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Title: S&P downgrades U.S. credit rating for first time
Source:
Washington (com)Post
URL Source: http://www.washingtonpost.com/busin ... 11/08/05/gIQAqKeIxI_print.html
Published: Aug 5, 2011
Author: Zachary A. Goldfarb
Post Date: 2011-08-05 20:54:22 by Get Outta Dodge!
Keywords: None
Views: 12460
Comments: 27
Standard & Poor’s announced Friday night that it has downgraded the sterling U.S. credit rating for the first time. The move came even though the Treasury Department said that it had found a math error in the firm’s calculations of deficit projections, according to a person familiar with the matter. S&P decided to lower the AAA rating, held by the United States for 70 years, to AA+ after a bipartisan debt deal signed into law this week failed to assuage concerns about the nation’s growing spending. Analysts have said a downgrade could increase the cost of borrowing for the U.S. government and lead to tens of billions of dollars in more interest costs per year. That could translate into higher borrowing for consumers and businesses, too. A downgrade would also have a cascading series of effects on states and localities that rely on federal funding, including in the Washington metro area, potentially raising the cost of borrowing for schools and parks. But the exact impact of the downgrade won’t be known at least until Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the immediate term impact is likely to be modest because the markets have been expecting a downgrade by S&P for weeks. Standard & Poor’s has warned Washington several times this year that, unless the federal government took steps to tame its debt, its credit rating could be lowered. Some analysts are worried about the impact of a downgrade on markets where Treasurys are held as collateral and the AAA rating is required. But most analysts don’t expect this issue to pose a major problem. S&P’s action is the most tangible vote of disapproval so far by Wall Street on the deal between President Obama and Congress to cut the deficit by at least $2.1 trillion over 10 years. S&P has said that it wanted at least $4 trillion of deficit reduction. The downgrade is likely to be used as a weapon by both Republicans and Democrats as they argue the other side has not taken deficit reduction seriously. Poster Comment: Wheeeeeeeeeeeee . . . .
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#11. To: Get Outta Dodge! (#0)
Obama Administration Official: S&P Analysis 'Way Off' (2 Trillion) (CNN) -- The Obama administration angrily responded to Standard & Poor's decision Friday to downgrade the U.S. credit rating, with one senior official saying the agency's "analysis was way off." U.S. Treasury officials received S&P's analysis Friday afternoon and alerted the agency to an error that inflated U.S. deficits by $2 trillion, said the administration official, who was not authorized to speak for attribution. The agency acknowledged the mistake, but said it was sticking with its decision to lower the U.S. rating from a top score of AAA to AA+. "This is a facts-be-damned decision," the official said. "Their analysis was way off, but they wouldn't budge." The White House is now in wait-and-see mode -- hoping the decision and the S&P analysis face outside scrutiny, the official said. "A judgment flawed by a $2 trillion error speaks for itself," a Treasury Department spokesperson said. In July, S&P placed the United States' rating on "CreditWatch with negative implications" as the debt ceiling debate devolved into partisan bickering. To avoid a downgrade, S&P said the United States needed to not only raise the debt ceiling, but also develop a "credible" plan to tackle the nation's long-term debt. In announcing the downgrade, S&P cited "political risks, rising debt burden; outlook negative." "The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," the agency said. Former Utah Gov. Jon Huntsman, who is among a field of Republican contenders for the 2012 presidential nomination, attributed the downgrade to "out-of-control spending and a lack of leadership in Washington." "For far too long we have let reckless government spending go unchecked and the cancerous debt afflicting our nation has spread," he said in a statement. "We need new leadership in Washington committed to fiscal responsibility, a balanced budget, and job-friendly policies to get America working again."
That news item is entirely BS, but thanks for posting it.
#15. To: Fred Mertz (#13)
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#13. To: hondo68 (#11)
Replies to Comment # 13. administration official, who was not authorized to speak for attribution
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