U.S. Debt Downgraded

August 6th, 2011
in econ_news

credit-downgrade Econintersect:  For the first time in history U.S. government debt does not have the top level credit rating.  S&P (Standard and Poor’s) downgraded Treasury debt from AAA to AA+ Friday (August 5).  The announcement came after stock and bond markets closed, so the impact on securities trading could not be immediately observed.  The credit rating agency said that two factors were foremost in their decision:  (1) The debt ceiling plan passed this week “falls short” of what is needed to stabilize the country’s long-term finances; and (2) The partisan brinksmanship of political action does not bode well for future responsible action.

Follow up:

From the Los Angeles Times:

"The political brinkmanship 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," said S&P, one of three leading credit rating agencies.

"The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy."

The outlook on the long-term rating is negative and S&P could go to a lower rating within the next two years, according to CBS News.

CBS also reported that the U.S. treasury has issued a statement that there is an error of $2 trillion in the S&P calculations.  From CBS:

A Treasury Department spokesperson said in reaction to the news of the downgrade: "A judgment flawed by a $2 trillion error speaks for itself."

CBS said that S&P has not responded to the Treasury allegation.

As reported by GEI News, the other two major credit rating agencies (Moody’s and Fitch) had reaffirmed the AAA rating on Thursday (Aug. 4).  No reaction to the S&P action from either Moody’s or Fitch has been reported yet.

Sources:  Los Angeles Times, CBS News and GEI News









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.











1 comment

  1. roger erickson says :

    you have to suspect that someone's betting on some fire-sale prices if large pools of money have to rapidly get out of some positions

    (those for which regulations allow large funds to own ONLY given AAA ratings)

    Some people should go to jail over this? Undoubtedly!

    what's the difference between S&P's actions and Rothschild's old fraud of spreading arbitrary rumors, then buying up targeted stocks at induced lower prices?





 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved