S&P Downgrades US Credit Rating to AA-Plus

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EmperorNapoleon said:
Lets take a minute to point out why the downgrade is a fair assessment.
  1. $2.2 trilion over 10 years amounts to only $220 billion per year. That represents only a 17% annual decrease in deficit spending at current levels.
  2. The rise in the debt ceiling exceeds the amount of spending cuts so there will still be a net budget deficit.
  3. There is no provision for generating additional tax revenue.
  4. S&P views the spending cuts as insufficient and rightly so. This bill represents, in the eyes of S&P,10 years of insufficient spending cuts and therefore shows a lack of any real commitment to reduce the debt.
  5. Projections over a period of 10 years are meaningless because they depend on the application of current spending levels over a period of 10 years. The federal budget changes every year and there is no guarantee that current spending levels will last that long. In fact, they never do. There is no guarantee that there will be $2.2 trillion in spending cuts over the next 10 years and such an assumption runs contrary to the historical reality of federal budgeting.
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This was “telegraphed” for weeks. S & P, as was poonted out in several networks last night, is doesn’t “care about politics.”
 
Soldier_Of_God said:
Now you are trying to rationalize that they were aware of the error before hand and they elected not to simply correct it, despite the fact it would undermine their credibility. I’m not sure you’re being sensible or dispassionate.
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I don’t presume to know why they do anything. I’m simply saying if the “error” were fatal to their decision to downgrade, they wouldn’t have downgraded. Therefore it’s no use saying the decision to downgrade is illegitimate because of the error, since they knew about it in advance and downgraded anyway.
 
OrdinaryMelkite said:
This was “telegraphed” for weeks. S & P, as was poonted out in several networks last night, is doesn’t “care about politics.”
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Weeks? Washington has had decades to contemplate what it would take to avoid default and credit rating declines. This is what happens when you squander decades worth of opportunities to find compromise and cobble together a deal at the last minute. We’re paying the price for partisan politics.
 
EmperorNapoleon said:
Lets take a minute to point out why the downgrade is a fair assessment.
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The issue at hand is the error and the credibility gap that has now created as a result. Had they published there document with the correct data, there would be less “wiggle room” for any detractors. The assessment may be correct but if the information it is based on is erroneous, especially a glaring one, it undermines confidence in the assessment.
 
Soldier_Of_God said:
The assessment may be correct but if the information it is based on is erroneous, especially a glaring one, it undermines confidence in the assessment.
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The assessment I presented is based on the facts of the bill as published by the CBO. The numbers S&P was using may have been incorrect but the same points can be made with the real figures. Even if the numbers are wrong; the conclusion is still correct. S&P wants to send a message to the government and its become apparent that the only thing Washington will pay attention to is a credit rating decline.
 
sw85 said:
I don’t presume to know why they do anything. I’m simply saying if the “error” were fatal to their decision to downgrade, they wouldn’t have downgraded. Therefore it’s no use saying the decision to downgrade is illegitimate because of the error, since they knew about it in advance and downgraded anyway.
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EmperorNapoleon said:
The assessment I presented is based on the facts of the bill as published by the CBO. The numbers S&P was using may have been incorrect but the same points can be made with the real figures. Even if the numbers are wrong; the conclusion is still correct. S&P wants to send a message to the government and its become apparent that the only thing Washington will pay attention to is a credit rating decline.
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However, it can now legitimately be called into question the motives and calculations they’ve employed because of the error. I would have more respect for S&P had they’ve admitted the error, thoroughly reviewed the assessment under the new light of the error and then come up with a final verdict, which well may be the same. Errors at this level have significant implications.
 
Soldier_Of_God said:
However, it can now legitimately be called into question the motives and calculations they’ve employed because of the error. I would have more respect for S&P had they’ve admitted the error, thoroughly reviewed the assessment under the new light of the error and then come up with a final verdict, which well may be the same. Errors at this level have significant implications
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S&P made clear that the difference is not significant enough to change their findings and they are correct. This isn’t a negotiation and, frankly, everyone should be grateful that S&P took the time to evaluate the obvious and only downgraded us by one notch. The government either gets serious about debt or pays the price. S&P doesn’t have to explain anything.
 
EmperorNapoleon said:
Weeks? Washington has had decades to contemplate what it would take to avoid default and credit rating declines. This is what happens when you squander decades worth of opportunities to find compromise and cobble together a deal at the last minute. We’re paying the price for partisan politics.
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True----but what I am getting at is that bradcasters had been saying that S & P had been warning for weeks that the government needed AT LEAST four trillion dollars in cuts for the plan to work. Of course, the compomise did not go that way.

Yes, partisan politics is alive and well-----even now. Democrats (predictably) are now blaming the Tea Party (!) :eek:. Republicans are blaming (predictably) the Democrats.

And WHERE, oh WHERE is our President the day after the fact?
For God’s sake, Obama, put down the golf club and talk to us!!!🤷
 
EmperorNapoleon said:
S&P made clear that the difference is not significant enough to change their findings and they are correct.
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Which, again, I find self-serving. The error undermines their credibility, which is my point. Moody doesn’t share their outlook, so who are we to believe? The company that publishes errors?
 
Soldier_Of_God said:
Which, again, I find self-serving. The error undermines their credibility, which is my point. Moody doesn’t share their outlook, so who are we to believe? The company the publishes errors?
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S & P is considered THE One of the “Three.”👍
 
Soldier_Of_God said:
Which, again, I find self-serving. The error undermines their credibility, which is my point. Moody doesn’t share their outlook, so who are we to believe? The company that publishes errors?
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The company that sides with reality; S&P. Moody’s hasn’t provided any rational explanation for their decision to allow the US to keep a AAA rating. I find it very unusual considering the fact that they were making the loudest threats of a downgrade. I think that, for the moment, they’re satisfied that a deal was made before default even though it isn’t a good one.
 
Soldier_Of_God said:
That’s the opinion of S&P, who is exercising damage control. I find that action highly self-serving. It doesn’t strike me as having an unbiased perspective.
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Unbiased when there is pressure by this (and the previous) administrations to keep the ratings at the highest possible? Seems that, if anything, Moody’s and Fitch will now be afraid to make an objective rating of their own. Let’s face it, it took guts by the S&P to make their call.
 
Proof that you can deny the laws of economics but you can not avoid the consequences of those laws.

I wish this would serve as a wake up call but it wont. The wake up call of the housing market collapse did nothing to change most peoples economic ideas and certainly did not change the ideas of politicians.

The political process is too rotten to reform. The politicians themselves are reprehensible people but the system rewards the most reprehensible politician. The politician has the incentive to promise rewards today and payment in the future.

Rather than look to the political system I would look to reform society. The politicians are merely a reflection of the people. Being a democracy this must be so. You can try to fix politics but that is fixing a symptom of the disease. The people want to have fun today and make their children pay for that fun. The people are wholly corrupt and just as the Congress is happy to have the President take responsibility so the people are happy to have the government take the responsibility and blame for what is really their doing.
 
Soldier_Of_God said:
Now you are trying to rationalize that they were aware of the error before hand and they elected not to simply correct it, despite the fact it would undermine their credibility. I’m not sure you’re being sensible or dispassionate.
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If there are any true errors here, they are of the accounting types. For example, the taxpayer is on the hook for all the money that the Fed prints and thus buys the bonds from the U.S. Treasury. This is even before the real spending comes. And the fact that Bernanke is contemplating a QE3 WITHOUT ANY CONGRESSIONAL APPROVAL automatically raises the debt. But where is this mentioned? And how do they stop him?

If anything the AA+ rating is still too high.
 
EmperorNapoleon said:
Weeks? Washington has had decades to contemplate what it would take to avoid default and credit rating declines.
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Exactly. The AAA ratings should have been downgraded the minute Nixon took us off the gold standard to allow the Fed to print all the money it wanted at low interest rates.
 
this is a horrible thing for our country here comes a double dip recession.
 
exnihilo said:
I wish this would serve as a wake up call but it wont. The wake up call of the housing market collapse did nothing to change most peoples economic ideas and certainly did not change the ideas of politicians.
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Pretty much.

As long as people are happy paying $500,000 for $50,000 homes, let the good times roll and the politician gets re-elected.
 
This downgrade could have been avoided had the tea party not disgraced their fathers by absolutely refusing to pay anywhere close to the taxrates paid by their conservative parents during wartime.

The neocon mantra of paying for our wars by cutting taxes on millionaires and billionaires is unique to only the tea party mentality, and has crippled this country in ways that are now self-evident as un-mitigated greed and refusal to sacrifice anything for the country that made their wealth possible.

That’s the precise reason the tea party is now toxic and destined for the most shameful pages of America’s history books, in my objective opinion, as well as many others apparently.

.nytimes.com/2011/08/05/us/politics/05teaparty.html

jomoco
 
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