MRB said:
CNN BREAKING: Rating agency Standard & Poor's says it has downgraded the U.S.
credit rating to AA+ from its top rank of AAA. [This is huge, folks. The
decades of statism are showing their logical consequences. Stand by for
rippling effects.]
dmb says:
The GUARDIAN REPORTING: S&P's decision shifts long-term US sovereign debt to
the same level as Britain, Japan and New Zealand – but below that of Canada,
Australia and France. [Can you believe those damn socialists in France and
Canada are better at money than we are?]
As a rule, a lower credit rating means higher borrowing costs for debtor
nations. But because of the size of the US and its deep capital markets – and
its crucial role as cornerstone of global finance – it remains to be seen
exactly what impact the move will have when financial markets reopen on Monday.
One big question will be the reaction of foreign investors, such as China, who
hold 46% of US government debt. But most analysts expect the short-term impact
to be muted.
"One of the reasons we don't really think foreign investors will start selling
US Treasuries aggressively is because there are still few alternatives to the
US Treasury market in terms of depth and liquidity," Vassili Serebriakov,
currency strategist at Wells Fargo in New York, told Reuters. [Ha! The best
ain't what it used to be, but it's still the best we got. Welcome to the new
mediocre world order!]
The Federal Reserve announced that US government securities such as bonds would
still be counted as AAA-rated under risk management regulations, an important
decision for insurance companies and other investors who would otherwise have
been faced with making massive movements in their portfolios. [Is that what you
mean by "statism"?]
Republican presidential contenders were quick to highlight the downgrade – the
first since S&P awarded AAA status to the US in 1941 – as a humiliation for
President Obama. [Notice how quickly this Republican claim evaporates...]
But S&P's statement explaining the move blamed both parties for the US fiscal
mess – and had harsh words for the Republican party for ruling out any taxes
increases. [S&P's reasoning for the downgrade is actually a humiliation for all
politicians, and especially the Republicans.]
"We have changed our assumption ... because the majority of Republicans in
Congress continue to resist any measure that would raise revenues," S&P said.
[Trying to solve a debt problem with spending cuts exclusively, which is only
half of the equation, doesn't make sense in terms of math or accounting. This
is a symptom of the "starve the beast" strategy. It's a way of killing the New
Deal legacy, which is their real game.]
S&P also said the budget savings agreed by Congress at the start of the week
were too feeble, and blamed political weakness and instability for triggering
the downgrade. [In other words, the downgrade is a result of politics, not
math. It is a manufactured crisis and yet it might do real damage and worsen an
actual economic crisis. It's like they want to screw things up. I think they're
playing a wildly irresponsible game.
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