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BREAKING: Egan Jones Downgrades US From AA To AA-
Zerohedge ^ | 10-14-12 | Egan-Jones via Zerohedge

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-".


TOPICS: News/Current Events
KEYWORDS: alteredtitle; credit; downgrade; economy; epicfail; notbreakingnews; obama; presidentdowngrade; uscreditdowngrade; uscreditrating
Are you distracted enough by the Muzzie Embassy attacks, to not be paying attention to the endless stream of horrible economic news that is coming out??
1 posted on 09/14/2012 12:32:45 PM PDT by tcrlaf
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To: tcrlaf

Obamanomics.


2 posted on 09/14/2012 12:33:22 PM PDT by SoFloFreeper
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To: tcrlaf

Obama’s plan is working.


3 posted on 09/14/2012 12:33:28 PM PDT by TigerClaws
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To: tcrlaf

They can expect a visit soon from Mr. Axelrod.


4 posted on 09/14/2012 12:33:53 PM PDT by dfwgator (I'm voting for Ryan and that other guy.)
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To: tcrlaf

Tick, tick, tick...


5 posted on 09/14/2012 12:35:07 PM PDT by chris37 (Heartless.)
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To: tcrlaf

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.


6 posted on 09/14/2012 12:35:25 PM PDT by LowTaxesEqualsProsperity
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To: tcrlaf

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.


7 posted on 09/14/2012 12:36:40 PM PDT by FlingWingFlyer (The United States of America apologizing to knuckledragging, cavedwelling Neandethals. Whodda thunk!)
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To: tcrlaf

Obama will be too busy with a fund raiser to notice.


8 posted on 09/14/2012 12:37:39 PM PDT by matt04
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To: dfwgator

“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.


9 posted on 09/14/2012 12:37:58 PM PDT by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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To: tcrlaf

10 posted on 09/14/2012 12:38:07 PM PDT by drewh
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To: tcrlaf

Way to go, Obama. Not that you give a care.


11 posted on 09/14/2012 12:38:31 PM PDT by KansasGirl ("If you have a business, you didn't build that. Somebody else made that happen."--B. Hussein Obama)
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To: tcrlaf

Whoa..


12 posted on 09/14/2012 12:39:32 PM PDT by SE Mom (Proud mom of an Iraq war combat vet)
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To: TigerClaws

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.


13 posted on 09/14/2012 12:40:54 PM PDT by GlockThe Vote (The Obama Adminstration: 2nd wave of attacks on America after 9/11)
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To: KansasGirl

EJ did this because they watched Innocence of Muslims...


14 posted on 09/14/2012 12:42:05 PM PDT by tcrlaf (Election 2012: THE RAPTURE OF THE DEMOCRATS)
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To: tcrlaf

Lawsuit from the Just Us Department in three.. two... one...


15 posted on 09/14/2012 12:44:38 PM PDT by Ingtar (Everyone complains about the weather, but only Liberals try to legislate it.)
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To: tcrlaf
Soon to be the price of a few eggs at your grocery store!


16 posted on 09/14/2012 12:45:19 PM PDT by COBOL2Java (I'm not voting for Obama, so therefore I must be helping Romney!)
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To: tcrlaf
Egan continues a trend, which isn't breaking news.
17 posted on 09/14/2012 12:45:39 PM PDT by A.A. Cunningham (Barry Soetoro is a Kenyan communist)
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To: FlingWingFlyer

The media will oversample Democrats at about 40 points, and maybe they can show a 6 point Obama lead!


18 posted on 09/14/2012 12:46:35 PM PDT by Lazamataz (Communist Party = Democrats. Socialist Party = Republicans. WE NEED A CAPITALIST FREEDOM PARTY!)
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To: tcrlaf
Meanwhile...Obama Goes to Vegas!


19 posted on 09/14/2012 12:47:04 PM PDT by massmike (The choice is clear in November: Romney or Caligula!)
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To: tcrlaf

Thank you, Democrats!!!!!!!!


20 posted on 09/14/2012 12:48:38 PM PDT by Psycho_Bunny ("Insulting" Islam is as impossible as casting aspersions on a pile of dog crap.)
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To: tcrlaf
Obama's lovin' it:

HOW LOW CAN WE GO, YEAH!!! BRING IT DOWN, OBAMA!!!! THIS IS 'CHANGE'!!!! AMERICA IS NO LONGER A SUPERPOWER, YEAH!!!!!! /s

21 posted on 09/14/2012 12:49:10 PM PDT by GeorgeWashingtonsGhost
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To: tcrlaf

I need a tshirt that says,

“My country went 16 trillion dollars into debt and all I got was this lousy credit rating”


22 posted on 09/14/2012 12:51:49 PM PDT by Psycho_Bunny ("Insulting" Islam is as impossible as casting aspersions on a pile of dog crap.)
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To: GlockThe Vote
OBAMA IS GOING 'SCORCHED EARTH' ON THE AMERICAN ECONOMY AND OUR FOREIGN STANDING

INTENTIONALLY leaving America in a mess that NO PRESIDENT CAN FIX.

23 posted on 09/14/2012 12:51:57 PM PDT by GeorgeWashingtonsGhost
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To: tcrlaf

24 posted on 09/14/2012 12:54:50 PM PDT by OB1kNOb (Vote for Paul Ryan 2012...... oh, and that other guy running on his ticket that's not Obama.)
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To: tcrlaf
It is all going to design as far as Obama is concerned. His worship of hate, lies and death brings plagues.
25 posted on 09/14/2012 12:59:11 PM PDT by Armaggedon
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To: tcrlaf

No report of this at cnn.com. I wonder if they plan to cover this breaking story? (Sarcasm)


26 posted on 09/14/2012 1:05:44 PM PDT by plain talk
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To: tcrlaf

The faux Intrade bump must be a manipulation — maybe QE3 related.


27 posted on 09/14/2012 1:06:08 PM PDT by Gene Eric (Demoralization is a weapon of the enemy. Don't get it, don't spread it!)
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To: drewh
What a vile disgusting, destructive man Obama is.
28 posted on 09/14/2012 1:18:36 PM PDT by Vision ("Did I not say to you that if you would believe, you would see the glory of God?" John 11:40)
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To: tcrlaf
Americans paid out sixteen trillion and found a zer0 in their accounts.
29 posted on 09/14/2012 1:30:52 PM PDT by no-to-illegals (Please God, Protect and Bless Our Men and Women in Uniform with Victory. Amen.)
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To: tcrlaf

President Downgrade proves himself ever more worthy of the title.


30 posted on 09/14/2012 1:52:47 PM PDT by fwdude ( You cannot compromise with that which you must defeat.)
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To: GeorgeWashingtonsGhost

I don’t doubt that.


31 posted on 09/14/2012 2:03:15 PM PDT by Jane Long (Soli Deo Gloria!)
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To: tcrlaf

Egan Jones defines the Fed’s quantitative easing as ‘’issuing additional currency and depressing interest rates via the purchasing of MBS...’’ Yet today the interest rate on 10-Year Treasuries rose by 6.5%.

No wonder Ben Bernanke held back from imposing QE3 for so many months. He must have surmised that there would be at least one bond-rating agency that would be honest with its clients in evaluating the U.S.’s credit-worthiness.

The fact is, the U.S. bond market is a giant, hugely overpriced tulip bulb that’s about to be bulldozed into oblivion.


32 posted on 09/14/2012 2:21:01 PM PDT by Bluestocking
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To: tcrlaf

This is huge, isn’t it?

Huge enough to not be covered up by the foreign-policy events.

If the mainstream media ignores it, Romney/Ryan better keep harping on it. Ryan explains economic data better than anyone.


33 posted on 09/14/2012 2:26:27 PM PDT by yorkiemom
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To: tcrlaf

Bump


34 posted on 09/14/2012 3:23:58 PM PDT by lowbridge (Joe Biden: "Look, the Taliban per se is not our enemy.")
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To: dfwgator

-

No -

That homo General has already ordered a gay firing squad to terminate the problemo with extreme prejudice.......

- Obama-Rigging is on the case!

-


35 posted on 09/14/2012 4:28:53 PM PDT by devolve (----- ------- ------------GO_AHEAD---MAKE_MY_SPAGHETTI-------- ----------------------------)
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To: drewh

So this is what he was doing when the phone rang at 3:00 AM.

36 posted on 09/14/2012 4:48:14 PM PDT by Tonytitan
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To: blam

The screwing continues....


37 posted on 09/14/2012 5:44:28 PM PDT by FrogMom (There is no such thing as an honest democrat!)
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To: tcrlaf

38 posted on 09/14/2012 5:53:14 PM PDT by RedMDer (https://support.woundedwarriorproject.org/default.aspx?tsid=93destr)
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To: SoFloFreeper

OMG-bama


39 posted on 09/14/2012 5:55:38 PM PDT by A CA Guy ( God Bless America, God bless and keep safe our fighting men and women.)
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To: tcrlaf

The left is saying the downgrade is Bush’s fault.


40 posted on 09/14/2012 6:00:20 PM PDT by chessplayer
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To: COBOL2Java

The true value of the American Benjamin Franklin in my pocket is exactly the same as the true value of that bill from Zimbabwe and I am afraid that it is about to be marked to market! Already we are at the point that the same nominal dollar amount that my father used to earn in a year as a master carpenter is only a good week’s pay or a poor month’s pay and he supported four sons and my mother stayed home to raise us. It would take his gross pay for ten years to buy a low end new car now. One average month’s electric bill for me now is equal to from two to three year’s worth of electric bills back in his day, of course I use a lot more power now but the price per kilowatt is twelve times higher than then. Gasoline is about fourteen or fifteen times higher than then. The sales tax on many items here is as much or even more than the item with sales tax added cost in those days. The worst part is that WE AIN’T SEEN NOTHIN’ YET!


41 posted on 09/14/2012 6:06:20 PM PDT by RipSawyer
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To: tcrlaf
The US has been on crack for a long time and China is the big supplier. While not destroyed yet, we must break the addiction and endure the pain. Breaking the addiction is a revolution in and of itself.
42 posted on 09/14/2012 6:22:03 PM PDT by TBall (Obama is our pimp dealer)
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To: GeorgeWashingtonsGhost

Yep, Romney will probably be elected and what he will have on his plate will make the labors of Hercules look like a child’s chore. After four years we will still be in a deep pile of dung regardless of what he has done or not done by then and we will be treated to endless stories from the “media” about how Obama would have had everything straightened out by now. A huge contingent of idiot voters will be begging for Obama to run again and become the second Grover Cleveland.


43 posted on 09/14/2012 6:29:45 PM PDT by RipSawyer
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To: Bluestocking

Ah, but all we need to do is develop a new variety of Tulip and it’s off to the races again, right? Can’t we make Ol’ Rattler hunt one more time?


44 posted on 09/14/2012 6:34:04 PM PDT by RipSawyer
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To: tcrlaf

I see a spike in air fares to El Salvador. Are there some sort futures I can buy on that?


45 posted on 09/14/2012 6:34:09 PM PDT by TBall
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To: FrogMom

Aye.


46 posted on 09/14/2012 6:41:47 PM PDT by blam
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To: tcrlaf

How long before banks charge you interest for your bank account?


47 posted on 09/14/2012 8:44:29 PM PDT by GeronL (The Right to Life came before the Right to Pursue Happiness)
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