An unprecedented and monumental development.... In my view, the end of the era of US economic dominance.....this will be the lasting legacy of his economic policies. Well done.....game, set and match. http://www.standardandpoors.com/ser...lobwhere=1243942957443&blobheadervalue3=UTF-8
Make no mistake about it. Both parties are at fault for this fiasco. If you watched/listened to the S&P rep on TV last night, you would know that they blame both parties equally and say that the problems leading to the downgrade go back through two administrations. I tire easily of the politics of vitriol, but it's a sad fact of life in our society. Now we are paying the price. As disappointed as I am in the downgrade, I applaud S&P for saying what needs to be said about the unstable atmosphere and lack of leadership in Washington. Having said that, I am aware that the misguided fiscal conduct of this administration is the root cause for the current fiasco, and the Democrat leadership in Congress is evidencing more vitriolic hot air than effective leadership on behalf of the citizens. The Republican leaders are doing the same thing and not showing strong leadership. Unfortunately, I don't see anyone on the horizon who is capable of leading us to higher ground. Mitt Romney stepped on his crank last night when he chose to be small by limiting his comments to criticism of Obama rather that stand tall by acknowledging the issue and offering at least the beginning of a solution to get us back on track.
We've seen the Tea Party try to stop the insanity and they are vilified and marginalized by the entrenched clowns that have been steering this bus towards a cliff for decades. We saw Paul Ryan try to propose a plan that while difficult might just actually turn the tide. And what was the response....ridicule some of it from his own party. Many of those criticizing him were Senate Democrats who haven't even proposed a budget for over 850 days!!!! We had "bipartisan" commissions who reviewed the future solvency of Social Security durning the Reagan and Clinton administrations. Their recommendations were completely ignored as we continued to "kick the can down the road." (Many of these neglegent lawmakes are dead or retired. They should be pissed on.) The Bush administration suggested that a small portion of Social Security might be invested in the market. (seems Dave and JO'Co did alright during the decade) and of course the response was enraged ridicule without one counter proposal or idea. And as for S&P they completely screwed the pooch when it come to the mortgage derivatives that brought down Lehman, AIG and other financial institutions. I can't in good conscience congratulate S&P for their current actions when they were a big time player in the financial meltdown of 2008.
I was actually awake last night when the S&P made their announcement. I flipped channels from Fox to CNN in an attempt to gather as much information as possible. What I came away with and is pretty obvious is the fact that the US should not have been AAA rated with the debt we are carrying. I agree with Sid in that both parties are at fault and that once you break down the debt limit agreement you see where 75% of the agreement does not go in place until the year 2017. Something like 36 billion is removed the first 12 months with this being pretty much the budget of what is cost to monogram the white house toilet paper, not much change at all.... So the house of cards is finally falling down and all the posturing from the blowhards we acknowledge as the leaders of our country is only adding to the ongoing heat wave, just a bunch of hot air.... Next look for the attack on the validity of S&P and how this does not really matter, they are incorrect (Which is what the White House told them yesterday afternoon at first and asked them to reconsider submitting their rating) and a general attack on S&P to prove that they are wrong. Instead of accepting the truthful results the spin doctors will weave their magic... I guess it is time to lose another $50,000 in my 401K like I did the last explosion...Monday may be an ugly event...
No doubt S&P deserves to be called out for failing to detect the flawed fundamentals in the Wall Street activities that contributed to the market meltdown. However, that is apples & oranges compared to the rationale supporting the rating downgrade. In this case, S&P knows what it's doing and does it with no bias or predisposition toward particular people, industries, or political parties. I worked with Moody's, S&P, and other lesser known rating agencies for many years. I know how they approach their ratings. They do it with integrity, regardless of the spin from those on the receiving end who are not happy with the results. The $2 trillion mistake pointed out by the administration by itself is large in amount but small in terms of how it affects the overall projected financial performance of the U.S. economy given the current lack of direction and the uncertainty caused by the gridlock in Washington. IMO criticizing S&P is shooting the messenger.
I don't know Sid. Moody's and S&P rated all those bundled subprime mortgate instruments as AAA when they were anything but. Large banks, most likely relying in part on the instruments ratings bought billions of dollars worth. This was especially true of foreign banks. Many of the foreign banks bought default credit swaps on the bundles to hedge their bets. Meanwhile AIG relying on the ratings was selling these swaps thinking that with their rating it was a good product. We ended up bailing out AIG to save the foreign banks who thought that they were insured. Our housing market was blown up by the continued writing of these subprime mortgages which ended up in AAA rated instruments by Moody's and S&P. Now after being a major player in the economic tsunami that resulted from a crippled housing market, credit drought, followed by rising unemployment, bailouts, and decreasing tax revenues S&P bravely tells us that thanks to them in part they really wounded our credit rating. They actually are shooting themselves.
One excuse out the window. (OTM) — Senior executives for the company that downgraded the nation’s credit rating on Friday night have made political donations to Democrats over the last several years. Deven Sharma, the president of Standard & Poor’s, contributed to Sen. Kirsten Gillibrand’s (D-N.Y.) campaign in 2009 and 2010. He also gave $2,000 to Rep. Jim Himes (D-Conn.) during the 2010 election cycle and Sen. Mary Landrieu (D-La.) and then-Sen. Christopher Dodd (D-Conn.) in the 2008 cycle. Sharma contributed to one Republican last year, giving $1,000 to Sen. Rob Portman (R-Ohio). Pat Milano, another senior executive at S&P, contributed to Gillibrand, Landrieu and Dodd over the last couple of cycles, according to data culled from opensecrets.org. John Weisenseel, senior vice president of finance at the firm, gave $500 to Himes in 2009. Adam Schuman, executive managing director and associate general counsel, contributed to Gillibrand in 2010. Catherine Mathis, senior vice president of marketing and communications, gave $1,000 to Gillibrand and $500 to Portman last year. Meanwhile, Executive Managing Director Alex Matturi in 2010 contributed $750 to Gilliband.
I have no problem with my good friends, who are intelligent and well-informed, criticizing the rating agency. I am not trying to be an apologist for S&P. They've screwed up big time in the recent past and by having done so certainly have wounded their credibility. I am saying simply that they know what they are doing, and they have a long history - albeit with the big bump in the road mentioned above - of being on target. My point is that they are using their own "bully pulpit" as one of the two most highly recognized rating agencies to point out the issues we face going forward regarding our debt management and our political infighting. They certainly have gotten everyone's attention in a way that challenges the spin masters on both sides of the aisle. At this point, ignoring the rationale for the downgrade is not a viable option. IMO, there are only two ways to go....either denigrate S&P and hope it sticks or stand up and take charge in finding a solution to the problem. The latter applies to everyone, the administration, the Congress, and any credible challengers to the president.
A week ago we were hearing if they didn't raise the debt ceiling that the US credit would be downgraded. It was passed. It didn't matter. I guess that those that were saying that just raising the limit wasn't enough were right.