US Debt Rating Downgraded… Thanks, Tea Baggers!

Well – the Tea Baggers were successful in screwing the country after all. Look for your interest rates to rise on everything from your mortgage to the cost of a new car.

Tea Baggers Succeed in Sinking the Country

S&P Downgrades U.S. Debt Rating — Press Release

Standard & Poor’s took the unprecedented step of downgrading the U.S. government’s “AAA” sovereign credit rating Friday in a move that could send shock waves through global. The following is a press release from Standard & Poor’s:

– We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.

– We have also removed both the short- and long-term ratings from CreditWatch negative.

– The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

– More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.

– Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.

– The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

Republicans Cripple American Credit Rating

Conservative Screw America... Again.

In a continuing effort to save corporations and rich individuals from paying their fair share of taxes under the misguided conservative maximum that making the rich richer makes them buy more Bentlys …

Republicans have already damaged America’s Credit Rating. Moody’s has announced it will downgrade the US’s credit rating based on the fact that irrational whackjobs like the Tea Baggers can cause a default – even if there is not actual underlying or precipitating crisis.

I hope it was worth driving your average American’s Mortgage interest up a point for conservative “principles”.

Moody’s: Abolish the debt limit

The United States should do away with the debt ceiling altogether to bring greater certainty to investors in U.S. Treasury bonds, Moody’s suggested Monday.

With the August 2 deadline for raising the debt ceiling barely more than two weeks away, the bond-rating agency issued a report Monday noting that the U.S. is one of just a few countries that has a statutory borrowing limit and saying that the limit creates “periodic uncertainty” for investors, Reuters reported.

Moody’s threatened last week to downgrade the AAA rating of the U.S. government if it is unable to meet its debt obligations next month and perhaps even if Congress and the White House are able to reach a deal.

In the past, Moody’s has considered the risk of U.S. default on its debts very low because Congress has routinely approved hikes to the debt limit, but with negotiations between President Barack Obama and congressional Republicans at an impasse, the agency is less confident.

“The current wide divisions between the House of Representatives and the Obama administration over the debt limit creates a high level of uncertainty and causes us to raise our assessment of event risk,” analyst Steven Hess wrote in the report.

But, he said, “We would reduce our assessment of event risk if the government changed its framework for managing government debt to lessen or eliminate that uncertainty.”

Rather than continuing to use the debt ceiling in an effort to keep U.S. borrowing down, the government should look toward Chile, Moody’s suggested. There, “the level of deficits is constrained by a ‘fiscal rule,’ which means the rise in debt is constrained though not technically limited.” Chile is considered to be Latin America’s most fiscally sound country.

And, the report noted, it’s not like the debt ceiling has been effective in keeping U.S. debt down: Congress has in the past raised it often and has not linked it to spending levels.

This from the other major rating firm, Standard and Poor -

U.S. warned of possible downgrade

U.S. lawmakers got another stern warning from a leading credit rating agency on Thursday that there is now a very real possibility that the country’s top-notch credit rating could be downgraded in the next three months.
Standard & Poors said in a statement it was placing the United States’ sovereign rating on “CreditWatch with negative implications.”
“[O]wing to the dynamics of the political debate on the debt ceiling, there is at least a one-in-two likelihood that we could lower the long-term rating on the U.S. within the next 90 days,” the agency said in a statement.