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S&P statement on lowering US long-term debt to AA+
Guardian ^ | 08/06/11 | Standard & Poor's

Posted on 08/05/2011 9:28:50 PM PDT by freespirited

• We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.

• We have also removed both the short- and long-term ratings from CreditWatch negative.

• The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.

• More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

• Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.

• The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

(Excerpt) Read more at guardian.co.uk ...


TOPICS: News/Current Events
KEYWORDS: 8811; 882011; aa; aaa; aaplus; aug8; aug82011; balancedapproach; creditdowngrade; creditrating; cutcapbalance; debt; debtceiling; debtlimit; downgrade; geithner; obama; obamanomics; sp; standardpoors; treasury; triplea; us2aa
Full statement at link. Worth reading IMO.
1 posted on 08/05/2011 9:28:56 PM PDT by freespirited
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To: freespirited

AA+ Ping


2 posted on 08/05/2011 9:29:44 PM PDT by mlocher (Is it time to cash in before I am taxed out?)
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To: freespirited
"Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating
to the Select Committee decisions on more comprehensive measures."

Standard & Poor's

3 posted on 08/05/2011 9:31:14 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited

Read the full pdf. It’s a disaster. On one hand, they say they aren’t taking a position on spending cuts versus tax increases. On the other hand, they mention new revenues three times in a favorable light.

Expect the dems and the liberal media to glom on to that and make political hay of it.


4 posted on 08/05/2011 9:31:35 PM PDT by bolobaby
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To: NoLibZone
"..., as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently."

Standard & Poor's

5 posted on 08/05/2011 9:32:21 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited
"Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty,..."

Standard & Poor's

6 posted on 08/05/2011 9:32:58 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited
"Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow."

Standard & Poor's

7 posted on 08/05/2011 9:33:45 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: bolobaby

They are essentially blaming the GOP for not letting “revenues” be raised - tax hikes and elimination of tax breaks!


8 posted on 08/05/2011 9:34:21 PM PDT by worst-case scenario (Striving to reach the light)
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To: freespirited
"Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. "

Standard & Poor's

9 posted on 08/05/2011 9:34:34 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited
"As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward. Standard & Poor's
10 posted on 08/05/2011 9:35:05 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited

SLAP!


11 posted on 08/05/2011 9:37:51 PM PDT by clintonh8r (Happy to be represented by Lt. Col. Allen West (this tagline under review))
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To: freespirited

Very interesting. The owner of S&P is McGraw Hill.

Note this:

Pre-Marketing: S&P for sale?

http://www.businessbrokerjournal.com/blog/pre-marketing-sp-for-sale

“Big breakup? Activists put pressure on S&P owner McGraw Hill “

Here is more about McGraw Hill:

http://www.mcgraw-hill.com/


12 posted on 08/05/2011 9:37:51 PM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: NoLibZone
".When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%.

However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015" Standard & Poor's "

13 posted on 08/05/2011 9:39:26 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: freespirited

14 posted on 08/05/2011 9:41:33 PM PDT by clearcarbon
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To: freespirited

“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. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.”


15 posted on 08/05/2011 9:41:49 PM PDT by worst-case scenario (Striving to reach the light)
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To: clearcarbon

“Uh, that’s uh, okay-just put it on my Uncle Sam card!”


16 posted on 08/05/2011 9:48:12 PM PDT by Frank_2001
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To: freespirited

IMF considers US debt as $203T, not $14T...look up Kotlikoff’s figures.

Weiss Ratings beat S&P to the punch:

http://ml-implode.com/viewnews/2011-07-15_WeissRatingsDowngradesUnitedStatesDebttoCMinus.html

Weiss Ratings Downgrades United States Debt to C-Minus

2011-07-15 — weissratings.com

Weiss Ratings, an independent rating agency of U.S. financial institutions and sovereign debts, has downgraded the debt of the United States government from C to C-minus.

The C-minus rating for the U.S. reflects a continued deterioration in the weaknesses cited in the Weiss Ratings release of April 28, 2011, including heavy debt burdens, shaky international stability, and poor economic health.

Weiss Ratings senior financial analyst Gavin Magor commented: “Our downgrade today is not contingent on the outcome of the debt ceiling debate in Washington. It is driven exclusively by the numbers, which indicate that, in addition to a decline in the long-standing weaknesses we noted three months ago, the U.S. has already lost the golden halo that helped guarantee liquidity and acceptance of its government securities in global markets.”

On the Weiss Ratings scale, which ranges from A (excellent) to E (very weak), a C-minus rating is the approximate equivalent of a triple-B-minus on the scales used by other credit rating agencies, or approximately one notch above speculative grade (junk).

About Weiss: By adhering to its independent business model, Weiss outperformed Standard and Poor’s, Moody’s, A.M. Best and Duff & Phelps (now Fitch) in warning of future life and health insurance company failures according to a 1994 study by the U.S. Government Accountability Office (GAO), while also outperforming its competitors in identifying the safest insurers, according to its follow-up study using the GAO’s research methodology.

http://weissratings.com/Login.aspx?a=r

U.S. Sovereign Debt Rating Close to “Junk”

by Weiss Ratings | July 14, 2011

“Weiss Ratings is very close to downgrading the sovereign debt rating of the United States one more notch to a ‘C –’, which will put it just one notch above junk,” Martin Weiss, President of Weiss Ratings told CNBC on Wednesday.

“In April, Weiss Ratings gave the U.S. sovereign debt rating a ‘C’. A ‘C’ is equivalent to approximately a triple-B on the S&P, Moody’s and Fitch scales. Its two notches above junk, Weiss told CNBC in May. Weiss added that while the rating was weak, the debt situation was not in a danger zone that should trigger panic.

In yesterday’s interview with CNBC, Weiss responded to Moody’s Rating Agency placing their U.S. triple-A rating on review for a downgrade in the coming weeks on mounting concern that legislators will fail to raise the debt limit in time to avert potentially drastic effects.

The U.S. government is deadlocked in negotiations to raise the $14.3 trillion debt ceiling by August 2 before a potential default. President Obama announced on Tuesday, that failure to increase the debt ceiling would jeopardize payments to Social Security and Veteran’s benefit recipients.

Weiss believes a downgrade by the large rating agencies is long overdue, noting that the top-notch standard assigned to the U.S. is unfair to investors and savers as they are not being compensated for the level of risk they are taking.

“The U.S. has a huge debt load compared to most other countries,” he said. “And, has a very unstable economy over the last 10 years compared to most other countries.” The U.S. ratio of debt-to-gross domestic product is currently over 90 percent.

“The only thing that’s really holding up the U.S. debt rating is a widespread international acceptance for U.S. Treasury securities and nice strong liquid market. But even that might be coming into question,” according to Weiss.

Weiss is hopeful that a last minute deal will fend off a potential crisis for U.S. and world markets. He pointed out that three years ago the legislature’s failure to pass a bailout package sent markets into a tailspin, and forced Congress to sign off on it.

He said, “We might see a similar scenario here in the debt ceiling debate, a failure at first and then a desperate deal in the thirteenth hour to rescue the situation at the last minute.”

Based on the government’s continued failure to agree on terms for raising the U.S. debt ceiling and the looming deadline, Weiss Ratings is reviewing its current ‘C’, rating signaling consumers that a ‘C-’ rating might be a fairer assessment under the circumstances.


17 posted on 08/05/2011 9:51:13 PM PDT by givemELL (Does Taiwan eet the Criteria to Qualify as an "Overseas Territory of the United States"? by Richar)
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To: freespirited
HEADLINE!

Moody’s, S&P Caved In to Ratings Pressure From Goldman, UBS Over Mortgages

S&P can be bought off. Somebody wanted a higher return from Treasury bonds. Some Obama friends? The Chi-Coms? Who?

18 posted on 08/05/2011 10:02:26 PM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: freespirited
The fools in Washington of both parties F***** around with raising the debt ceiling proving they were not only idiots but they are insane.

The market capitalization is off $1.4 trillion since this lunacy started. If the markets react to this news on Monday with a 1000-1500 point drop then $4.0 trillion of market cap..peoples 401k’s, pensions, market accounts will have disappeared. That's sure a way to get the country on the road to fiscal responsibility.

Anyone voting for any of these fools in the next election deserves what they get..

19 posted on 08/05/2011 10:06:45 PM PDT by montanajoe
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To: freespirited
"Remember, during the debt ceiling fight, S&P warned that there was a 50/50 chance of a downgrade if spending weren't cut by at least $4 trillion dollars."

BusinessInsider

20 posted on 08/05/2011 10:11:05 PM PDT by NoLibZone (Life as Nancy Pelosi knows & wants it, must end, Life As Nancy Knows it is to raise Debt 10% annualy)
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To: WilliamofCarmichael
Ok, I'll geek. How do you figure making US bonds worth less will raise their rates?
21 posted on 08/05/2011 11:27:40 PM PDT by Ophiucus
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To: worst-case scenario
They had no intention to raise enough revenue to balance the budge or make a dent in the debt.

It was just to satisfy the Democratic base.

22 posted on 08/05/2011 11:34:04 PM PDT by fortheDeclaration (When the wicked beareth rule, the people mourn (Pr.29:2))
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To: All
The House, under Boehner, passed a plan with bipartisan support that would have averted this downgrade, with $4T in cuts, and on put us on the right path: "Cut, Cap & Balance" (HR 2560).

What did Obama & the obstructionist Senate say?

Harry Reid: "Over, Done, Dead"

White House: "Duck, Dodge and Dismantle."

23 posted on 08/06/2011 12:02:36 AM PDT by newzjunkey (Get behind ONE "Balanced Budget Amendment" (BBA))
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To: worst-case scenario
They are essentially blaming the GOP for not letting “revenues” be raised - tax hikes and elimination of tax breaks!

Take the people who provide the revenue down first - then the government will crash instead of slide into oblivion...

24 posted on 08/06/2011 4:57:51 AM PDT by trebb ("If a man will not work, he should not eat" From 2 Thes 3)
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To: Ophiucus
RE: How do you figure making US bonds worth less will raise their rates?

OK, it seems to me that a lower rating that suggests even a slightly higher risk will require a higher return to match the increased risk. I am no expert but it seems to me that a bond worth less results in a higher return.

Let me ask you and all others reading this a question.

Moody’s, S&P Caved In to Ratings Pressure From Goldman, UBS Over Mortgages

Is S&P too big to be held liable? No one cares that it appears there is proof that S&P was one of the “key enablers of the financial meltdown” that led to this mess?

No one cares that S&P could well be the Arthur Andersen of the bond ratings industry?

Personally their holier-than-thou attitude is wholly annoying!

25 posted on 08/06/2011 6:21:48 AM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: WilliamofCarmichael

Obama wanted to bring this fight over wealth transfer to an international crisis and that is why he threatened to default on the US debt if he did not get his tax increases.

The limo liberal bankster community agree with Obama and are using the political show down to prop up his demand for heavy taxation. They wanted socialized medicine, too, so corporations would not be saddled with this employee benefit. They want heavy income taxes on the middle class to pay for it and the debt.

I think this is an internationalist political battle against the people of the US because we continue to defeat their efforts. For example, we rejected their global warming scam and their self-serving solution - UN taxation (carbon trading) and their new carbon commodies “market.” We won’t buckle under the international court. We bristle at them using our military as they choose. We won’t accept open borders and shira. We created a political backslash when they dipped into the Treasury and Fed for their own profit.

This is economic punishment against Americans for disobeying their internationalist superiors and being uppity Americans. If you don’t want your economy to crash, do what we say politically.


26 posted on 08/06/2011 7:48:36 AM PDT by SaraJohnson
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To: SaraJohnson

I think you have some excellent points. Even without an all-powerful cabal there are enough one-world advocates who will use their “bankster community,” international and U.S. government influence to, as the 1960s radicals (spoiled brats) used to say, “Bring it all down, man.”


27 posted on 08/06/2011 8:03:08 AM PDT by WilliamofCarmichael (If modern America's Man on Horseback is out there, Get on the damn horse already!)
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To: aflaak

Ping


28 posted on 08/06/2011 9:31:10 AM PDT by r-q-tek86 ("It doesn't matter how smart you are if you don't stop and think" - Dr. Sowell)
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To: bolobaby
On the other hand, they mention new revenues three times in a favorable light.

I know they mean "revenues" as a synonym for raising taxes. But, given the long historical evidence that revenues change as a result of the status of the economy, and not as a result of tax rate changes--wouldn't "raise revenues" properly mean "improve the economy"?

29 posted on 08/06/2011 9:48:08 AM PDT by exDemMom (Now that I've finally accepted that I'm living a bad hair life, I'm more at peace with the world.)
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To: WilliamofCarmichael
Thanks, William.

No doubt the “sixties” radicals are in power now - in government, nonprofits and business and globally. What unites them is a Marxist utopian belief structure and a sense of superiority that always accompanies megalomaniacs. We have been watching them operate and resisting them for a long time. They arrived.

30 posted on 08/06/2011 11:36:56 AM PDT by SaraJohnson
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To: WilliamofCarmichael
OK, it seems to me that a lower rating that suggests even a slightly higher risk will require a higher return to match the increased risk.

Not really, the two don't have a correlation like that. A bond that is worth less is simply worth less and will take a harder sell to get someone to buy it. People will gamble one high risk stocks for a chance at a higher return but there's no guarantee, the return may be lower or negative.

I don't see a plot from great banking bogeymen, but a serious symptom of failed socialist policies here and abroad.

31 posted on 08/13/2011 12:56:13 AM PDT by Ophiucus
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To: freespirited

So Standard and Poor’s is now in the business of legislating the USA? I think not.


32 posted on 08/13/2011 1:02:14 AM PDT by antceecee (Bless us Father.. have mercy on us and protect us from evil.)
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To: newzjunkey

I think nothing would have averted the downgrade... the “crisis” was in the works by those who planned it.


33 posted on 08/13/2011 1:03:50 AM PDT by antceecee (Bless us Father.. have mercy on us and protect us from evil.)
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To: exDemMom

I believe you are correct. Unfortunately there are many who believe revenue equals taxes alone.


34 posted on 08/13/2011 1:05:30 AM PDT by antceecee (Bless us Father.. have mercy on us and protect us from evil.)
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