US downgraded to AA+ by S&P

[Mister D]

This was breaking late last night. I turned it off because I didn't want fall asleep to such depressing news.

Spunkloaf, I think this just hurt BO's chances for reelection.

[Conley]

Yeah I read it and thought we're completely fucked. It's going to make the debt worse because now we'll be paying higher interest on future bonds as well.

The Treasury was saying S & P's numbers were off by a few trillion, not sure if that's true or not.

:-\

[MMC]

Yeah I read it and thought we're completely fucked. It's going to make the debt worse because now we'll be paying higher interest on future bonds as well.

The Treasury was saying S & P's numbers were off by a few trillion, not sure if that's true or not.

:-\


Plus look at what the article states about long term sustainability. Also why did SP do this.

Credit rating agency Standard & Poor's on Friday downgraded the nation's rating for the first time since the U.S. won the top ranking in 1917. The move came after Congress haggled over budget cuts and the nation's borrowing limit -- and failed to cut enough government spending to satisfy S&P. The issue has contributed to convulsions in financial markets. >:(

[Conley]

Lost in all this though is that S & P is full of shit on most things. They completely missed the mark on the financial and housing market collapses. Their 'grades' are just guesses, some more educated than others. Realistically I see no reason for them to have issued this downgrade other than to try to bolster their own credibility at the expense of our country.

[Mister D]

The Obama Administration is pushing back hard but from what I've come to understand over the last 12 hours is that this should have been no surprise to Washington. Basically, S&P said this will happen if 4 trillion in cuts are not made. Period. S&P does have a lot of baggage but let's face it; so do we. Our debt is close to 100% of GDP. :o :-\

[Conley]

That sounds bad but it's not terrible from a historical perspective, and a lot of other countries have far worse GDP to debt ratios. Still, I'm not trying to poo poo it, it's a problem and we need to fix it. I wouldn't even have such a problem with the spending if we were getting something from our money in terms of economic benefit, but it seems to just be flushed down the drain.

[MMC]

The Obama Administration is pushing back hard but from what I've come to understand over the last 12 hours is that this should have been no surprise to Washington. Basically, S&P said this will happen if 4 trillion in cuts are not made. Period. S&P does have a lot of baggage but let's face it; so do we. Our debt is close to 100% of GDP. :o :-\


Yeah aren't we like around 74% or something close to that? >:(

[Conley]

The U.S. debt is over $14 trillion and reached 100 percent of GDP. An often-cited study by Ken Rogoff and Carmen Reinhart states that a healthy economy can handle no higher than a 90 percent debt-to-GDP ratio.

http://www.ibtimes.com/articles/193607/20110806/u-s-debt-downgrade.htm

[Mister D]

That sounds bad but it's not terrible from a historical perspective, and a lot of other countries have far worse GDP to debt ratios. Still, I'm not trying to poo poo it, it's a problem and we need to fix it. I wouldn't even have such a problem with the spending if we were getting something from our money in terms of economic benefit, but it seems to just be flushed down the drain.


Well that's just it. I think the agencies see that and they aren't wrong to criticize it despite their own issues. I think we'll see a lot of shenanigans over the next two weeks. On the other hand, I've heard that this probably won't scare the markets all that much.

[Mister D]

The Obama Administration is pushing back hard but from what I've come to understand over the last 12 hours is that this should have been no surprise to Washington. Basically, S&P said this will happen if 4 trillion in cuts are not made. Period. S&P does have a lot of baggage but let's face it; so do we. Our debt is close to 100% of GDP. :o :-\


Yeah aren't we like around 74% or something close to that? >:(


As per Conley's citation, it looks like we've hit the magic number.