officials said previously that the changing timetables reflected the belief that if the current political atmosphere in Washington was so toxic that lawmakers could not reach a deal, they were unlikely to do so in the future.

 

“What’s changed is the political gridlock,” said David Beers, S.& P.’s global head of sovereign ratings, in an e-mail several days before a debt ceiling agreement was announced.

 

For more- http://www.nytimes.com/2011/08/06/business/us-debt-downgraded-by-sp.html?hp

[Shortline Bus]

This news caps off the worst couple of weeks of Obama's Presidency. Now this downgrading is on 'his watch' and the first major stain as Commander in Chief that could cost him in Nov. 2012.

Hopefully the stock markets will stablize next week as this rumored move is now a reality.

 

Worst case is that America and world returns to the deep recession that started around 2007. Very confusing and worrysome time but we got to keep the faith things will work.:confused:

[Kamen Rider]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[MHV9218]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[Kamen Rider]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[Nova RTS 9147]

cough* misguided fool who would beleave the earth was a cube if a democrate told him*cough

 

you can't just keep borrowing, becuase eventually there will be nothing left to borrow. Washington needs a budigtary diet, or else we are never going to see progress. What the democrates wanted to do is the very reason we are in a rut in the first place. borrow borrow borrow, spend spend spend. We, the people, did it to such an extream, it's why the banks were falling apart. They we running out of money to pass around from us talkng out so many loans. And I will keep saying it till ether I'm horse, or you dopes start listening, this is all the Clinton Administartion's fauilt. This is all the fault of the democrats.

 

Are the republican's blamesless? No, they not. but to preptually point the finger simply shows you have no clue as to the reailty of the problems our government is facing.

 

You just dedicated the majority of your post to pointing the finger at the Democrats yet you then say "to preptually point the finger simply shows you have no clue as to the reailty of the problems our government is facing."

 

Thats the pot calling the kettle black dude.....

[Shortline Bus]

Sounds like a commerical for a GOP canadiate in 2012. Kamen why not just admit you a 'closet' GOP supporter and not another Garbaldi.

 

To put all of the blame on either party is unfair. Remember GW Bush as well as Pres. Clinton. Yes this mess is now on Team Obama as well.

So there enough blame to go around in which both parties only care about getting re-elected and serving their masters of rich party loaylsts and the rest of the American people be damned.

 

 

cough* misguided fool who would beleave the earth was a cube if a democrate told him*cough

 

you can't just keep borrowing, becuase eventually there will be nothing left to borrow. Washington needs a budigtary diet, or else we are never going to see progress. What the democrates wanted to do is the very reason we are in a rut in the first place. borrow borrow borrow, spend spend spend. We, the people, did it to such an extream, it's why the banks were falling apart. They we running out of money to pass around from us talkng out so many loans. And I will keep saying it till ether I'm horse, or you dopes start listening, this is all the Clinton Administartion's fauilt. This is all the fault of the democrats.

 

Are the republican's blamesless? No, they not. but to preptually point the finger simply shows you have no clue as to the reailty of the problems our government is facing.

[MTARegional Bus]

I blame both party's in congress and the voters who put them there because there had an Allison of a better Government and economy told by congressman and women.

 

You know what they say ''ignorance will get you know were''

And it is that ignorance that I see when I here ''Obama suck'' or Bush suck''were in reality Congress runs this country and the presidents is just there to be the punching bag for the american people and Congress to blame there ignorance on.

 

I feel so for sorry of anyone who will take Obama job in 2012.

[Tokkemon]

I watched the DOW fall on Thursday minus 512 points with my jaw on the floor. Watch it happen on Monday again.

[MHV9218]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[MTARegional Bus]

let also for not forget it was the all Republican congress the Voted to go to 2 Wars in 2003.

[Shortline Bus]

And Democratics are never wrong right MHV? No offense MHV but I thought you were smarter than that and saying the (D)'s have not also did help either. However Imo that just as bad as those bleed the GOP colors all the time.

What happened to just calling it like it and say partisan poliitcs has got us down this point.

 

You *SPEND* when you're in a *RECESSION* (which Bush put us in, following the Democrat Clinton's surplus, but that's ancient history) because *SPENDING* is how you stimulate the economy. So yes, right now, we should be borrowing and spending.

 

We should also be doing something to balance that out. You also bring in *REVENUE* through *TAXES* to help balance the spending.

 

These are basic, basic points.

 

And do you wanna know why I blame the Republicans?

 

Because all it took was to quickly raise the debt ceiling and afterwards negotiate cuts. But no, the massive heap of selfishness that is the Republican party (and specifically the Tea Party dimwits) held the country hostage by refusing to budge on the most simple issue, raising the ceiling.

 

They continued their charade until the last possible day, sparking as much fear as humanly possible in the markets, and leading to the downfall that we saw this week. They refused to even negotiate, selfishly holding the entire country hostage and jeopardizing the entire market place to get their idiotic desires. And it worked. The market fell, our credit dropped, and we did nothing but cut.

 

So I ask you, just who the misguided fool is. The one who listens to everything he hears on TV and then respouts the talking points, or the one he looks at the issue as a separate entity and actually thinks about it all.

[MHV9218]

Please, watch the Nazi Banksters Crimes Ripple Effect at http://jforjustice.co.uk/banksters

[Urbanfortitude]

Yeah on that account, I really hope this starts a wakeup call for the country. This should make it clear more than ever that our elected officials are more interested in their games than any of our well-being.

[Tokkemon]

I couldn't be more disappointed with Obama, and I've never heard of a president who has so little strength in Congress. He's shifted from a Liberal to a Conservative so quickly I question whether he ever even was one. I had so much faith in him. I read his book. I believed I was looking a Democrat. He's a centrist at best and can't anything done.

 

 

LOL! Getting some voter's remorse, I see.

 

This guy is Jimmy Carter all over again, folks.

[SubwayGuy]

I see many here still buy into the foolish dog and pony show that is the Democrats and the Republicans.

 

AKA the rich and the rich.

 

Q: WHO REPRESENTS EVERYONE ELSE???

 

A: NO ONE

 

Both sides are too blame. I welcome the downgrade to the credit rating. I've invested my money wisely and will continue to do so, to avoid the worst of it. That said, if things get bad enough, the groundwork is laid for someone who knows what the f*ck is going on to come in and make RAPID NECESSARY CHANGES (not Obama change - REAL change) to get this country back on track.

 

If the rating had stayed AAA, the backslapping circle jerk crowd in washington would have sat their and played grabass with their own parties, fighting with the other party over who was responsible for such a wise financial policy that actually did not reduce spending at all, but only reduced the rate at which it would increase.

[JubaionBx12+SBS]

American Politics= Dysfunctional

 

Move on

[Nova RTS 9147]

LOL! Getting some voter's remorse, I see.

 

This guy is Jimmy Carter all over again, folks.

 

I see many here still buy into the foolish dog and pony show that is the Democrats and the Republicans.

 

AKA the rich and the rich.

 

Q: WHO REPRESENTS EVERYONE ELSE???

 

A: NO ONE

 

Both sides are too blame. I welcome the downgrade to the credit rating. I've invested my money wisely and will continue to do so, to avoid the worst of it. That said, if things get bad enough, the groundwork is laid for someone who knows what the f*ck is going on to come in and make RAPID NECESSARY CHANGES (not Obama change - REAL change) to get this country back on track.

 

If the rating had stayed AAA, the backslapping circle jerk crowd in washington would have sat their and played grabass with their own parties, fighting with the other party over who was responsible for such a wise financial policy that actually did not reduce spending at all, but only reduced the rate at which it would increase.

 

The groundwork is laid between someone who has the negotiating skills of a three year old and who's lack of convictions have to be explained with a Voltaire quote, and a group of people who are even more deeply embedded with corporate welfare money and an extra dose of christian bs wrapped in hypocritical rhetoric, and were all still screwed in the end.

[Grand Concourse]

*cough* Fault of the Republicans. *cough*

 

You can only keep taxing the rich to the point where you either drive them away to some other country or you dry up everything they have. Tax and spend is NOT the solution. People on both sides needs to CUT SPENDING. The more they keep spending the more money they end up paying on interest instead of paying off the debt.

 

So that line is totally wrong and partisan. The democrats in general have a problem with trying to cut spending, the republicans have a problem with the rich being taxed more. I'd rather the spending be cut first and try to live within our means and then tax the rich. The rich are not atms where they can be taxed forever if people aren't willing to scale back the spending.

 

To me the spenders are drug addicts, they keep going back to the source looking for more money to feed their addiction. This needs to stop.

[MTARegional Bus]

Regardless Grand Concourse, the Rich will still pay there taxes if they leave this country.

 

 

But I do I agree the we can not rely on the Rich to solve this country's problems and should cut spending, but I also agree there should be tax at what they can afford not as an equal percentage to everyone. That why we need tax reform. the old tax system haven't been changed in a long time, is time to fix it and get rid of the loopholes and tax deductions for cooperation, if you want your deductions, don't move your production overseas and but your production in America.

[SubwayGuy]

Tax the rich and cut spending is the policy to follow.

 

History dictates that when taxes are raised on individuals, they don't move.

 

When taxes are raised on corporations, they outsource.

[Tokkemon]

Where's your history to back that up?

[R68 Subway Car]

Look at what I said. In this instance, I think you can see a pretty clear fault.

 

Don't get me wrong, the Democrats were weak, spineless, pathetic, and useless during this debacle. I couldn't be more disappointed with Obama, and I've never heard of a president who has so little strength in Congress. He's shifted from a Liberal to a Conservative so quickly I question whether he ever even was one. I had so much faith in him. I read his book. I believed I was looking a Democrat. He's a centrist at best and can't anything done.

 

However, I think that's neither here nor there. I think, quite honestly, you can pin the blame on this downgrade to the Republicans. It was downgraded because we came so close to default, and no Democrat even mentioned a default. It was assumed we'd raise the ceiling and then negotiate, but these Republicans held the country hostage until we were a day from default (scaring everybody), and as a result the markets are in turmoil and we're AA+ now.

Bro, you are gonna get what you want in the end! The Special Committee will support increased taxes on the rich! Obama in the end wins this battle! Leftists win, THHHHHHHAAAAAAAAA LEFTISTS WIN!

 

**** John Boehner, ******* RINO pussy. :mad:

[R68 Subway Car]

Here is the real reason why S&P downgraded us to AA+:

 

We were downgraded because the stupid bill passed by this Congress fell short of the $4 Trillion of spending cuts that S&P said was necessary to avoid a downgrade. Before people like SubwayGuy and MHV9218 attack me with the "S&P wanted revenue increases" line, the S&P report on why they downgraded our credit rating explicitly states:

Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

 

Once again, S&P states that have no stance on revenue increases. Finally, S&P in that same report stated what they felt was necessary to put an an end our problems:

 

the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

 

What S&P meant was that we need to fix these entitlement programs because they are strangling economic growth. Of course, the left would be greatly against it. Eventually, it will have to be done.

[MTARegional Bus]

One that I don't get about S&P? why didn't they downgrade after the 2008 crisis? and there doing it now? Now investor are scared like cats hiding in the Gold House.