Page 12 of 14 FirstFirst ... 34567891011121314 LastLast
Results 166 to 180 of 198
Like Tree9Likes

Thread: U.S. political impasse threatens world?

  1. #166
    Senior Contributor
    Join Date
    07 Oct 08
    Location
    CT
    Posts
    5,229
    Quote Originally Posted by Doktor View Post
    Is someone's head gonna roll over that downgrade or the WH will blame S&P for not knowing their job?
    read S&Ps statement. They refer to one political party. They refer to the Bush taxcuts. When then president offers 4 trillion in reductions and it's shot down he is hardly the stick in the mud in the way.
    DOR likes this.
    Where free unions and collective bargaining are forbidden, freedom is lost.”
    ~Ronald Reagan

  2. #167
    Senior Contributor Doktor's Avatar
    Join Date
    25 Aug 08
    Location
    Skopje, Macedonia
    Posts
    11,890
    Quote Originally Posted by Roosveltrepub View Post
    read S&Ps statement. They refer to one political party. They refer to the Bush taxcuts. When then president offers 4 trillion in reductions and it's shot down he is hardly the stick in the mud in the way.
    Can you tell me where you read that? The only mentioning of the former administration is in this phrase "Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021."

    From what I could read they say they made this downgrade solely because the Congress and the White House waited for the last day and are not sure an agreement will be reached in the future.

    The full report:

    Research Update:
    United States of America Long-Term
    Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden;
    Outlook Negative


    Primary Credit Analyst:
    Nikola G Swann, CFA, FRM, Toronto (1) 416-507 2582; nikola_swann@standardandpoors.com

    Secondary Contacts:
    John Chambers, CFA, New York (1) 212-438-7344; john_chambers@standardandpoors.com
    David T Beers, London (44) 20-7176-7101; david_beers@standardandpoors.com


    Overview

    · We have lowered our long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term rating.
    · We have also removed both the short- and long-term ratings from CreditWatch negative.
    · The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics.
    · More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
    · Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us 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 any time soon.
    · 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.

    Rating Action

    On Aug. 5, 2011, Standard & Poor's Ratings Services lowered its long-term sovereign credit rating on the United States of America to 'AA+' from 'AAA'.

    The outlook on the long-term rating is negative. At the same time, Standard & Poor's affirmed its 'A-1+' short-term rating on the U.S. In addition, Standard & Poor's removed both ratings from CreditWatch, where they were placed on July
    14, 2011, with negative implications.

    The transfer and convertibility (T&C) assessment of the U.S.--our assessment of the likelihood of official interference in the ability of U.S.-based public- and private-sector issuers to secure foreign exchange for debt service--remains 'AAA'.

    Rationale

    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.

    Our lowering of the rating was prompted by our view on the rising public debt burden and our perception of greater policymaking uncertainty, consistent with our criteria (see "Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). Nevertheless, we view the U.S. federal government's other economic, external, and monetary credit attributes, which form the basis for the sovereign rating, as broadly unchanged.

    We have taken the ratings off CreditWatch because the Aug. 2 passage of the Budget Control Act Amendment of 2011 has removed any perceived immediate threat of payment default posed by delays to raising the government's debt ceiling. In addition, we believe that the act provides sufficient clarity to allow us to evaluate the likely course of U.S. fiscal policy for the next few years.

    The political brinksmanship 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. The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy. Despite this year's wide-ranging debate, in our view, the differences between political parties have proven to be extraordinarily difficult to bridge, and, as we see it, the resulting agreement fell well short of the comprehensive fiscal consolidation program that some proponents had envisaged until quite recently. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. It appears that for now, new revenues have dropped down on the menu of policy options. In addition, the plan envisions only minor policy changes on Medicare and little change in other entitlements, the containment of which we and most other independent observers regard as key to long-term fiscal sustainability.

    Our opinion is that elected officials remain wary of tackling the structural issues required to effectively address the rising U.S. public debt burden in a manner consistent with a 'AAA' rating and with 'AAA' rated sovereign peers (see Sovereign Government Rating Methodology and Assumptions," June 30, 2011, especially Paragraphs 36-41). In our view, the difficulty in framing a consensus on fiscal policy weakens the government's ability to manage public finances and diverts attention from the debate over how to achieve more balanced and dynamic economic growth in an era of fiscal stringency and private-sector deleveraging (ibid). A new political consensus might (or might not) emerge after the 2012 elections, but we believe that by then, the government debt burden will likely be higher, the needed medium-term fiscal adjustment potentially greater, and the inflection point on the U.S. population's demographics and other age-related spending drivers closer at hand (see "Global Aging 2011: In The U.S., Going Gray Will Likely Cost Even More Green, Now," June 21, 2011).

    Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing.

    The act calls for as much as $2.4 trillion of reductions in expenditure growth over the 10 years through 2021. These cuts will be implemented in two steps: the $917 billion agreed to initially, followed by an additional $1.5 trillion that the newly formed Congressional Joint Select Committee on Deficit Reduction is supposed to recommend by November 2011. The act contains no measures to raise taxes or otherwise enhance revenues, though the committee could recommend them.

    The act further provides that if Congress does not enact the committee's recommendations, cuts of $1.2 trillion will be implemented over the same time period. The reductions would mainly affect outlays for civilian discretionary spending, defense, and Medicare. We understand that this fall-back mechanism is designed to encourage Congress to embrace a more balanced mix of expenditure savings, as the committee might recommend.

    We note that in a letter to Congress on Aug. 1, 2011, the Congressional Budget Office (CBO) estimated total budgetary savings under the act to be at least $2.1 trillion over the next 10 years relative to its baseline assumptions. In updating our own fiscal projections, with certain modifications outlined below, we have relied on the CBO's latest "Alternate Fiscal Scenario" of June 2011, updated to include the CBO assumptions contained in its Aug. 1 letter to Congress. In general, the CBO's "Alternate Fiscal Scenario" assumes a continuation of recent Congressional action overriding existing law.

    We view the act's measures as a step toward fiscal consolidation. However, this is within the framework of a legislative mechanism that leaves open the details of what is finally agreed to until the end of 2011, and Congress and the Administration could modify any agreement in the future. Even assuming that at least $2.1 trillion of the spending reductions the act envisages are implemented, we maintain our view that the U.S. net general government debt burden (all levels of government combined, excluding liquid financial assets) will likely continue to grow. Under our revised base case fiscal scenario--which we consider to be consistent with a 'AA+' long-term rating and a negative outlook--we now project that net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 79% in 2015 and 85% by 2021. Even the projected 2015 ratio of sovereign indebtedness is high in relation to those of peer credits and, as noted, would continue to rise under the act's revised policy settings.

    Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. 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. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.

    Our revised upside scenario--which, other things being equal, we view as consistent with the outlook on the 'AA+' long-term rating being revised to stable--retains these same macroeconomic assumptions. In addition, it incorporates $950 billion of new revenues on the assumption that the 2001 and 2003 tax cuts for high earners lapse from 2013 onwards, as the Administration is advocating. In this scenario, we project that the net general government debt would rise from an estimated 74% of GDP by the end of 2011 to 77% in 2015 and to 78% by 2021.

    Our revised downside scenario--which, other things being equal, we view as being consistent with a possible further downgrade to a 'AA' long-term rating--features less-favorable macroeconomic assumptions, as outlined below and also assumes that the second round of spending cuts (at least $1.2 trillion) that the act calls for does not occur. This scenario also assumes somewhat higher nominal interest rates for U.S. Treasuries. We still believe that the role of the U.S. dollar as the key reserve currency confers a government funding аdvantage, one that could change only slowly over time, and that Fed policy might lean toward continued loose monetary policy at a time of fiscal tightening. Nonetheless, it is possible that interest rates could rise if investors re-price relative risks. As a result, our alternate scenario factors in a 50 basis point (bp)-75 bp rise in 10-year bond yields relative to the base and upside cases from 2013 onwards. In this scenario, we project the net public debt burden would rise from 74% of GDP in 2011 to 90% in 2015 and to 101% by 2021.

    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.

    When comparing the U.S. to sovereigns with 'AAA' long-term ratings that we view as relevant peers--Canada, France, Germany, and the U.K.--we also observe, based on our base case scenarios for each, that the trajectory of the U.S.'s net public debt is diverging from the others. Including the U.S., we estimate that these five sovereigns will have net general government debt to GDP ratios this year ranging from 34% (Canada) to 80% (the U.K.), with the U.S. debt burden at 74%. By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

    Standard & Poor's transfer T&C assessment of the U.S. remains 'AAA'. Our T&C assessment reflects our view of the likelihood of the sovereign restricting other public and private issuers' access to foreign exchange needed to meet debt service. Although in our view the credit standing of the U.S. government has deteriorated modestly, we see little indication that official interference of this kind is entering onto the policy agenda of either Congress or the Administration. Consequently, we continue to view this risk as being highly remote.

    Outlook

    The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction--independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners--lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government's debt dynamics, the long-term rating could stabilize at 'AA+'.

    On Monday, we will issue separate releases concerning affected ratings in the funds, government-related entities, financial institutions, insurance, public finance, and structured finance sectors.
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  3. #168
    Contributor
    Join Date
    19 Nov 09
    Location
    Chungli, Taiwan
    Posts
    501
    "Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. 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. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.
    "

  4. #169
    Senior Contributor Doktor's Avatar
    Join Date
    25 Aug 08
    Location
    Skopje, Macedonia
    Posts
    11,890
    So it is the only argument in the report? Great!
    No such thing as a good tax - Churchill

    To make mistakes is human. To blame someone else for your mistake, is strategic.

  5. #170
    Senior Contributor
    Join Date
    07 Oct 08
    Location
    CT
    Posts
    5,229
    Quote Originally Posted by DOR View Post
    One of these days, the GOPers are going to come up with an actual candidate. He, or she, will then have to explain how (s)he would have dealt with whatever pops up.

    Should be interesting.
    They can't speak the truth they wouldnt get a third of the vote if they campaigned to end medicare and cut social security so we could maintain top end rates.
    Where free unions and collective bargaining are forbidden, freedom is lost.”
    ~Ronald Reagan

  6. #171
    Senior Contributor
    Join Date
    07 Oct 08
    Location
    CT
    Posts
    5,229
    Quote Originally Posted by Doktor View Post
    So it is the only argument in the report? Great!
    Well which side did you see as unwilling to compromise. the ones calling for 80-20 in cuts/revenue or the ones calling for default? What would the rating be if we defaulted?
    Where free unions and collective bargaining are forbidden, freedom is lost.”
    ~Ronald Reagan

  7. #172
    Senior Contributor
    Join Date
    12 Aug 08
    Location
    UK/Europe
    Posts
    2,684
    I don't recal S&P downgrading the banks before they crashed...

  8. #173
    Regular
    Join Date
    01 Mar 08
    Posts
    151
    Quote Originally Posted by Parihaka View Post
    It's going to be interesting to see what the Chinese will do over the next month. Aside from stating the bleeding obvious of course
    Xinhua said the U.S. must slash its “gigantic military expenditure and bloated social welfare costs” and accept international supervision over U.S. dollar issues.
    Our military expenditure is about 4% GDP and they are asking for that to be cut? Sounds like a wish list from a special interest to me. Its not like post WW2 when we were about 10% huh?.

    The Chi-coms are loving this because it gives them a reason to be mouthy about it.

  9. #174
    Official Thread Jacker Senior Contributor gunnut's Avatar
    Join Date
    27 Jan 06
    Location
    DPRK, Demokratik People's Republik of Kalifornia
    Posts
    22,797
    Quote Originally Posted by RollingWave View Post
    "Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. 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. Key macroeconomic assumptions in the base case scenario include trend real GDP growth of 3% and consumer price inflation near 2% annually over the decade.
    "
    Small issue with wording here. Republicans in congress are not resistive to raising revenues. They are resistive to raising taxes. They are entirely happy to raise government revenue by way of a growing economy and a growing tax base.
    "Only Nixon can go to China." -- Old Vulcan proverb.

  10. #175
    Regular
    Join Date
    01 Mar 08
    Posts
    151
    Quote Originally Posted by Roosveltrepub View Post
    When Obama gets re-elected the Bush taxcuts will expire unless the house demands we cut taxes again to raise the debt ceiling next time.


    As funny and terrifying as I think this is.....



    Quote Originally Posted by DOR View Post
    One of these days, the GOPers are going to come up with an actual candidate. He, or she, will then have to explain how (s)he would have dealt with whatever pops up.

    Should be interesting.
    I don't think the GOP is going to get anyone worth electing. With that said, I don't think it will take anyone in particular to beat him. Once again, the choices are crap. Its not often you can quote rock songs and they be pertinent, but to quote Bon Jovis' Dead or Alive, "Its all the same, only the names have changed".

  11. #176
    Global Moderator
    Dirty Kiwi
    Parihaka's Avatar
    Join Date
    10 Nov 04
    Location
    Wellington, Te Ika a Maui, Aotearoa
    Posts
    18,250
    Quote Originally Posted by 7thsfsniper View Post
    Our military expenditure is about 4% GDP and they are asking for that to be cut? Sounds like a wish list from a special interest to me. Its not like post WW2 when we were about 10% huh?.

    The Chi-coms are loving this because it gives them a reason to be mouthy about it.
    I was think more along the lines of this in regards of stating the bleeding obvious

    The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone
    In the realm of spirit, seek clarity; in the material world, seek utility

    Gottfried Leibniz

  12. #177
    Contributor
    Join Date
    16 Sep 10
    Posts
    303
    John Bolton is talking about getting in the race now. It would be very interesting to see him in the debates. I always thought he would make a good Sec. of State. I would like to hear his ideas on the economy.
    Don't listen to me, I'm a wack job.

  13. #178
    Senior Contributor antimony's Avatar
    Join Date
    22 Feb 08
    Location
    Seattle, WA
    Posts
    3,028
    Quote Originally Posted by gunnut View Post
    I still don't know who I would vote for. I know I WILL NOT vote for Newt, Romney, Pawlenty, and another RINO whose name I forgot.
    There is another guy named Barry Sotoro who is running on the democratic ticket. Since you are a registered Democrat, have you considered him?
    "Is God willing to prevent evil, but not able? Then he is not omnipotent. Is he able, but not willing? Then he is malevolent. Is he both able and willing? Then whence cometh evil? Is he neither able nor willing? Then why call him God?" ~ Epicurus

  14. #179
    Administrator Tarek Morgen's Avatar
    Join Date
    08 Feb 07
    Location
    Kassel
    Posts
    4,413
    comments regarding Perry moved here: Rick Perry is throwing his hat into the ring

  15. #180
    Contributor
    Join Date
    19 Nov 09
    Location
    Chungli, Taiwan
    Posts
    501
    Quote Originally Posted by Laser View Post
    John Bolton is talking about getting in the race now. It would be very interesting to see him in the debates. I always thought he would make a good Sec. of State. I would like to hear his ideas on the economy.
    Wait... the same John Bolton that basically said that the UN should do whatever the US tells them to ?

    Whatever this guy does domestically, he'll be a nightmare for international relationship that's for sure.

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Similar Threads

  1. 5 political parties that are of risk of political irrelevance
    By Kevin Brown in forum International Politics
    Replies: 0
    Last Post: 14 Jul 09,, 00:00
  2. Call In Political Shows Around The World
    By PATRICKHENRY in forum International Politics
    Replies: 0
    Last Post: 26 Aug 06,, 23:52
  3. World's Smallest Political Quiz
    By THL in forum World Affairs Board Pub
    Replies: 23
    Last Post: 01 May 06,, 12:32
  4. Impasse over French bombing deal
    By Ironduke in forum International Politics
    Replies: 1
    Last Post: 25 Aug 03,, 01:11

Share this thread with friends:

Share this thread with friends:

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •