S&P Threatens US With Another Downgrade In As Little As 6 Months

Tyler Durden's picture

Will A be the new AA+? Perhaps, if the S&P follows through with its latest threat. Bloomberg reports that, "the U.S., lacking a plan to contain $1 trillion deficits, faces the prospect of another rating cut in six to 24 months depending on the outcome of November elections, according to John Chambers of Standard & Poor’s. America has had an AA+ rating with a negative outlook since Aug. 5 when the New York-based unit of McGraw-Hill Cos. stripped the nation of its AAA ranking for the first time, citing the government’s failure to agree on a path to reduce deficits. The U.S. has a one-in-three chance of another downgrade, Chamber said today during an S&P sponsored Webcast. “What the U.S. needs is not so much a short-term fiscal tightening, but it has to have a credible medium-term fiscal plan,” said Chambers, managing director of sovereign ratings." Too bad the US doesn't even have a fiscal plan what it will do tomorrow, let alone in the "medium-term" courtesy of the most deadlocked political system ever. As for "credible" - forget it. And as was shown, if the first US downgrade from August 5, 2011 broke the US stock market, we can't wait to find out how the Citadel-controlled, FRBNY-blessed stock market will deal with this particular event. In other news, we are still waiting to hear from Moody's on both the US and France.

More from Bloomberg:

“That is going to have to say something about entitlements, and that is probably going to have to say something about revenues.”


Bond investors ignored the downgrade, driving Treasury yields to the lowest levels in history, amid concern the U.S. economy was stalling and as Europe’s debt crisis intensified.


Treasuries have returned 3.9 percent since the rating cut and gained 9.8 percent last year, the debt’s best performance since 2008, according to Bank of  America Merrill Lynch index data.


“I don’t think anything is going to happen between now and the election in November,” Chambers said.


S&P said in August that political brinkmanship over increasing the government’s debt ceiling year showed the U.S. is becoming “less stable, less effective and less predictable” as the Treasury almost reached its borrowing limit before the government reached a compromise.


The “political brinkmanship hasn’t gone away,” Chambers said today. “That simply doesn’t happen in other AAA economies.”

Well as long as it happens in AA+ economies as is well.

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GeneMarchbanks's picture

A nice August downgrade should have us all saying President Santorum, no?

Future Tense's picture

Fortunately we heard great news from Sam Zell this morning on both the residential and commercial real estate markets where he said everything looks.......terrible.  That should help get our tax receipts soaring.  Video here:


nope-1004's picture

Stock market is controlled by PPT via HFT.  Total fraud.

PM's are being attacked and manipulated daily because the gold and silver ETF's don't have any physical metal.  I am convinced all the data coming out of the CRIMEX about # of contracts standing, etc... is also a 100% fabrication.

100% ponzi.  This system is a joke.  Someone with half a conscience involved in the sinful manipulations needs to speak up and come clean.  I've never seen a more broken system held up on life support in my life.

All gov't and bankster data is a total farce.


WonderDawg's picture

No one alive or dead has ever seen a farce of this magnitude. Total fraud is correct. Epic fraud, even.

Mr Lennon Hendrix's picture

And to add to the safety of finance, da fed just sold Maiden Lane to Goldman. 

MachoMan's picture

This is the whole plan...  kill off unentrenched entities>feed them to uncle sugar/FED>regurgitate the nutrients to the club of entities for pennies on the dollar>gravity ends up killing off the entities>who sell to their principal actors/execs for pennies on the dollar...  thus solidifying the caste system and reinforcing the glass ceiling.

And, if it's not the plan, then it's what's happening...

StychoKiller's picture

You're a clever lad.  The purpose of a System is what it does.  Now, ask yourself, "What is the System doing?"  Please send your conclusion(s) to the email address found on http://www.frontiernet.net/~jimbot/.index.htm

oldman's picture

Da fed is the same as the da gubbiment, effectively.
They had to choose between the sale to Goldman or cutting military entitlements by a like amount. Wouldn't you rather have poor Goldman get a small payday than to cut military entitlements??
Think, man, think!!! we are going up against SYRIA!!!

Thanks for your sense of humor om

TruthInSunshine's picture

Sam Zell on commercial/office property, Howard Davidowitz on retail propety, Robert Schiller on residential properties:

These guys know their shit. Of all the prognosticators out there, none that I know of have been more consistently accurate.

Zell sold at the ultimate top Blackstone at the EXACT bubble PEAK. He's a freaking Jedi Knight:

Sam Zell exited the office property market in February 2007, selling Equity Office Properties Trust and its more than 500 buildings to Blackstone Group for $39 billion in debt and equity, the largest leveraged buyout at the time. It was the peak of the market.



People get ready, there's a pain train comin'

You don't need no ticket, it's gonna' ride up your ass



If I was S&P, given that actual U.S. national debt is at least 61 trillion USD (or 61 trillion Federal Reserve Notes, to be accurate), I would seriously consider rating the U.S. at a CCC [Extremely speculative]. Fitch's designation for this is a Caa2 or Caa3.

Given that we're adding to that 61 trillion 43% of each dollar taken in on an ongoing basis, that's good. /s

chunga's picture


Zell failed to mention MBS fraud and seemed to suggest he is in favor of debtor's prison.

TruthInSunshine's picture

Yep, he's a dick, but he knows his office/commercial real estate.

Uber Vandal's picture

Perhaps the fact that the Baltic Dry Index is now off its Feb. 3, 2012 low of 647 should equate to a May 3, or thereabouts, "correction" of the S&P to under 650.

If this follows the Dec. 5, 2008 BDI crash to 660 ish, follwed by a March 5, 2009 S&P "correction" to 660ish, that is.



Ripped Chunk's picture

S & P, now that's a name you can trust for accurate forecasting. This constant threat of downgrade could not have anything to do with 2012 being a Presidential election year at all?......?

CPL's picture

Why would you think there would be an election?

surf0766's picture

I have thought for some time the 2012 election would be postponed.


GeneMarchbanks's picture

Election or no election, you will get a steady serving of the same. No election might be a bit of a hint that not all is well so there'll be an election.

pods's picture

Bingo.  The last thing they would do is to scare the sheep.  If things get bad, we will get a new president, new hope, new change.

The last thing the people who own this place would do is to tell the people they live under tyranny.

Just like you will NEVER see tanks in the streets to know that fascism has arrived here (as it already has).


sabra1's picture

my avatar will promise you, this, that, and the other thing!

DosZap's picture


My thoughts for ever since it was voted in, in '08.

Then again, IF there is NOT one, look for the Masses to reach Defcon 1.

Nothing short of a NUKE/Massive Bio Hit would stop this one.( too many want him G_O_N_E.)

theMAXILOPEZpsycho's picture

I hope you zero hedgers are happy. This all comes from lack of proper legislation from the government to get a grip on the economy. Legislation such as SOPA and PIPA couldve bought billions of revenue into the US economy, but internet dirtbags opposed it, prefering that the terrorists continue making hay off the backs of hardworking americans in hollywood.

In my job working for the government regulating small businesses I'm constantly left agast at the impotence of our ability to prosicute dollar whores who think they can just go out and start a business - just like that! In meetings Iùve constantly told my supiriors that we need to criminalise more people, as that represents our best source of revenue - and if the laws won't permit it, then give us the laws! This is the only way to get a grip on the terrorists ruining our economy and our reputation accross the world. You say leave people alone? They don't deserve it? Well, I say hte crime has already been commited once it has been thought. I'd like to run through many posters on Zero Hedge and prosicute them to their just deserts!

nope-1004's picture


In my job working for the government regulating small businesses


Just don't enter the private sector.  We need people that kan spel wurdz in the privut sekter.



Comay Mierda's picture

MAXILOSER, your sarcasm sucks. talk to MDB, he can give you some pointers

SillySalesmanQuestion's picture

Your innate inability to spell properly, or use grammtically correct prepositions and verbs in any useful manner, or form, only proves to all of us here at ZH that you DO work for the goverment...go back to your hole or rock.

A Nanny Moose's picture

Those ESL classes seem to be working out well. Can't wait till the national DREAM act passes.

StychoKiller's picture

Bah, verbogeny is one of many pleasurettes afforded a creatific thinkerizer.

Fukushima Sam's picture

You're doing it wrong.  You need a better name and better grammer.

Global Hunter's picture

prosicut them to there just desserts...

V in PA's picture

Judging by the spelling and lack of coherent thought, it's obvious that you would work for the Government. In regulation no less.


edit: Apparently I'm not alone in this thought

Schmuck Raker's picture

You mean its iznt yur job to post online on blogz?

smiler03's picture

If I was employing him to post online I'd demand a refund.

StychoKiller's picture

The "internet water army" has apparently lowered its standards for raw recuits...

Red Raspberry's picture

They just need to tax stupid and the books will balance in no time.  Of course it would be a progrssive tax.

Imminent Collapse's picture

Get a spell checker or maybe get some education.  I am assuming that this is a sarcastic post, but if it is not, then this guy is a dick.

DosZap's picture


And,I as a former PoTusss, would like to know what you on today?.

It's surely banned,(except in Commiefornica).

StychoKiller's picture

"There's no way to rule innocent men.  The only power any government has is to crack down on criminals.  Well, when there aren't enough criminals, one makes them.  One declares so many things to be a crime that it becomes impossible for men to live without breaking laws.  Who wants a nation of law-abiding citizens?  What's there in that for anyone?  But just pass the kind of laws that can neither be observed nor enforced nor objectively interpreted--and you create a nation of law-breakers--and then you cash in on guilt.  Now that's the system, Mr. Rearden, that's the game, and once you understand it, you'll be much easier to deal with. --  Dr. Floyd Ferris, "Atlas Shrugged"

LongBalls's picture

How can the downgrade be as early as 6 months if it depends on the November elections? Am I missing something here?

Comay Mierda's picture

they are waiting for the republican nomination.  if its Rmoney, GingRICH, or Santowrong, then Obummer is a definite win.  If its Paul, they might upgrade to AAA

ebworthen's picture

Judging by the national debt and unfunded entitlement programs the U.S. should be CCC-.

alien-IQ's picture

You're too kind. The US should be rated FFFucked.

alien-IQ's picture


History proves this.

(the /ES is UP 145 points since the last downgrade in august...go figure)

Gamma735's picture

HAHAHAHAHA! I have a better credit rating than the US goverment.

Quintus's picture

Presumably because you don't have to borrow 1/3rd of your daily outgoings in order to keep the lights on.

BurningFuld's picture

Now how can you downgrade someone that can print their own money?  The USSA's credit will always be good. The money on the other hand...not so much.

edookati's picture

Celebrating bitchezz....

Vincent Vega's picture

FBI to declare S&P financial terrorist in 3...2...1...

surf0766's picture

My neighbor told me the downgrade was all the tea party fault.  " If we just raised the debt ceiling there would never be a downgrade."  How screwed up is that thinking from a 60 year old baby boomer hippy wanting to keep the market up so he can golf 2 times a week.

Gamma735's picture

The boomers have been srewing every other generation since the day they were born.   But it is not their fault, their parents gave them a since of entitlement.  

Excursionist's picture

Everyone, tin foil hats on! Bernanke and S&P are in cahoots.  Check out prices of 10-year USTs beginning on July 27, 2011, when fund managers with priviliged information began front running the August 5th downgrade announcement.  By my reckoning, one notch on the S&P scale = 75 bps decrease in yields on the 10-yr, as the fear trade takes hold.  Three more notches, and 10-yr. yields go negative without Bernanke so much as having to incur the brain damage of justifying QEx.  It's fuckin' brilliant.

Boomers may be locusts infesting developed markets, but their comeuppance is coming during their golden years, when they'll have to pay Timmay G. for the privilege of holding Treasurys.