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S & P DOWNGRADE US CREDIT to "NEGATIVE" Under Obama

S & P DOWNGRADE US CREDIT to "NEGATIVE" Under Obama

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Published by Levitator
In “S&P Cuts U.S. Ratings Outlook to Negative,” Damian Paletta at the Wall Street Journal reports that the influential firm Standard & Poor’s has just “for the first time lowered its outlook on the U.S. government’s debt to ‘negative’ from ’stable.’”

A stark warning from a credit-rating firm about the U.S. government’s fiscal problems stoked concern on Wall Street and in Washington on Monday, pushing global stock markets lower and intensifying political divisions about the best way to tackle the country’s growing deficits.

Both the Obama administration and House Republicans scrambled to gain leverage from a new report by Standard & Poor’s, which for the first time lowered its outlook on the U.S. government’s debt to “negative” from “stable.”

While S&P didn’t change its triple-A bond rating for the U.S. government, the move was enough to send the Dow Jones Industrial Average tumbling almost 250 points at one point Monday.

S&P questioned whether the White House and Republicans would be able to reach an agreement before the 2012 presidential elections on a plan to rein in deficits. This year’s shortfall is projected to be about $1.5 trillion, roughly 10% of the country’s gross domestic product.

The S&P analysis didn’t offer any new insight into the nation’s fiscal plight or partisan differences about how to solve it, but served as a reminder that investors may not always be as patient as they have been about U.S. deficits.

The U.S. debt now stands at $14.2 trillion and is expected to balloon in part because of rising costs for health care, retirement and other so-called entitlement programs, and the interest costs on existing debt. S&P said that even if a short-term deal is reached to contain deficits, any agreement could later be undone by politicians.

Administration officials, who were first alerted to the report on Friday, questioned its conclusions but said it validated their efforts to broker a bipartisan deal to address the debt.

“Any call for a bipartisan agreement on deficit reduction, on fiscal reform, is a welcome one, and in that context, I think that it adds to what we believe is some momentum towards that end,” White House spokesman Jay Carney said.

Republicans, who control the House of Representatives, said the report reaffirmed their demands that deficits be addressed immediately, and that any deal to raise the debt ceiling be packaged with other changes meant to cut spending.

“As S&P made clear, getting spending and our deficit under control can no longer be put off for another day, which is why House Republicans will only move forward on the President’s request to increase the debt limit if it is accompanied by serious reforms that immediately reduce federal spending and end the culture of debt in Washington,” said House Majority Leader Eric Cantor (R., Va.).
http://online.wsj.com/article/SB10001424052748704004004576270693061767996.html?mod=WSJ_hp_LEFTTopStories

http://www.mygovcost.org/2011/04/18/standard-poors-downgrades-u-s-government-debt-rating-to-negative/
In “S&P Cuts U.S. Ratings Outlook to Negative,” Damian Paletta at the Wall Street Journal reports that the influential firm Standard & Poor’s has just “for the first time lowered its outlook on the U.S. government’s debt to ‘negative’ from ’stable.’”

A stark warning from a credit-rating firm about the U.S. government’s fiscal problems stoked concern on Wall Street and in Washington on Monday, pushing global stock markets lower and intensifying political divisions about the best way to tackle the country’s growing deficits.

Both the Obama administration and House Republicans scrambled to gain leverage from a new report by Standard & Poor’s, which for the first time lowered its outlook on the U.S. government’s debt to “negative” from “stable.”

While S&P didn’t change its triple-A bond rating for the U.S. government, the move was enough to send the Dow Jones Industrial Average tumbling almost 250 points at one point Monday.

S&P questioned whether the White House and Republicans would be able to reach an agreement before the 2012 presidential elections on a plan to rein in deficits. This year’s shortfall is projected to be about $1.5 trillion, roughly 10% of the country’s gross domestic product.

The S&P analysis didn’t offer any new insight into the nation’s fiscal plight or partisan differences about how to solve it, but served as a reminder that investors may not always be as patient as they have been about U.S. deficits.

The U.S. debt now stands at $14.2 trillion and is expected to balloon in part because of rising costs for health care, retirement and other so-called entitlement programs, and the interest costs on existing debt. S&P said that even if a short-term deal is reached to contain deficits, any agreement could later be undone by politicians.

Administration officials, who were first alerted to the report on Friday, questioned its conclusions but said it validated their efforts to broker a bipartisan deal to address the debt.

“Any call for a bipartisan agreement on deficit reduction, on fiscal reform, is a welcome one, and in that context, I think that it adds to what we believe is some momentum towards that end,” White House spokesman Jay Carney said.

Republicans, who control the House of Representatives, said the report reaffirmed their demands that deficits be addressed immediately, and that any deal to raise the debt ceiling be packaged with other changes meant to cut spending.

“As S&P made clear, getting spending and our deficit under control can no longer be put off for another day, which is why House Republicans will only move forward on the President’s request to increase the debt limit if it is accompanied by serious reforms that immediately reduce federal spending and end the culture of debt in Washington,” said House Majority Leader Eric Cantor (R., Va.).
http://online.wsj.com/article/SB10001424052748704004004576270693061767996.html?mod=WSJ_hp_LEFTTopStories

http://www.mygovcost.org/2011/04/18/standard-poors-downgrades-u-s-government-debt-rating-to-negative/

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Published by: Levitator on May 12, 2011
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Research Update:
United States of America‘AAA/A-1+’ Rating Affirmed;Outlook Revised To Negative
Primary Credit Analyst:
Nikola G Swann, CFA, FRM, Toronto (1) 416-507-2582;nikola_swann@standardandpoors.com
Secondary Contacts:
John Chambers, CFA, New York (1) 212-438-7344;john_chambers@standardandpoors.comDavid T Beers, London (44) 20-7176-7101;david_beers@standardandpoors.com
Table Of Contents
April 18, 2011
www.standardandpoors.com/ratingsdirect
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861397 | 301001911
 
Research Update:
United States of America ‘AAA/A-1+’ RatingAffirmed; Outlook Revised To Negative
Overview
We have affirmed our 'AAA/A-1+' sovereign credit rating on the UnitedStates of America.
The economy of the U.S. is flexible and highly diversified, the country'seffective monetary policies have supported output growth while containinginflationary pressures, and a consistent global preference for the U.S.dollar over all other currencies gives the country unique externalliquidity.
Because the U.S. has, relative to its 'AAA' peers, what we consider to bevery large budget deficits and rising government indebtedness and thepath to addressing these is not clear to us, we have revised our outlookon the long-term rating to negative from stable.
We believe there is a material risk that U.S. policymakers might notreach an agreement on how to address medium- and long-term budgetarychallenges by 2013; if an agreement is not reached and meaningfulimplementation does not begin by then, this would in our view render theU.S. fiscal profile meaningfully weaker than that of peer 'AAA'sovereigns.
Rating Action
On April 18, 2011, Standard & Poor's Ratings Services affirmed its 'AAA'long-term and 'A-1+' short-term sovereign credit ratings on the United Statesof America and revised its outlook on the long-term rating to negative fromstable.
Rationale
Our ratings on the U.S. rest on its high-income, highly diversified, andflexible economy, backed by a strong track record of prudent and crediblemonetary policy. The ratings also reflect our view of the unique advantagesstemming from the dollar's preeminent place among world currencies. Althoughwe believe these strengths currently outweigh what we consider to be theU.S.'s meaningful economic and fiscal risks and large external debtorposition, we now believe that they might not fully offset the credit risksover the next two years at the 'AAA' level.The U.S. is among the most flexible high-income nations, with bothadaptable labor markets and a long track record of openness to capital flows.In addition, its public sector uses a smaller share of national income thanthose of most 'AAA' rated countries--including its closest peers, the U.K.,France, Germany, and Canada (all AAA/Stable/A-1+)--which implies greaterrevenue flexibility.
Standard & Poor’s
| RatingsDirect on the Global Credit Portal |
April 18, 2011
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Furthermore, the U.S. dollar is the world's most used currency, whichprovides the U.S. with unique external flexibility; the vast majority of U.S.trade flows and external liabilities are denominated in its own dollars.Recent depreciation of the currency has not materially affected this position,and we do not expect this to change in the medium term (see "Après Le luge,The U.S. Dollar Remains The Key International Currency," March 10, 2010,RatingsDirect).Despite these exceptional strengths, we note the U.S.'s fiscal profilehas deteriorated steadily during the past decade and, in our view, hasworsened further as a result of the recent financial crisis and ensuingrecession. Moreover, more than two years after the beginning of the recentcrisis, U.S. policymakers have still not agreed on a strategy to reverserecent fiscal deterioration or address longer-term fiscal pressures.In 2003-2008, the U.S.'s general (total) government deficit fluctuatedbetween 2% and 5% of GDP. Already noticeably larger than that of most 'AAA'rated sovereigns, it ballooned to more than 11% in 2009 and has yet torecover.On April 13, President Barack Obama laid out his Administration'smedium-term fiscal consolidation plan, aimed at reducing the cumulativeunified federal deficit by US$4 trillion in 12 years or less. A key componentof the Administration's strategy is to work with Congressional leaders overthe next two months to develop a commonly agreed upon program to reach thistarget. The President's proposals envision reducing the deficit via bothspending cuts and revenue increases, and the adoption of a "debt failsafe"legislative mechanism that would trigger an across-the-board spendingreduction if, by 2014, budget projections show that federal debt to GDP hasnot yet stabilized and is not expected to decline in the second half of thecurrent decade.The Obama Administration's proposed spending cuts include reducingnon-security discretionary spending to levels similar to those proposed by theFiscal Commission in December 2010, holding growth in base security (excludingwar expenditure) spending below inflation, and further cost-control measuresrelated to health care programs. Revenue would be increased via both taxreform and allowing the 2001 and 2003 income and estate tax cuts to expire in2012 as currently scheduled--though only for high-income households. We notethat the President advocated the latter proposal last year before agreeingwith Republicans to extend the cuts beyond their previously scheduled 2011expiration. The compromise agreed upon in December likely provides short-termsupport for the economic recovery, but we believe it also weakens the U.S.'sfiscal outlook and, in our view, reduces the likelihood that Congress willallow these tax cuts to expire in the near future. We also note thatpreviously enacted legislative mechanisms meant to enforce budgetarydiscipline on future Congresses have not always succeeded.Key members in the U.S. House of Representatives have also advocatedfiscal tightening of a similar magnitude, US$4.4 trillion, during the coming10 years, but via different methods. House Budget Committee Chairman PaulRyan's plan seeks to balance the federal budget by 2040, in part by cuttingnon-defense spending. The plan also includes significantly reducing the scopeof Medicare and Medicaid, while bringing top individual and corporate taxrates lower than those under the 2001 and 2003 tax cuts.
www.standardandpoors.com/ratingsdirect
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861397 | 301001911
Research Update: United States of America ‘AAA/A-1+’ Rating Affirmed; Outlook Revised To Negative

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Levitator added this note
Keynesian modle DO NOT ACCOUNT FOR TRUE DISTINCTIONS FOR PRICE LEVELS & REAL OUTPUT, i.e., REAL JOB GROWTH. In current US economy, when supply & demand increases so do prices; hence we're short of full employment, consumer spending stays down, wages stays low, economy fail to rebound & falls into recession.http://biggovernment.com/jbradley/201...
Levitator added this note
Amidst ballooning federal debt, Michelle & family HAD FUNS on TAXPAYERS" FUNDED African Getaway COSTING TAXPAYERS $800,000. Before Obama signed failed $787 billion stimulus bill, he lectured US TAXPAYERS: “Everyone must sacrifice for the greater good, everyone must have some skin in the game.”--EXCEPT THE COMMUNIST OBAMAS! http://www.thegatewaypundit.com/2011/...-
Levitator added this note
Obama Propose $600 BILLION NEW TAXES & ending subsidies to oil & gas companies in Debt Deal Negotiations TO PAY FOR HIS SPENDING: He increased national debt by > $3 trillion in > 2 yrs-- Triple the deficit in 1 yr with failed stimulus plan. He & Democrats also added > $1 Trillion Dollars to Federal Budget in last 4 yrs. http://www.newsmax.com/Headline/obama...
Levitator added this note
Obama' 2008 LIES or “Defining Moment” highlights the question is NOT “are you better off than you were four years ago?” We NOW know it WAS A SMOKE & MIRROR TO GET YOUR VOTES. The real question is WILL OUR COUNTRY BE BETTER OFF 4 YEARS FROM NOW? Fast forward to 2011...AMERICANS ARE WORSE OFF NOW THAN THEY WERE TWO YEARS AGO BY A 44% to 34% RATIO. http://www.youtube.com/watch?v=vJvkRF...
Levitator added this note
CBO projection: long term debt will limit lawmakers’ ability to adopt tax & spending priorities in good times & reduce flexibility to deal with recessions & high debt will make financial crises more likely & long term growth less likely. @ end of 2011, projection of federal debt to equal 70% of GDP-highest % since end of WWII.http://biggovernment.com/jdunetz/2011...
Levitator added this note
Obama' $787 billion STIMULUS did not lift US out of depression. It X3 the DEFICIT as 1/3 of grants to states weren't spend but used to pay debt & Cash for Clunkers, mortgage help, homebuyer tax credits, auto rescue plans came late as recession ended-was ending or busted.http://www.investors.com/NewsAndAnaly...
Levitator added this note
IMF warned of a economic crisis & said bigger threats to growth had emerged--IMF cut its forecast for U.S. economic growth on Friday and warned Washington that they are “playing with fire” unless they take immediate steps to reduce their budget deficits.http://www.thegatewaypundit.com/2011/...
Levitator added this note
OBAMA' disastrous ECONOMIC POLICIES caused U.S. stocks to plunge 172 points on Friday for the 6th straight weekly loss amid further signs of global economic melt down.-the longest losing streak since fall of 2002- market’s last 7 week stretch of losses began in 5/2001, as the dot-com bubble deflated. http://www.thegatewaypundit.com/2011/...
Levitator added this note
OBAMA HAS PUSHED US NATIONAL DEBT TO NEARING !5 TRILLION DOLLARS! Obama vowed to cut deficit in 1/2 in 2009, instead he TRIPLED THE DEFICIT in his 1st year & it's GETTING WORSE! Obama' 2011 deficit will reach $1.65 trillion-the worst jobs president since Great Depression & HE STILL LIE ABOUT IT NONSTOP! http://gatewaypundit.rightnetwork.com...

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