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S&P clearly stated that the reason for the downgrade was because of the dysfunction in DC. That the debt ceiling should have simply been raised; instead they watched a manufactured crisis unfold, taking us up until the last minute. This was brought on purely by one group of people: The tea party and nobody else. They went on to say that lack of revenue was another contributing factor.
If you'd like to see our rating go down even more then make sure the 'baggers fight to keep Bush tax cuts again and we'll get just that. That's S&P talking not me.
Now you can ignore facts, like you always do, and change the subject but the truth is still the truth. If the GOP would not have been so laser focused on attacking Obama we wouldn't have been downgraded. They chose to turn this into a circus for one reason and one reason only, and this is the result.
As I said, congrats, pat yourself on the back while you're at it to, you deserve it.
Please read the S&P report before you post more misinformation... Here is a link.. If you need help understanding please post back and we will give you a hand..
It bothers me when posters come on here, post information based on what they hear in the media then form an opinion and post it as if it's God's truth. Take some time and research before you post.
I have to assume you voted for the village idiot if you used the same basis for decision making as you did to determine the reasoning behind the S&P downgrade.
The Tea Party is not mentioned, the Bush tax cuts have a minimal impact on long term debt.. entitlements are a large part and mentioned/referenced several times in addition to raising revenues. Notice that they don't mention taxing the rich...they say raise revenue.. The also mention a dysfunctional administration and congress.
How in the world can you come up with what you posted from the S&P report?
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.
note whats missing liberals. RAISING TAXES.. SPENDING IS THE PROBLEM...
Please read the S&P report before you post more misinformation... Here is a link.. If you need help understanding please post back and we will give you a hand..
It bothers me when posters come on here, post information based on what they hear in the media then form an opinion and post it as if it's God's truth. Take some time and research before you post.
I have to assume you voted for the village idiot if you used the same basis for decision making as you did to determine the reasoning behind the S&P downgrade.
The Tea Party is not mentioned, the Bush tax cuts have a minimal impact on long term debt.. entitlements are a large part and mentioned/referenced several times in addition to raising revenues. Notice that they don't mention taxing the rich...they say raise revenue.. The also mention a dysfunctional administration and congress.
How in the world can you come up with what you posted from the S&P report?
I still like how S&P degraded us at the same time as our 2 year T-bond hit all time low yields. I have to wonder how connected to reality some of these rating agencies are especially because they rated mortgage backed securities so highly.
I still like how S&P degraded us at the same time as our 2 year T-bond hit all time low yields. I have to wonder how connected to reality some of these rating agencies are especially because they rated mortgage backed securities so highly.
But mortgage backed securities were AAA credit, because they were backed by the federal governments guarantee. Without the guarantee, they were junk, but with it they were top quality highly leverable assets.
The vitriolic nature of the debt ceiling debate was a contributing factor to the downgrade as well as the refusal to increase revenue. Can't blame that on anybody else but the Republicans.
So congratulations to you all, you've done a fantastic job so far.
So true. This downgrade is still further proof that the Right Wing is willing to sink the nation versus compromise and work with President Obama. And the utterly disruptive influence of the Tea Party neophytes in Congress. I shake my head in complete disgust at the depths of the GOP's dysfunction. All of the bickering was a play by the Repubs and the TPers to prevent the re-election of President Obama with this scorched earth approach. Very sad for America.
The blame for the downgrade lays squarely at the feet of the Repubs and the TPers...let's see how they will spin this now.
But mortgage backed securities were AAA credit, because they were backed by the federal governments guarantee. Without the guarantee, they were junk, but with it they were top quality highly leverable assets.
No they weren't. Only Ginnie Mae was backed fully. Fannie and Freddy had lines of credit with the government, but their securities were not backed in any significant way.
Besides that the fact remains that S&Ps rating change comes at a time when demand for T-Bonds as a safe asset is extremely strong. In fact in the short term T-bonds are viewed as a more secure asset today then they have been at any other point in US history. I have to believe this is about politics, or trying to influnence public policy on S&Ps part, because the facts on the ground are the direct opposite of what S&P is suggesting. Interest rates on T-Bonds are collapsing which is the exact opposite of what usually happens when a credit rating is downgraded.
No they weren't. Only Ginnie Mae was backed fully. Fannie and Freddy had lines of credit with the government, but their securities were not backed in any significant way.
Besides that the fact remains that S&Ps rating change comes at a time when demand for T-Bonds as a safe asset is extremely strong. In fact in the short term T-bonds are viewed as a more secure asset today then they have been at any other point in US history. I have to believe this is about politics, or trying to influnence public policy on S&Ps part, because the facts on the ground are the direct opposite of what S&P is suggesting. Interest rates on T-Bonds are collapsing which is the exact opposite of what usually happens when a credit rating is downgraded.
While they were not linked to the federal government, Fannie and Freddy are GSA's and in the investment world, GSA's are backed completely by the full faith of credit of the United States. Its no different than the US Post Office. We government investors, accept lower than normal cap rate on these investments in exchange for knowing that they are backed by the US credit.
Both Fannie/Freddie borrowed money from the bond market using the linkage to the US Government to obtain lower than market rate bonds. They also held special asset requirements granted to them from the US Government. Its this implied linkage to the US Government which allowed them special priviledges, and its this connection which offered the implicit government guarantee backing them.
While they were not linked to the federal government, Fannie and Freddy are GSA's and in the investment world, GSA's are backed completely by the full faith of credit of the United States. Its no different than the US Post Office. We government investors, accept lower than normal cap rate on these investments in exchange for knowing that they are backed by the US credit.
Both Fannie/Freddie borrowed money from the bond market using the linkage to the US Government to obtain lower than market rate bonds. They also held special asset requirements granted to them from the US Government. Its this implied linkage to the US Government which allowed them special priviledges, and its this connection which offered the implicit government guarantee backing them.
They are GSE but they are not completely backed by the full faith and credit of the US. They are publically chartered and do get special privileges, but they are still private companies. Its nothing like the post office. If it was why would they have to be taken into conservatorship. So while they do get preferential treatment in terms of credit there are no guerantees of creditworthiness from the US government.
From the link
"Although many investors assume that F-F obligations are effectively guaranteed by the U.S. government, the fact is that the guarantee is implicit only. I will not attempt to forecast what would happen should either firm face a solvency crisis, because I just do not know. What I do know is that the issue is a political one, and political winds change in unpredictable ways."
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