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Thread: S&P has downgraded the U.S.'s credit rating from AAA,

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    S&P has downgraded the U.S.'s credit rating from AAA,

    Breaking News: The Associated Press reports that the credit rating agency S&P has downgraded the U.S.'s credit rating from AAA, the first debt downgrade in U.S. history.

    Got this off of WRAL.

    Breaking News - Durham, Cary, Chapel Hill & Raleigh NC News from WRAL.com

    So thoughts?

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    Quote Originally Posted by freecell View Post
    Breaking News: The Associated Press reports that the credit rating agency S&P has downgraded the U.S.'s credit rating from AAA, the first debt downgrade in U.S. history.

    Got this off of WRAL.

    Breaking News - Durham, Cary, Chapel Hill & Raleigh NC News from WRAL.com

    So thoughts?
    Sucks. The result of too much screwing around. Impasses are bad for business.

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    I'd downgrade us, too. 14 trillion in debt and we chose to borrow more.

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    Miss Mock Out jackalope's Avatar
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    Quote Originally Posted by freecell View Post
    Breaking News: The Associated Press reports that the credit rating agency S&P has downgraded the U.S.'s credit rating from AAA, the first debt downgrade in U.S. history.

    Got this off of WRAL.

    Breaking News - Durham, Cary, Chapel Hill & Raleigh NC News from WRAL.com

    So thoughts?

    Well, not good. But it is only 1 of the 3 agencies. Guess we'll have to see what impact it has on interest rates. I also think it will likely be a political football, the downgrade, because S&P said it was b/c of
    political issues, specifically Republican intransigence on the debt deal and opposition to revenues:


    ... 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.

    S&P Downgrades U.S. AAA Bond Rating To AA+, Outlook Negative | TPMDC

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    Here's one for those who deny we have a spending problem:
    Credit rating agency Standard & Poor's on Friday downgraded the nation's rating for the first time since the U.S. won the top ranking in 1917. The move came after Congress haggled over budget cuts and the nation's borrowing limit -- and failed to cut enough government spending to satisfy S&P. The issue has contributed to convulsions in financial markets.
    S&P downgrades US credit rating from AAA - Yahoo! Finance

    No mention of taxes being too low.... hmmmm...

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    Quote Originally Posted by AmendmentX View Post
    Here's one for those who deny we have a spending problem:

    S&P downgrades US credit rating from AAA - Yahoo! Finance

    No mention of taxes being too low.... hmmmm...

    The quote I excerpted is from S&Ps actual statement that they released. That is what they said. They changed their assumption because of the Republicans actions with regard to revenues:

    ... 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.

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    Needer needer, I told you all.

    What did you expect?

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    Eh... I'm pretty sure it's happened to Canada and Japan and we both bounced back. Or so I read somewhere.

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    Quote Originally Posted by jackalope View Post
    The quote I excerpted is from S&Ps actual statement that they released. That is what they said. They changed their assumption because of the Republicans actions with regard to revenues:
    Oh, but there's more. From your article:
    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.
    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
    and finally:
    Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

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    Quote Originally Posted by AmendmentX View Post
    Oh, but there's more. From your article:


    and finally:

    Re: your finally. They take no position on mix of revenues and spending measures. That's true. But they definitely DO take a position on revenues. The failure to raise them, and the Republicans actions in doing so, is what led to the downgrade. They very specifically take a position not just on 'revenues', but the 2001 and 2003 Bush tax cuts for high earners:


    (snip ... )

    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. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. 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.

    (snip ... )

    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.

    Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

    (snip ... )

    The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

    This downgrade is directly at the feet of the Norquist-bound Republican Party.

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