S&P warns that chance of downgrading U.S. credit rating is 50 percent

[Cereal Kyller]

Source: Washington Post

Standard & Poor’s said late Thursday that it could downgrade the U.S. credit rating as soon as this month, and there is a 50 percent chance it will do so within three months, if Washington fails to come to an agreement over the nation’s debt.

In a statement, S&P indicated a “substantial likelihood” of downgrading the U.S. credit rating, citing a stalemate in Washington over raising the federal limit on borrowing.

S&P managing director John Chambers said in an interview that the downgrade could come by the end of the month if Congress has not voted to raise the $14.3 trillion debt ceiling.

“The positions of the administration and the Republican leadership are still very far apart,” Chambers said. “The tone of the debate has made us wonder whether a compromise can be achieved.”

Read more: http://www.washingtonpost.com/business/economy/sandp-warns-that-chance-of-downgrading-us-credit-rating-is-50-percent/2011/07/14/gIQAvUzwEI_story.html?hpid=z1

[PoliticAverse]

1. Moodys fired the first shot across the bow, S&P fires the second... n/t

[plumbob]

7. Why are these terrorists not in jail for threatening the US in a much more

real and damaging way than some supposed al qaeda group?

After all, these brainy bastards certified all that junk shit during the meltdown as AAA. Why isn't someone in jail for THAT fraud?


Seal Team 6 could probably handle both outfits this weekend.

[simonmagnus]

32. Question

Aren't they the same assholes that gave the bailed out banksters A+ ratings?

[Not Me]

2. I just moved my retirement accounts into safe fund groups

I have ridden the stock market up and down for years, understanding that it is damn near impossible to time the market.
But as I get closer to retirement, I can't allow these children in the House to cause my retirement to be in peril.

I hope this is a temporary move, and I can confidently return to the market soon; we shall see.

[dixiegrrrrl]

5. What does a "safe fund" invest in?

[Cereal Kyller]

8. Weapons

A market that'll NEVER go away, unfortunately.

[Not Me]

12. In my case, these are guaranteed fixed income funds.

nt

[dixiegrrrrl]

28. Treasuries, then, must be. Most "inflation proof" and "fixed income" funds are T-bonds.

[Psephos]

33. Gold, or it's not "safe." n/t

[Demeter]

3. IF the Rating Agencies Had Kept Their Standards, They Might Be Feared

as it is, they may be killing their own jobs. Their credibility is shot already. Downgrading the US debt may lead to political repercussions that put them out of business permanently.

The rating agencies are captive to the banksters. The banksters think they hold all the power, but the worm could turn on them and fry their banks to ash.

Isn't it interesting to live in times like these?

[closeupready]

25. This is exactly right. They sold out for some short-term gain before, they'll likely do it again

if the US government tells them 'don't you dare!'

Ergo, their ratings really are close to meaningless, IMHO.

[JackRiddler]

30. Respectfully I disagree: Moody's & Co are totally in charge.

Because the ratings agencies actively participated in the great housing securitization fraud, they have been rewarded and are more powerful than ever. If they were going to be stopped, then it would have happened years ago.

Both the bankster engineers of the great financial fraud and their indispensable enablers at the ratings agencies remain on the loose. One lesson they have learned is that crime pays and is in fact the best way to survive in the financial industry. Solvent and prudent institutions did not get a "bailout" and are at a competitive disadvantage against the fraud banks, who now control more of the market than ever.

The other lesson they have learned is that their control of governments is extremely durable. They blackmailed their way into the bailout plunder, their class controls all the key state economic positions, and the ratings agencies still get to sit in judgment over the public sector, even though the financial sector fraud they enabled is responsible for most of the public sector "debt crisis."

And despite the way in which they burned investors, investors still respond to their signals. First of all, the biggest market makers are the ones who benefitted from the ratings agency participation in fraud. The ratings agencies work for them, and they are satisfied. Second, the market is a giant stupid beast; it reacts to signals according to the way people believe other people will react to signals. So still, when Moody's etc. speak, the market reacts accordingly.

It's an opportunity, right? Why not get to demand higher interest rates on government bonds? Where's the downside in that for those who make the market? They're not the ones paying taxes or losing services to pay off the interest on public debt, are they?

I only hope your optimism that the worm will turn is right. There is only one way. The impetus will never come from states, these are simply too corrupt. Only large popular uprisings can force states to render the necessary justice on the banksters -- which is little more than enlightened self-defense -- and even that means is questionable. So far it hasn't worked even in Greece, though I'm optimistic about that still, and it has worked in other cases.

In the United States, I simply see no evidence of an uprising on the necessary scale.

[rucky]

4. Investors want higher yields on bonds?

Is that the angle?

[madrchsod]

10. yes it is....

oil is played out,right now commodities are to big a gamble,housing...ya right. so where else is money to be made? that`s right bonds and the rise of all interest rates in the country. my banker will be thrilled when i have to pay 2-3 more points on my mortgage.

[Thor_MN]

6. Michele Bachmann says that's no problem...

She claims it won't affect us if the credit rating of the US goes down...

[Marrah_G]

9. I would like Wall Steet to say "It's okay if you have to tax us more"

....somehow I doubt they are worried about the debt ceiling enough to say that.

[pam4water]

11. Jaw drop D:

[SoapBox]

13. And a very special Thank You to all the GOBPers, RushThugs, CONservaTurds and T.HATE baggers

for getting us into a lot of this mess, over the years.

To all the top 2%er's (yes, you that control over 40% of the wealth in America)...thanks for all your help. NOT!

[joeglow3]

14. U.S. AAA Rating May Be Cut by S&P

Source: Bloomberg

The U.S. may have its AAA credit rating cut by Standard & Poor’s Ratings Services, which said there is a growing risk of a policy stalemate enduring beyond any near-term agreement to raise the debt ceiling.

The long-term rating may be lowered by one or more notches into the AA category in the next three months if S&P concludes Congress and President Barack Obama’s administration haven’t achieved a credible solution to the rising U.S. government debt burden and aren’t likely to achieve one in the foreseeable future, according to a statement today.

“Owing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days,” S&P said.

The debt limit’s proximity has left investors unfazed, with the Treasury attracting higher-than-average demand for a third consecutive sale at an auction of 30-year bonds today. Benchmark 10-year note yields were at 2.97 percent at 11:23 a.m. in Tokyo, heading for a second consecutive weekly decline.


Read more: http://www.bloomberg.com/news/2011-07-15/u-s-debt-rating-may-be-cut-by-s-p-on-stalemate-over-plans-to-cut-deficit.html

---

Looks like we may see a drop even if the limit is raised.

[joeglow3]

15. I also found it interesting that if it is not passed...

...the Treasury gets to decide which bills get paid (not Congress or Obama).

[No Elephants]

19. ? Who do you think controls Treasury ultimately?

Do you think Geithner will decide on his own whether to pay the troops or the OASDI recipeients or China without consultation with his boss? And how long do you think he would have his grand title and job if he did anything like that on his own and made a choice with which Obama disagreed?

[enlightenment]

16. Would someone please tell me again why

private corporations (S&P, Moody's) have such total control over the fate of nations, worldwide? It's not like they've been around forever - they're both products (American) of the first decade of the 20th century.

[david_vincent]

17. Not only that, but

these are the same lying asshats who kept assigning top ratings to the mortgage-slurry products that were used to inflate the real estate balloon, even though everyone on the ground knew them to be worth little or nothing. But when it comes to the government, they're going to play bad cop ????

[No Elephants]

20. Regardless of how long they've been around, I don't know why anyone would put any

stock in what they say, literally or figuratively, after they gave one crap mortgage derivative security after another their highest ratings for years, knowing they were crap.

Typo edit.

[Freddie Stubbs]

21. They do not have 'total control'

There are more than one credit rating agency, so they may not all agree.

What is the alternative? Have the government rate its own creditworthiness?

[enlightenment]

31. I suspect there are better alternatives to private, for profit

corporations controlling the destiny of nations. Somehow or another, nations managed to exist before these ratings agencies existed - didn't they? (the answer is yes, by the way)

As far as agreement goes, these are the two biggies, right? And they seem to march in lockstep every single time.

[No Elephants]

18. The only thng S & P should be doing about the U.S. economy is penance.

Its greed in the crap mortgage derivatives boondoggle should put its executives and a number of its employees in jail under RICO.

[closeupready]

22. Not scared. They sold out by rating garbage CDO's as AAA, so

it doesn't matter as much as it would have 'back in the day', IMHO.

[FreakinDJ]

23. WTF - they gave AAA ratings to Mortgage Backed Securities

[jtuck004]

27. Just slip 'em a few bucks. More expensive than some politicians,

but certainly within our means as taxpayers.

These worthless opinions are so "for sale" it's a wonder they don't have a store on Ebay.

[closeupready]

24. Who cares. They sold their reputation for some short-term fees during the real estate boom.

They don't scare me.

[Festivito]

26. We should be the Republicans, if this does drop our economy, we re-distribute all wealth.

That should be the bet. If Repubs set the economy right, they win, if not, we all become equal and let the market take over on who's word will be more important.

[kirby]

29. They are as accurate as flipping a coin n/t

[Psephos]

34. The bond market provides the only rating worth the name.

When demand for US Treasuries drops (it already has), and the Fed stops buying Treasuries with imaginary money (it just did), then we will see the true rating of those bonds, reflected in the interest rate.

If the interest rate the US Treasury has to pay moves up, anywhere near the normal historical rate of about 5.5% (a high likelihood), then the US will enter a debt spiral, where each ratchet up in the interest rate will suppress the economy further, cutting revenues, causing more borrowing, pushing the interest rate higher, lather, rinse, repeat. A move to 6% would cause the US to spend 100% of government revenue on interest payments alone by 2020. End of game.