Nice, if the interest rate goes up two percent, there goes 300 billion of tax dollars a year. And those tea party morons want to reduce the debt? http://news.yahoo.com/u-likely-lose-top-rating-economists-000214380.html U.S. likely to lose top rating: economists By Pedro da Costa and Andy Bruce | Reuters – 7 hrs ago tweet66 Email Print RELATED CONTENT A demonstrator holds placards to protest U.S. debt in front of the Capitol in Wa … Article: Loonie stays above $1.06 US CBC - 1 hr 17 mins ago Article: Fears of second-half slowdown spook corporate America Reuters - 1 hr 37 mins ago Article: Americans view debt deadlock with worry and scorn Reuters - 1 hr 37 mins ago WASHINGTON/LONDON (Reuters) - The United States will lose its top-notch AAA credit rating from at least one major rating agency, according to a Reuters poll that also found wrangling over the debt ceiling has already damaged the economy. A small majority of economists -- 30 out of 53 -- surveyed over the past two days said the United States will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's or Fitch. Respondents saw a 20 percent chance of a new recession over the next year, a prospect that some economists say has been compounded by the acrimonious political fight over what is normally a procedural legislative vote on the debt. Lawmakers have one week left to hash out a deficit-cutting plan without which Republicans in Congress have said they will not raise the legal $14.3 trillion debt limit, risking a potentially devastating government debt default in August. "We believe that Congress will act with an 11th hour deal to raise the debt ceiling. However, the risk of that deal failing increases with each passing day," said Guy LeBas, director at Janney Capital Markets. "I would say that the chance of a U.S. ratings downgrade is now more likely than not." Economists still see the probability of an outright default on U.S. Treasury bonds as remote -- 5 percent on median. http://link.reuters.com/nyc82s Downgrade and default would have vastly different consequences. A ratings cut might raise the risk of recession by hurting confidence, but might allow financial markets to muddle through the next few months without incident. A default, however, would send shockwaves through the global financial system that could kick-start a new financial crisis, analysts say. Even if this worst-case scenario is not borne out, a firm majority of respondents -- 38 out of 54 -- said the uncertainty brought about by the political acrimony over the debt has already hurt economic growth. The U.S. economy had already been under stress in recent months. Gross domestic product expanded just 1.9 percent in the first three months of the year, and the second quarter is not expected to have fared much better. Industrial production has slowed and employment nearly ground to a halt in the last two months. The jobless rate climbed to 9.2 percent in June. "This whole debt ceiling debate doesn't seem to be making anyone any more confident," said Sean Incremona, economist at 4Cast Ltd. in New York. Goldman Sachs argued in a research note recently that the decline in consumer sentiment over the last few months has been disproportionate to the economy's slowdown, pegging the debt battle as a culprit. The government's first reading on GDP in the second quarter will be released on Friday. (Reporting by Andy Bruce, Polling by Bangalore Polling Unit; Editing by Ruth Pitchford, Leslie Adler, Chizu Nomiyama and Dan Grebler)
To be fair though, these are the same credit agencies that rated Lehman Brothers and Bear Stearns as high investment grade only a few days before their fates, so well, I don't think their "opinions" should count for as much as it does. but it will make it somewhat harder on all Americans if there is a downgrade. sigh.
Who better to read the tea leaves of Washington's creditworthiness, than a random bunch of clowns in London who have access to the exact same data everybody else does? The whole idea of ratings agencies for entirely public stuff like government finance is hilarious - it's like standing in front of a thermometer and waiting for a TV weatherman to walk up to you and tell you how hot it is.
That's a highly problematic issue then, a vast amount of power is concentrated in few who don't ostensibly merit it; Let's eliminate NRSRO designations and see if this remains true.
<iframe width="560" height="349" src="http://www.youtube.com/embed/thgAs8eJC3U" frameborder="0" allowfullscreen></iframe> it's worth wondering why their "opinions" are worth anything at all. it would have nowhere near the impact it has now, if people took the rating agencies and their credit ratings as what they are---sometimes-arbitrary, and sometimes-inaccurate opinions.
Are these the same economists that thought everything was fine and dandy before the housing market collapsed?
What are you going to do, tell the NRSROs they can't rate sovereign debt? IMO, the problem here isn't with the NRSROs; it's with the SEC's reliance on them, in the form of regulations mandating that certain investments must have a particular NRSRO rating. We've already seen how destabilizing that can be when high-rated securities are downgraded. So you could do away with those regulations, but you'd need to replace them with something better unless you were comfortable giving money market funds et al greater leeway to take riskier investments.
Exactly - do away with the NRSRO rating entirely and let the duopoly/tri-opoly fend for itself. You can regulate risk in other ways (capital requirements, asset allocations, etc) - obviously this way didn't work in the last decade (and was actually exploited mercilesssly).
Hey, we can always borrow money from Apple and Steve Jobs. Could Apple pull a J.P. Morgan and bail out the U.S. government? July 30, 2011 | 10:05am Apple Inc. may not have more money than God. But it's got more cash than Uncle Sam. As the government struggled to reach an agreement on raising the debt ceiling, the U.S. Treasury's cash balance fell to $74 billion this week. That's less than the $76 billion that Apple now has in cash. It's not terribly likely that the government will ask Apple Chief Executive Steve Jobs for help. But it wouldn't be the first time the government has asked for a bailout from an industry mogul. In the mid-1890s, with the U.S. economy still recovering from the financial panic of 1893, the U.S. Treasury was in danger of going bankrupt as worried investors clamored to collect what they were owed from U.S. gold reserves. With few options left, President Cleveland met with New York financier J.P. Morgan, who pledged a whopping $60 million in gold. Adjusted for inflation, that would be about $1.5 billion today. "The fact that Morgan had become a cosigner on the federal debt was what impressed the markets," historian H.W. Brands wrote in his account "The Upside-Down Bailout." "Within days the Treasury's condition stabilized; within weeks the dollar's danger had passed." http://latimesblogs.latimes.com/tec...p-morgan-and-bail-out-the-us-government-.html
A downgrade credit rating is not the end of the world and it might be better for us in the long run. Maybe it's time to get our fiscal house in order, stop with the crazy out of control spending and realized that Barry and his band of lefties are really bad for the economy and the country!
I'm not even going to comment on this ludicrous post, but is there a reason that far right wingers call him Barry? This isn't the first time I've seen this phenomenon, and is just something that doesn't seem to make any sense.
Has anyone considered the possibility that the US is actually not deserving of an AAA credit rating at the moment? Not an expert, just wondering.
It sucks being No.2 because their enemy will always be No.1. Besides, their military did not loot any oil for them. Let out the soldiers, now!
