Brother, Can You Spare a Dime?

06Aug11

Taxpayer

U.S. Loses AAA Credit Rating as S&P Slams Debt, Politics
By John Detrixhe – Aug 6, 2011 7:14 AM ET

Standard & Poor’s downgraded the U.S.’s AAA credit rating for the first time, slamming the nation’s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits.

S&P lowered the U.S. one level to AA+ while keeping the outlook at “negative” as it becomes less confident Congress will end Bush-era tax cuts or tackle entitlements. The rating may be cut to AA within two years if spending reductions are lower than agreed to, interest rates rise or “new fiscal pressures” result in higher general government debt, the New York-based firm said yesterday. “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement late yesterday after markets closed.
Even with the accord, S&P said the U.S.’s debt may rise to 74 percent of gross domestic product by year-end, to 79 percent in 2015 and 85 percent by 2021.
S&P also changed its assumption that the 2001 and 2003 tax cuts enacted under President George W. Bush would expire by the end of 2012 “because the majority of Republicans in Congress continue to resist any measure that would raise revenues.” http://www.bloomberg.com/news/2011-08-06/u-s-credit-rating-cut-by-s-p-for-first-time-on-deficit-reduction-accord.html

Honestly, can you blame them?

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13 Responses to “Brother, Can You Spare a Dime?”

  1. 1 1george1

    I wish my Debt to Asset Ratio and intangibles were the same
    as the United States.

  2. 2 jezebel282

    This downgrade is a reasonable reaction to the inability of Congress to act above a second grade level.

    The debt ceiling was no surprise, yet Congress only managed to raise it with six hours left and they attached undefined spending cuts as well as no revenue at all.

    They allowed the FAA to shut down costing $30 million a day in an attempt to save $16 million for a year. That tells you it was really about union voting rules.

    Unemployment compensation has lapsed four or five times costing people their homes, car payments, food, utilities. Not so with the Bush tax cuts. They haven’t (and probably won’t) lapse for even a day.

    82% of Americans have already downgraded Congress. What will probably happen is that the S&P 500 (where 401K’s live) will take a hit. The smart cash will buy…….United States Treasury Notes.

  3. 3 jezebel282

    Update:

    So who still has a AAA rating?

    Australia
    Austria
    Canada
    Denmark
    Finland
    France
    Germany
    Hong Kong
    Netherlands
    Norway
    Singapore
    Switzerland
    United Kingdom

    (Errr…they all have a national health plan too. Just sayin’…..)

  4. 4 jezebel282

    On the other hand, one wonders why Standard & Poors didn’t downgrade AIG, Lehman Brothers or most sellers of subprime mortgages a bit sooner than, say, after they crashed.

  5. 5 jezebel282

    Update:

    As predicted:
    “The smart cash will buy…….United States Treasury Notes.”

    Reminder: The Stock Market is not the economy. It is a casino that bets what the economy may be like in 6-12 months. Or not. Public companies have made all the money they are ever going to make on their stock price when they went public. Granting options or actual stock to company management is merely an added incentive to company executives to pay attention to stock price for the benefit of shareholders.

    If you still have your 401K, Roth, Keough in the market you took a 5% hit yesterday. However, considering what happened in the casino in 2007-2008, you deserve it.

  6. 6 jezebel282

    Update:

    As the market “rallies” around 2% up they are treading water until Bernanke and the Fed speak. Why? They are hoping that Bernanke will start the printing press again. If he does, they will complain about irresponsible action. If he doesn’t, they will complain that he didn’t react. Banks are already borrowing at zero percent interest and lending it to us at 13%-29% (depending on your credit rating). And they want more?

  7. 7 1george1

    I remember when my posts about national issues were erased
    as not being relevant to the blog charter.com

    I prefer these posts and updates, because the national & state
    government actions affects locals

  8. 8 jezebel282

    George,

    “I prefer these posts and updates, because the national & state
    government actions affects locals”

    Very observant of you. Sadly, it is very difficult to properly explain the effects of these moves to anyone who actually has things to do during the day. Here’s one thing to be expected: we can probably kiss a boatload of Federal Grant money goodbye for the next few years.

    But here is a more important lesson: anyone who still has their money in the stock market should contact their HR department (good luck if you are a Town of Stratford employee) and move their funds to high quality commercial paper or T-bills (in a few weeks after things calm down). One more time: Retirement funds can only purchase stocks long (they will go up). At best, you can only win 50% of the time. the likelihood of “winning” for the next 5+ years is very low.

    If you have no idea what margin call, put, bid, ask, future, option or swing trade are, you have no business in the casino. It is like your grandfather or grandmother strapping on a pair of roller blades and hitting the skate park because it looks so easy on TV. Somebody is going to get hurt.

  9. 9 1george1

    “Somebody is going to get hurt.”

    UNDERSTATEMENT

    What goes up, must go down.

    Because Stratford IS Stratford, it will be Business as usual for awhile.

    I believe there is a 99 % chance of Chapter 11, contract repudiation,
    criminal investigation, and CLAW BACKS.

    Like MLK Jr predicted on the EVE of his MURDER
    “A long life has its’ place …”
    “I have been to the mountain top …”
    “I may not get there with you … “

  10. 10 1george1

    I thought I posted here about donating soda, snacks, or food to EMS
    for SUNDAY between 2 – 6 when volunteers would be cleaning for a
    state inspection, per request from a volunteer?

  11. 11 jezebel282

    George,

    “donating soda, snacks, or food to EMS
    for SUNDAY between 2 – 6 when volunteers would be cleaning for a
    state inspection”

    You have a good heart. I did a little checking and yes, many volunteers will be scrubbing and cleaning the entire ambulance fleet today. They will be giving up their Sunday (shopping, football, family time) to present the best fleet to State inspectors.

  12. 12 1george1

    Yesterday 2 liter coca cola was $ . 89 + tax + deposit.
    I dropped off 6 today.
    Friday I dropped off 1 & a package of oranges as thank you
    for letting me call AAA and wait for Tow on black friday.

    Nov 18 I dropped off some stuff as appreciation for EMS
    help Sept 16, when they took me to Hospital.

    100 % sure I was arsenic poisoned Dec 4 2010 & Sept 12, 2011.
    Exceptionally high probability related to FIRE TRUCKS SALES &
    POLICE / FIRE PENSIONS + BOE BOON DOGGLES.

    Since Whitey Bolger is FBI BFF ….

  13. 13 1george1

    Merry Christmas
    Happy Hanukka
    Happy Holidays


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