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S&P Downgrades US To AA+, Outlook Negative - Full Text
United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative
We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.
We have also removed both the short- and long-term ratings from CreditWatch negative.
The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon.
The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.
Rating Action
On Aug. 5, 2011, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'. The outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July 14, 2011, with negative implications.
The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service--remains 'AAA'.
Rationale
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. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.
Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.
We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.
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.
Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).
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.
The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.
The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.
We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.
We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.
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.
Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding advantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.
Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.
When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.
Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.
Outlook
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+'.
On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.
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I just bought some more physical from apmex ... they are still selling tonight at Fridays spot close...
By default ..... the only save haven plays are Gold and Silver and other PMs.
and for a real laugh
the HuffPo crowd is all abuzz about the evil demon republicans who caused this
__________________
HUFFPOST SUPER USERlifepanels
sorry for the inconvenience 825 Fans
0 minute ago (9:34 PM) And Mitch "The Turkey" McConnell says this was a template for all future debt ceiling debates? He's a piece of work.
ALL REPUBLICAN'S FAULT! ______________ HUFFPOST SUPER USER
notalwaysfittoprint
1025 Fans
0 minute ago (9:34 PM)
S&Poor are they in bed with the Republicans? Not enough cuts? Well, how about cutting from the military, rolling back the tax cut for the rich, and looking to curtail welfare for corporations?
6. " I was not personally responsible for your downgrade"
7. " Do not shoot me I am an honest Economist "
9. "No one could have predicetd this."
10. "What time do we tee off?"
About 9:30AM on Monday. Thats when we start selling our Tees.
11. "it's your baby"
12. I like turtles.
I remember my college roommate laughing in the next room when he heard my girlfriend say "you better not come in my mouth."
Oh, memories. That's all I have now.
i don't know iNull...i'm pretty familiar with the mechanics of the manuver to which you're referring, and it seems to me that your bitch would have to have plenty of free space remaining in that filthy orafice of hers to articulate a full sentence (predicate noun subject verb...) just as the cummin was bout to commence. But now that i'm getting to know you, i reckon it may be possible after all.
Can we get this "to go"?
http://youtu.be/SGi37eToDmY
Why not just label it AAA all the way out? That's effectively what they've been doing recently, so why change policy now?
This is an analysis they should have done 15 years ago, and they probably should have done it before that.
Another Barama achievement!
first black president
wins nobel peace prize first week in office
assassinates OBL first try
first president to downgrade the USA
And all 3 of his "achievements" have been farces and shams...
...going down down down down. http://www.youtube.com/watch?v=dOTt-gP2uDE
Has to be one of the saddest days in the Nation's history. The Nation is in a Tail Spin now...everyone saw this coming, but did nothing.
I sold 60% of my sotcks this week. Hard to figure out where to put it now.
Sad.
answer: anti-treasuries = TMV (3x) or TBT (2x). I reckon there's a 1x but don;t know wht it is. take a look at charts. will never be cheaper than right now
I would be very cautious about 3x short plays on Uncle Ben's wild treasuries. Very risky play in terms of knowing when to navigate in and out.
If you're not sure what to do with your holdings (presumably in cash for now), take some time to get more sure.
Good counsel, mayhem_korner, for anybody not a balls-out gambler (like me). Sound financial advice
Holy Shit. Stuff just got real.
S&P just yelled that the emperor has no clothes in the streets. Things will get interesting now that the facade is shattered.
If S&P really yelled the emperor has no clothes, it would be printing Bs, not As.
True- it's more like they pointed out that the Emperor could use a haircut, and has mustard on his tie.
1.28 seconds into this clip, ,Glenn Beck explains to the Isrealis, in Isreal that poltics is forever over and the American people just dont know it yet.
He then goes on saying that Americans were so scared from 911 that in the future they will come running forward after the next false flag event and that they will be seeking the truth.
and that the media will keep giving them more of the same, "the commies did this"
Glenn Beck ends the show on complimenting the Isrealis on a fine job covering up 911, other than the "5 dancing Isrealis" of course.
http://www.youtube.com/watch?v=ZHoaXgA99Mk
1.28 seconds into this clip, ,Glenn Beck explains to the Isrealis, in Isreal that poltics is forever over and the American people just dont know it yet.
He then goes on saying that Americans were so scared from 911 that in the future they will come running forward after the next false flag event and that they will be seeking the truth.
and that the media will keep giving them more of the same, "the commies did this"
Glenn Beck ends the show on complimenting the Isrealis on a fine job covering up 911, other than the "5 dancing Isrealis" of course.
http://www.youtube.com/watch?v=ZHoaXgA99Mk
France is gonna be downgraded next...bringing down Germany... and Europe will go kaput.
...''pension'' for disaster, hello divestment. http://www.youtube.com/watch?v=rhhtRxqSrys
by the time Monday rolls around it will be
a) the result of actions by the extreme right (Tea Party)
b) an opportunity to (with complete cover) make some tough/ opportunistic decisions
c) an eleventh hour (October 2012) restoration of AAA
Yes We Can
PS (S&P did not take this action independently)
d) insure QE3 planned in Jackson Hole
e) opportunity to BTFD on Sunday and Monday
f) 'this is really good news for the markets since it gets any speculation of a downgrade behind us' ... CNBC, Monday am
Out look "Negative". WTF?!? This is GREAT news. Long overdue! Who says we deserved the higher rating in the first place? TIme to clean house. Time for a total restructuring of a corrupt system. Time for this country to snap out of denial. Throw away the credit cards. Pay off personal debts. Simplify our life-styles. Get off the Rx drugs, the junk food, and all the other mind/body altering substances. When the society gets their act together, the government will have no choice but to follow suit.
Government is an innocent reflection of the collective quality of the masses.
"Government is an innocent reflection of the collective quality of the masses."
Gotta call bullshit on that. Government today is about power and greed. Our government is corrupt. Our masses are not corrupt, just asleep at the wheel.
So, you believe that the government is corrupt because of their impairment of integrity, virtue, or moral principle. Is that correct? The integrity, virtue, or moral principle of the government is overshadowed by power and greed. Yes? Is that what you are implying?
And that the masses are not corrupt, i.e. do not have an impairment of integrity, virtue, or moral principle, but, as you expressed "just asleep at the wheel". Is that correct?
But if someone is asleep at the wheel, they are not doing their job or taking their responsibilities very carefully, are they not? At least that is my interpretation of the idiom "asleep at the wheel", and you were using that phrase as an idiom, correct?
Well then, how can you tell me if someone is not doing their job or taking responsibility for voting in someone who is corrupt, who does that reflect upon? Are you saying these politicians were "clean" before than ran for office and got swayed by the power and greed once in those positions of power? Is that what you are saying. If so, I question your stance.
I didn't vote. And I didn't vote because I knew those running for office were (almost) ALL corrupt. Yes, there are a few who haven't been overshadowed by the power and greed. Ron Paul might be one of them. But they are few and far between and to what extent they are "clean" is anybody's guess. The system reflects the Consciousness of the Collective that voted them in. Weak minded people will "allow" greedy and selfish and power mongers to be elected and run government. That's a Law of Cause and Effect. What one puts out into the environment comes back. As you sow, so shall you reap. It's a Law of Nature that can be proven time and again.
Isn't there a direct correlation between integrity, virtue, or moral principle AND people doing their job and taking responsibility for their actions? Yes, absolutely.
This country, with its masses, as you say, asleep at the wheel, got exactly what it deserves because that is exactly what we asked for, directly and indirectly. Never in the history of the world has a society been so massively under the influence of Rx and nonRx drugs, alcohol, junk food, texting, gadgets, internet, TV, PROGRAMs and Propaganda, personal debt, fear, illness, destructive tendencies, etc., etc., as this dysfunctional, multi cultured country of the U. S. of A. is! We are a very sick country with very sick politicians. Therapy is not going to work for us. It's too late.
And you're telling me, all we are is "asleep at the wheel"? I say BULLSHIT!
I'm telling you that your trite little dumbass assessement that government is an innocent reflection of the masses is bullshit. The system is corrupt, and a corrupt system produces corrupt politicians. This is way bigger than what I can put into a few paragraphs on this forum. We have reached the end result of at least a century of corruption and manipulation.
I think that my circle of friends represents an accurate cross section of our society. The majority of the people in my circle go about their daily business of providing for their families, working, paying their bills, etc. They are honest. They have integrity. They don't want handouts. However, they get their news from the headlines, and don't take the time to actually seek out the truth. They have been lulled into a state of semi-consciousness by the media, and the fact that during their lifetimes (40+ years), there has never been a time when America couldn't overcome her problems. The media and the entities that control the media have seen to it that this illusion continues. That's what I mean by "asleep at the wheel".
The masses bought into the illusion that was sold to them. The masses have been very naive, and are a product of a machine that they don't control. They are waking up now, and it's going to get very ugly before it gets better. The masses are to blame for buying into the dream, but they didn't create the system that produces such fraud.
As a side note, you're kind of a tool.
"...my circle of friends represents an accurate cross section of our society...They are honest. They have integrity...they get their news from the headlines, and don't take the time to actually seek out the truth. They have been lulled into a state of semi-consciousness..."
Semi Consciousness: an impaired state of consciousness, characterized by obtundation, stupor, or hypersomnia.
So, let me get this straight. What you are saying is: You have friends that are an accurate cross section of society who you believe are honest and have integrity but they don't take the time to seek out the truth because they are in a self imposed stupor, and, because of their impaired state they can't be held responsible for their actions (inactions). Is that what you are saying? Cause it sure sounds like that is what you are saying. Seems like a person in an impaired state might have difficulty making clear decisions, e.g. electing corrupt politicians. THAT is the Point in all of this: There is an inherent weakness both in the voter AND in the politician. They both have something in common. Does it make the voter corrupt? Not necessarily. What does it reflect in a voter that elects a corrupt official? I'll let you figure that out. That's your lesson to learn.
I would conclude, in your case, birds of a feather flock together.
On that note, I rest my case.
"As a side note, you're kind of a tool"
Thank you, I take that as a compliment.
You don't get points for asking me what I'm saying, and then restating what I'm saying with a few of your own twists thrown in. That doesn't work in a debate with anyone with above average intelligence. Your cheesy rhetorical schtick doesn't cut it here.
Let's get back to the main point of this little debate. The original point of the argument was your attempt to be profound with your over-simplistic comment that "government is an innocent reflection of the masses". Maybe it started that way, but over time the system was corrupted by greed and lust for power, and it in no way represents or reflects the masses today. Yeah, the masses are guilty of a lot of human shortcomings, and so are you, but there is something much bigger at play here.
By the way, are you from a particular country in Europe or just the entire continent as a whole? I'd be curious to know, as it might help me frame your comments in the proper perspective, because all those European countries, you know, are doing so well these days.
NO more mind/body altering substances! Fuck that!
the other side of that coin is that government manipulates the masses too....but it IS a two sided coin
Germany volunteers to bailout the Us.. ha ha, They are a remarkable people.
Hmmm ... I will wait to see how that works out :)
So how does Gross make out with this downgrade (having dumped his treasuries a few weeks ago)
The guy is golden
Watch out for that first step, it's a long one.
For all those who think the Affirmative Action President is incompetent, I ask you to consider that in less than 3 years, he has, without question, FUNDAMENTALLY TRANSFORMED AMERICA. Just as he said he would. What else does he always yammer on about, ..., oh, yeah, SHARED SACRIFICE.
Good luck to all.
Under Obama we lost all hope and changed our rating.
Will we get our junkmail delivered this Mon?.. the Gov performs an important function in this Junk mail delivery.
Retire to doomsday bunker giggling, surrounded by Spam. Burn baby burn.
Watch out for that first step, it's a long one.
Taken years of spending to reach such a momentous point where you actually get a downgrade.Bernamke and the Fed deserve Congressional medals of Honour all round,taken years of hard work spending everything.Such vision and foresight.
Yet another non-event that was pre-leaked and sold off the markets, and will be soaring higher on Benny's QE release next week.
50-75Bp move factor? Bernanke will have that bought up in less than 2 days....S&P is such a joke, all these ratings agencies are a joke with ZERO credibility.
Stocks will go higher; dollar down, treasuries down, Euro up= what? The same it has the past 3 years stocks up!
So if the story was leaked and this led to the equities sell-off, care to explain why Treasury prices went up? If they went up on the leak, why will they go down on the news?
Logic kind of blows up your theory, eh?
Yea they are blaming the tea party in between the lines. Yes the Whitehouse is saying that this doesn't matter yada yada yada. But it's real funny that even though this doesn't mean much, the whitehouse was fighting tooth and nail for this not to happen today. The S&P blamed the tea party because they won't cross that red line of the democrats and the president having some responsibility also. And trust me, it's going to be a bloody sunday night/monday morning.
Yea they are blaming the tea party in between the lines. Yes the Whitehouse is saying that this doesn't matter yada yada yada. But it's real funny that even though this doesn't mean much, the whitehouse was fighting tooth and nail for this not to happen today. The S&P blamed the tea party because they won't cross that red line of the democrats and the president having some responsibility also. And trust me, it's going to be a bloody sunday night/monday morning.
The downgrade is to ensure that tax revenues / increases are included in the recommendations from the "Committee of Twelve." Rather than reduce spending, pork, and waste, the old guard in cahoots with the Wall Street minions, want to keep the game going (tax and spend).
S & P has less credibility than Heidi Fleiss, Hugo Chavez, Charlie Sheen or Mahmoud Ahmadinejad.
This coming from a company that rated sub-prime mortgages triple A.
The MPAA has more honest ratings than these clowns.
Drug dealers that have more street cred than S&P.
More people lost money investing with S&P ratings than listening to Bernie Madoff.
GTFOOH.
So you're saying that the S&P is WRONG in downgrading?
Should I take that charlie sheen comment as a compliment or an insult ...
ha! i knew s&p would down grade. good on them
We always have said we wanted the rating agencies dismantled permanently, well HELLO!!!!! Say goodbye to these agencies they will out of business real soon....All 3 of them...
And then everyone in the world will be AAA again, even Zimbabwe
What makes you think there are only 3 of them, o bleating one?
http://www.defaultrisk.com/rating_agencies.htm
Yet another non-event that was pre-leaked and sold off the markets, and will be soaring higher on Benny's QE release next week.
50-75Bp move factor? Bernanke will have that bought up in less than 2 days....S&P is such a joke, all these ratings agencies are a joke with ZERO credibility.
Stocks will go higher; dollar down, treasuries down, Euro up= what? The same it has the past 3 years stocks up!
Nice logic you got there Von Havenstein.
Did you also go long Bear Sterns and Lehman before they imploded?
Yeah...go long and big at the open on Monday. What can possibly go wrong?
After all...it's just paper.
the king is dead. long live the king.
Big Party at Jimmie Carter's place this weekend!
Fuck Carter. Big party at Jim Cramer's place. Fresh scotch and a dirty linoleum floor.
Tyler, ZH may have jumped the shark. IQ levels have dropped precipitously.
Oh, so sorry. Your little gangstalking multiple ID didn't work out. Poo poo baby. Go create another hundred aliases and hope that fighters can't see through it.
Poo pooo baby. Ass.
wha-what? you cagy devil, you caught me. some call me Leigon; you can call me janus. whatever the case, yes, i'm a demon come to menace you.
i have one million, four hundred and seventy two thousand nine hundred and 33 identities, wittle bitch, i needn't create another thing, why i could sooner create inulls out of those stones over there.
i'm in the mood to screw with you, you obnoxious ass. please, i beg you, reply to me in some way...i'm guilty of it all; i confess -- just engage ole janus.
this is gonna hurt me a lot more than it's gonna hurt you.
pleased to meet you/
hope you guess my name/
but what's puzzlin you is just the/
nature of my game,
janus
So the appraiser(S&P) came by today and said we can't afford to stay in the house Benny and the Pols built for us??
So the appraiser(S&P) came by today and said we can't afford to stay in the house Benny and the Pols built for us??
Nice picture ... America underwater ... 70% of homes in Las Vegas are underwater and now, everyone
+1
what is their fn game. this is a trillions of dollar move potentially. once the triple a is gone it can never really come back. it is like virginity. is this the sudden hyper inflation surge to discount all the world's debt to managable levels in one move, a world bailout via a suddenly devalued dollar. will the renminbi decouple? what will the euro do to match it?
all i know is pms have become the trade of the century.
From Daily Caller:
"S&P officials told the Treasury Department of the downgrade and presented the department with their report around 2 p.m. However, according to sources familiar with the issue, Treasury staff noticed a $2 trillion error in S&P’s assessment. S&P went back to the drawing board and submitted a revised report to the Treasury before reaffirming its original decision around 8 p.m."
From Bear:
"You might think they cound get it within a couple of trilliion"
Maybe they finally started using the Quick Books subscription they purchased last year
Nonevent on Monday?
doubt it...not after the non event on friday
Ironically enough, treasuries are likely to have a bid while spread product and equities are likely to take a hit.
Jim in MN is correct - we'll need to see how strict investment guidelines are for large pools of more conservative investors. If so, out with spread product and USG derivatives (i.e. GSE debt and MBS).
And then, as Nate H said upthread, there are the derivative markets. Margin calls? Yikes... Those thinking this is simply a symbolic event may be underestimating things. The US fixed income market uses treasuries as the foundation for virtually everything. Think about what that means for all other bonds for a minute...
You know what's funny?
The entire US of A now has the same rating as...Texas.
hehehe
There is no cure for stupid.
Oh yeah and the font
http://www.nationalreview.com/corner/256288/senator-barack-obama-explain...
Timmay Geithner, US Treasury Secretary
1500 Pennsylvania Ave NW
Washington DC 20220
MR. Geithner,
We are in receipt of your application for a credit line increase. After careful consideration we are unable to extend more credit to you at this time. In making a credit decsion we gather thrid party information for verification of your application information. We made our decision based on a number of factors:
03 Excessive revolving debt (current spending in excess of 140% of receipts)
27 Current obligations too high in comparison to income (current debt to GDP over 100%)
33 Projected obligations impossible to meet in relation to income (entitlements)
42 Too many recent inquiries
Though we used a third party to gather information they did not play a role in our final credit decision. Under the FRCA you have the right to review your rating by the credit rating agencies for free. If you believe there is a mistake you can address that with the agency listed below.
Standard and Poors
55 Water Street
New York ,NY
10041-0001
We appreciate your interest in our services and hope you will consider us for your future financing needs.
Sincerely
The Communist Party of China
LMFAO!!!!! This makes my day!!!!
Perfect!!
You MUST send that to Timmy G's office. You must.
I just may, I mean after all, I already can't fly thanks to some remarks I made to the bernank about being incompetent, returning his PhD, and not knowing the first thing about monetary policy when it comes to inflation, what harm is another watchlist?! Guess I shouldn't have used my real email address when emailing the fed...BWAHAHAHAHA! Besides that you are aware the treasury runs the atf, right? I don't think I have EVER, EVER heard a good story about getting a visit from those assholes! Oh well fuck it you only live once, right?!
That is funny. Maybe they could also try to address their concerns with Dagong Global Credit Rating Co.
A lot of people find it hard to understand the esoteric language of Finance and Politics. Therefore, I’ve translated the “Overview” section (page 2) from the S&P downgrade notice. Anyone able to sit on a bar stool or swallow should be able to understand this.
The S&P’s Top Story Tonight:
• We lowered the US credit rating to AA+
• We removed our “negative” rating since AA+ pretty much covers that.
• What happened last week in the U.S. Congress was a complete circle jerk. After watching this unfold, we have sincere doubts that Congress could even find its collective ass with a roadmap and a flashlight.
• We honestly hoped that since the financial future of the U.S. was at stake that you assholes wouldn’t have blown this off. We even showed in DC to let you know that we weren’t bullshitting.
• “Super Congress” What the fuck? If you ass clowns aren’t tarred and feathered by your constituents before the end of the summer, you might consider getting off your asses and passing a real budget next chance you get.
• Don’t think we’re serious? How would AA grab you? You have maybe two years before we do that. If you guys are planning on pulling a QE3 rabbit out of your ass, you just might find an AA boot on your neck much sooner.
Love and kisses,
S&P
Welp, it's the truth. Heed it or not...
So are S&P the new Taliban? Or as Max Keiser might call them - Financial Jihadists? I can see them running into problems shortly.
It's a hell of a start. It could be made into a monster, if we all pull together as a team.
relax...have a cigar
you're gonna go far
And did we tell you the name of the game, boy? We call it riding the Gravy Train...
Welcome to the machine!
This is one small step for ratings, one giant leap to default...
"Our government has not been warring on poverty; it has been creating poverty by attacking every value and every institution on which the generation of wealth depends. And with this, inevitably, it is corroding our liberty. Unless the lethal pattern is changed -- which means , unless the philosophy that shapes this pattern is changed -- this nation will be destroyed."
maybe someone can help me out:
are they saying that they believe the interest rate will rise 50 to 75 basis points by 2013 or 2021? Either way, that seems like a tiny bump to send us careening off the cliff; but if that's all they're allowing ten full years into the future...then it's finished.
also, to me this seems like the equivelent of johnson (i think it was johnson) changing the gold window conversions to foreign entities only...by that i mean, it seems like S&P is going out of their way to stress the credit worthiness of the US viz. other soverign states, while smacking the market investor with all the nasty side of exposure and counterparty...is this another version of "the twist"?
this is panic...reason is out the window...
Word.
The real scandal is S&P leaking a flawed report to the STreet first. And not the press.
From Politico:
"S&P officials had spent time at the Treasury Department this week, and administration officials were prepared for an announcement to be made after the market close on Friday."
So was this the selling today .. who knew what when? The HFT's never got the message and sent ES from 1164 to 1210.
How is Bernanke going to annouce QE3 a couple weeks after the debt gets downgraded? Won't that risk further downgrades?
So what is the best investment now?
1. Gold
2. Guns
3. Food
4. God
Guns.
Guns will get you food, gold, and more guns.
Question: What is best investment now. Guns, gold, food, God?
Answer: All of the above.
Guns do you no good when they come for you and you are asleep.
Your best defense is secrecy. Find a place that no one knows about. Be there.
How is Bernanke going to annouce QE3 a couple weeks after the debt gets downgraded? Won't that risk further downgrades?
In a logical world, yes. But in Keynsian fantasy land, no.
I don't think this was the selling. I think Thursday and the early part of today was more of a "yeah, we'll probably get downgraded at some point but man Europe is royally fudged right now." Maybe I'm just being naive, though.
More firsts for the "Messiah"...
- National debt now greater than GDP
- Loses AAA rating from S & P
Well done bin Bernanke, Timmaayy and Obungler.
How many money market mutual funds are going to break a buck next week ? Obama must fire his entire economic team. Paul Volker at Federal reserve, not too late to bring back Elizabeth warren, William Black at SEC, Harry Markopolous at FDIC. They will clean up and our country will be a better place.
Bye, bye Turbo Timmy,Bernanck, Dudley.
ok...i can't see anything but a giant monday lemming clusterf*k
1. forced PM liquidation
2. forced long (really, you're still long?) equity selling
3. flight to treasuries (they're safe right?) wait, flight FROM treasuries (this is hard)
4. flight to ???
5. help me super congress !!!
Currencies should be fun too!
Just a moment...just a moment...I've just picked up a fault in the AE-35 unit. It's going to go a hundred percent failure within 72 hours.
There were rumors 'til after lunch today that there might be a "run on the banks" in EUROPE!
Any takers on a bet there's a bank run in the U.S. by Tuesday A.M.?
Or is John Q American simply too dull to realize the ramifications?
Kudos to all the sharp-witted forked tongues who contributed above!
("Timmeh!")
You gave us an evening of levity, in the midst of sobering news.
Run tomorrow morning
you might want to wait till monday, but yeah Floyd - Run Like Hell
no run america can't run anymore.
everyone except the machines knew the joint was busted , it's not that big a deal to the bottom 90% they know their place, in the middle of the pen.
After so long you don't even need to close the door, they just stand there.
I still am convinced that BAC dies this weekend...plan accordingly!
If they go I sure hope they take Shittybank (aka Citibank) down with them. The absolute worst people on earth are the TBTF bankers!
sorry, duplicate
Buy the selloff monday morning that tests the lows. You dont think Goldman knew about this Wednesday night? Anyways, rating may be one notch lower then AAA but about 15 notches above reality. 120%Debt/GDP here we come....
nah...im adding to my shorts letters and numbers be damned short this shit
Tea Party. Fucking things up good because it wasn't bad enough already.
what a fucking ridiculously stupid statement.
That comment makes no sense.
Which is more likely
1) Barry-O bringing the US back to AAA
2) Someone other than reefermadness down-arrowed you and p.e.
(I think it's a push)
Should change your sign to "No Exit" or some such Sartrean metaphor.
I think "Vacancy" would be a suitable sign for him.
Twitcompoop,
i had one of those 'homin-ah...homin-ah' double-take moments just now. imagine me seeing you telling another to change their avatar when that's what i'm to be doin' to you, you foul beast from the nethers of marianas. yes, that's what's to be for you:
go forth and find yourself the image best representing whatever parasitic, slime-membraned beast it is that you are.
don't get cute with this, just be honest.
"Tea Party. Fucking things up good because it wasn't bad enough already."
outside the confines of ZH that's what people are really saying...breathtaking demonization...
This is happening at the same time a HUGELY costly U.S. Power Grid test is set to happen WITH NO PUBLIC APPROVAL
http://theintelhub.com/2011/08/05/costly-u-s-power-grid-tests-approved-w...
I was talking to a guy at the gym about the goings on in Washington and such, and he just waved his hand. "I can't be bothered to get involved with all that stuff." He said. After all, "there's nothing I can do about it anyway."
But, later. I saw him discussing the weekend Cubs game in Cincinnatti in passionate tones. He seemed to know every detail. I mean every fucking detail. From the entire batting lineup to the manager, to who was hired or fired in the last year. Everything. He had it committed to memory.
Clearly, he did have an interest, and a passion about SOMETHING. I looked at him, and he looked at me, the way a guilty dog will look at you when it knows it's soiled the carpet. I just shook my head and walked off.
People, my friends, are idiots. That's just the way it is. And it's never going to change. Sorry about that. Guess we made a bad choice when we decided to come to this planet and manifest as humans.
a-fucking-men to that
I think it's safe to say that we all know several people like the guy you met at the gym. I know I'm guilty of being related to a couple of guys like that...I've now reached a point in which not only do I no longer try to argue their idiotic belief that things are "getting better" (since they believe what the news tells them) I actually egg them on. "Yeah man, shit is gonna be fine" I tell them. "Go ahead dude, finance that Beamer, it's a bargain!" They love hearing that shit. And you know what they love to hear the most? "Dude, your house is only gonna go up in value from here. Don't worry, the bottom is in".
Then as things go sour, I e-mail them that image of the deer in headlights Tyler uses here so often. Without commentary since I gave up sending them any articles that actually contain any real information, especially if that article has more than 200 words, since they can't read that much without getting a headache or dreadfully bored.
Some people don't want to know...so don't try to tell them. Fuck em.
That's some insidious reverse-psychology. I like it. Wish I could work that angle, but the German in me doesn't allow. Beating people over the head is the only game I know.
careful...hungry neanderthals are a bitch...'specially the ones at the gym...
Very funny and very astute!
Sadly, I must agree with you. I find my female counterparts, 99% of the time, to be equally as uninformed and ambivilent as the average armchair jock.
Only difference being the focus of their leisure activities ... hair and nail grooming mostly, or similar vacuous concerns. I have never been able to "relate" to these types.
Great story iNull! YOU make a difference with your care and passion. Maybe the fact that you shook your head at the guy might have been the wake up call he needed...keep up the good fight!
Best regards,
Agrotera
damn, Agrotera, i didn't see you all sweet on iNull. trust me, the only gym conversation he hears is when he's handing out towels. but you're sweet; i don't want to disuade you in your affection for the little toad (yes i do), only be cautious of him, he's no prince...he's not even a frog...wart ridden rascal!
trust me, this is the kind of guy who pretends to drop dimes in the blind vet's cups; only to rob the poor paupers blinder than they already are...he's rotten to the core.
don't get me wrong, i'm sure his mother loves him dearly and that some cocker spaniel had once touched his heart; but apart from that sort of fiddle faddle, he's a regular blighter.
I tell folks who are concerned, but don't know how how to deal with the public's apathy..."don't worry about them.....prepare".
Folks, there are your FAMILY, and your FRIENDS, and then the rest of the CITIZENS and then there are HOSTILES. Keep that clear. Each category is different and is accorded different treatment.
Monday could make Thursday's selloff look like a sunny afternoon.
There was a post today in which the author said that he now felt "safe to go long equities". I have a feeling that person is going to have a very very difficult time sleeping this weekend without pharmaceutical assistance.
i almost felt bad insulting that guy...almost...
I did also...for like...a nanosecond.
"In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law." Ha .... translation, when this "deal" becomes inconvenient we will just change the law like we always do....Elect Ron Paul....
Message as follows: It is dangerous to remain here. You must leave within two days.
This is not a recording.
No this is sheep herding . . .
. . . Pump (stocks up) & Dump (stocks down)
..forget morality, BTFD, we're all following shepherd Goldman Sucks and their sheepdog (S&P) now
Call APMEX now and buy PM at Friday's price.
Gold and silver now !
Friendo?
What this country really needs is not an economist. No.
We need a specialist in Ponzinomics
Someone who really understands how to game the system, rig reports and keep people smiling all the way to the poor house