# S&P Downgrades US To AA+, Outlook Negative

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S&P Downgrades US Credit Rating to AA-Plus – cnbc.com
"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," S&P said in a statement.​

Result of extreme partisan Tea Terrorists implementing a dysfunctional democracy?

Last edited by a moderator: Sep 25, 2014
2. ### AwwYeaa44

4
I hope you're not playing the devil's avocado here because I love guacamole.

The tea party did agree to raise the debt ceiling if an amendment was included to balance the budget within 8 years.

Given that we've raised spending in real, inflation-adjusted dollars by 60% since 2000, and could run a surplus on that budget, that doesn't seem too much to ask for.

I certainly don't notice any more benefits from the government than I did in 2000 so that budget is A-OK for me.

A $1.5 trillion/ year deficit for 0 noticed benefits is just unacceptable. Threats not to raise the debt ceiling had little impact on this credit rating drop. We pull in more than 10 times enough revenue to cover interest on the debt and the president is legally obligated to pay debt interest before anything else. This is just like how corporations must pay bondholders first. So, there was never any danger of default. Anyone talking about it was just trying to scare people into supporting their plan or scare people into watching their TV show. It was another WMD-in-Iraq-OMG-INVADE-SCARE-TACTICS or omg-pass-10000-page-multitrillion$-legislation-without-reading-it-or-world-economy-will-end-4ever tactic.

The downgrade is mostly because of a failure to cut spending. The fear is that we'll inflate our way out of increasing government obligations - and S&P is probably right.

Mainstream republicans really didn't want to cut spending. Neither did democrats. At least, neither wanted to cut spending enough. The tea party was the only political faction that had a plan that would have avoided a downgrade.

### Staff: Mentor

No, given that they also said:
Considering that until last year's election brought in the Tea Party and a Republican majority, Obama's plan was to drive up the debt even faster than it is being driven up now, I 'd say the S&P would see them pushing the economy back in the right direction, away from the truly massive debt the Obama admin is driving us toward. Sounds to me like they think it is the democrats that are being irresponsible.

I realize it is a chicken or egg problem, but the way I see it, businesses are hoarding cash largely because of long term debt uncertainty, which keeps unemployment up and stalls the recovery. But regardless of which is the chicken and which is the egg, a policy that massively drives up debt has shown to not meet Obama's predictions of economic recovery while driving up debt in a way that will be difficult to recover from even if it had worked as advertised.

4. ### edward

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A senate investigation of the credit ratings agencies really raked them over the coals a few years back.

http://hsgac.senate.gov/public/inde...aring_id=5f127126-608a-4802-ba77-d1bdffdfbe9b

Click on: view archive webcast. The first five or ten minutes of Senator Levin's opening comments demonstrates what the credit agencies were accused of.

Basically they gave triple A ratings to packaged sub prime loans.

It looks like it is pay back time.

5. ### AwwYeaa44

4
I don't know what to think about this because, wouldn't prices adjust if that were the case, and then everything else would adjust around the lower price levels?

And so the hoarding wouldn't have any effect in the long-term?

### Staff: Mentor

From other threads, the perception from liberals in here is 'he who smelt it, dealt it'. That republicans made the debt an issue by making it an issue. That logic doesn't work past 7th grade. The debt issue is real, even if the democrats successfully ignored it for 2 years. One way or another, someone would have to make it an issue and it sure as heck wasn't going to be the party that was driving the debt up so fast! The Republicans should be commended for at least trying to do something about it before we got downgraded, rather than rubber-stamping another increase as the democrats wanted them to.

### Staff: Mentor

Prices of what?

Hoarding cash means that businesses are taking their profits (and profits over the past year have been pretty good) and sticking them in the bank rather than re-investing them in their business.

I work in construction on the industrial level and there is both a cyclical component and a fixed component to the market. The cyclical is driven by demand for products, so it isn't surprising that that is down, but the fixed component is driven by the fact that buildings deteriorate over time and a certain amount of annual maintenance is required to just to keep them running at a certain level. My company's clients cut both components for the past two years and are damaging their ability to function by doing so.

8. ### AwwYeaa44

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I'll keep that in mind next time I look at Reagan and Bush-era spending.

If the republicans had power right now, they'd be raising spending just like they did a few years ago. This is not a party-issue.

No matter what party you elect, you're going get warfare, welfare, and debt.

The tea party was supposed to offer an alternative to this.

### Staff: Mentor

You're saying you think the S&P did this out of revenge for a senate investigation a few years ago? Really? You don't think the S&P believes it sees an actual problem?

Was the top Chinese credit agency, which also downgraded us - before the S&P did - also a part of that scandal? http://www.cnn.com/2011/BUSINESS/08/02/china.us.rating/index.html?hpt=hp_p1&iref=NS1

10. ### AwwYeaa44

4
You have $2 and 4 pieces of bread,$.5 each. You hoard $1 into the bank, and now prices adjust to$.25 each. My line of thought, I don't know too much. I'm sure it's a bit more complicated when you start including foreign competition, etc.

It's probably the case that the amount hoarded isn't enough to effect prices but is enough to stop a good bit of hiring. Or perhaps there's just less bread.

Last edited: Aug 6, 2011
11. ### Jimmy Snyder

I gotta laugh when I hear Republicans blame Democrats for the debt.

12. ### AwwYeaa44

4
And vise-versa. It's sad when people get stuck into such a tribal mentality.

8 years of bush = debt, corporatism, war. A few years of Obama = debt, corporatism, war.

The only thing that ever changes is the color of the rod ramming itself up your ***. And it seems that 90% of the population will accept a blue rod or a red rod, but not no rod.

### Staff: Mentor

By all means, compare the two spending rates! And be sure to include Obama's predictions for the next 10 years!
Maybe they would, maybe they wouldn't. A few years ago, spending (discretionary spending, anywa) increased primarily because of wars, which are now ending (where's that savings?), and a new government agency created due to 9/11.

While it is true that sometimes the Republicans don't act like their mantra of lean government says they should, you're more likely to see Republicans get back to type than you are to see Democrats stray from type, particularly in hard economic times.
As said, they tried and they did have at least a little success. They just didn't get as much as they wanted. The tea party is the very last group that should be getting blame here.

Last edited: Aug 6, 2011

### Staff: Mentor

Is the debt not getting worse much faster than it was when the Republicans were in power?

And I'm not discounting that the debt was high 2 years ago - this issue today isn't primarily about how we got here, it is about where we are going and where we are going clearly has Democrats pushing to keep spending and raising the debt rapidly and Republicans trying to slow the increases in the debt.

Reread my post if you missread it the first time: I didn't make a claim about anything other than who was (is) pushing for massive spending increases over the past year. I'm talking about where we are now and where we are going. AwwYeah44 brought up history and you followed him there.

### Staff: Mentor

I'm not even following the line of thought, much less how it is relevant.

16. ### AwwYeaa44

4

You're liking someone because they promise to kill you slower.

Both rates are way too high to claim to be fiscally responsible. Neither party has any fiscal credibility.

Republicans will claim to be fiscally responsible when they don't have the power to increase spending . Then, when they get the power, they'll just dangerously increase spending.

How is this an excuse for the spending?

Not to mention the bailouts, etc.

Sometimes?? Republicans have raised government spending every time they've had power in the past 30 years!

It's like the democrats claiming to be anti-war and then... more war.

Both parties are lying to your face and giving you empty promises.. People need to stop buying them.

Since neither has ever done it in recent history, you can only say that they have equal odds of doing so... which are 0.

Clinton at least ran a very small deficit (not counting social security raids).. So, you could say that the democrats have more credibility.

Last edited: Aug 6, 2011

### Staff: Mentor

These are the choices available to us. It sucks, but yeah, I'll pick the lesser of two evils.
I didn't say it was an excuse, I just said it was ending. Or are you saying that you think Republicans will always find another war to fight?
The irony of Bush's bailout (TARP) is it shows up as spending on his balance sheet and income on Obama's. It's a trillion dollar misleading swing in their balance sheets!

I didn't like it, but it was ultimately completely painless.
Yeah, I know - I've seen the misleadiing graphs that ignore the history of what actually happened. Again, I'm not interested in playing history games, I'm interested in where we are now and where we are going.
Does your recent history include the past year? Because during that history, Republicans reverted to type.
Not really, no. To be sure, Clinton's no Obama, but Clinton also had a Republican Congress to keep him from spending as much as he wanted to.

18. ### WhoWee

Total crap! How much spending is attributed to the TEA Party?

They were swept into office last Fall to solve the problems in the US. They were elected because we are borrowing $.43 of every dollar spent - on trajectory to a$20+Trillion national debt - with additional unfunded liabilities projected anywhere from $60Trillion to$120Trillion over time.

Perhaps the Treasury Secretary and President Obama should have been paying closer attention? Geithner said this three (3) months ago:

The Obama administration response - acting like children (IMO) - they blame S&P:

"The Obama administration is questioning the math that led to the decision to downgrade the U.S. credit rating by credit agency Standard & Poor's."

Would anyone be surprised if a global public corporation hired a CEO with no business or executive experience at a time of extreme financial distress - and the value of the stock dropped after the new hires policies failed to solve the problems and shareholders took steps to place problem solvers on the board?

Last edited: Aug 6, 2011

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lol :rofl: no worries mate!

I think you’re wrong. If the greatest economy in the world, in possession of the global reserve currency, behaves like little kids in a sandpit – it will of course affect the confidence of investors.

When John Chambers (S&P) was asked if the latest mayhem in congress had a major impact on the decision to downgrade – he answered (@03:00):
Yes, I think that is what put things over the brink.

And here I would say your 'analysis' differ from most professionals. It doesn’t matter if Tea Terrorists thinks that they can make up their own rules – if no one else believes in them. Default is default, no matter what Sen. Rand Paul thinks. You cannot just decide to "take default off table" – that’s only an option for the kids in the sandpit. The can do whatever they like – in fantasyland.

It doesn’t make it any better to pretend to be a "doomsday financial analyst" – It’s not our fault! It’s going to hell no matter what we do!

Investors are generally not impressed by this conception of life ...

... and not many buy the "truth" the everything is President Obama’s fault, no matter what happens in congress ...

Last edited by a moderator: Sep 25, 2014
20. ### RudedawgCDN

0
I find it amusing when people try to defend the Republicans and spending.

The Republicans and Democrats are equally to blame and equally bad. Anyone who denies this has their head in the sand and is in complete denial.

What hurt the US under Bush:

Medicare Part D - unpaid for
2 very costly wars - 4 trillion dollars
Bush Tax cuts - 11.5 trillion dollars
TARP (Bush October 3, 2008)
600,000 Americans losing their job every month when Bush left office
1 in 8 homes going into foreclosure when Bush left office
The worst WORLD recession since the 1930's!

You Americans are so divided along party lines you fail to see that both parties and all congresses have been equal to blame for your current crisis.

The Republicans are reckless (willing to risk default) and your Democrats are inept (unable to implement spending cuts and revenue increases).

When I find truly amusing is how you can be so arrogant as to think you can wage 2 costly wars and cut taxes at the same time.

Bush was truly a moron, but why Obama is making the same mistake is perplexing.

As I said both parties seem equally set on financially ruining your once great nation.