Well, another fine mess the thieves in New York and Washington have stuck the average American with; just like TARP, the Stimulus, Fannie, Freddie, AIG, Obamacare and the latest $8 TRILLION IN DEBT they just saddled us with. Remember the Tea Party Juggernaut starting in February 2009 when Obama wasted close to a trillion dollars of borrowed money on the ‘Recovery Act’?
Bush abandoning the free market to save it? Paulson setting up the ‘too big to fail’ banks to get even bigger? Obama’s not qualified? Bernanke lying about not monetizing the debt? Geithner stating that the rating agencies won’t downgrade us? Obama’s Keynesian economics are destroying the US economy, our future, and fiscally abusing our children and grandchildren? Duh! We told you so over and over and over and over – for YEARS!
Now the beginning of the official slide has happened with S&P’s downgrade of our sovereign debt and we are at the crossroads. What’s it gonna be America? More or less Obama, Geithner, Bernanke, the Fed, borrowing, money printing, spending, and a big federal government? Here is your moment to realize the gravity of the big picture and do something about it. I’m still waiting for the bankers’ arrests to start…any time now…
Standard & Poor’s announced Friday night that it has downgraded the U.S. credit rating for the first time, dealing a symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.
Lowering the nation’s rating to one notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would not be likely to achieve more savings in the future.
“It’s always possible the rating will come back, but we don’t think it’s coming back anytime soon,” said David Beers, head of S&P’s government debt rating unit.
The decision came after a day of furious back-and-forth debate between the Obama administration and S&P. Treasury Department officials fought back hard, arguing that the firm’s political analysis was flawed and that it had made a numerical error in a draft of its downgrade report that overstated the deficit over 10 years by $2 trillion. Officials had reviewed the draft earlier in the day.
“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesman said Friday night.
The downgrade to AA+ will push the global financial markets into uncharted territory after a volatile week fueled by concerns over a worsening debt crisis in Europe and a faltering economy in the United States.
The AAA rating has made the U.S. Treasury bond one of the world’s safest investments — and has helped the nation borrow at extraordinarily cheap rates to finance its government operations, including two wars and an expensive social safety net for retirees.
Treasury bonds have also been a stalwart of stability amid the economic upheaval of the past few years. The nation has had a AAA rating for 70 years.
Analysts say that, over time, the downgrade could push up borrowing costs for the U.S. government, costing taxpayers tens of billions of dollars a year. It could also drive up interest rates for consumers and companies seeking mortgages, credit cards and business loans.
A downgrade could also have a cascading series of effects on states and localities, including nearly all of those in the Washington metro area. These governments could lose their AAA credit ratings as well, potentially raising the cost of borrowing for schools, roads and parks.
But the exact effects of the downgrade won’t be known until at least Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the initial effect on the markets could be modest because they have been anticipating an S&P downgrade for weeks.
While republican presidential hopeful Mitt Romney cautiously stated the downgrade is ‘a troubling indicator of our country’s decline’, Michele Bachmann came right out and demanded TurboTax Timmie Geithner’s resignation as did Sen. Jim DeMint. Ron Paul is not as concerned with the markets as he believes they foresaw this downgrade and have factored it in as the credit ratings missed the problems with Fannie Mae and Freddie Mac, yet he does have a concern about the state of the dollar (see video below).
Michele Bachmann on Greta, 8.5.2011:
Bachmann: “Tonight’s decision by S&P to downgrade our credit rating to AA+ is a historically significant and serious event for the United States. The United States has had a AAA credit rating since 1917. That rating has endured the great depression, World War II, Korea, Vietnam and the terrorist attacks on 9/11. This President has destroyed the credit rating of the United States through his failed economic policies and his inability to control government spending by raising the debt ceiling.
“We were warned by all of the credit agencies that a failure to deal with our debt would lead to a downgrade in our credit rating, but instead he submitted a budget that had a $1.5 trillion deficit and then requested a $2.4 trillion blank check. President Obama is destroying the foundations of the U.S. economy one beam at a time. I call on the President to seek the immediate resignation of Treasury Secretary Timothy Geithner and to submit a plan with a list of cuts to balance the budget this year, turn our economy around and put Americans back to work.”
Ron Paul on America’s Credit Downgrade
In the true spirit of pouring gasoline on a raging fire:
The U.S. Federal Reserve will extend its program to purchase the nation’s debts and stabilize long- term interest rates after Standard & Poor’s downgraded its credit rating, according to an adviser to China’s central bank.
The Fed will roll out quantitative easing 3, a tactic to purchase treasuries, Li Daokui, an adviser to the People’s Bank of China, wrote in his microblog weibo.com. Institutional investors will be forced to sell long-term U.S. debt, which may cause financial turbulence, he wrote.
S&P lowered the U.S. rating one level to AA+ from AAA for the first time yesterday while keeping the outlook at “negative,” citing the nation’s political process and criticizing lawmakers for failing to cut spending enough to reduce record budget deficits. The rating may be cut to AA within two years if spending reductions are lower than agreed to, said the New York-based rating firm.
The U.S. must address its “structural debt problems” and ensure the safety of China’s dollar assets, the state-run Xinhua News Agency said in a commentary today. China is the biggest holder of U.S. debts.
What would happen to a CFO in the private sector who had this occur on his watch?