[EjPWyPm4]

S&P Downgrades U.S. Debt for First Time - WSJ.com

[quote]A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world.

S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn't do enough to address the gloomy outlook for America's finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen countries, including Liechtenstein, and on par with Belgium and New Zealand. S&P also put the new grade on "negative outlook," meaning the U.S. has little chance of regaining the top rating in the near term.[quote]
Note: The article title was too long to post and did not reflect the content of the story.

I'd be interested to hear more about why S&P chose to go foreward with the downgrade if their original assessment was based on a math error beyond the official reason.

[Unlopssesuj]

Clearly they felt the risk outweighed the relevance of a $2 trillion dollar math error.

Here's an explanation seemingly from S&P:

Standard & Poor’s Clarifies Assumption Used On Discretionary Spending Growth

New York, Aug. 6, 2011. In response to questions, Standard & Poor’s today said that the ratings decision to lower the long-term rating to AA+ from AAA was not affected by the change of assumptions regarding the pace of discretionary spending growth. In the near term horizon to 2015, the U.S. net general government debt is projected to be $14.5 trillion (79% of 2015 GDP) versus $14.7 trillion (81% of 2015 GDP) with the initial assumption.



We used the Alternative Fiscal Scenario of the nonpartisan Congressional Budget Office (CBO), which includes an assumption that government discretionary appropriations will grow at the same rate as nominal GDP. In further discussions between Standard & Poor’s and Treasury, we determined that the CBO’s Baseline Scenario, which assumes discretionary appropriations grow at a lower rate, would be more consistent with CBO assessment of the savings set out by the Budget Control Act of 2011.

Our ratings are determined primarily using a 3-5 year time horizon.


In the near term horizon, by 2015, the U.S. net general government debt with the new assumptions were projected to be $14.5 trillion (79% of 2015 GDP) versus $14.7 trillion (81% of 2015 GDP) with the initial assumption – a difference of $345 billion.


In taking a longer term horizon of 10 years, the U.S. net general government debt level with the current assumptions would be $20.1 trillion (85% of 2021 GDP). With the original assumptions, the debt level was projected to be $22.1 trillion (93% of 2021 GDP).

The primary focus remained on the current level of debt, the trajectory of debt as a share of the economy, and the lack of apparent willingness of elected officials as a group to deal with the U.S. medium term fiscal outlook. None of these key factors was meaningfully affected by the assumption revisions to the assumed growth of discretionary outlays and thus had no impact on the rating decision. S&P Explains Why The "$2 Trillion Error" Is Irrelevant | ZeroHedge

[uaodnabnjz]

FFS, the $2 Trillion dollar "mistake" has to do with projections, it is not a mistake at all. This error should be beyond painfully difficult but typical in dealings with anything involving US budget projections and not a reason at all to dismiss S&P analysis of the situation. Welcome to politics getting the better of US budget projections that usually do not become realized fact. It really does not matter what Timothy Geithner says on this.

[w4WBthjv]

Considering the trajectory of our spending, I agree with S&P. Their (along with other credit rating agencies) credibility was hurt bad several years ago, and now they seem willing to regain it back by stating an obvious truth despite how much it pisses off those in power: the United States is fiscally irresponsible and the ability of it to pay back all of its debt is in question.

[nicktender]

FFS, the $2 Trillion dollar "mistake" has to do with projections, it is not a mistake at all. This error should be beyond painfully difficult but typical in dealings with anything involving US budget projections and not a reason at all to dismiss S&P analysis of the situation. Welcome to politics getting the better of US budget projections that usually do not become realized fact. It really does not matter what Timothy Geithner says on this.

If they made a $2 Trillion dollar projection mistake on this down grade I would have to question any and all other projections they make.

[xtrudood]

Our credit should have been downgraded a while ago. They should be thanking S&P for waiting this long.

[tutkarussia]

FFS, the $2 Trillion dollar "mistake" has to do with projections, it is not a mistake at all. This error should be beyond painfully difficult but typical in dealings with anything involving US budget projections and not a reason at all to dismiss S&P analysis of the situation. Welcome to politics getting the better of US budget projections that usually do not become realized fact. It really does not matter what Timothy Geithner says on this.

What's 2 trillion--when we're looking down the barrel at 21 trillion in red ink in 10 years?

The problem we have is a President who has been warned by his own congressional budget office over a year ago--that his spending was unsustainable--and Obama with a full house of democrats just spent more.

Moody's has been threatening for months that they were going to downgrade US debt if this congress and administration did not CUT spending. So instead of passing the only bill that would have satisfied these agencies that this country was serious about fiscal responsibility--cut--cap--balance bill that had bi-partisan support--Harry Reid tabled it without discussion--and Obama continually threatened to veto it.

[tutkarussia]

Clearly they felt the risk outweighed the relevance of a $2 trillion dollar math error.

Here's an explanation seemingly from S&P:



S&P Explains Why The "$2 Trillion Error" Is Irrelevant | ZeroHedge

I agree it is irrelevant--when we're talking about 21 trillion in red ink in 10 years.

Clinton spent 432 million a day
G.W. Bush spent 1.6 BILLION a day
Barack Obama is spending 4.3 BILLION dollars a DAY

And then Obama has the audacity--after he was warned over a year ago that this downgrade was imminent--if he didn't stop--to blame everyone else--but himself.

Attachment 11565

[MasdMnPa]

What's 2 trillion--when we're looking down the barrel at 21 trillion in red ink in 10 years?

The problem we have is a President who has been warned by his own congressional budget office over a year ago--that his spending was unsustainable--and Obama with a full house of democrats just spent more.

Moody's has been threatening for months that they were going to downgrade US debt if this congress and administration did not CUT spending. So instead of passing the only bill that would have satisfied these agencies that this country was serious about fiscal responsibility--cut--cap--balance bill that had bi-partisan support--Harry Reid tabled it without discussion--and Obama continually threatened to veto it.

That's bullshit. You know very well that this President inherited two wars that weren't on the books. He put them on the books and it makes the books look terrible. Conservatives have a convenient way of applying their stupid logic: if you don't see it, it doesn't exist.

Like if we just think away the gay, than gays won't really exist. If we think away the debt, it just won't exist either.

I blame unpatriotic members of the party-within-a-party of the Republicans for this, since S&P and others around the world have stated that the recent debt-limit deal and it's ridiculous process the last few weeks shook the confidence of the markets.

It was a deal that Republicans could've agreed to months ago but didn't because they need the economy to be as bad as possible in order to get elected in just over a year.

All that conservatives talk about now is how even liberals don't like Obama. That's ironic. Conservatives seem to like him more now that the country is on it's way back down the shitter, which says something about their values.

The number one reason to write-off anything that the S&P says was made clear on Monday, as the only thing that investors bought was U.S. Treasury Bonds, which means investors think that the U.S. is good for paying back their loans despite the hard times.

Once again, the bond market reveals to us that the President is right; radical steps don't need to be taken. Just compromise and intelligence.

Had the President got the $4 trillion+ deal he wanted that included tax reform in it, and had he got it a couple months ago, the country wouldn't have been downgraded, and this funk would have never happened, but it did, and we all know why it did, thanks to the moronic wing of the Republican party who relished seeing their country practically fall to it's knees right before their unpatriotic eyes.

[Styparty]

Considering the trajectory of our spending, I agree with S&P. Their (along with other credit rating agencies) credibility was hurt bad several years ago, and now they seem willing to regain it back by stating an obvious truth despite how much it pisses off those in power: the United States is fiscally irresponsible and the ability of it to pay back all of its debt is in question.

What they really said was that Washington is too bipartisan to handle the debt.

So if taxes need to be raised, they won't, because of politics, regardless of what is needed.

If programs for the less fortunate need to be cut, they won't be, because of politics, regardless of what is needed

If drastic military cuts need to occur, they won't, because of politics. etc.

With close to 25% of the world's wealth, the problem really isn't spending. We have more than enough resources to handle these problems. We just politically choose not to.

[Hitfaromarf]

Personally, I don't think the 2 trillion math error was a mistake.

They just did it to create volatility in the market.

[uaodnabnjz]

If they made a $2 Trillion dollar projection mistake on this down grade I would have to question any and all other projections they make.

That depends on who you listen to, but it still is not all that much of a mistake when you consider that these budget projections really are not all that accurate. In this case there are quite a few variables such as the continuation of the Obama tax cuts (for example) that makes S&P decision not as flawed as Geithner says. Politicians are just not going to like it, that is the point.

[textarchive]

That's bullshit. You know very well that this President inherited two wars that weren't on the books. He put them on the books and it makes the books look terrible. Conservatives have a convenient way of applying their stupid logic: if you don't see it, it doesn't exist.

Apparently it was so terrible he went and added a third. Without the approval of congress btw.

Like if we just think away the gay, than gays won't really exist. If we think away the debt, it just won't exist either.

That seems to be your response, because your only answer is "tax the rich" who don't have enough money to do what you want. Assuming of course they'd be dumb enough to stay in this country with the punitive tax rates you want.

I blame unpatriotic members of the party-within-a-party of the Republicans for this, since S&P and others around the world have stated that the recent debt-limit deal and it's ridiculous process the last few weeks shook the confidence of the markets.

Who proposed a plan, and actually voted it through the House that did what S&P said was necessary?

It was a deal that Republicans could've agreed to months ago but didn't because they need the economy to be as bad as possible in order to get elected in just over a year.

A bad deal which doesn't do the job is no reason to compromise. They foolishly caved in and agreed to a bad deal, and here is the result.

All that conservatives talk about now is how even liberals don't like Obama. That's ironic. Conservatives seem to like him more now that the country is on it's way back down the shitter, which says something about their values.

I haven't seen too many conservatives say they have any liking for the moron in chief.

The number one reason to write-off anything that the S&P says was made clear on Monday, as the only thing that investors bought was U.S. Treasury Bonds, which means investors think that the U.S. is good for paying back their loans despite the hard times.

That's expecting them to have a higher yield since the interest rate on them should rise.

Once again, the bond market reveals to us that the President is right; radical steps don't need to be taken. Just compromise and intelligence.

It would probably help if you understood the bond market. And if the president ever displays any intelligence, be sure to let us know, we haven't seen much of a display of that from him.

Had the President got the $4 trillion+ deal he wanted that included tax reform in it, and had he got it a couple months ago, the country wouldn't have been downgraded, and this funk would have never happened, but it did, and we all know why it did, thanks to the moronic wing of the Republican party who relished seeing their country practically fall to it's knees right before their unpatriotic eyes.

What 4 trillion+ deal? By all means do give us a link to that plan.

Remember, CBO said they don't score speeches, and that's the only place we've seen any of the economic plans you attribute to your lord and master.

A speech isn't a plan, talking points aren't plans. Plans have details, where are his?

As for patriotic, some are trying, yet you demonize them because you would rather kill the country than admit you're wrong. Because this country is DEAD unless the spending government has gotten addicted to is broken, unless those entitlement programs you love are radically altered or removed outright, defense spending is cut, and the monstrosity that is our tax code is completely throw out and revamped.

Some are trying to do those things, and you call them Tea Party extremists. With luck they and people like them will save this country in spite of people like you.

[nicktender]

Apparently it was so terrible he went and added a third. Without the approval of congress btw.


That seems to be your response, because your only answer is "tax the rich" who don't have enough money to do what you want. Assuming of course they'd be dumb enough to stay in this country with the punitive tax rates you want.


Who proposed a plan, and actually voted it through the House that did what S&P said was necessary?


A bad deal which doesn't do the job is no reason to compromise. They foolishly caved in and agreed to a bad deal, and here is the result.


I haven't seen too many conservatives say they have any liking for the moron in chief.


That's expecting them to have a higher yield since the interest rate on them should rise.


It would probably help if you understood the bond market. And if the president ever displays any intelligence, be sure to let us know, we haven't seen much of a display of that from him.


What 4 trillion+ deal? By all means do give us a link to that plan.

Remember, CBO said they don't score speeches, and that's the only place we've seen any of the economic plans you attribute to your lord and master.

A speech isn't a plan, talking points aren't plans. Plans have details, where are his?

As for patriotic, some are trying, yet you demonize them because you would rather kill the country than admit you're wrong. Because this country is DEAD unless the spending government has gotten addicted to is broken, unless those entitlement programs you love are radically altered or removed outright, defense spending is cut, and the monstrosity that is our tax code is completely throw out and revamped.

Some are trying to do those things, and you call them Tea Party extremists. With luck they and people like them will save this country in spite of people like you.

Bolded mine.

When I see people say this, it just makes everything else they say meaningless. I've never seen a liberal say it just the ones on the right.

Hate to break it to you, but the Tea Party is no different then the other politicians, one of the first things they did was to belly up to the pork trough.

[AAAESLLESO]

Compared to the Democrats, who call a 7 trillion increase in our debt in ten years a decrease in spending, I'll take S&P's word ahead of Obama's and the whole Democrat Party with the RINO's thrown in.

[textarchive]

Bolded mine.

When I see people say this, it just makes everything else they say meaningless. I've never seen a liberal say it just the ones on the right.

Hate to break it to you, but the Tea Party is no different then the other politicians, one of the first things they did was to belly up to the pork trough.

We'll see how different some are. Some apparently are sticking to their guns, and some being a tremendous improvement over the few we've been seeing.

And as for the lord and master comment, haven't you been paying attention to his worship of Owebama?

[standaman]

That's bullshit. You know very well that this President inherited two wars that weren't on the books. He put them on the books and it makes the books look terrible. Conservatives have a convenient way of applying their stupid logic: if you don't see it, it doesn't exist.

Like if we just think away the gay, than gays won't really exist. If we think away the debt, it just won't exist either.

I blame unpatriotic members of the party-within-a-party of the Republicans for this, since S&P and others around the world have stated that the recent debt-limit deal and it's ridiculous process the last few weeks shook the confidence of the markets.

It was a deal that Republicans could've agreed to months ago but didn't because they need the economy to be as bad as possible in order to get elected in just over a year.

All that conservatives talk about now is how even liberals don't like Obama. That's ironic. Conservatives seem to like him more now that the country is on it's way back down the shitter, which says something about their values.

The number one reason to write-off anything that the S&P says was made clear on Monday, as the only thing that investors bought was U.S. Treasury Bonds, which means investors think that the U.S. is good for paying back their loans despite the hard times.

Once again, the bond market reveals to us that the President is right; radical steps don't need to be taken. Just compromise and intelligence.

Had the President got the $4 trillion+ deal he wanted that included tax reform in it, and had he got it a couple months ago, the country wouldn't have been downgraded, and this funk would have never happened, but it did, and we all know why it did, thanks to the moronic wing of the Republican party who relished seeing their country practically fall to it's knees right before their unpatriotic eyes.

Sorry but you can throw all the blame and spin on it anyway you can. The fact is the S&P downgraded our credit rating is because of DEBT. It could care less what congress did or did not do, it's because of debt and the outlook of raising the debt. To make it clear if there was no debt there would be no downgrade. That's as simple as it gets.

[standaman]

Compared to the Democrats, who call a 7 trillion increase in our debt in ten years a decrease in spending, I'll take S&P's word ahead of Obama's and the whole Democrat Party with the RINO's thrown in.

I think your math is off a little, Obama will by the end of his only term will have raised the national debt by 6 trillion in just four yrs.

[Unlopssesuj]

That's bullshit. You know very well that this President inherited two wars that weren't on the books. He put them on the books and it makes the books look terrible. Conservatives have a convenient way of applying their stupid logic: if you don't see it, it doesn't exist.

Hmmm, he also got elected promising he'd bring the troops home...how's that working out? So far his track record is about as Richard Nixon when it comes to bringing the troops back from a war.

Adding one more doesn't seem to be a great way to reduce the cost to the public.

[StizePypemype]

so in typical progressive manner its always someone else fault.....Anyone else tired of this pathetic game?