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Thread: U.S. Loses AAA Credit Rating from S&P

  1. #1
    SiriuslyLong is offline
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    U.S. Loses AAA Credit Rating from S&P

    While Hava-gafa-kasha is fretting over who got what - democrats or republicans, here is some real news that may effect everyone.

    ----------------------


    For the first time in history, Standard & Poor's cut America's top-notch credit rating one notch to AA-plus from AAA on Friday night.

    The move comes less than a week after Congress and the Obama Administration crafted a last-minute deal to reduce burgeoning government spending and increase the debt ceiling, narrowly averting a catastrophic default on U.S. sovereign debt.

    The ratings company, which had previously warned that a downgrade was possible, cited both political and fiscal concerns in making its decision.

    "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what ... would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement.


    Read the rest here:http://www.foxbusiness.com/markets/2...ating-from-sp/
    Last edited by SiriuslyLong; 08-06-2011 at 12:31 PM.

  2. #2
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    China tells U.S. "good old days" of borrowing are over

    NEW YORK/SHANGHAI (Reuters) - China bluntly criticized the United States on Saturday one day after the superpower's credit rating was downgraded, saying the "good old days" of borrowing were over.

    Standard & Poor's cut the U.S. long-term credit rating from top-tier AAA by a notch to AA-plus on Friday over concerns about the nation's budget deficits and climbing debt burden.

    China -- the United States' biggest creditor -- said Washington only had itself to blame for its plight and called for a new stable global reserve currency.

    "The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone," China's official Xinhua news agency said in a commentary.

    After a week which saw $2.5 trillion wiped off global markets, the move deepened investors' concerns of an impending recession in the United States and over the euro zone crisis.

    Finance ministers and central bankers of the Group of Seven major industrialized nations will confer by telephone later on Saturday or on Sunday, a senior European diplomatic source said.

    The source said the credit rating downgrade had added a global dimension on top of the euro zone debt issue, raising the need for international coordination.

    "The G7 will confer by telephone. It's not yet confirmed whether it will be in one stage or in two stages, tonight and tomorrow," the source said.

    French Finance Minister Francois Baroin, who would chair such a meeting under France's G7 and G20 presidency, said it was too early to say whether there would be an early G7 gathering.

    In the Xinhua commentary, China scorned the United States for its "debt addiction" and "short sighted" political wrangling.

    "China, the largest creditor of the world's sole superpower, has every right now to demand the United States address its structural debt problems and ensure the safety of China's dollar assets," it said.

    It urged the United States to cut military and social welfare expenditure. Further credit downgrades would very likely undermine the world economic recovery and trigger new rounds of financial turmoil, it said.

    "International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country," Xinhua said.

    In Washington, President Barack Obama urged lawmakers on Saturday to set aside partisan politics after the debt battle, saying they must work to put the United States' fiscal house in order and refocus on stimulating its stagnant economy.

    Read the rest here: http://finance.yahoo.com/news/China-...88722.html?x=0

  3. #3
    SiriuslyLong is offline
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    Does this surprise anyone?


    Krugman Blames Downgrade On 'The Extremism of Anti-Tax Republicans'

    Tax and Spend - the stereotype is all too true. I'm many others will blame "The Extremism of Pro Spend Democrats"

    Talk about rigid ideologues?? He may very well be one of the most rigid.

    Read it here: http://www.newsbusters.org/blogs/noe...ax-republicans

    That link had anti liberal bias; as such, here is Krugman's take direct: http://krugman.blogs.nytimes.com/201...-sp-downgrade/
    Last edited by SiriuslyLong; 08-06-2011 at 01:21 PM.

  4. #4
    SiriuslyLong is offline
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    One more - someone agreeing with Krugman that a downgrade doesn't matter. Well, we'll see.

    http://www.theblaze.com/blog/2011/08...doesnt-matter/

  5. #5
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    China state paper says U.S. debt downgrade a "warning bell"

    http://news.yahoo.com/china-state-pa...030310192.html

    It would be a shame to lose this priviledge, and it would likely have terrible consequences.

  6. #6
    SiriuslyLong is offline
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    More from Krugman.

    Credibility, Chutzpah And Debt

    To understand the furor over the decision by Standard & Poor’s, the rating agency, to downgrade U.S. government debt, you have to hold in your mind two seemingly (but not actually) contradictory ideas. The first is that America is indeed no longer the stable, reliable country it once was. The second is that S.& P. itself has even lower credibility; it’s the last place anyone should turn for judgments about our nation’s prospects.

    Let’s start with S.& P.’s lack of credibility. If there’s a single word that best describes the rating agency’s decision to downgrade America, it’s chutzpah — traditionally defined by the example of the young man who kills his parents, then pleads for mercy because he’s an orphan.

    Read the whole thing here: http://www.nytimes.com/2011/08/08/op...R_AP_LO_MST_FB

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  8. #8
    Havakasha is offline
    Frum:
    The bond market has reacted to the S&P downgrade of US debt with a big rally in US Treasuries. As I write, the US government can borrow money for 10 years at about 2.3% and for 2 years at under one quarter of a point. The market wants to buy, buy, buy US debt [...]
    What the market wants to sell are stocks: ie, claims on the future earnings of private-sector companies.

    In other words, the market is saying: We fear recession and deflation. The Washington consensus is that we need to fight debt and inflation. Itís utterly upside down, utterly perverse.

  9. #9
    Havakasha is offline
    John Boehner got 98% of what he wanted
    byBarbara Morrill


    Last week this is what a gleeful John Boehner had to say about the GOP having their ransom demands met on the debt deal:

    When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I'm pretty happy.
    And tonight, for the first time in this country's history, "S&P cut the long-term U.S. credit rating by one notch to AA-plus," because:

    The political brinksmanship of recent months highlights what we see as America’s governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy ... It appears that for now, new revenues have dropped down on the menu of policy options.
    Congratulations, Mr. Speaker.
    Last edited by Havakasha; 08-09-2011 at 09:07 AM.

  10. #10
    Havakasha is offline
    From the S&P release ...
    Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

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