I'm sure a lot of other people are going to point this out, but...you do know that the United States of America was just downgraded by the same agency that, not too many years ago, bestowed its much-coveted AAA rating on financial instruments backed by a whole bunch of crappy loans? You do know that S&P is being investigated for fraud, don't you?
Incidentally, it seems the rationale for the S&P downgrade is that they presume that the Republicans will not allow the Bush upper-class tax cuts to expire in 2012, as is currently the plan. S&P may be onto something there.
Haven't much time to write now, but when I do, perhaps we can talk about how Moody's and Standard & Poors are entirely subservient to the great Wall Street investment banks. That's the reason why the crap got treated like gold: The banks wanted it that way. So that must also be the reason why the U.S. was downgraded: The banks want it that way.
Either Goldman Sachs and its buddies want to end the American experiment, or, more likely, they want to end the Obama administration. It's a little hard for us too-liberal-for-Obama types to understand that the Wall Streeters despise Obama, but they do. This situation is not rational, but it is what it is.
The other scenario is that the Wall Streeters want to force the gummint to raise taxes. Well, raising taxes will solve the problem. But somehow I don't think that they have that endgame in mind.
8 comments:
Maybe they're putting their money behind Romney? A Boston attorney who specializes in developing "wealth transfer strategies for private clients" just dissolved a phantom NYC company after it donated $1 million to the Romney-pac.
Apparently there were two more of those from Utah.
I remember the print and broadcast media blaming fund managers for buying Wall Street's crap paper backed securities, not the ratings agencies bogus approvals. Once again the media has failed to do it's job. Or it's doing the kind of job the corporate masters dictate.
I like Max Keiser's explaination :
"...traders on wall street want U.S. debt downgraded
to junk status if possible - because you can make a lot more money trading junk." Spreads are too thin
with AAA. http://maxkeiser.com/2011/08/06/downgraded/
It is not all about the Bush tax cuts. Christ!
We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process.
This is the thesis statement of the PDF published by Standard and Poor explaining why they downgraded the U.S. credit rating. Everyone who has some other idea is accusing Standard and Poor of lying about their rationale, an accusation that is probably political and certainly bears the burden of proof or is foolish.
Standard and Poor did not saying that rampant spending was the sole explanation. They said overspending without the support of revenue combined with a willingness to default was the cause. They suggested that we could cut spending to near 4 trillion dollars, or combine cuts with increased revenue, or, they implied, simply not put defaulting on the table as an option: "Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policy-making uncertainty, consistent with our criteria." After this they referenced: "Sovereign Government Rating Methodology and Assumptions."
The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
What this all means is that if the Tea Party had cooperated with Obama, the credit rating would not have been lowered. If Obama had cooperated with the Tea Party, the credit rating would not have been lowered.
FOX says Standard and Poor downgraded our credit because we did not honor our pledge to cut 4 trillion dollars in spending. Various democrats say they cut our rating because we had a budget with no revenue. Standard and Poor says both sides are leaving out details:
Republicans and 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. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.
In other words, Standard and Poor says spending without revenue to support the spending is a problem. They do not say that you must generate more revenue to solve the problem, they say you must generate more revenue or cut spending. That is common sense.
Additional spending cuts would have done the trick. Additional revenues added would have also done the trick. Taking us to the brink of default did not do the trick and made Standard and Poor's decision an obvious one.
Standard and Poor's John Chambers (head of ratings division) told FOX that we came "within a day of having cash flow problems," something he considers unacceptable for a AAA rated nation.
I agree with Standard and Poor’s decision. We are not a AAA credit-worthy nation.
OT #1 Joseph, not sure how it looks on your end, but there is a typo...a hotlink is inserted into the word "United states"
OT#2 Get ahead on the coming conspiracy....the elite team that killed bin laden just died in a helicopter crash. Sorry for no link but Newser has a nasty habit these days of linking back to themselves instead of the original story and I won't link to that condensed-news site.
A dilligent reader of S&P propaganda wrote:
Additional spending cuts would have done the trick...
Nonsense. The deficit is a problem relative to the overall size of the economy. If the economy grows, then the debt, relative to size of the economy, is less of a burden.
Government spending cuts at this time will mean fewer consumers, fewer taxpayers (to pay down the debt), and more people collecting benefits (at least until their benefits are cut, after which time there will be more thieves and rioters, and the state will need to pay for more police to protect the bankers. Also pay to build more prisons and hire more security guards. If the proles continue to be allowed access to Emergency rooms, that will be an additional cost.)
Prowell,
The deficit is a problem relative to the overall size of the economy. If the economy grows, then the debt, relative to size of the economy, is less of a burden.
This is true and I absolutely agree. However it in no way logically supports the predicate on which it was based.
The idea that spendings cuts don't reduce deficits is erroneous and obviously so.
I favor only very small spending cuts, however.
The Myste Budget uses mostly revenue to solve the problem, and it has the advantage of being somewhat workable.
John Myste, I believe you were responding to me when you wrote:
The idea that spendings cuts don't reduce deficits is erroneous and obviously so.
The idea that spending cuts don't necessarily reduce debt burden is freakin' obvious. I did NOT say "spending cuts don't reduce deficits." The issue is the burden of the debt: the size of the debt relative to the size of the economy.
Without additional stimulus (i.e. investment in America's rotting infrastructure), the economy is unlikely to grow much. In the absence of stimulus at this time, GDP could shrink. There could be a double-dip recession.
Spending cuts at this time can -- and probably will -- increase debt burden. Spending cuts might reduce the rate at which the national debt increases. However, if GDP growth slows, stalls, or declines because Uncle Sam won't spend enough, then the burden of the debt will increase. And debt burden is the thing that matters, not the amount owed!
Whether anyone's debt goes up or down is only meaningful relative to earnings. You'd be nuts to chop away at your debt irrespective of how this action impacts your earnings potential. But that's what they're doing.
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