Some early thoughts in anticipation of Monday’s NY Stock Exchange reaction to last Friday’s news about the United States’ AAA credit rating devaluation.

How do credit ratings come about? Go here for an interesting article about S&P, Fitch and Moody’s.

An important quote:

Losing your rating or being downgraded can have a fatal effect on your country’s ability to borrow money on the markets.

The Good:
The two other remaining credit rating agencies, Fitch and Moody’s, weren’t motivated to downgrade the United States. Yet. (Though S&P is considering another downgrade.)

The Bad:
Stock exchanges are ruled by emotions — that is, how they tend to feel about the security, worthiness, consistency, strength and reliability of a given stock, country or situation.

Literally, if the exchange doesn’t “feel” right about the downgrading of the US, there could be a massive sell-off and a divestment of anything US-branded.

From S&P’s recent report (in PDF), I quote:

· 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.

Less reduction in spending? You even remotely believe that Demorats will agree to less spending than reflected in the current “debt ceiling” bill? You’re out of your mind; that won’t occur because that conflicts with the core, foundational philosophy of the Demorats and Leftists.

S&P writes:

We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements, or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. We also believe that the fiscal consolidation plan that Congress and the Administration agreed to this week falls short of the amount that we believe is necessary to stabilize the general government debt burden by the middle of the decade.

“Containing the growth in public spending.” Meaning that S&P has little confidence that the US government can contain said growth. Clearly, entitlements are an issue and cannot continue. Remember when President Bush attempted to reform Social Security? That was verboten! So now we’re paying that price. And how do you raise revenues? With the Demorats it’s TAX TAX TAX. With Conservatives, it’s “get government the hell out of the way of a free market economy.” And that the plan “falls short of the amount we believe is necessary to stabilize the federal government debt burden”? Of course!

Because the Demorats and Leftists and RINOs refuse to CUT.

Again:

We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.

That’s correct, and proud of them. “Raising revenues” = MORE TAXES. Raising taxes isn’t the point and, in a recession, is a death knell for any economy. One could raise all the taxes on the “wealthy” and, further, even confiscate all their wealth and the debt/deficit problems wouldn’t even remotely be solved. All the US “billionaires” combined don’t have the earning power to take a small bite out of our debt. That is a specious argument, and one made politically in order to demonize capitalists. Any taxation, trust me ladies and gentlemen, will have to be borne by the MIDDLE CLASS, where the resiliency, consistency and true cash reside. That’s YOU and ME. In addition, you and I are already going to be taxed via ObakaKare and the expiration of the “Bush Tax Cuts.” But of course, conveniently, people forget that and the media won’t cover it.

The US government does NOT have a revenue problem; it has a SPENDING problem. Simple logic and common sense tells us this, not convoluted economic theorems and formulas.

One can raise revenues by relaxing taxes and regulations on businesses. By making businesses feel like they are WELCOME in the national, state and local economies and not simply sources of governmental oppression. Perfect example: Fornicalia. Let THAT be your current lesson, Leftists. Businesses are FLEEING the FLEECING state of Fornicalia.

And “green jobs,” Mr Obama? Where in the hell are those promised thousands of “green jobs”? Arnold promised “green jobs” as well. Where are they, I ask? I don’t see them.

Infrastructure? You dare to go there, sir? Your first Porkulus was predicated upon the entire RESURRECTION of our national infrastructure. So where did that get you? Oh yes, that’s right, concerned about the upgrading of airports under FAA because you didn’t have sufficient cash.

Hello? Is ANYONE paying attention?

Further:

Our revised scenarios also take into account the significant negative revisions to historical GDP data that the Bureau of Economic Analysis announced on July 29. From our perspective, the effect of these revisions underscores two related points when evaluating the likely debt trajectory of the U.S. government. First, the revisions show that the recent recession was deeper than previously assumed, so the GDP this year is lower than previously thought in both nominal and real terms. Consequently, the debt burden is slightly higher. Second, the revised data highlight the sub-par path of the current economic recovery when compared with rebounds following previous post-war recessions. We believe the sluggish pace of the current economic recovery could be consistent with the experiences of countries that have had financial crises in which the slow process of debt deleveraging in the private sector leads to a persistent drag on demand. As a result, our downside case scenario assumes relatively modest real trend GDP growth of 2.5% and inflation of near 1.5% annually going forward.

Meaning: Mr Obama has been LYING to the nation, indicating that things are getting better when, in fact, they are not and, additionally, Mr Obama refuses to do what logic demands:

1. STOP further spending, and 2. Begin massive CUTTING

With that in mind, next up on Mr Obama’s plate?

The Ugly:

That’s right; another STIMULUS PACKAGE consisting of MORE SPENDING.

Just waiting for the conclusion of today.

It shall be, as the Chinese say, “interesting times.”

BZ

P.S.
As Treasury Ignoramus Timmy (Incompetent) Geithner just said on April 19th of this year:

Treasury Secretary Tim Geithner said Tuesday there is “no risk” the U.S. will lose its top credit rating amid a new analysis that revised its outlook on American debt to “negative.”

Geithner took to the airwaves of financial news networks to push back against a report Monday by Standard & Poor’s that lowered its outlook on U.S. debt to “negative,” reflecting political uncertainty over whether lawmakers will reach an agreement to address long-term debt.

Your current party in charge believes in no foundational documents.

Facts in evidence.

1) You can’t get straight answers out of Obama’s Minions and
2) You can’t get them to say they believe in our core documents to the exclusion of all else.

And we’re somehow shocked that there exist problems in this administration?

You can’t even stand up and say that you will adhere, as a Justice, to the Constitution and the Bill of Rights to the exclusion of all else?

BZ

[No politics today. Moritorium. –BZ]

In my prior job, I did a little of this. And drove it. And enabled it. And managed it. Back when we actually had training and EVOC and a coordinated motor unit in my department — before not just training was essentially eliminated wholesale but my entire department was abused and ridden and driven into the ground by incompetence, incompetents, arrogance, indifference, naivete, the mismanagement of funds, the abuse of power, with negligence in hiring, negligence in training and negligence in retention.

If somebody would only ask (and I suspect it’s just a matter of time), I could make so much more money testifying against my department than I could working for it. And every sentence would be factual (oh, the truths I could tell)!

That said, it’s time to revel in some incredibly-amazing skill:

On April 30th of 2011, GPPD Motor Officer Donnie Williams — on my most despised motorcycle ever — (Harley-Davidson), dragged appropriate footboards and kept the revs up whilst remarkably-feathering the clutch (Not so long thereafter replaced?) in order to clean an incredibly-intricate, detailed and complicated competitional exercise pattern.

One mistake, and he was gone.

One cone down, and he was gone.

He cleaned every-damned-thing.

This from the April 30th, 2011 Grand Prairie Police Motorcycle Rodeo — hosted by the GPPD in Texas.

I’m not bad on a bike. But Donnie Williams, however, might just be an alien from another galaxy.

Dude, you are in fact a Motor Officer Star.

BZ

P.S.
Thanks, Chris!

A very few people, in one company, determined an edict that will have complications to come for quite some time.

Standard & Poors just now downgraded the credit rating of the United States of America for the very first time in its history, from a AAA rating to a AA+ rating.

And that makes every difference in the world. Literally.

Under the watch of Mr Barack Hussein Obama.

You OWN it, sir.

We are now, adrift, in completely uncharted territory.

Standard & Poor’s announced Friday night that it has downgraded the United States credit rating for the first time, dealing a huge symbolic blow to the world’s economic superpower in what was a sharply worded critique of the American political system.

Lowering the nation’s rating one-notch below AAA, the credit rating company said “political brinkmanship” in the debate over the debt had made the U.S. government’s ability to manage its finances “less stable, less effective and less predictable.” It said the bi-partisan agreement reached this week to find $2.1 trillion in budget savings “fell short” of what was necessary to tame the nation’s debt over time and predicted that leaders would have no luck achieving more savings later on.

The decision came after a day of furious back-and-forth between the Obama administration and S&P. Government officials fought back hard, arguing that S&P made a flawed analysis of the potential for political agreement and had mathematical errors in its initial analysis, which was submitted to the Treasury earlier in the day. The analysis overstated the U.S. deficit over 10 years by $2 trillion.

“A judgment flawed by a $2 trillion error speaks for itself,” a Treasury spokesperson said Friday.

The downgrade will push the global financial markets into unchartered territory after a volatile week fueled by concerns over the European debt crisis and the slowdown in the U.S. economy.

Analysts say that, over time, the downgrade is likely to push up borrowing costs for the U.S. government, costing taxpayers tens of billions of dollars a year. It could also drive up costs for borrowing for consumers and companies seeking mortgages, credit cards and business loans.

A downgrade could also have a cascading series of effects on states and localities, including nearly all of those in the Washington metro area. These governments could lose their AAA credit ratings as well, potentially raising the cost of borrowing for schools, roads and parks.

But the exact impact of the downgrade won’t be known until at least Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the impact on the markets may be modest because they have been anticipating an S&P downgrade for weeks.

This occurred on a Friday, when there are two days before the markets open on Monday. And this has the chance to affect, obviously, every aspect of American finance and commerce. From loans to the prime rate to gas prices to trucking rates to food and water and shelter to the ability of the United States to even defend itself.

Every mortgage in the US could be “called” in a fiscal constriction. Every person owing cash on their homes could find themselves in foreclosure.

This is no joke.

No one has any idea where this could go, in our current environment.

If you think this rating has no affect upon you, you would be so incredibly wrong.

This is uncharted, incredibly uncharted territory. Everything is up for grabs.

BZ

Every day, the world gets turned upside down by one more notch.

On yesterday’s (Friday, August 5th) MSNBC “Morning Joe“, Senator John Kerry (D – MA) said:

And I have to tell you, I say this to you politely. The media in America has a bigger responsibility than it’s exercising today. The media has got to begin to not give equal time or equal balance to an absolutely absurd notion just because somebody asserts it or simply because somebody says something which everybody knows is not factual.”

“It doesn’t deserve the same credit as a legitimate idea about what you do. And the problem is everything is put into this tit-for-tat equal battle and America is losing any sense of what’s real, of who’s accountable, of who is not accountable, of who’s real, who isn’t, who’s serious, who isn’t?”

That’s correct, the American media has a responsibility to not provide “equal time” to TEA Party type ideas or “notions.”

So let’s see: if there is speech with which Mr Kerry disagrees, then it is to be dismissed out-of-hand. But let’s portray things a bit more plainly: it is dissent that Mr Kerry wishes to suppress — in total contravention of, I’d care to point out, the First Amendment.

In truth, it is challenging and caustic speech that requires defense, not political pablum spewed by — for example — the likes of Mr Kerry and his ilk. And even then, of course, Mr Kerry’s speech requires protection under the First Amendment. I have no desire whatsoever to suppress what Mr Kerry says. Nor, rightly so, any lawful ability to do so. That is as it should be.

I contend, further, by dint of his Senatorial position, Mr Kerry holds no major sway on veracity; I would submit, perhaps even the reverse. It is his job to fabricate and parse and minimize.

The final upside-down aspect I’d care to point out today: 58-year-old Roseanne Barr has decided to run for President of the United States:

I was raised a Socialist.”

That there, buddy, is called a Clue. She said she will rid Americans of all taxes, overlook student loans, eliminate the exchange of money and legalize marijuana. Will her family at least vote for her? Oh, that’s right; she doesn’t have a family.

The Moonbattery keeps on keepin’ on.

BZ