Skip to comments.5 reasons why S&P just guaranteed U.S. debt will lose AAA rating
Posted on 04/20/2011 8:32:11 AM PDT by library user
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By prodding Washington to agree on a debt plan, Standard & Poors might achieve just the opposite. Its dour take on Treasuries could inflame the debt-ceiling debate, leaving little energy for a grand budget compromise. And the severe austerity S&P desires would have few takers anyway. Consider the following:
1) Obviously the rating agency hopes its unnerving note will nudge lawmakers into reaching agreement on taxes and expenditures. Inaction until after the 2012 national elections risks an actual downgrade of Americas AAA bond rating.
2) But striking some mega-deal doesnt have top priority on Capitol Hill. First up is the battle over raising the debt ceiling. Democrats want a clean vote on a bill, while Republicans are trying to tack on various debt reduction measures. The GOP quickly pointed to S&Ps statement as further justification of its bargaining position.
3) That the rating agency made no mention of the debt ceiling is irrelevant. Nor does it matter that Congress just released a report blaming S&P and its peers for triggering the financial crisis. Politicians take their friends where they can find them. And S&Ps warning is spurring Republicans to dig in. That helps ensure the negotiations will be arduous, requiring Capitol Hills nearly undivided attention until July and potentially pushing the country to the brink of default. There probably wont be much chance to work on major changes to taxing and spending.
4) Such efforts didnt have much momentum anyway. A bipartisan Gang of Six in the Senate is working on a proposal that draws on recommendations from the presidents debt panel. And it was gaining support among Republicans until House Budget Chairman Paul Ryan released his plan.
(Excerpt) Read more at blogs.reuters.com ...
Here's why: 1) S&P wants to keep its credibility. Someone, someone, had to throw the B.S. flag about our federal debt and our ability to service it.
2) The odds against a truly useful grand bargain are about nil. The GOP (most of it) wants to reign in spending. The President cleraly does not. There is no common ground to negotiate over. You can't make a deal without a fundamental agreement on the need to cut the budget deficits.
3) Meanwhile, the POTUS is out demonizing the GOP and trying to scare the young skulls full of mush and the old people. This is not the Dale Carnegie approach to making deals.
that graph should be rotated 90 degrees to be more clear about the real problems we are facing...
The stock market is up +170
All is well, the Messiah has saved us!!!!
My unicorn should be here any day now!!!
Remember when Libs use to say what’s good for Wall Street is not good for Main Street. We are actually witnessing it. However, instead of working for the conservative (as they would imply) it’s actually working for the Libs. It’s unbelievable!
We’re not selling our debt to anyone that cares about a rating.