Skip to comments.BREAKING: Egan Jones Downgrades US From AA To AA-
Posted on 09/14/2012 12:32:42 PM PDT by tcrlaf
From Egan Jones:
Synopsis: UNITED STATES (GOVT OF) EJR Sen Rating(Curr/Prj) AA-/ N/A Rating Analysis - 9/14/12 EJR CP Rating: A1+ Debt: $15.2B EJR's 1 yr. Default Probability: 1.2%
Up, up, and away - the FED's QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities). The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power. Hence, in our opinion QE3 will be detrimental to credit quality for the US.
Some market observers contend that a country issuing debt in its own currency can never default since it can simply print additional currency. However, per Reinhart & Rogoff's " This Time Is Different: Eight Centuries of Financial Folly " , p.111, 70 out of 320 defaults since 1800 have been on domestic (i.e., local currency) public debt. Note, US funding costs are likely to slowly rise as the global economy recovers or the FED scales back its Treas. purchases (75% recently).
From 2006 to present, the US's debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%. We are therefore downgrading the US country rating from "AA" to "AA-".
Obama’s plan is working.
They can expect a visit soon from Mr. Axelrod.
Tick, tick, tick...
It needs to be downgraded to Junk. That is what a nation is when takers are the majority and steal from and pick clean the makers.
That is what America has become.
I’m curious to see how much of a “bump” in their “polls” the state controlled “media” are going to give their boy for this.
Obama will be too busy with a fund raiser to notice.
“They can expect a visit soon from Mr. Axelrod.”
Surely the SEC can find more paperwork to file charges against them, right?
Where is Egan Jones located?
The Navy needs to send some ships there.
Way to go, Obama. Not that you give a care.
The only thing I can say if obama wins is that this disaster will unfold on his watch. If Romney wins - he is going to have a near impossible task righting this mess.
EJ did this because they watched Innocence of Muslims...
Lawsuit from the Just Us Department in three.. two... one...
The media will oversample Democrats at about 40 points, and maybe they can show a 6 point Obama lead!
Thank you, Democrats!!!!!!!!