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Senior Contributor

Re: Down grade


@Democratforlife wrote:

Since you probably didn't read Hawken's link for more than one reason, here is a snip;

 

"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."

 

 

Remember kraft, spending is the problem not revenue.

 

 


I read it and you are taking a simplistic explanation out of a decision that has multiple facits.

From the link and note all the contributing factors listed in this paragraph and the one I highlighted


 The political brinksmanship of recent months highlights what we see as America's governance and policymaking becoming less stable, less effective, and less predictable than what we previously believed. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key 
to long-term fiscal sustainability.

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Senior Contributor

Re: Down grade


@BA Deere wrote:

I`m sure it will be some how spun to be the Tea Party`s fault even though the Dow crash and the down grade happened AFTER they got their precious debt ceiling raise.  Definitely sets the stage for QE3.  Bottomline : Democrats should have agreed to more spending cuts, not the measely $200 billion a yr that was passed  Woo-Hoo! now the deficit will only be $1.4 Trillion.  It`s like Ole and Lars having a job hauling hay and losing 50¢ a bale.  Ole sez "Lars, ve need to haul more hay to make money, looks like ve need a bigger truck!".   


BA my understanding of economics is they need to get more income. Raise the price, increase the income!

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Senior Contributor

Re: Down grade


@kraft-t wrote:
Perhaps its a different reason than you think.  This was the first time in history that a significant portion of congress thought it was ok to default on our obligations. I wouldn't loan you any money if you were considering defaulting on what you already owe.

Commentators in Canada would tend to agree with you.

A couple have made the point that it was the inability of your legislators to compromise enough to pass the debt increase in a timely manner was a big part of the down grade.

It shows the inability of your present government to govern in a stable, predictable way.

Leaves uncertainty in future economic policy and if it will continue in a secure manner.

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Senior Contributor

Re: Down grade


@BA Deere wrote:

Don, those holding US debt were at NO time at risk of not getting paid their nearly nonexsistant interest, there is enough revenues coming in for that.  If anything you seasoned citizens talking about "Why do we have to pay the Chinaman on the backs of social security ??" that is what spooked `em.  When Barry Obama took over the National debt was $10.4 Trillion, in 3 years Barry and the Dems added over $4 TRILLION!! The Dems DID control BOTH houses and the White House, you know.  In my opinion, Standard and Poor should have took the US rating down to a "A" rating the minute the Nat debt hit $10 Trillion when Bush was in, that would have brought attention to the inevitable.  The debt to GDP ratio under Bush was somewhat managable, under Barry any way you cut it our debt/GDP is 100%!!!! no coming back from that.  Would the last one to leave, please turn out the lights? 


Comparing Obama to Bush without pointing out the differences is not a good practice for considering where the problem is.

Bush had a vibrant economy so a chance to pay down the debt.

Obama is saddled with a recession and a greatly increased debt leaving with little chance to control spending and saddled with tax cuts which reduce income and on going wars not many options. 

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Senior Contributor

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Senior Contributor

Re: Down grade

You won't even have to read tea leaves to get this one right, BA. As I said, the American people have already picked who the losers are in this debacle, and this article spells out so even YOU can appreicate it.

http://www.nytimes.com/2011/08/05/us/politics/05poll.html

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Honored Advisor

Re: Down grade

Hey Canuck, the Democrats won big time in `08 the House of Representatives the Senate and the White House. If the Bush tax cuts were such a millstone around Obama`s neck they could have gotten rid of it.  The wars?? Same deal, Democrats had alllllll of 2009 and alllll of 2010 to bring the boys home...but they didn`t.  Going against the "will of the people" wasn`t something that bothered Democrats when they were cramming Obamacare down our throats, so "getting relected" is a non excuse.  What plan has Obama had to get the economy going? +9% unemployment, real unemployment +16%, $1.5 Trillion deficits what`s his plan?  Seriously, outside of partying like it`s 1999 and playing 18 holes of golf and sending his family on trips, can anyone tell me what the guy`s plan is? 

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Senior Contributor

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Senior Contributor

Re: Down grade

All that is very interesting, BA. Problem is, the only thing the tp/gop have to offer is the same **bleep** thing that put us in a ditch in the first place. A Congress with an 82% diapproval rating? The American people aren't that stupid to put idiots like that back in power, I doubt they can keep the House next year either. This week in Wisconsin is going to speak volumes about how the next election is shaping up.

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Senior Contributor

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