U.S. Rating Downgrade is Now ‘Base Case’: ISI

[xchrom]

http://www.bloomberg.com/news/2011-07-26/rating-downgrade-for-u-s-is-now-base-case-amid-budget-impasse-isi-says.html

The odds of the U.S. failing to reach a budget deal by Aug. 2 are about 40 percent, and a reduction of the nation’s credit rating “now seems the base case,” according to Andrew Laperriere, a managing director at International Strategy & Investment in Washington.

Laperriere said in a note to clients today that there are “strong policy and political incentives” for President Barack Obama and House Speaker John Boehner to reach a deal. “That’s still possible, but a deal that would alter the trajectory” of the ratio of federal debt to gross domestic product “now appears unlikely,” he wrote.

Standard & Poor’s placed the U.S. AAA rating on “CreditWatch” July 14, saying there is a 50 percent chance it would be cut in the next 90 days even if an agreement is reached by Aug. 2.

“We may lower the long-term rating on the U.S. by one or more notches into the ‘AA’ category in the next three months, if we conclude that Congress and the administration have not achieved a credible solution to the rising U.S. government debt burden and are not likely to achieve one in the foreseeable future,” S&P said.

[Imajika]

1. The ratings agencies are going to start threatening us....

...just like they are doing in Europe.

They will start demanding austerity and threatening downgrade if we don't go along, and it begins to look like our nation is prepared to go down that road.

[dkf]

2. The long term numbers aren't good. What did we expect?

[Imajika]

4. Sadly, there is truth in what you say...

The lesson here is, never, ever, get into huge amounts of debt. You'll always have to answer to someone if you do.

[dkf]

5. Exactly.

Yet here we are planning to raise the debt ceiling every year. And this is with $1 trillion in war costs cut from the estimates already.

[CountAllVotes]

3. yes, the cancer is spreading

and people like Boehner are responsible! SHAME ON ALL OF THEM FOR ALLOWING THIS TO EVEN BE MORE THAN A PASSING THOUGHT!!

:kick:

[Yo_Mama]

6. That's not the fault of the credit ratings agencies

That's the faults of the idiots running the deficits, surely?

There is no way that any entity evaluating a good credit risk can "threaten" the good credit risk. All the countries are yowling because now they have to face reality.