Thread: S&P drops US "future prospectives" from "stable" to "negative"

Given how hyperactive the rating agencies are regarding Europe this step was over overdue. In my opinion actually a real downrating is overdue, at least if the rating agencies don't want to be accused of double measurement, evaluating both sides of the atlantic according to different criteria.

Interesting developement...
I wonder if this will divert attention from the trouble in less than 5% of the European economy.

THis could become painful for the government of the US... or for every Dollar holder in the world, if we get QE3,4,5,6,.... => inflation.

Nobody here cares...

I posted this earlier today and drew not a comment.

This is long overdue, should have been downgraded a while back. The important subject here is without some real direction to fiscal responsibility and handling of our debt, this is just one of many indications that investor and world market confidence in the US government's handling of the US dollar and US debt is becoming a horrible joke. At this point the US will end up being last in the world at turning the boat away from massive panic filled political party interest debt spending towards some level of fiscal responsibility.

Originally Posted by tsquare

Nobody here cares...

I posted this earlier today and drew not a comment.

That's because the liberals don't want to touch this with a ten foot pole. To a liberal there's no end to the money supply and they hate the fact S&P would even think of doing such a thing. In fact the liberals will claim the S&P was politically motivated in it's call to hand a negative rating to our debt. As it would bolster the deficit hawks and bring more creditably to the T Party. However the rest of us saw this coming a long time ago.

They should have done this on November 3, 2010.

Interestingly, Moody's hasn't followed suit.

So, is this pessimism on the part of S&P, an overreaction because they so completely dropped the ball on the mortgage-backed securities front, or are they finally being responsible?

Hard to say.

Well, I'm going to sound very strangely like an optimist here, but seriously....

While getting the debt down is a good thing and very needed, a weaker dollar means cheaper exports.

As I mentioned in another thread, this might come at a cost to the quality of living for the average American, but it will help us address our trade deficit.

If we somehow developed a trade surplus instead of a trade deficit, that would make paying down our debt easier.

Originally Posted by pramjockey

Interestingly, Moody's hasn't followed suit.

So, is this pessimism on the part of S&P, an overreaction because they so completely dropped the ball on the mortgage-backed securities front, or are they finally being responsible?

Hard to say.

I think it is a couple of things honestly. Pessimism on the part of S&P with respect to the grid lock on the hill right now when it comes to taxes, spending, and debt is of course a big factor. The issue of our levels of debt spending is just a real concern and neither party seems realistic in getting us off this path of increasing debts sooner than later. Basically, we are still very partisan divided on what is cut, what taxes should be, etc. Realistically the S&P changing this outlook but not changing the rating (AAA, is still the case as I understand it) is not the first time we have heard investors having issue with US debt anyway. China (and really other investors in US debt) has voiced concerns on our debt spending needs, thus this is not new news really. Personally I think there is some pressure from investors on organizations like S&P that will make other credit agencies start to follow on posting more realistic expectations on the US politically being able to handle fiscal responsibility.

Originally Posted by Forplay

That's because the liberals don't want to touch this with a ten foot pole. To a liberal there's no end to the money supply and they hate the fact S&P would even think of doing such a thing. In fact the liberals will claim the S&P was politically motivated in it's call to hand a negative rating to our debt. As it would bolster the deficit hawks and bring more creditably to the T Party. However the rest of us saw this coming a long time ago.

Isn't Europe considered to be much more liberal (as Americans call it)? Why is it far more serious about austerity then?

Originally Posted by pramjockey

Interestingly, Moody's hasn't followed suit.

So, is this pessimism on the part of S&P, an overreaction because they so completely dropped the ball on the mortgage-backed securities front, or are they finally being responsible?

Hard to say.

Well, tell me, how can all those rating agencies continue downrating all sorts of European economies while not touching the US at all? Have a look at debts and deficits and then tell me.

Originally Posted by Occam's Razor

Well, I'm going to sound very strangely like an optimist here, but seriously....

While getting the debt down is a good thing and very needed, a weaker dollar means cheaper exports.

As I mentioned in another thread, this might come at a cost to the quality of living for the average American, but it will help us address our trade deficit.

If we somehow developed a trade surplus instead of a trade deficit, that would make paying down our debt easier.

A somewhat weak dollar is an advantage, but on the long of course undermines the great currency privilege which keeps the US afloat. You better not live to the day that this privilege falls. Anyway, you can have a decently weak dollar also without completely derailing your sovereign debt.

So the Republican political posturing and playing chicken with the full faith and credit of the USA just caused a slight dip in the rating. Do you think they will think twice before continuing to play chicken with basically what amounts to the existence of the USA? And if I may...do you know what the difference between now and Obama voting no to raise Bush's credit rating? Bush was operating on a surplus and chose to dive the country into deficits of his own making. A reversal of his own idiotic policies would have been all that was needed. Obama was handed insurmountable deficits that have no possibility of being balanced until 2014 at the earliest assuming the appropriate tax hikes are put in place.