[Al Jazeera] Standard & Poor's (S&P) has threatened to downgrade the United States' prized AAA credit rating unless the B.O. regime and Congress find a way to slash the yawning federal budget deficit within two years. The only way to accomplish that is to start dismantling the enormous machinery of government and trimming what's left. Dump NPR, the Department of Education, Department of Energy, the EPA, the Department of Transportation, Homeland Security, Housing and Urban Development, all the bureaucratic mess that's grown into fiefdoms over the years. We live in a computer age: rather than seeing government grow we should be seeing it shrink as computers pick up the paper shuffling.
S&P, which assigns ratings to guide investors on the risks involved in buying debt instruments, slapped a negative outlook on the country's top-notch credit rating, on Monday.
It said there is at least a one-in-three chance that it could eventually cut it.
A downgrade, which would leave Germany and La Belle France with a higher rating, would erode the status of the United States as the world's most powerful economy and the dollar's role as the dominant global currency.
If investors start demanding higher returns for holding riskier US debt, the rise in bond yields would crank up borrowing costs for consumers and businesses.
That would threaten to hurt the economy as it recovers from the worst recession since World War II.
"This new warning highlights the need for the US to take better control of its fiscal destiny if it is to avoid higher borrowing costs and maintain its central role at the core of the global economy," said Mohamed El-Erian, chief executive at PIMCO, which oversees $1.2tn in assets and has a short position on US government debt.
Major US stock indexes fell by more than 1 per cent on the day.
Longer-dated government bond prices initially fell but recovered to post solid gains as falling stocks took over as the main driver for price action in the Treasury market. Bond prices frequently trade inversely to stocks.
Although the dollar rose as more immediate fiscal problems in Greece hurt the euro and supported some US assets, it is down about 5 pertcent against major currencies in 2011.
S&P's move, coupled with record low US interest rates, will do little to make it more attractive, said Kathy Lien, director of research at GFT.
"Even though I don't think an actual downgrade would occur, in this very sensitive or vulnerable time for the US dollar, it's enough to spook investors from holding or buying dollars," she said.
The dems are deliberately spending to take this country down. Either that or they are stupid. Or both.
Posted by: Alaska Paul ||
04/20/2011 1:58 Comments ||
Wiki had a section on criticism of S&P:
Credit rating agencies such as Standard & Poor's have been subject to criticism in the wake of large losses beginning in 2007 in the collateralized debt obligation (CDO) market that occurred despite being assigned top ratings by the CRAs.
Credit ratings of AAA (the highest rating available) were given to large portions of even the riskiest pools of loans. Investors, trusting the low risk profile that AAA implies, loaded up on these CDOs that later became unsellable. Those that could be sold often took staggering losses. For instance, losses on $340.7 million worth of CDOs issued by Credit Suisse Group added up to about $125 million, despite being rated AAA by Standard & Poor's.
Despite common perception, Standard & Poor's didn't rate the two major Icelandic banks, Kaupthing and Landsbanki.
Companies pay Standard & Poor's to rate their debt issues. As a result, some critics have contended that Standard & Poor's is beholden to these issuers and that its ratings are not as objective as they should be.
Posted by: Alaska Paul ||
04/20/2011 2:06 Comments ||
So is S&P just 'suggesting' to the US Government that it needs to pay/pay more for its next rating?
If you want a shock, go to the Economist Intelligence Unit.
They rate the Government Finances of the US at a "4" out of 100. Countries with higher ratings include Mynamar, Pakistan, Bangladesh, Iraq, Chad, Mali, Sri Lanka. The only countries lower than the US are Zimbabwe, Angola, Somolia.
Posted by: Bill Clinton ||
04/20/2011 11:00 Comments ||
The Obama administration privately urged Standard & Poors in recent weeks not to lower its outlook on the United States a suggestion the ratings agency ignored Monday, two people familiar with the matter said.
Treasury officials told S&P analysts that they were underestimating the ability of politicians in Washington to fashion a compromise to curb deficits, a Treasury official said. They argued a change in ratings was not needed at this time because the debt was manageable and the administration had a viable plan in the works, the official said.
But S&P analysts told Treasury officials on Friday that they were unmoved and released a report that expressed skepticism that the political parties could come together on how to bring spending in line with revenue.
No-interest savings accounts and high user fees, coupled with high-interest loans and huge credit barriers, won't end until the banks manipulate their way to solvency. The Financial sector is indifferent to interests other than their own. Obama should have been working towards devising new credit instruments, rather than subsidizing the banks and throwing money at non-productive job creation. Every Clinton-Bush era de-regulator kept his job under the Enlightened One.
There are only two ways of cutting deficits; raise taxes or cut expenditure.
Leaving the cutting of taxes to one side and concentrating on expenditure cutting the major issue to address is the pain threshold(I prefer to call it the cold turkey syndrome, more descriptive)
A high threshold means a country can handle more pain, a low threshold less pain. A good example of a high threshold would be Ireland, where the populous has meekly accepted their medicine and most of the productive workers have stolen away to foreign shores, leaving the drones behind.
An example the low threshold would be Greece where there is low level civil war as exemplified by Keratea. As explosions boom, the town's loudspeakers blare: "Attention! Attention! We are under attack!" Air-raid sirens wail through the streets, mingling with the frantic clanging of church bells. Clouds of tear gas waft between houses as helmeted riot police move in to push back the rebels. This isn't a war zone, but a small town just outside Athens. And while its fight is about a rubbish dump, it captures Greece's angry mood over its devastated economy.
As unemployment rises and austerity bites ever harder, tempers seem to fray faster in Greece, with citizens of all stripes thumbing their noses at authority. Some refuse to pay increased highway tolls and public transport tickets. There has been a rise in politicians being heckled and even assaulted. Yesterday, in Thessalonika, scores of activists were arrested after violent clashes with police
Now if the US turns out to be a low threshold country and the rubes march on Washington and raze the Houses of Congress and the Senate to the ground before making the politicians perform the Highbury gig while suspended from the nearest lamppost, what would be the constitutional implications?
When could new elections be held, etc?
The Obama administration privately urged Standard & Poor's in recent weeks not to lower its outlook on the United States -- a suggestion the ratings agency ignored Monday, two people familiar with the matter said.
Treasury Department officials had been discussing with S&P whether the ratings agency should change its outlook on the United States to "negative" from "stable," an indication that the country could lose its crucial AAA rating in coming years over its soaring debt levels.
Treasury officials told S&P analysts that they were underestimating the ability of politicians in Washington to fashion a compromise to curb deficits, a Treasury official said. They argued a change in ratings was not needed at this time because the debt was manageable and the administration had a viable plan in the works, the official said. Another boatload of FAIL for team Bambi. People will support you as long as they aren't threatened by your actions. Well, Bambi... the investors are starting to look at you like a toxic asset. Enjoy. Imagine what the press would say if George Bush had tried to influence the raters at the S & P. Of course, Dubya had no need to do so in the first place.
So, what will be the focus of attack on S&P? Can we expect new regulations on ratings agencies whereby the gov't controls the scores? Or maybe that the agencies are no longer allowed to rate non-private issues?
I figure that the thugocracy that is Barry's buddies will start swinging soon.
Rep. Darrell Issa has tired of waiting for the Department of Justice and the Bureau of Alcohol, Tobacco, and Firearms to respond to his subpoenas in the House Oversight and Government Reform Committee's probe of the ATF gunwalker scandal. In a letter today to ATF's director, Issa warned of contempt proceedings if the DoJ and White House continue their refusal to comply with subpoenas, and pointedly explained why the DoJ's current investigation isn't germane to the issue:
For the first time since Republicans took control of the House and gained the power of congressional subpoena, the Obama administration has declined to comply with a subpoena issued by top GOP oversight official Rep. Darrell Issa.
In the face of a subpoena by Issa, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) provided no documents by the April 13 deadline, according to an April 20 letter from Issa to ATF's director, Kenneth Melson.
Issa is threatening contempt proceedings if ATF does not comply.
First simple step, Defund the ATF. As the T-shirt says, ATF should be a convenience store, not a government agency.
Intentional manipulation of basic law enforcement and border security to give dishonest numbers for political use by the Obama Administration. There was a time when people got prosecuted and impeached for such abuse of elected/appointed public office.
That time needs to return and this administration needs a flushing to clear out the excrement.
A multi-volume chronology and reference guide set detailing three years of the Mexican Drug War between 2010 and 2012.
Rantburg.com and borderlandbeat.com correspondent and author Chris Covert presents his first non-fiction work detailing
the drug and gang related violence in Mexico.
Chris gives us Mexican press dispatches of drug and gang war violence
over three years, presented in a multi volume set intended to chronicle the death, violence and mayhem which has
dominated Mexico for six years.