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US Risks Loosing Its AAA Credit Rating  
User currently offlinemaxthrusta330 From , joined Dec 1969, posts, RR:
Posted (2 years 2 months 2 weeks 4 days 10 hours ago) and read 2917 times:

The Moody's Credit Rating Agency has warned that the US could lose its top credit rating status if policy makers fail to agree on measures to reduce the country’s debt to gross domestic product ratio next year:

http://www.ft.com/intl/cms/s/0/17dcd...33-00144feabdc0.html#axzz2665T5Hi5

What is fascinating is that The US dollar fell broadly after the warning - except in Iran where it bizarrely has soared to an all time high.

If ever there was a case of the blind leading the blind this is it. At the exact same time that the future of the US Dollar is looking shaky and it set to loose significant value, the Iranian public rush to pay record high prices for it. What utter ignorance and madness.

http://www.globalpost.com/dispatch/n...s-record-low-amid-sanctions-monger

49 replies: All unread, showing first 25:
 
User currently offlineMaverick623 From United States of America, joined Nov 2006, 5716 posts, RR: 6
Reply 1, posted (2 years 2 months 2 weeks 4 days 6 hours ago) and read 2848 times:

Quoting maxthrusta330 (Thread starter):
The Moody's Credit Rating Agency has warned that the US could lose its top credit rating status

So another credit rating agency (aka, scam outfit) will degrade the US's standing from "absolutely perfect" to "perfect".

Yawn.



"PHX is Phoenix, PDX is the other city" -777Way
User currently offlineokie From United States of America, joined Jul 2003, 3155 posts, RR: 3
Reply 2, posted (2 years 2 months 2 weeks 4 days 5 hours ago) and read 2826 times:

Quoting maxthrusta330 (Thread starter):
The Moody's Credit Rating Agency has warned that the US could lose its top credit rating status if policy makers fail to agree on measures to reduce the country’s debt to gross domestic product ratio next year:

It is pressure for congress to come to a solution to the fiscal cliff.

This is an election year.
Look for inaction, finger pointing, political posturing with zero results and a mountain high pile of political Bovine Manure.

Look for solutions to be posted from expert economists who have an economic degree from a 30 second sound bite on their favorite news channel with only their candidate shown in a favorite light and no other logic.

So the answer is nothing is going to happen until after the election.

For what ever it is worth Gold did go up today but more importantly Gold mining stock went way up indicating Wall St sees a long term problem but again that is just a one day rise at this point.

Okie


User currently offlineKen777 From United States of America, joined Mar 2004, 8436 posts, RR: 9
Reply 3, posted (2 years 2 months 2 weeks 4 days 5 hours ago) and read 2807 times:

Maybe our first step "to reduce the country’s debt to gross domestic product ratio next year" should be to put a windfalls profits tax on credit rating agencies.

Odd thing about next year - if Romney wins he will be cutting taxes (unless there is a Democratic filibuster to avoid it) and there will not be any noticeable change in the ratio for 2013. Obama has a better chance of delivering an improvement in 2013.


User currently offlinekngkyle From United States of America, joined Dec 2006, 411 posts, RR: 1
Reply 4, posted (2 years 2 months 2 weeks 4 days 3 hours ago) and read 2772 times:
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Yet Germany, France, and the United Kingdom all have much higher debt to GDP than us and are AAA.

Japans massive debt and A+ credit rating hasn't caused their cost of borrowing to go up at all, in fact it has dropped, just like ours did after being downgraded to AA.

The debt and deficit should not be the priority of the government at this time. The economy should be. Large spending cuts or tax increases to combat the deficit would not be wise due to their negative impact on growth and jobs.


User currently offlineus330 From United States of America, joined Aug 2000, 3873 posts, RR: 13
Reply 5, posted (2 years 2 months 2 weeks 4 days 3 hours ago) and read 2763 times:

S&P did this in 2011 and the net result was that demand for US Treasuries actually increased.

User currently offlineRara From Germany, joined Jan 2007, 2139 posts, RR: 2
Reply 6, posted (2 years 2 months 2 weeks 4 days 3 hours ago) and read 2747 times:

Quoting kngkyle (Reply 4):
Yet Germany, France, and the United Kingdom all have much higher debt to GDP than us and are AAA.

Not really. The US's debt-to-GDP stands at over 100% and is quite a bit higher than the other countries you listed with about 80%.



Samson was a biblical tough guy, but his dad Samsonite was even more of a hard case.
User currently offlinecmf From , joined Dec 1969, posts, RR:
Reply 7, posted (2 years 2 months 2 weeks 4 days 3 hours ago) and read 2743 times:

Quoting kngkyle (Reply 4):
Yet Germany, France, and the United Kingdom all have much higher debt to GDP than us and are AAA.

From where do you get your data?


User currently offlineBMI727 From United States of America, joined Feb 2009, 15812 posts, RR: 27
Reply 8, posted (2 years 2 months 2 weeks 4 days 2 hours ago) and read 2729 times:

Quoting maxthrusta330 (Thread starter):
US Risks Loosing Its AAA Credit Rating

This is a kind of big deal. It isn't the end of America, but what it is saying is that the wealthiest country on the planet is getting close to maxing out the credit card. It's a shot across the bow stating that America needs to make sure that they are willing and able to pay their bills.

Quoting us330 (Reply 5):
S&P did this in 2011 and the net result was that demand for US Treasuries actually increased.

Plenty of people have invested in junk bonds.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinekngkyle From United States of America, joined Dec 2006, 411 posts, RR: 1
Reply 9, posted (2 years 2 months 2 weeks 4 days 2 hours ago) and read 2728 times:
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Quoting Rara (Reply 6):
Not really. The US's debt-to-GDP stands at over 100% and is quite a bit higher than the other countries you listed with about 80%.
Quoting cmf (Reply 7):
From where do you get your data?
http://usdebtclock.org/world-debt-clock.html


User currently offlineAesma From France, joined Nov 2009, 6847 posts, RR: 12
Reply 10, posted (2 years 2 months 2 weeks 4 days 2 hours ago) and read 2715 times:

Moody's has warned France too a few months ago (but they waited after the elections, maybe because in France we usually get lawmakers that are in the same camp as the president). We'll see who gets degraded first, and for what reason. Us, it will probably be because implementing measures to curb the deficit will make us enter into a recession. The US, probably because no significant forays will be made in curbing the deficit.


New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
User currently offlinecmf From , joined Dec 1969, posts, RR:
Reply 11, posted (2 years 2 months 2 weeks 4 days 1 hour ago) and read 2698 times:

Quoting kngkyle (Reply 9):
http://usdebtclock.org/world-debt-clock.html

That data does not match anything else I have seen, e.g. they put US public debt at 73% put a simple google search puts it at over 100%.

I can't take that source seriously.


User currently offlinestasisLAX From United States of America, joined Jul 2007, 3286 posts, RR: 6
Reply 12, posted (2 years 2 months 2 weeks 4 days 1 hour ago) and read 2695 times:

Quoting maxthrusta330 (Thread starter):
The Moody's Credit Rating Agency has warned that the US could lose its top credit rating status if policy makers fail to agree on measures to reduce the country’s debt to gross domestic product ratio next year:

In other news, Moody's gives millions to several GOP super-PACS. Just more political high-jinks from the robber-barons on Wall Street....



"Those who would give up essential liberty to purchase temporary safety deserve neither liberty nor safety!" B.Franklin
User currently offlinekngkyle From United States of America, joined Dec 2006, 411 posts, RR: 1
Reply 13, posted (2 years 2 months 2 weeks 4 days 1 hour ago) and read 2685 times:
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Quoting cmf (Reply 11):
That data does not match anything else I have seen, e.g. they put US public debt at 73% put a simple google search puts it at over 100%.

I can't take that source seriously.

There is more than one figure provided. The other one is over 100% and is the one that you are likely finding on google. There are different ways of calculating it, but that site uses the same methodology for all of the countries listed so it's a fair apples-to-apples comparison.


User currently offlineDocLightning From United States of America, joined Nov 2005, 20247 posts, RR: 59
Reply 14, posted (2 years 2 months 2 weeks 4 days 1 hour ago) and read 2677 times:

Quoting BMI727 (Reply 8):

This is a kind of big deal. It isn't the end of America, but what it is saying is that the wealthiest country on the planet is getting close to maxing out the credit card. It's a shot across the bow stating that America needs to make sure that they are willing and able to pay their bills.

How is the US going to pay its bills by increasing defense spending and reducing taxes more than any spending cut?


User currently offlineBMI727 From United States of America, joined Feb 2009, 15812 posts, RR: 27
Reply 15, posted (2 years 2 months 2 weeks 4 days ago) and read 2664 times:

Quoting DocLightning (Reply 14):
How is the US going to pay its bills by increasing defense spending and reducing taxes more than any spending cut?

End crap social programs and stop bailing out struggling private corporations. Lower regulatory barriers to help make America competitive to grow the tax base rather than just shaking the same tree harder.

Plus, I'd be in favor of moving to FairTax or something similar. We've raised taxes during a recession before. It didn't go well.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinecmf From , joined Dec 1969, posts, RR:
Reply 16, posted (2 years 2 months 2 weeks 4 days ago) and read 2660 times:

Quoting kngkyle (Reply 13):
The other one is over 100% and is the one that you are likely finding on google.

  

The two figures they provide are public dept to GDP and external debt to GDP.

The link I provided is to public debt numbers. The numbers at the site you provided are some 30% too low.

If you look around a bit you will find that the numbers aline more around with what IMF publish

Quoting kngkyle (Reply 13):
There are different ways of calculating it

Is there?


User currently offlinepu From Sweden, joined Dec 2011, 750 posts, RR: 13
Reply 17, posted (2 years 2 months 2 weeks 4 days ago) and read 2648 times:

Quoting cmf (Reply 16):
are some 30% too low

You are quite incorrect.

The US government debt held by the public is found here:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

The rest of the world does not include intergovernmental debt in its national debt figure, and therefore to compare apples to apples you can only compare America's debt held by the public .

The US government has in years passed collected taxes marked on paycheck stubs as 'social security tax' which it has instead used for general government spending. It accounts for this by calling it 'intergovernmental debt,'. This debt is owed to no one and in fact does not exist using the standards of the rest of the world.

The US is about 11 trillion in debt., which is about 67% of GDP and substantially lower than most of its industrial allies. See debt figure here, the CIA gets it right, America-haters and others deliberately use a false figure for political reasons.

https://www.cia.gov/library/publications/the-world-factbook/geos/us.html

It is amazing how many people have no clue as to the facts of their own government, but blindly following a lazy media produces this.

Pu

[Edited 2012-09-11 18:29:33]

[Edited 2012-09-11 18:36:44]

User currently offlinekngkyle From United States of America, joined Dec 2006, 411 posts, RR: 1
Reply 18, posted (2 years 2 months 2 weeks 4 days ago) and read 2644 times:
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FORUM MODERATOR

Quoting cmf (Reply 16):

Yes, there are different ways of calculating it. All of these numbers are just estimates after all. And all of this is besides the point, even on the site you linked to, Japan is over twice our debt-to-GDP and actually has lower borrowing costs than the US.

The US dollar is still the safe haven currency, as is evident in how when S&P downgraded the US, our interest rates actually dropped further. Debt-to-GDP doesn't tell the whole story. I believe we could double our debt and still be able to borrow at low interest rates, just like Japan. Not that it's a desirable position to be in or something that we should try. But on the scale of immediate problems this country faces, our debt shouldn't be the first priority, like many on the right seemingly think. You can't compare us to Greece. It's totally different.

EDIT: thank you pu for explaining the differences.

[Edited 2012-09-11 18:33:23]

User currently offlinemt99 From United States of America, joined May 1999, 6651 posts, RR: 6
Reply 19, posted (2 years 2 months 2 weeks 3 days 23 hours ago) and read 2618 times:
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Quoting BMI727 (Reply 15):
End crap social programs and stop bailing out struggling private corporations. Lower regulatory barriers to help make America competitive to grow the tax base rather than just shaking the same tree harder.

Is closing loopholes "shaking the same tree harder?"



Step into my office, baby
User currently offlineBMI727 From United States of America, joined Feb 2009, 15812 posts, RR: 27
Reply 20, posted (2 years 2 months 2 weeks 3 days 22 hours ago) and read 2609 times:

Quoting mt99 (Reply 19):
Is closing loopholes "shaking the same tree harder?"

Effectively, yes.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinemt99 From United States of America, joined May 1999, 6651 posts, RR: 6
Reply 21, posted (2 years 2 months 2 weeks 3 days 22 hours ago) and read 2602 times:
Support Airliners.net - become a First Class Member!

Quoting BMI727 (Reply 20):
Quoting mt99 (Reply 19):
Is closing loopholes "shaking the same tree harder?"

Effectively, yes.

Damn - What are we going to do?!! That a main part Romeny's and Ryan plan! The HORROR!!

"Ryan told Fox News that he and Romney want "to clear up the tax loopholes, get rid of special interest loopholes to lower tax rates for everybody."

http://www.reuters.com/article/2012/...paigns-taxes-idUSBRE87K0OO20120821

Its more clear here

""The question is not necessarily what loopholes go, but who gets them," Ryan replied. "High income earners use most of the loopholes. That means they can shelter their income from taxation. But if you take those loopholes, those tax shelters, away from high income earners, more of their income is subject to taxation and that allows us to lower our tax rates on everybody."

http://leanforward.msnbc.com/_news/2...-loopholes-romney-would-close?lite

[Edited 2012-09-11 20:26:02]


Step into my office, baby
User currently offlineMaverick623 From United States of America, joined Nov 2006, 5716 posts, RR: 6
Reply 22, posted (2 years 2 months 2 weeks 3 days 22 hours ago) and read 2588 times:

Quoting BMI727 (Reply 8):
This is a kind of big deal. It isn't the end of America, but what it is saying is that the wealthiest country on the planet is getting close to maxing out the credit card.

Um, no.

To put it into terms a layman can understand, it takes the US's credit rating from a perfect 850 down to an "awful" 830.



"PHX is Phoenix, PDX is the other city" -777Way
User currently offlineus330 From United States of America, joined Aug 2000, 3873 posts, RR: 13
Reply 23, posted (2 years 2 months 2 weeks 3 days 21 hours ago) and read 2585 times:

Quoting BMI727 (Reply 8):
This is a kind of big deal. It isn't the end of America

Glad you are refraining from the hyperbole....

Quoting BMI727 (Reply 8):
but what it is saying is that the wealthiest country on the planet is getting close to maxing out the credit card.

According to a private, for profit, ratings agency. These are the same rating agencies that gave great ratings to some of the CDOs.

Quoting stasisLAX (Reply 12):
In other news, Moody's gives millions to several GOP super-PACS. Just more political high-jinks from the robber-barons on Wall Street....

That is an important point to keep in mind--these rating agencies aren't the independent, not-for profit, public-interest orient commissars. So evaluate their decisions with that mind and with a grain of salt.

Quoting BMI727 (Reply 8):
Plenty of people have invested in junk bonds.

But people usually don't invest in junk bonds when they are looking for a low risk investment--and get a higher coupon payment to compensate for the greater risk. Treasuries are considered low-risk investments and their lower YTM reflects this. So, the downgrade did create uncertainty by investors. A typical investor response during a time of market uncertainty is to invest in low-risk investments, which meant that money moved toward the treasuries.


User currently offlineBMI727 From United States of America, joined Feb 2009, 15812 posts, RR: 27
Reply 24, posted (2 years 2 months 2 weeks 3 days 21 hours ago) and read 2578 times:

Quoting Maverick623 (Reply 22):
To put it into terms a layman can understand, it takes the US's credit rating from a perfect 850 down to an "awful" 830.

That seems like nothing, but we are the wealthiest country on the face of the earth. There is no reason a billionaire shouldn't have perfect credit, especially if they get to print money.

Quoting us330 (Reply 23):
A typical investor response during a time of market uncertainty is to invest in low-risk investments, which meant that money moved toward the treasuries

True. My overall point is to say that increased demand for treasury securities does not mean everything is great.



Why do Aerospace Engineering students have to turn things in on time?
25 Maverick623 : I'm not quite sure what to say about that... other than it's a completely wrong understanding of basic economics.
26 Post contains links pu : http://www.myfico.com/crediteducatio...les/warren-buffett-fico-score.aspx I know, its embarrassing to watch and I normally don't respond to the teenag
27 BMI727 : There is only one way to interpret a downgrade in credit rating or a threat of a downgrade: it is doubt, pure and simple. It means that there is unce
28 mt99 : And how long did that last? FYI DOW is back at 2007 levels..
29 DocLightning : OK, but the math still doesn't add up. Those crap social programs are a pittance compared to the defense budget.
30 BMI727 : Didn't make back the drop until December. Actually the social programs add up to quite a bit. Going with a FairTax plan or something like it could so
31 Post contains links us330 : Care to be more specific? Here are the actual numbers: Defense accounts for 20% of the budget, safety net programs (Excluding social security and med
32 BMI727 : There's also Social Security which should be phased out and accounts for 20% as well. Education will have to grow to more than 2% but there's a lot o
33 something : The result that little work and intelligence has got you is indeed funny.
34 cupraibiza : Sorry I cant get past the title "US Risks Loosing": It's losing losing losing It's not loosing Phew that feels better
35 Post contains links cmf : How do you explain IMF's data?
36 par13del : The US has been doing deficit spending for decades, the debt ceiling has been on a steady climb, I do not recall any declines, so which president exa
37 Ken777 : Right - and be sure to pass that open carry law in all states while you're at it. Those not in poverty will need those guns for protection and those
38 BMI727 : Social programs are extortion now? Set up an environment that promotes growth and jobs take care of themselves. But if GM and Chrysler were liquidate
39 cmf : I much rather have money going in to the biggest possible insurance system there can be in a country. Best option to handle people living longer or s
40 BMI727 : Then go buy insurance from the biggest company you can find or buy government securities and leave my money alone.
41 Post contains links pu : The IMF is counting money already collected by the US government in tax revenue as debt, because the money was spent on general government expenditur
42 Aesma : Why not add in personal debt, since this is a figure where the US is not so good? And what about states debt ? Some countries don't have those.
43 par13del : Correct, some countires do not have local governments who have tax and spending authority like US States, they rely on a budget from their central go
44 soon7x7 : Whatzup?...wan duznt half 2 knoww hou toooooooooo zpel tumaT beeeeg nAmricka...sined...sxcesssfL.
45 Post contains links pu : As far as personal debt, Americans are shrinking thst number massively and have been since the current economic crisis began. The average American is
46 cmf : I'm not touching your money. Stop being a freeloader. Only explains US numbers. Doesn't explain the big difference in the other countries numbers.
47 Flighty : My question is, how is it possible for a US company to have a higher credit rating than the US government? If GE borrows money and pays back in dollar
48 pu : Not sure what you are referring to here? What big difference in the other contries numbers from what source? If you read the lengthy explanation Stan
49 Flighty : That's certainly a very interesting and true point. I think the downgrade today also mentioned the Federal Reserve monetizing the debt, making the US
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