S&P cuts U.S. ratings outlook to negative

[WildspitzE]

Re: S&P cuts U.S. ratings outlook to negative

Worth noting that when the agencies started down-grading Ireland and Greece, the authorities and many of the population reacted the same way, i.e. "these guys don't know what they're talking about". In fact, with hindsight, it's clear that Ireland and Greece were already beyond the point of no return when the agencies started downgrading them. I'm not sure that's true for the US. The US is on a road to crisis but could probably still turn around if the authorities had the will. Unfortunately it's becoming clear that the only thing strong enough to turn them around will be a full blown crisis, ergo crisis is assured. The fact that so many in the mainstream world are already downplaying the S&P warning merely confirms this observation.

The prevalent institutional investor view re: agencies is broken down into the following two simultaneous views: (i) the rating agencies don't know what they're doing so we don't really care what they say, we do our own credit work, and (ii) if the rating agencies don't like it, we don't either so we won't even bother with the credit work.

(ii) is very much driven by the regulatory requirements regarding the rating agencies discussed herein above.

The interesting position the rating agencies find themselves in is: if i downgrade (or sound the alarm in fragile cases) will i make it worse, a self-fulfilling prophecy that creates a feedback loop, or not. akin to many accounts receivables securitization transactions or secure lending, if i as a lender enforce on the collateral i bankrupt the company and make it worse for myself.

[Slimprofits]

Re: S&P cuts U.S. ratings outlook to negative

That the ratings agencies weren't put out of business over the rampant and undenied MBS corruption is stunning. That anyone pays any attention to their pronouncements today is even more stunning...

Neither are stunning, especially the latter.

The ratings agencies are part of EJ's bullhorn or as Joe Bageant describes it, The Hologram.

On TV, even when the hosts dared to mention the past failures of the ratings agencies, they still plow forward with the report attaching all manner of credibility to it.

[cjppjc]

Re: S&P cuts U.S. ratings outlook to negative

Neither are stunning, especially the latter.

The ratings agencies are part of EJ's bullhorn or as Joe Bageant describes it, The Hologram.

On TV, even when the hosts dared to mention the past failures of the ratings agencies, they still plow forward with the report attaching all manner of credibility to it.

Excellent point. I've observed that and so much more, and wonder what is going on in the world.

[big67]

Re: S&P cuts U.S. ratings outlook to negative

Excellent point. I've observed that and so much more, and wonder what is going on in the world.

Still, even if the S&P timing is supportive of a specific political agenda, the downgrade, per se, is not unwarranted at all.

See for example Kotlikoff article that came out before the outlook downgrade:
http://www.bloomberg.com/news/2011-04-05/u-s-fiscal-crisis-in-spitting-distance-commentary-by-laurence-kotlikoff.html

Do you think Obama is willing / has the political support to put forward a 4 Trillions cut before next presidential elections in 2013?

[Thailandnotes]

Re: S&P cuts U.S. ratings outlook to negative

S&P downgrade is pure BS in the run up to this big bluff...

http://www.washingtonpost.com/busine...PtE_print.html


"But most analysts take a darker view. Bill Gross, who runs Pimco, the world’s biggest bond fund, said in an e-mail that failure to raise the debt ceiling would be “catastrophic — global investors would move money at the margin to countries which have their act together, interest rates might rise by 50 basis points overnight, the stock market would plunge.”

"Already, some traders have begun hoarding Treasury bills and other short-term assets in case the government stops issuing new debt. For now, such “disruptions” are minor but noticeable, said Karen Shaw Petrou, managing partner of the research firm Federal Financial Analytics.

“It’s like before a thunderstorm,” she said. “The birds are quiet in the trees, and there’s a very weird mood in the market. But it hasn’t yet started to rain.”

[cjppjc]

Re: S&P cuts U.S. ratings outlook to negative

Still, even if the S&P timing is supportive of a specific political agenda, the downgrade, per se, is not unwarranted at all.

See for example Kotlikoff article that came out before the outlook downgrade:
http://www.bloomberg.com/news/2011-04-05/u-s-fiscal-crisis-in-spitting-distance-commentary-by-laurence-kotlikoff.html

Do you think Obama is willing / has the political support to put forward a 4 Trillions cut before next presidential elections in 2013?

I was responding to this sentence:

On TV, even when the hosts dared to mention the past failures of the ratings agencies, they still plow forward with the report attaching all manner of credibility to it.


The world appears to be taking on an Alice in Wonderland feel.


My favorite video from this site:

http://www.youtube.com/watch?v=rlQ--3juteM

Itulip should do a video with the claimed Fed strong dollar policy as a theme.

And to answer your question, I don't think Obama has the will to cut anywhere near that amount.

[Slimprofits]

Re: S&P cuts U.S. ratings outlook to negative

The world appears to be taking on an Alice in Wonderland feel.

Eyes wide open!