Friday, August 5, 2011

S&P Downgrades U.S. Credit Rating

WASHINGTON (AP) — Credit rating agency Standard & Poor's on Friday downgraded the United States' credit rating for the first time in the history of the ratings.

The credit rating agency said that it is cutting the country's top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.

A source familiar with the discussions said that the Obama administration feels the S&P's analysis contained "deep and fundamental flaws."

S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.

S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country's debt.

After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package at the 11th-hour that averted a possible default.

In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.

S&P said it was now "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 anytime soon."


Faye said...

Hello Campers,

So Congress get the debt thing settled for a time, bills get paid and then we loose our AAA credit rating. Can anybody explain that to me please?


Faye said...

Actually, I was shocked that it wasn't lowered more than it was; a lot more. And what's up with Moody's? Are they delusional or are they just plain liars? Why do they even bother rating credit?

And I guess I missed something. Did congress "get the debt thing settled for a time"? All I saw was that they raised the debt ceiling once again to incur additional debt. If anyone believes that borrowing more money settles anything, I want to try whatever it is they are smoking. It is obvious to me congress is smoking it. I think Obama is putting his in brownies and eating a lot of 'em. Seems like most of the voters have been smoking it too. On second thought, I don't want any. Keep that crap WHAY the hell from me!

Do ANY of you sincerely believe any of the "cuts" are real? Come on. Surely you don't?

We are heading for disaster.