S&P Warns Of U.S. Downgrade If No Debt Deal Reached - Reuters

[WillyT]

S&P warns of U.S. downgrade if no debt deal reached
Reuters
July 14 | Thu Jul 14, 2011 8:07pm EDT

<snip>

(Reuters) - Ratings agency Standard & Poor's has warned there is a one-in-two chance it could cut the United States' prized triple-A rating if a deal on raising the government's debt ceiling is not agreed soon. Putting the U.S. on negative watch, S&P warned that it could cut the rating this month if talks between the White House and Republicans remain stalemated. Any cut would be by one or more notches, it added.

"Today's CreditWatch placement signals our view that, 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," the agency said in a statement on Thursday. The deadline to raise the ceiling is on August 2.

"We have also placed our short-term rating on the U.S. on CreditWatch negative, reflecting our view that the current situation presents such significant uncertainty to the U.S.' creditworthiness."

The agency also warned that even if there was a deal done on raising the ceiling, it might still cut the rating if it was not convinced that the deal would stabilize the country's medium-term debt dynamics.

<snip>

Link: http://www.reuters.com/article/2011/07/15/sp-us-idUSL3E7IF00820110715

:kick:

[originalpckelly]

1. Ruh-roh raggy.

"The agency also warned that even if there was a deal done on raising the ceiling, it might still cut the rating if it was not convinced that the deal would stabilize the country's medium-term debt dynamics."

EVEN IF THEY RAISE IT?

Oh my, we are fucked.

[nadinbrzezinski]

6. That is as clear as they could

to send a signal to the flea baggers

[still_one]

2. Just a note, S&P, Moody's and Fitch all told people Credit Default Swaps were AAA, along with

financials.

So if they downgrade U.S. debt, and the interest rate goes up, my suggestion is buy U.S. bonds then

[WillyT]

5. Oh I Agree...

Why TPTB still listen to these fools is amazing... but listen to them, they do.

:shrug:

[still_one]

8. Absolutely /nt

[originalpckelly]

9. What?

If a government defaults, it's not a reliable debtor. It would be higher risk and therefore would pay a higher interest rate to reflect it. It would probably be astronomically higher, and with that in mind, that means they would probably not be reliable from then on.

[WillyT]

11. I Agree With That Too... I'm Just Saying, Look At Post # 2...

These idiots were giving BEST ratings to SHITTY investments leading up to the financial crisis.

Even though what they say has weight still, it's worth remembering that they are not necessarily honest actors.

Jesus... did I just feel the need to say THAT?

:puke:

:D

:hi:

[socialist_n_TN]

10. Can't we bribe them like AIG?

nm

[nadinbrzezinski]

7. It will attract foreign investors

who stay away since they are so bad in the interest department

[Faygo Kid]

3. OK, now Wall Street beats on the GOP and the hell with the Tea Partiers

Ultimately, the Tea Partiers are just tools who got away. Now it gets serious - The same crowd who has destroyed us again and again are not about to let this happen. Bye, Tea Partiers. Useful idiots, but now the REAL GOP string-pullers will step up and give Obama whatever he wants. We will find out what that is.

[nadinbrzezinski]

4. We are BEYOND smoke signals

and notice the CHANGE in tone from the Media... Mathews telling people to call Congress...

Oh my

[Dept of Beer]

13. Mathews swings whatever way the wind is blowing.

Ratings, dear, ratings.

[nadinbrzezinski]

15. In this case, GE stock...

[Ragnarok]

12. No one gets it.

The idea IS to trash the rating, not "never borrow" or borrow responsibly. The ceiling will be raised, but only after the damage is done and we all get our rocks off with a healthy dose of righteous indignation to feed our egos. We'll gladly borrow money at a higher interest rate because we fought for it damn-it! Once the rate is up, we are worth something again - the crazy interest we will pay out on the staggering amount we will borrow. It's a hugely safe bet for any investor and now the payoff for that sure thing is going to increase big time. Ask yourself, if the interest rates double, will we actually stop borrowing? Unlikely. We'll pay the fee, take the money and continue fighting amongst ourselves. It would shock me if we didn't ultimately get to double or triple how much we borrow, like a credit card with no limit. Wanna carry $75 trillion? No problem! It does at least two things:

-High rates mean constant haranguing by the right every time we want to borrow. It keeps the Democrats saying "Please, please, it's for the children." all the time to the point where it hardly raises a pulse. "The Dems want more money, how shocking" will be the tag line with rolled eyes. High rates means there's always the "it's too expensive" argument if things get dicey and a balance sheet to scare the crap out of anyone. Look for the pattern: ask for a bump, get shamed, be granted bump, debt goes up, shamed again

-And, high rates means a new crop of good investments that pay a lot of interest - putting one's money in funds that loan the US money. Welcome to the global economy where statehood and sovereignty mean less than ownership and interest. People we don't even have legal jurisdiction over will own us, and we'll thank them as we fight each other across the aisle. Hell, we might even "merc" for some of them since they've bought the only country that can seemingly go to war "whenever" without even being sanctioned, let alone bombed or invaded. They will be getting paid by us, to go fight for them. Classic!

[girl gone mad]

14. Obama should have crushed them when he had the chance.

Deja vu all over again.