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Moody's Sees US Rating Under Pressure After $3.8 Trillion Budget
If there is one thing the rating agencies can be proud of, it is... well, there isn't one. And if after yesterday's mindboggling budget proposal which sees the deficit increasing to $9 trillion in 10 years, coupled with the fact that GSE liabilities now should be counted as part of overall US obligations, neither S&P nor Moody's could muster enough courage to at least put the US on even the weakest form of downgrade review, one can say that after 2 years of pretending otherwise, both rating agencies are still as [clueless/corrupt] as always. Then one barely visible silver lining, the following disclosure from Moody's in the report released today:
The ratios of general government debt to GDP and to
revenue are deteriorating sharply, and after the crisis they
are likely to be higher than the ratios of other Aaa-rated
countries.If the current upward trend in government debt were to
continue and become irreversible, the rating could come under
downward pressure. The trend and the outlook would be more
important than any particular level of debt.
IF it becomes irreversible? We wonder what would happen to Moody's U.S. models if they were to plug in 10% or even 5% blended interest rates. The ensuing explosion would likely be sufficient, if not to restore any credibility in the Deep "Throat" Shah-ridden organization, then to at least accelerate Buffett's full disposition of any remaining holdings of MCO shareshe may be stupid enough to still be in possession of.
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I'd like to see a sensitivity analysis on their part - describing how the downward pressure would increase at certain interest rates.
It wouldn't be a linear function.
Any guesses at what % it hockey sticks and the debt sprial begins?
Whats the over under on interest rate?
+1
Tyler points out in the original poist:
It's sad commentary on society that I've concluded the ratings agencies, in addition to being "shake-down" organizations (not new) appear to be a bunch of mathematical and economic morons (that's new to me, I *so* did not want that to be true).
These guys in theory work with numbers and valuations every day, and it's increasingly obvious to me that they have absolutely no idea what they are doing, nor understand the results of their "analysis", nor understand the "theory-of-operation" for their analysis itself.
The last one just kills me - they really don't undestand the purpose for their daily activities, nor how that purpose is served?
sensitivity analysis
ha,, take a bug.. and hit it with a 20 pound sludge hammer
Deep Shah is still at large.
These rating agencies are like the Court Jesters of old.
The "rating might come under downward pressure" comment is called amusing.......not enlightening. Like we don't know the ratios are terrible and bound to get terribler.
Moody's must think Obama and CongressCritters read this ratings shit. It's Timmy's job to punk them up and put them back on course.
Yeah, right. Consider the following phone call:
Yello, this is your secretary. Look, if you downgrade treasury, we'll remove your first protection first, then we'll revoke your license to kill, er, rate.
Well, Moody's will only downgrade treasury after the implosion of the treasury via failed auction. In other words, after the patient is buried well under 6 feet, then Moody's will sign off the death certificate with the reason of death unknown.
""Could" come under downward pressure"".
Could. Really?
And the sun "could" come up tomorrow morning.
Like Geithner, why pay attention to Moody's anymore....they are both full of shit and cannot be trusted.
Just because we choose not to partake in Geithner's, Moody's or the rest of these folks dangerous game of confidence does not mean that others will not willingly give over to paycheck induced mass hallucination.
Downward pressure? As in "getting this turd of a budget to pass is going to take alot of downward pressure"...??????
The good news is this is almost over. How much more can they steal now that they've dismantled the bathrooms to get at the stainless steel faucets and they've sold the dog into slavery?
Well............actually it can still get much worse. And it will. See, the thieves understand that even when the alarm goes off, the cops ain't coming. So they aren't even in a hurry.
My fellow American cowards cower in their living rooms, huddled in front of the darkened boob tube, pleading with the cable company to have mercy and reactivate their lifeline to salvation. Can you imagine going weeks without the Simpsons?
Oh the inhumanity of it all. No Simpsons? Screw the unemployed, the homeless, the people dying for lack of adequate health care, the thieving and greed. No Simpsons? That's just not right.
http://en.wikipedia.org/wiki/List_of_characters_in_The_Simpsons
Thank you CD! I ROFLOL!!!
They will never go that far.
Whats to downgrade, until someone takes the printing press away, the US can surely print any amount of money people want...sadly.
that quote from moody's was the most ignorant blather i could imagine....wah wah wah wah wahwah wahwahwah wah....
i am sure they are paid by the syllable....
"IF"? According to the Presidents Budget, Deficits hit a low of just 706B in 2014 and rise every year thereafter through 2020 (the end of the projections). In 2011, providing we have an 18.5% increase in revenue to the government and a 4.6% increase in the GDP, our total debt/GDP ratio will peak at 98.9%. If that ain't the start of a fever, I don't know what is!
To hit these massive deficits they plan on raising taxes.
Reuters first prints the story then removes it. No surprise to people here but they are censuring the news. Got to cover this administration at all costs.
http://www.powerlineblog.com/archives/2010/02/025513.php
Drudge flags the Reuters story on the Obama administration's planned middle class tax increases. Reuters reports: "The Obama administration's plan to cut more than $1 trillion from the deficit over the next decade relies heavily on so-called backdoor tax increases that will result in a bigger tax bill for middle-class families." It's an impressive list. Does the administration contemplate that these tax increases might have an adverse impact on incentives to work and invest? I doubt it, but they will.
Now Drudge also flags the withdrawal of the Reuters story. The only explanation provided is that "[a] replacement story will run later in the week." Here is the text of the withdrawn Reuters story:
TT
Powerful and very disturbing story.There is now a tag at the end of the withdrawn article that says "Reuters now says the story was factually inaccurate and 'there will be no substitute story.' Reuters probably got ahold of an advance copy of the tax increases, and they've since been changed. The WSJ said today that income taxes would be raised on individuals earning $200,000 and up and on couples earning $250,000. I'm hanging on to the Reuters' story, however, because I bet there's still a lot of tax truth in it. If it is implemented, I think there will be a massive tax revolt. THANKS!!
I had commented earlier on CNBS regarding the back-door marriage penalty via the $200 indiv/$250 couple levels, then found this post, read the Removed Reuters on powerlineblog... turns out CNBS' account was pretty watered down. (Yeah, I know, big surprise.) So, I did their huddled masses a favor and popped the powerlineblog link in a comment. It got posted, but will be curious to see if it's still there in the morning.
If powerlineblog gets denial of service attacks, we can probably trace them to the basement of 1600 Pennsylvania Ave NW.
Nice work, Anonymous, u rock.
I love how its basically impossible for a layman like myself to find ratings on any nation. Can you see this information without being in some sort of club?
Is there a list of all the ratings for nations worldwide?
The US is AAA? Or no? Which nations have taken hits?
They're too compromised to give a "de jure" downgrade. However, this almost certainly constitutes a "de facto" downgrade.
True, but I realized as to why when the Fed says that an audit of the Fed would necessarily raise rates, why didn't yields go up immediately? Everyone sees through the big lie but as long as everyone acts as though the big lie is the truth, then the game goes on and certain players keep sucking up the capital. "They" won't end the game and call the big lie to light, we have to do it..one way or another.
If it becomes "irreversible", the ratings "could" come under pressure? WTF. When it becomes irreversible, it's game over.
Whatever happened to Einhorn's lawsuit against S&P??
WTF, could they dance around the issue any more than that? Typically non-committal.
as an old friend told me,,,sometimes its whats not being said. In either case its all lies built on bullshit. Seems to me our fate is in the hands of the liars and cheaters.
How long can they keep up the mirage? How long till China or another entity pulls the lever ?
In whose interest is it to destroy our country? What kind of loyalty to country do those have who, having the wherewithall are leaving our country for so called safety?
The millions living on the east coast , bubble territory , must need a seeing eye dog to be so blind to the corruption and not respond.
How long can good men stand by and do nothing? Ok i will bring a lunch
Blah Blah Blah
Either downgrade someone (like us, the UK, etc.) or STFU, you toothless, gutless wonders.
Le question es no if, bu wen.
"I am not over the hill, but I can see the other side."
Kinda silly really.
US credit rating has no meaning - they can always print - except in the sense that someone benefits from buying US CDS, obviously because its ownership enhances the value of something else they own or wish to sell. Obviously the seller is laughing his head off - just another curious facet of our peculiar system. Probably IBs sell it to each other on matching transactions, book profits and pay bonuses.
Really goes back to Basel II, which specified how much reserves banks needed to hold for securities of different ratings - so the rating is only really used to enable the bank to increase its leverage by buying riskier securities with higher yields which have retained high ratings.
Until they don't. Which is why downgrades tend to be sticky, because they can initiate deleveraging throughout the system.
Nobody with a brain trusts ratings, but everyone uses them to game the system. If you ever wonder why MDO have such a high valuation, remember that they are worth more alive than dead. Same goes for ABK, MBI, MTG, PMI and RDN. It is valuable for FNM/FRE to sustain the illusion that mortgage insurance policies will be honored, so the zombies live on.
Even when they lie about ratings, you can't believe them. The leaders of these ratings agencies belong in jail for the damage they participated in.
With a few friends to keep them company...
http://biggovernment.com/fgaffney/2010/02/02/geithner-and-bernanke-laundering-money-through-an-illegal-trust/
Has anybody here actually bothered to read the Basel Capital Accord?
Sure, the USA is hugely overrated but anyone who seriously suggests that it should be downgraded right now is a damn fool. It would trigger a deflationary cascade the likes of which the world has never seen.
There is only ONE answer dudes.
http://www.leap2020.eu/GEAB-N-41-is-available!-Global-Systemic-Crisis-The-Decade-2010-2020-Towards-a-knockout-victory-by-gold-over-the-Dollar_a4201.html
regards.
These guys are genius. Why would anybody in their right mind be listening to them. They AAA rated a lot of shit and had a big helping hand in all this. They need to be tried and convicted of fraud.
Did anybody have a look to the BDI these last few days? You can indeed see a explenation for the 6% GDP growth in it, but it you look to it now, it's already down 50% of that peak of a few months ago.
Row Row Row Your Boat, Gently down the stream...
How can these bonds be rated AAA ?
What a joke... The Fed is doing a planned
Demolition of the USA
"...GSE liabilities now should be counted as part of overall US obligations..."
Well, actually, NO. The budget is proposed expenditures and, in effect, more of a flow of funds or income statement--that is revenues and expenses. As you say, GSE liabilities are, well, liabilities. They should no more be counted in the budget than all the tanks, airplanes, cars, office buildings, etc., the Uncle Sam owns should be counted as assets.
Please don't continue this line of argument. It undermines your credibility.