US Credit rating downgraded to AA+Follow

Thanks!

Sure.

Do you ever intend to actually not pay a bill? Not paying bills is all a national debt ceiling is good for.

You want to address the deficit, address the deficit. Don't tell the world you have no money and no intention of borrowing any to pay your bills until 10 hours before they're due, that's just stupid.

Give me one good reason for having a debt ceiling. It'll have to be increased at some point simply due to inflation so all it really is is wasted administration. Hey, look at that, I cut your deficit a little bit by getting rid of wasted admin time.

He's in it for the puffy shirts.



and the leather vests

Except for Moody's which warned specifically about this ahead of time and S&P in their explanation for why they did downgrade our rating. Take the blinders off for a second. Did you read the S&P statement?




I suspect you're unclear about what a credit rating is for. It acts as a guideline for lenders to help them determine if it's a good idea for them to let you borrow money. It's not just about whether or not you can raise your debt ceiling via statute, but whether borrowing that much more money without fixing the deficit problem which is forcing you to borrow in the first place will affect the value of the investments those who buy that debt will get 2 years or 5 years down the line.

They absolutely care about more than just whether you can pay your bills or whether you will default on your debt. They are rating the value of the country's treasury bills as an investment for other people. It should be pretty darn obvious why failing to address the deficit problem would have an effect on this. Frankly, I'm surprised it was only S&P who downgraded us. But it's a good bet that the other agencies are waiting to see what happens in the next round of debt reduction discussions before making that decision themselves.




Like I said, read the document from S&P. I's abundantly clear that their reason for the downgrade was the failure of the US to reach any sort of agreement to fix its deficit. Now maybe if we hadn't had that discussion, the credit agencies would not have known for sure that the US government was unable to reach an agreement with regard to the deficit problem. Maybe. But IMO that's basically like just hiding a problem and hoping no one notices. At some point, if we don't handle it, they will downgrade us anyway.

What does it serve for us to pretend that we can reach an agreement at some future date? Because of these events, the public knows that we need to do something about the deficit. It's not a problem that will go away by itself. The Democrats can no longer kick this can down the road, and if they try to, they'll suffer a crushing defeat next fall and we'll elect people into office who will fix it. IMO, the Dems wanted this to stay hidden so they could continue to tell the public that the conservatives were just fear mongering about the economy and to not worry. And if that had worked, what? We continue with the same stale mate and hit this same brick wall? Only now it's 2 years later, we still haven't fixed the political part of the problem and our debt is even bigger than it is today and it's harder to dig ourselves out of the hole.


The first step to solving a problem is admitting that it exists in the first place. Now, no one can pretend that our deficit isn't a problem. It's painful, but perhaps the Dems should have thought about that when they embarked on this spending spree in the first place?

So the credit agencies were supposed to be precognitive now? I think mid-June is pretty reasonably early in this whole thing. Despite your talk about Jan-Apr time frame, the debate didn't start to heat up until mid April, during which time Dems mostly just tried to back themselves out of the fact that they voted against raising the debt ceiling when Bush was in office so as to not look too much like hypocrites. Moody's statement comes about half way between those first salvos fired in April and the eventual debt deal reached in early August.

They probably waited until it was apparent that there was going to be disagreement over this to point out that failing to reach an agreement would be "bad". Maybe you're a super parent or something, but I'm betting that you don't normally threaten to take away ice-cream until after the kids have been fighting each other in the back seat for awhile. But that does not change the fact that just as the kids should know that bickering in the back seat will get mom and dad upset, congress failing to reach an agreement on deficit reduction will tend to make the credit agencies upset.


They don't really have to warn us. It's actually pretty exceptional in this case that one of them did. That should tell you something.

Oh god fuckin' saved.

Edited, Aug 8th 2011 10:18pm by lolgaxe

Sure. To predict economic outcomes, but not necessarily to predict that congress would fail to address the deficit problem in any real way.



Moodies was the most recent Joph. I suppose I could have linked this.



It's NPR, so there's some interesting "spin" on things. I suppose I could dig up the actual warning from S&P, but I'm heading out shortly. Feel free to if you want. At least according to the article, S&P warned about the deficit and its effect on future ratings.

So kinda exactly what you insist didn't happen. And that was in mid April Joph. Right at the same time the Dems were just starting to clamor for a clean bill.



Hah! Funny...




Yeah. Sorry about that. I was checking several links to timelines of various related events and somehow got mid June in my head as the date when Moody's warning came out. Honest mistake. Still doesn't change the broader point. During the process warnings that failing to address the deficit problem were made to the US congress. Warnings which were ignored. Well, ignored by Democrats anyway.

Oh, and let's not forget that in the same report S&P said this...


So Standard & Poor's said in April that they were giving Congress a few years to compromise on a comprehensive plan to reduce the debt and that lack of such an agreement could cause a downgrade, then we had the GOP refusing to accept any plan that was a compromise or comprehensive (because "Haha! Let it default! Nothing will happen!")...

...and you thought this was going to help your argument??

Edited, Aug 10th 2011 10:20am by Jophiel

By which you clearly mean "literacy".


"We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer 'AAA' sovereigns."

By 2013. Remember you insisting that this meant they were going to downgrade the US if a clean debt bill was passed in 2011? Remember? Remember you saying this April report just proved it? Remember that? What part of "by 2013" means "in 2011" to you?

Feel like admitting you're wrong yet?


S&P said they were looking for "Some compromise that achieves agreement on a comprehensive budgetary consolidation program". You think this is what the GOP was attempting? Seriously?

Edited, Aug 10th 2011 8:24pm by Jophiel

Hah! Funny!



Um... Joph? Agreement reached and meaningful implementation begun by 2013. Not just agreement reached by 2013. Read the whole thing, not just the bits you like. They also say this:



This is them saying that if agreement isn't possible prior to the 2012 elections, then meaningful implementation cannot occur until 2014. Then then follow that a few paragraphs later with the statement you quoted about requiring agreement *and* meaningful implementation to begin by 2013. Someone with decent reading comprehension skills should then conclude that the triggering determination of their rating is based on whether agreement can be reached prior to the 2012 election.

Right? Don't just read the words as though they're all separate bits, but read the whole freaking thing. The downgrade is because S&P does not believe that congress can come to an agreement on deficit reduction prior to the 2012 election. The fact of that inability to agree didn't change because of GOP actions. It existed before hand.


The disagreement itself involves both parties, not just the GOP. The Dems are just as guilty of disagreeing. However, the GOP at least attempted to put deficit reduction into play. The Dems wanted to just ignore the issue and hope it would go away. I don't see how we lay the blame on the GOP for this. Not unless you think it would have been better to just pretend that we could reach an agreement "someday" right up until we get downgraded anyway? Again, don't you think that raising the debt ceiling without any deficit reduction plan at all would have clued the credit rating folks off a bit?


The Dems were pursuing at best a childish path on this. The GOP is acting like mature adults. Yes. That means taking responsibility for the actual bad state of the economy instead of pretending that everything is just rosy and hoping no one notices. How long did the Dems think they could just put this off?

'

Since I'm not wrong? Lol!



Yes. What part of "let's cut spending 3-4 Trillion dollars" fails to meet the criteria S&P put out there? You do get that if we just done exactly what the GOP has been saying for the last 3 years, we wouldn't be in this mess, and if we did what the GOP is saying now we could get ourselves out of this mess. It's the Dems who've been on the wrong side of this the whole way through. I know you don't like this fact, but it's the truth. They're the ones who grossly overspent, over the objections of the GOP. And now, we're supposed to give them a pass because the wanted to just stay quiet about the lack of any plan to fix the deficit?


You're kidding, right? That's the kind of plan a 5 year old might come up with. I would hope we expect a bit more of our representatives. Maybe we conservatives hold ours to a higher standard though.