A beggar asks for money in Washington, DC. Ratings agency Standard & Poor's has cut the outlook on US sovereign debt to "negative", raising doubts about Washington's ability to tackle its huge debt and fiscal deficits. (AFP/File/Mandel Ngan)
Posted on 04/18/2011 9:21:45 PM PDT by NormsRevenge
WASHINGTON (AFP) – Ratings agency Standard & Poor's has cut the outlook on US sovereign debt to "negative", raising doubts about Washington's ability to tackle its huge debt and fiscal deficits.
The move, the first time S&P has ever placed such a warning on the US's gold-standard AAA rating, raised the stakes as Washington's political leaders began grappling over how to address the government's yawning budget shortfall over the long term.
Administration officials said S&P "underestimates" political leaders' ability to agree a path out of the country's worst financial jam since the 1930s.
But S&P said it could not foresee any deal between Democrats and Republicans until after the November 2012 presidential and congressional elections, and that without one, the problem was only going to worsen.
"Because... the path to addressing these (problems) is not clear to us, we have revised our outlook on the long-term rating to negative from stable," S&P said.
With no action, S&P officials warned, within two years it could cut the US rating for the first time, a move which would send Washington's debt costs sharply higher.
Other countries with the coveted AAA rating and deficit challenges, like France, Germany and Britain, had all moved last year on their fiscal problems, they said, said S&P's Nikola Swann.
But "the US has yet to agree on a plan," he said .
US stocks and bonds plunged at the news, although the bond market subsequently made up the ground.
President Barack Obama's administration rebuffed the rating agency's warnings.
"We think that the political process will outperform S&P expectations," said White House spokesman Jay Carney.
...
Carney said, however, that S&P's negative outlook was a "reminder that it is important that we reach agreement on fiscal reform."
(Excerpt) Read more at news.yahoo.com ...
A beggar asks for money in Washington, DC. Ratings agency Standard & Poor's has cut the outlook on US sovereign debt to "negative", raising doubts about Washington's ability to tackle its huge debt and fiscal deficits. (AFP/File/Mandel Ngan)
The warning shot over the bow so to speak.
It sounds as though S & P was as impressed by Barry’s rant the other night as was his freeloader voter base.
Get out of California as fast as possible!
lol..
Quick Barry! Send in that application for the new VISA card!
I think Obomba’s OVERDRAWN...
Vice President Joe Biden, pictured on April 12, will this Thursday chair the first of what is tipped to be "regular" two-party meetings on ways to reduce the ballooning US deficit, the White House said. (AFP/File/Mandel Ngan)
“Ratings agency Standard & Poor’s has cut the outlook on US sovereign debt to “negative”,”
You left out the most ludicrous part of their statement...
“we have revised our outlook on the long-term rating to negative from STABLE,” S&P said.”
When was the last time it was stable?
Neither the democrats or republicans have the will to reign in spending and a tax increase would only further reduce revenues.
Yep why sweat over it? We both know that USA will default. So all that’s left is to prepare ourselves for the aftermath.
when we default...what will exactly happen?
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| So now that Zer0 has a track record that he must run on, the Republicans need to remain unified and focused on offering the American people a clear alternative to Obama's bullet train to bankruptcy. |
Countdown until Obama leaves Office: 641 days as of April 19, 2011.
And they just happened to release this determination on Tax Day, huh? Could they get more crude? Is it possible?
Anyway, here's the way out of this mess (and everybody knows it):
Well for starters we are the worlds reserve currency so any effects will be felt globally, not to mention most debt is held by other governments like China.
My guess would be a global recession/depression followed by a bunch of pissed off folks wanting their money back, wars tend to get started this way.
Nobody knows EXACTLY. But the application of political-monetary thought can discern these basic principles:
In the fiat monetary system...only the belief the sovereign will pay it's debts with something valuable (an exchange of product) makes it's money valuable. If the sovereign defaults, the "money" should be instantaneously worthless to the rest of the world.
Additionally, enormous amounts of our currency and obligations are held by foreign sovereigns as "assets" to guarantee their own obligations....so they would likely default as well.
And finally, enormous amounts of domestic debt is guaranteed by treasuries and cash. That would also be worthless.
The ultimate debt deflation.
The only thing propping up the world's monetary system is the belief that the USA can take on ever-increasing debt and make good on it. That we will actually pay it back.
Without belief in the US Dollar there's no "money". Anywhere.
Or, not:)
Once form of default is creating high inflation that shrinks the relative scale of the national debt relative to the depreciated dollar. If the dollar’s value is cut in half relative to gold, incomes and housing, then a $14 trillion national debt only has the impact of a $7 trillion national debt in today’s dollars. This is painful but not catastrophic.
The other form of default is “tear up your T-bills or use them for TP because they are worthless, we aren’t going to pay off on them.” This flat out non-payment would have world-wide repercussions right down to the US dollar possibly losing reserve currency status. Our political stability and financial reliability are a big reason the dollar is the reserve currency and the US finances much of the world. If we flat out don’t pay off on the debt, then our reputation is shot with our trust. This is catastrophic.
The government is trying to default by inflation. Nobody knows if there plan will work. I guess we’ll see. If they can’t force high inflation, then the only other course of action is just not paying on the debt, either by choice or because taxes collected are less than the amount of money required to service the debt.
Standard and Poor is not buying the Democrat bullshit. Nobody else should either, except perhaps stupid Democrats.
They've been trying for 3 years but the velocity of money is far too low to inflate. All we are seeing is surging commodity prices in the face of increased supply and decreased demand.
All the free Fed money is going into commodities and the stock market. In fact, free Fed money is about the only money buying in the financial, commodity and stock markets.
The Fed must pull back. They have created another big bubble and it's hurting people directly and now.
Deflation and default.
The Failed Obama Administration©
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