The Site > Old Forums > It Is The Economy, Stupid > S&P revises U.S. debt rating outlook to negative

S&P revises U.S. debt rating outlook to negative

I was just about to post the same news.

»www.marketwatch.com/story/sp-cut···8-910460

This isn't good, esp when this follows on the heels of China and a few other countries agreeing to use their own currencies instead of the USD for trading between them.
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reply to lolwhat
Oh, uh, Bill Gross something something.

reply to lolwhat
How far has their collective head been up their a**?
Isn't this rating 3 years too late, and a grade or two too high?
And yet the markets are reacting like S&P have any kind of credibility...
Is the game so rigged/incestuous? Or is it more likely I'm way out of my league commenting on this.
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~ Project Hope ~

EUS , your instincts are totally correct, and your questions are purely rhetorical. It really is that simple. Ratings downgrades - by S&P, Moody's, or whoever - are almost always after the fact.
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Tutto nelle banche, niente al di fuori delle banche, nulla contro le banche

reply to lolwhat
Ouch. Stuff like this really causes me to deeply ponder doing something drastic with my 401k.

Oh well, we recently purchased some land just outside of town and started a rather large garden this spring. At least we'll hopefully have some green things to munch on.

I read today that Moody's did this in 96 when there was similar posturing over raising the debt limit. After the limit was raised the negative outlook was removed. So it could be a signal for Congress not to play political games with defaulting on the debt.

I certainly hope that people see an analogy to their personal lives here. If you spend spend spend on your credit card, and the interest keeps racking up on your debt, what happens? Why should sovereigns be immune to the same thing?

Also, the U.S. doesn't absolutely need to default... if the gummint embarks on a very, very aggressive austerity program right now. However, some extremely sacred cows would need to be slaughtered, and I have total confidence that our elected whores will refuse to do so.
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Tutto nelle banche, niente al di fuori delle banche, nulla contro le banche

reply to lolwhat

reply to lolwhat
S&P or Moody's are always threatening to downgrade the U.S. credit rating but it never happens, this is nothing new.

It's a conflict of interest because S&P and Moody's are headquartered in the U.S. If they were foreign they might not be so lenient and would have downgraded the U.S. a long time ago. It isn't beneficial to them to cause panic here, their executives would lose their bonuses, have to sell their yachts and settle for a modest lifestyle if the DOW plunged.

Moody's was not very hesitant on downgrading other countries recently.

reply to lolwhat
Just a warning that S&P has no confidence in the US Congress to actually deal with the ever growing deficit. And almost everyone would have to agree that the pols haven't the guts to REALLY do something about it.