Standard & Poor's Downgrades U.S. Debt Rating

[solanis]

It matters if most people involved in the financial market also think S&P is full of shit.

but we don't. the US doesn't deserve the AAA rating, and we all know it. we've all been expecting a downgrade for a while now; the only thing we didn't know was whether it would be now or in six months. surely you don't think we deserve a risk-free rating?

[Kuya]

I don't know if the US's credit rating should objectively be downgraded. My argument (a very strong one) is that S&P is full of shit. Rating agencies consistently underestimate public credit, and S&P has proven itself to be a screwup. I'll let the facts speak for themselves.

Any liberal on this forum who thinks that you shouldn't cut the living shit out of spending because it will ruin people's lives during a shit economy, should also oppose S&P because this very same credit rating agency has been the one pushing for large cuts to the deficit, and you know that realistically, those cuts from the deficit were going to come from cuts to spending and not revenues. Hence, why they're irresponsible.

[solanis]

I would love to take your derailing bait, but I'll resist. bottom line: US doesn't deserve AAA. do you think the US deserves to keep its risk-free rating?

[Kuya]

I would suggest people not take solanis' derail bait (does solanis have a good reputation for you to believe him?), and focus more on the fact that S&P is full of fags, fags that wanted major cuts to the US economy while unemployment is high.

[solanis]

stop avoiding the question kuya. do you think the US deserves to keep its risk-free rating?

[Gwynplaine]

this very same credit rating agency has been the one pushing for large cuts to the deficit, and you know that realistically, those cuts from the deficit were going to come from cuts to spending and not revenues. Hence, why they're irresponsible.

But Moody's and S&P are basically QUANGOs under the thumb of the government. Which is why this so surprising, not because of the fact the U.S. is actually subject to the rules of cause and effect after all.

[Andalusian girls]

Long overdue, we just came within 24 hours of a default as the result of a politician-made crisis and even then the deal they manufactured barely dents our debt problem. Reckon the markets were expecting it, nearly everyone else was, but it could destroy whatever minor confidence the jobs report instilled in investors. For all their credibility issues and all the strength of the U.S.'s fourteen trillion dollar economy we just got downgraded for the first time in seventy years. It might just be symbolic. but it's a dire symbol. Closer to an omen if this keeps up.

All eyes on the Asian markets come Sunday, it could be ugly.

[Headspace]

What does this mean for Americans? In layman's terms

[Kuya]

It could mean that it would become more expensive to borrow. Assuming S&P's downgrade is enough.

[Kuya]

Long overdue, we just came within 24 hours of a default as the result of a politician-made crisis and even then the deal they manufactured barely dents our debt problem. Reckon the markets were expecting it, nearly everyone else was, but it could destroy whatever minor confidence the jobs report instilled in investors. For all their credibility issues and all the strength of the U.S.'s fourteen trillion dollar economy we just got downgraded for the first time in seventy years. It might just be symbolic. but it's a dire symbol. Closer to an omen if this keeps up.

All eyes on the Asian markets come Sunday, it could be ugly.

And yet if they had made a larger deal to reduce the deficit, the American economy would have taken a larger hit, and aiding in this whole investor scare that's going around now for fear of a new recession. Even though a sluggish american economy is not the main reason for the scare (a default from spain and italy is).

[Headspace]

So I'm they're taking away pell grants and unsubsidized loans for grad students (and probably more) and now those student loans are going to have higher interest rates?

Fuck America

[Kuya]

No, that's not happening now.

[RuQuS]

Laymans terms from my perspective... China will own/take over the U.S. sooner rather than later.

[solanis]

...no.

[Andalusian girls]

What does this mean for Americans? In layman's terms

U.S. Treasury bonds have traditionally been looked at as sacrosanct investments, a safe place to invest your money and stay above inflation with no exposure, no risk because the government would never default. As a result security not profit was the primary incentive to buy one, the government was able to sell them (borrow money) at very low interest rates. With a ratings downgrade and having come so close to default they will likely have to raise the interest rates to entice investors who might not believe the bonds hold the same security value they once did, costing the U.S. government, i.e. American taxpayers, more to finance our deficit spending.

Fundamentally, it will cost more for our government to borrow money, and we could see a ripple effect throughout the economy where business loans, mortgages, credit cards, car loans, all manner of private and professional borrowing are compelled to carry higher interest rates as well for they track government issued-debt. The stock market's value will likely deflate, volatility will increase, and while many of these issues will be short term and small-to-moderate rather than severe, nothing good will come of them.

[aurik]

I'm sure the S&P folks would have been content with tax increases rather than spending cuts to shrink the deficit.

[Kuya]

I always found it interesting how racist undertoned anxiety over China's ascendent economy and US worries over deficit/debt/foreign debt always came attached at the hip.

[Dalek]

Usually solanis is full of shit on just about everything, which is why it pains me to agree that he's right about this one. Kuya if you think the US should continue to have a AAA rating despite the disastrous state of the budget, your head is firmly planted in the sand my friend. You're in denial. Whether S&P is full of shit or not, all over the world people are starting to recognize that the US's financial position is crumbling. All the while billionaires continue to balk at the prospect of paying more taxes into the system that allowed them to amass such ridiculous fortunes in the first place. A deficit reduction plan with no new revenues is absolutely absurd.


The foxes are running the henhouse, and the average working american is the one who's going to feel the pain when the house of cards comes crumbling down. I'd love to say I'm happy to sit and laugh from the comfort of Canadian soil, but when America finds itself in the gutter, we're going to feel the pain too.

[Andalusian girls]

And yet if they had made a larger deal to reduce the deficit, the American economy would have taken a larger hit, and aiding in this whole investor scare that's going around now for fear of a new recession. Even though a sluggish american economy is not the main reason for the scare (a default from spain and italy is).

Entitlement reform (tax more initial earnings to pay for social security + look at means testing/a raising of the retirement age to fit new demographics, do something, anything, to stop runaway medical costs), tax code reform (eliminate deductions and exemptions and loopholes and lower top marginal rates/corporate tax rates/capital gains a touch), and a long and hard look at the Defense budget (we are not going to fight the next 14 wealthiest nations in the world at once we do not need to spend their aggregated budgets annually) are the only means with which to fit our long-term debt outlook.

The deal did none of this, as you say it may have even hurt short term prospects as it castrates the Keynesian model Obama is attempting to implement by focusing entirely on present spending levels.

[notorious bum]

What does this mean for Americans? In layman's terms

Get outta Wallstreet homie, start growing your own food. The apocalypse is coming, etc.

None of this shit means anything right now if you're on the grind, living check to check, like most of us.

Big bank take little bank(the govt.) like always