17 votes

Via Drudge: S&P Downgrades U.S. for First Time in History!

Via Drudge Report: S&P Downgrades U.S. for First Time
By Zachary A. Goldfarb, Updated: Friday, August 5, 6:33 PM

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.

http://www.washingtonpost.com/business/economy/sandp-conside...

S&P Downgrades the U.S. Credit Rating To AA+

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.

E&W downgraded them 20 years

E&W downgraded them 20 years ago to junk status, what took S&P so long?

I think the administration

I think the administration knew that the downgrade was coming and pushed for a debt increase to save his reelection. If the downgrade were to happen a couple months ago, no deal would have raised the debt!!! Think about it!

"The economy's not a class you can master in college. To think otherwise is the pretense of knowledge."

So the federal government debts are held in less esteem.

Maybe the public will wake up and realize that the entire federal government is not worthy of their respect; if enough people realize this is not their government, but the government of the privileged few, operated to the detriment of the majority, they might insist on reducing it to 5% of its current size.

Even better, maybe the entire institution will just collapse and go away like the USSR did in the 1990's; most of us would be better served without it.

But then, the US public is probably too brainwashed, too dumb, too easily led by the nose, and too narcissistic to do what makes sense.

"Bend over and grab your ankles" should be etched in stone at the entrance to every government building and every government office.

But Geithner said there was

But Geithner said there was no risk that could ever happen:

http://www.youtube.com/watch?v=q7Z0L-NYFlE

Let it not be said that we did nothing.-Ron Paul
Stand up for what you believe in, even if you stand alone.-Sophia Magdalena Scholl

CRAZY!! SOMEHOW EVERYONE IS

CRAZY!! SOMEHOW EVERYONE IS NOW BLAMING THE TEA PARTY!!! BAHAHAHAHAH

"The economy's not a class you can master in college. To think otherwise is the pretense of knowledge."

SteveMT's picture

Classic scapegoat: Tea Party = Emmanuel Goldstein

Taliban/Al Qaeda/Hezbollah/Hamas = Eurasia

About time

Long time coming.

I went on the Huff and tried to talk to those drunken lib idiots, they do not have a clue.

Maybe this will wake some of the brain dead citizens of this country up. We can only hope.

I have been Posting this on Foxnews.com

and I thought you might like this too, It's hope for the future. We can do it ! http://www.youtube.com/watch?v=Z79T2veZy0Q&feature=watch_res...

Excellent,

I doubt Faux will ever show it. This needs to be sent to Hannity and the other neo-con hypocrites. They talk about Reagan as the greatest Republican president of modern time, but don't follow what he said.

Great Video

I never saw that one...Thanks

interesting

I hope this knocks the markets down some more so i can start buying stocks again, I have been siiting on the sidelines since DOW 9500 just waiting for the next move down. Sometimes in life you have to be very patient.

The taxman is 'a knockin

Well, this sure is a rather convenient occurrence that can be used to extend the perma-crisis mode and scare the general population into accepting some new taxes (besides inflation) ASAP (even though they would eventually force them on us anyway):

http://www.economicpolicyjournal.com/2011/08/s-p-downgrades-...

What about that guy who

placed that billion $ bet on the downgrade?Has anyone heard anything?

I'd rather die on my feet than live on my knees...

check this out

http://thehill.com/blogs/on-the-money/budget/156747-geithner...

Geithner said not long ago it would never happen "No risk, no risk at all"!

Many pension/trust funds

Have restrictions on what they can own based on credit ratings. I wonder if this will lead to some forced selling.

Maybe

I've also heard rumors that they will not have to force sell until 2 of the major 3 downgrade the US

NO

They will just rewrite their policies to say "AAA OR U.S. Treasuries".

You may be surprised

How dysfunctional pension funds are. It's hard to get a board to agree on a policy change. Much of the forced selling in 08-09 was because average credit ratings fell below the limits allowed in prospectuses.

Still, large portions of our debt are held by banks, other countries, and the Fed, and I doubt they will be selling. The Fed will probably enact QE3 if they think this may lead to an increase in interest rates.

Dear Jesse Benton

10:45 est: commentators from Cavuto to Jared Bernstein to Cooper are interpreting, sometimes explicitly, Tea Party ultimatums as the cause for this downgrade as they read the S&P's written opinion. Boehner and Bachmann have commented that the wreckless spending is the reason but RP needs to be ready for this line of questioning as he campaigns tomorrow.

10-15 million more voters need to believe in non-interventionism (liberty) at home and abroad to change America. Minds changed on Syria. Minds changing on privacy. "Printing money" is part of the dialogue. Win minds through focus, strategy.

inflate..yes..

this is both major political parties mess.. romney and other repubs will blame obama.. its not just obama's fault .america got here after years or trash policy .. and..s and p also was derelict in their ratings of the underlying assets of mbs/ housing debacle .. so the entire world of debt finance is removed from the publics control and a disaster ..so we have been failed by the folks we have elected..so the people of the USA have themselves to blame.............we chose cheap and cozy and the nfl/nba/the rose bowl and the nightly news and war over personal accountability.and sadly, its still obamas to loose.. I support ron paul .........

Michael Nystrom's picture

I was listening to an interview with Bill Gross

of Pimco. He famously dumped all US Treasury bonds because he didn't think that they offered a proper risk / reward ratio with the AAA rating. The AAA rating means that the return they offer is dirt low.

Ironically, Gross said that if the bonds were ultimately downgraded, and as a result offered a better yield, that he might be more interested in buying. After all, what are the chances that the US actually defaults -- I mean explicitly defaults? Still pretty close to nil.

I don't think this is the end of the world, though I also heard that the reason the market took the big cliff dive this morning was because of the rumor that S&P was going to do exactly this. I think it will push interest rates up, which is what the Fed wants. The Fed wants inflation - more of it.

But I think that the effect it will have is that it will spook the markets, and drive more money into T-bonds, ironically, as Gross said, because they're safe and they offer a better yield. So go figure.

Look at what has been happening to the 30 yr yield as the market has fallen off the cliff these past couple of weeks:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s...

(The TYX is a proxy for the 30 year T-bond yield)

Old habits die hard, and the T-bond is still considered the safest asset around. People have rushed in, driving yields down.

Weird, I know. Not everyone thinks like us. The other safe haven, of couse, has been gold:

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?s...

All art is only done by the individual. The individual is all you ever have, and all schools only serve to classify their members as failures. E.H.

This date will mark the top in the ten year

is my call, if you want to gamble with the banksters derivitives buy TBT.(only if it doesnt gap up 5-6 pts on monday) This will be an interesting open monday,and you may be right on the kneejerk reaction monday but this great bond bull has to mark a top soon !

Goldmember777

Question

Hasn't the Fed been buying bonds to keep rates low in the hope of spurring inflation? How will rising rates induce inflation?

If the Fed wants rates to rise, all they have to do is raise them or stop buying bonds or both, I think... The bond market is not my strong suit.

Astute observation

You are on to something Michael

For Freedom!
The World is my country, all mankind is my brethren, to do good is my religion.

SteveMT's picture

Reality about downgrade.

"U.S. Treasuries, once undisputedly seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany, France or Canada."

http://www.chicagotribune.com/business/breaking/chi-us-expec...

strange....

why did they downgrade the US Credit Rating.

This doesn't make any sense at all. It's not like the US government has done anything wrong....right?

Total shocker.

Ohhhh boy.

Here we go...the end of the dollar is finally at hand...this is gonna be a hell of a ride...

Will this do anything to the

Will this do anything to the price of gold or silver?

Murrieta, Ca

Yes

Why invest in Gov Bonds if they are in jeopardy of becoming junk? Gold will rise

For Freedom!
The World is my country, all mankind is my brethren, to do good is my religion.

SteveMT's picture

S & P Statement on why U.S. downgraded: Too Little, Too Late

http://www.standardandpoors.com/servlet/BlobServer?blobheade...

http://www.standardandpoors.com

Quote from Statement:

"On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors."