S&P Downgrades U.S. Credit Rating

[TheTastyGreek]

And the entitlement mentality...

of Greeks.

Somewhere, right now, on a messageboard for Atromitos F.C.- A guy who goes by EleusinaEagle is scolding us for being wasteful, stupid, decadent, and overly entitled.

[Mean Green Matt]

Somewhere, right now, on a messageboard for Atromitos F.C.- A guy who goes by EleusinaEagle is scolding us for being wasteful, stupid, decadent, and overly entitled.

Hmmm....In 2009 Atromitos got promoted to the "BCS" of Greek Football....if only the similarities could continue a bit further...

[CMJ]

If as a country you demonstrate you have people in the government that are willing to take their own country down the rabbit hole by using the threat of defaulting to get what they want - it would be ridiculous to think a downgrade was not coming.

While I would agree that there is reason to be concerned about America's fiscal situation, the credit rating agencies have consistently overestimated the risk of public defaults while consistently underestimating the risk of private defaults.

For instance, S&P downgraded Japan in 2002 (then the 2nd biggest economy in the world) and they can still borrow at absurdly low rates. Yet they were utterly wrong when they gave AAA ratings to the CDO's that helped finance the housing bubble.

S&P has been doing a terrible job over the last decade.

Edited August 6, 2011 by CMJ

[Green Mean]

Both Republicans and Democrats have caused this. No need pointing fingers. Just try to fix the problem at this point.

[UNT90]

If as a country you demonstrate you have people in the government that are willing to take their own country down the rabbit hole by using the threat of defaulting to get what they want - it would be ridiculous to think a downgrade was not coming.

While I would agree that there is reason to be concerned about America's fiscal situation, the credit rating agencies have consistently overestimated the risk of public defaults while consistently underestimating the risk of private defaults.

For instance, S&P downgraded Japan in 2002 (then the 2nd biggest economy in the world) and they can still borrow at absurdly low rates. Yet they were utterly wrong when they gave AAA ratings to the CDO's that helped finance the housing bubble.

S&P has been doing a terrible job over the last decade.

[KRAM1]

Calm down folks...the sky is not falling and we will all see the light of day come Monday morning. There is a theory that the markets had already priced this downgrade in as it has been known to be coming for many weeks if not months. Corporate earnings continue to be pretty strong and the US still has one of the very highest ratings in the world. Yes, we may see some volatility Monday morning, but it may not be as bad as some here seem to think. The challenge will come if everyone (see Saudi Arabia & China) holding US debt panics and opens up Monday in a selling mood. If that happens, yes, hide the women and children, but there is a lot of behind the scenes work going on and lots was done even before the downgrade.

Anyway, most people sell at the wrong time and buy at the wrong time. Take that into consideration before you make any move. By the time the general public buys or sells it is often "after the fact" and at the absolute wrong time as all the "smart money" moved some time ago...one way of the other. But, the good news is that everyone gets to make their own call as it is their money. Unlike the crap DC is doing with "other people's money" these days.

[TheTastyGreek]

S&P downgraded Japan in 2002 (then the 2nd biggest economy in the world) and they can still borrow at absurdly low rates. Yet they were utterly wrong when they gave AAA ratings to the CDO's that helped finance the housing bubble.

That downgrade DESTROYED the Tamagochi industry. Destroyed it.

Also, where is Japan now? Hmmm??? NUCLEAR WASTELAND. Rhetorical scoreboard, Courtland.

[UNT90]

Calm down folks...the sky is not falling and we will all see the light of day come Monday morning. There is a theory that the markets had already priced this downgrade in as it has been known to be coming for many weeks if not months. Corporate earnings continue to be pretty strong and the US still has one of the very highest ratings in the world. Yes, we may see some volatility Monday morning, but it may not be as bad as some here seem to think. The challenge will come if everyone (see Saudi Arabia & China) holding US debt panics and opens up Monday in a selling mood. If that happens, yes, hide the women and children, but there is a lot of behind the scenes work going on and lots was done even before the downgrade.

Anyway, most people sell at the wrong time and buy at the wrong time. Take that into consideration before you make any move. By the time the general public buys or sells it is often "after the fact" and at the absolute wrong time as all the "smart money" moved some time ago...one way of the other. But, the good news is that everyone gets to make their own call as it is their money. Unlike the crap DC is doing with "other people's money" these days.

What happens when the lenders say no?

[CMJ]

If I recall correctly, France has a larger percentage of debt per capita per citizen than we do, and they are Triple A.

[TheTastyGreek]

What happens when the lenders say no?

They've got their own problems. Makes our housing bubble look like nothing.

If we needed economic counsel on playing ping pong, building railroads, exterminating female children, or playing cruel soda-related pranks... Then I'd care what China had to say.

We could take 'em in an arm rasslin' match.

[KRAM1]

What happens when the lenders say no?

Didn't read the link, but assume by "lenders" you mean the folks who by US debt instruments...bonds, t-bills, t-notes, etc. that help fund this outrageously high debt of ours. Well, if no one buys, that indeed, would be a major problem. But, with a AA+ rating I am going to guess they will continue to buy, but will demand higher rates. When I say "higher rates" I am not talking about rates 2 or even 3% higher than they are now...that would, indeed, be a major issue, but higher than they would have demanded with a AAA rating.

We will certainly all find out soon enough as the Treasury will be auctioning securities as soon as next week, I believe. People will definitely buy...question is...at what rate. That, folks, is the question we all need to find the answer to and soon enough we will.

I would guess the markets next week will continue to be volatile as they have been the last few weeks with a bias toward a bit of down, but soon enough folks will settle down, the markets will balance and return to a more normal pattern.

If the folks in DC actually show some leadership, and stop all the partisan bickering, the problem should not last long. It is, however, a big "if" regarding the DC crowd acting like adults...and by adults I do not mean shoving an unwarranted tax increase down the throats of the American public, but a sensible approach to figuring this growing debt burden out and doing something about it. Time to stop worrying about name calling and getting re-elected and to actually start being adults and doing the job they were sent to DC to do in the first place...it can happen. We'll all see if it does.

Name calling and finger pointing and bowing to big labor, tea party advocates and any number of other special interest groups simply will no longer work. Get a grip, grow some backbone and get on with the rat killing.....

[Coffee and TV]

Now that we're not AAA, every country who has that rating has socialized health care.

Edited August 6, 2011 by Coffee and TV

[Mean Green 93-98]

Now that we're not AAA, every country who has that rating has socialized health care.

So I assume your point is that there won't be any AAA-rated governments in a few years?

[eulesseagle]

Unfortunately the Tresuary keeps printing fiat currency....Print more money is the answer. It is almost like someone's "ex" saying, "We can't be out of money I have more checks."

http://dailybail.com/home/print-money-thats-how-im-gonna-fix-the-economy.html

This 33 second video says it all....almost.

The United States is almost at the final station of bankruptcy that has been, virtually, planed for decades. Think about this:

1913 Wilson puts our money into the hands of international bankers by creating the federal reserve. Let's not kid ourselves who the international bankers are and what their agenda entails. World domination of currency. Conspiracy? No...but only for the uniformed. IMHO, some of the best writings on this subject were the Catholic community in the 1920's and 1930's and from some "orthodox" Jewish leaders. I make this distintion because like in any organized religion there are your believers and non-believers who attend services....it is almost like being a republican or republican in name only. Same concept. One may also state that the Bible states the same concept of the "Mark of the Beast." One world order...one world currency.

The other obvious indicators that the United States is, at least AA+, is:

**we are at 100% of GNP....kinda like where Greece was a couple of years ago.

**gold approaching $1700/oz. and predicted to be at $2k/oz by the end of the year.

**food prices up 35-40% over the last 18 months.

**gas prices still up over a dollar since the BP leakage in the gulf.

**unemployment, according to the govt. at 9%+....if you believe the govt..

**housing.........need i say more?

**50% of americans "do not pay" taxes!

**H. Ross Perot once said in the early 90's, that sucking sound is american jobs going overseas....concerning NAFTA.....well...it has not stopped since.

**republicans fold again by raising the debt ceiling last week.

IMHO, again, the logical course of action, by congress..et al....is to print more fiat money and raise the taxes while concurrently keeping our welfare state growing.

[GrayEagle]

We all know that Bush gets a "poor" rating for fiscal responsibility but this chart, wherever it came from, distorts the hell out of things.

Where is the revenue produced by the tax cuts in the chart for instance? Here's another point...who voted for this spending? How much of this was proposed/caused by Bush's party and how much by Obama's? The Democrats controlled Congress during Bush's administration and check to see how much of the spending came directly from bills rammed down our throats by Pelosi/Reed. The chart covers eight years of Bush vs. two years of Obama actual without future spending already voted in by Congress. Remember when Nancy Pelosi said you'll have to pass this bill to see what's in it? Has that been included? How about adding those items in then produce a chart and let's see what it looks like?

[eulesseagle]

We all know that Bush gets a "poor" rating for fiscal responsibility but this chart, wherever it came from, distorts the hell out of things.

Where is the revenue produced by the tax cuts in the chart for instance? Here's another point...who voted for this spending? How much of this was proposed/caused by Bush's party and how much by Obama's? The Democrats controlled Congress during Bush's administration and check to see how much of the spending came directly from bills rammed down our throats by Pelosi/Reed. The chart covers eight years of Bush vs. two years of Obama actual without future spending already voted in by Congress. Remember when Nancy Pelosi said you'll have to pass this bill to see what's in it? Has that been included? How about adding those items in then produce a chart and let's see what it looks like?

this link shows the crap load of economic indicators/charts.....of which coffee and tv's is one of them....

http://www.bing.com/images/search?q=obama+deficit&qpvt=obama+deficit&FORM=IGRE#x0y5855

there is something in these images for everyone.

[HoustonEagle]

We all know that Bush gets a "poor" rating for fiscal responsibility but this chart, wherever it came from, distorts the hell out of things.

Where is the revenue produced by the tax cuts in the chart for instance? Here's another point...who voted for this spending? How much of this was proposed/caused by Bush's party and how much by Obama's? The Democrats controlled Congress during Bush's administration and check to see how much of the spending came directly from bills rammed down our throats by Pelosi/Reed. The chart covers eight years of Bush vs. two years of Obama actual without future spending already voted in by Congress. Remember when Nancy Pelosi said you'll have to pass this bill to see what's in it? Has that been included? How about adding those items in then produce a chart and let's see what it looks like?

You may want to go research that comment

Also the data came from the congressional budget office and was reprinted by the New York Times.

[UNTflyer]

Remember when Nancy Pelosi said you'll have to pass this bill to see what's in it? Has that been included? How about adding those items in then produce a chart and let's see what it looks like?

It is. See the $142 billion for the next 6 years labeled health care reform? That's all it's going to cost... $142 billion.

[UNTflyer]

Also the data came from the congressional budget office and was reprinted by the New York Times.

The data was thrown together from various sources by the New York Times, and presented in an extremely misleading graphic.

Basically, the chart is bullshit.

[KRAM1]

The data was thrown together from various sources by the New York Times, and presented in an extremely misleading graphic.

Basically, the chart is bullshit.

Very true, but let's not point that out to those who failed eco 101...like say, the President and his economic advisors who refuse to take responsibility for any of the failed programs they have tried...let's see, what's the unemployment number today? What's the nation's debt rating? What's the debt level? What's the GDP? Those "changes" just don't seem to be getting the job done, but I am sure this administration can figure out whose fault it is that nothing they have tried seems to work...surely they cannot have any part to play in this whole mess...let's just have a big birthday party, raise a few millions for the campaign and continue to stick our collective heads in the sand...carry on!

Look, I know everyone is frustrated by the lack of leadership coming out of DC these days. The buck, however, stops with the President...I think even Harry Truman understood that. I think the administration would start getting much higher grades from the public if they would just own up to the fact that they have yet to figure this out, and tell the American public that they will continue to propose solutions, and will finally start to work with all sides in real and sincere compromise mode to get the US back on track.

Blame...and the White House is great about blaming everyone but themselevs...gaming doesn't get us anywhere...just look how both sides came out immediately and blamed the other for the debt downgrade instead of honestly talking about why it happened, the consequences and how they all plan on getting us out of this mess.

Congress is broken and so is the non-leadership in the White House...maybe WE can fix it come the 2012 elections. The "change" we got in 2008 sure hasn't been worth a crap. If you can't lead, get the hell out of the way and make room for someone who can!

[HoustonEagle]

The data was thrown together from various sources by the New York Times, and presented in an extremely misleading graphic.

Basically, the chart is bullshit.

So the part in the bottom right corner that cites the CBO is a lie? Damn the liberal media! I am headed to Fox News where I know they have the proper phones tapped to bring me the real story!

[UNTflyer]

So the part in the bottom right corner that cites the CBO is a lie? Damn the liberal media!

You notice the graphic says it comes from more than one source. You cannot mix data sources into one graph and present a consistent and reliable message.

What I'm saying is, anybody can pick and choose numbers from multiple sources and create a graph that will hammer home the desired point.

[FirefightnRick]

You may want to go research that comment

The Libs had full blown control, without some major national catastrophe shutting down the country, from January '09 to January '11? That's 24 months. They had 2/3rds the 24 months before that time, and since that time they have enjoyed the next 9 with at least 2/3rds majority, right? We know they won't take responsibility for any of the housing bubble mess despite hours of video showing who voted for what in congress back then(Barney Frank). So what about now? When will the left take responsibility for maintaining control of the government the past 57 months?

Amazing!

Rick

Edited August 8, 2011 by FirefightnRick

[Green2012]

The Libs had full blown control, without some major national catastrophe shutting down the country, from January '09 to January '11? That's 24 months. And since that time they have enjoyed the next 9 with at least 2/3rds majority, right? We know they won't take responsibility for any of the housing bubble mess despite hours of video showing who voted for what in congress back then(Barney Frank). So what about now? When will the left take responsibility for maintaining control of the government the past 33 months?

Amazing!

Rick

I'll get blasted for this and that's fine but we (Republicans) cannot solely blame our debt problem on Democrats. There was some reckless spending going on the past ten years (and many more but the focus is on the past decade). Yes, the Democrats did do some reckless and inefficient "stimulus" spending but TARP was Bush backed and even when Dems had control Bush never used vetoing powers. There was also a heavy amount of earmarking going on in 2005 and 2006 and an unfunded medicare prescription plan that's adding to the debt. Can we blame the housing bubble on Bush? Nah. Started heavily under Clinton but even Bush supported giving everyone the American dream and even pushed for private institutions to buy up mortgage backed securities to make it happen and lowered lending requirments. Republicans had an opportunity to fix the looming house mess but failed to do so.

What I don't agree with is Democrats not taking responsibility for what they've done while in office and how that has affected the economy. It seems like Obama always places blame on something else. When he's not blaming it on Bush he blames it on the Arab spring and Japan tsunami.

[Side Show Joe]

The problems that are destroying the economic power of our nation were started long ago. The country is facing two economic bubbles that are related.

We have a housing bubble that will take another decade to work itself out. Baby Boomers are retiring and attempting to downsize out of their large older homes, into more energy efficient smaller houses, only to find out they do not have the equity in them they planned on. Many younger American families can't afford to buy homes period. Last I checked somewhere between 11 and 14% of American homes were vacant. Even if the 30 and 20 somethings in the U.S. had the buying power to purchase more homes, there just are not enough of them to fill the gap that will be created as Baby Boomers die off. This housing market will remain weak for many years to come. The American economy can not grow under these conditions.

The second bubble is the retirement investment system. Financial institutions have leveraged their assets to irresponsible levels. the government knew TARP and the stimulus (Obama's wasteful spending plan) would not result in an increase in loans. Global assets are inflated by a factor of 10. Wall Street is trying to hold money. They need a down grade in our economy, so the dollar will weaken more, because Boomers are starting to retire, and draw on the interest in their 401K's. A weaker dollar will allow them to pay less to investers. Currently the dollar has lost about 20% of its value over the last decade. Without a major change, many investment funds won't be able to honor their obligations in 5-10 years, as more and more Boomers retire. In America, there simply are not enough younger Americans investing in the markets, to substantiate the value of the Baby Boomer's assets. Remember, our economic system is built on the concept of supply and demand.

I hope I'm wrong, but I don't think so.