BAD NEWS
First time in USA history
First time in USA history
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S&P considering first downgrade of U.S. credit rating
Updated: Friday, August 5, 8:18 PM
Standard & Poor’s plans to enact the first downgrade of the U.S. Sterling credit rating was delayed Friday night when the Treasury Department said that it had found a math error in the firm’s calculations, according to news reports.
The White House was bracing for the downgrade, the reports said, after S&P officials advised the Treasury that it had decided to lower the AAA credit rating, which the U.S. government has held for 70 years. S&P decided to lower the rating after a bipartisan debt deal
But administration officials told the firm that it had wrongly calculated the nation’s deficit projections, according to the reports.
It was unclear when, or whether, the S&P would issue its downgrade in light of the mistake. Neither S&P nor the Treasury responded immediately Friday night to inquiries about the matter.
Standard & Poor’s has warned Washington several times this year that, unless the federal government took steps to tame its debt, its credit rating could be lowered.
Analysts have said a downgrade could increase the cost of borrowing for the U.S. government and lead to tens of billions of dollars in more interest costs per year. That could translate into higher borrowing for consumers and businesses, too.
A downgrade would also have a cascading series of effects on states and localities that rely on federal funding, including in the Washington metro area, potentially raising the cost of borrowing for schools and parks.
But the exact impact of the downgrade won’t be known at least until Sunday night, when Asian markets open, and perhaps not fully grasped for months. Analysts say the immediate term impact is likely to be modest because the markets have been expecting a downgrade by S&P for weeks.
Some analysts are worried about the impact of a downgrade on markets where Treasurys are held as collateral and the AAA rating is required. But most analysts don’t expect this issue to pose a major problem.
The downgrade by S&P is the most tangible vote of disapproval so far by Wall Street on the deal between President Obama and Congress to cut the deficit by at least $2.1 trillion over 10 years. S&P has said that it wanted at least $4 trillion of deficit reduction.
The downgrade is likely to be used as a weapon by both Republicans and Democrats as they argue the other side has not taken deficit reduction seriously.
Other credit rating agencies — Moody’s Investors Service and Fitch Ratings — have decided not to downgrade the United States credit rating. But they’ve warned that, if the economy deteriorates significantly or the government does not take additional steps to tame the debt, they could move to downgrade too.
In April, S&P first said it might downgrade the United States credit rating on concerns that lawmakers would not be able to come to a deal on reducing the debt. In July, as efforts stagnated, S&P said the odds of a downgrade within three months had moved up to 50 percent.
The ultimate deal between Obama and Congress ultimately failed S&P’s benchmark. Obama administration officials have been critical of S&P for making what was essentially a political judgment and for failing to conclude that the country was making a strong first step to reducing its deficit.Comment -
they 'miscalculated' the nations deficit so they are delaying the downgrade?
yeah right, they aint downgrading shit, the bankers gave them a call and let them know who's bossComment -
junk bondComment -
this would be bad news but how does it happen?Comment -
Should be downgraded more.........
Again, congrats to all that made the clutch move of cashing out their 401's recently.................brillant.Comment -
No big deal
Business as usualComment -
Settle down baldy, we'll be fine. Quit acting like the town is on fire when in it's just your rug that is on fire. S&P can go fukk themselves. Most of us won't even notice this.Comment -
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jj DO SOMETHING!!Comment -
USA = Buried
WTF happened to this once great nation
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Cool pie chart Excel.
Source?Comment -
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administration calling the downgrade amateur hour at s&p
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American families lost a total of $19.4 trillion (in 2010 dollars) in household wealth from June 2007 to March 2009
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What exactly does Bush have to do with this?Attached FilesComment -
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This is not good and indeed really bad that will effect our pockets.Comment -
Crustyme already on top of it
The charts don't lie
George W Bush is responsibleComment -
Lets go to two wars and give tax cuts to the rich
Ahhhhh the Republican wayComment -
Bush destroyed the country. There is a reason he is the worst president in history.Comment -
Nice graphs all these government figures are total BS. If you honestly think the country is improving you are really kidding yourself. Most job #'s are skewed becasue of all the people that have totally given up in finding work. At a certain point many republicans even admitted Bush was a clown. But all you Democrat Fanboys will continue licking Obama ass all the way down. hope he enjoys his $5 million Vineyard vacation.Comment -
JJ - Will the loan sharks in Newark and Paterson will be raising their interest rates due to this?
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