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Thread: S&P cuts U.S. outlook to negative on fiscal worry

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    S&P cuts U.S. outlook to negative on fiscal worry

    From Reuters:

    Standard & Poor's on Monday downgraded the outlook for the United States to negative, saying it believes there's a risk U.S. policymakers may not reach agreement on how to address the country's long-term fiscal pressures.

    The S&P said the move signals there's at least a one-in-three likelihood that it could lower its long-term rating on the United States within two years.
    S&P cuts U.S. outlook to negative on fiscal worry | Reuters

    IMO, this decision, with which I agree, makes it even more important that a credible fiscal consolidation path be tied to the forthcoming increase in the debt ceiling. To get there, Republicans will need to compromise on taxes and Democrats will need to compromise on entitlement reform. In its April 2011 Fiscal Monitor, the IMF stated:

    Especially in advanced economies, substantial further adjustment will be required over the remainder of the decade to eventually restore debt ratios to prudent levels. The challenge is even greater when the impact of trends affecting entitlement spending is taken into account. Indeed, rising spending on health care is the main risk to fiscal sustainability, with an impact on long-run debt ratios that, absent reforms, will dwarf the financial crisis.

    To put things into perspective, the required adjustment between 2010-2020 is projected by the IMF to amount to 11.3% of GDP in the U.S. Only Japan (13.3% of GDP) and Ireland (12.4% of GDP) face larger fiscal adjustment. Greece is at 10.5% of GDP. For the 2010-2030 timeframe, the projected U.S. adjustment is 17.5% of GDP. No country faces a greater 20-year adjustment.
    Last edited by donsutherland1; 04-18-11 at 12:47 PM.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    This is totally correct to do as the US's GDP to Debt ratio is pretty much 1:1 and with the US having opened a 4th war theater in Libya, we are spending more money than ever.
    "And in the end, we were all just humans, drunk on the idea that love, only love, could heal our brokenness."

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by donsutherland1 View Post
    From Reuters:



    S&P cuts U.S. outlook to negative on fiscal worry | Reuters

    IMO, this decision, with which I agree, makes it even more important that a credible fiscal consolidation path be tied to the forthcoming increase in the debt ceiling. To get there, Republicans will need to compromise on taxes and Democrats will need to compromise on entitlement reform. In its April 2011 Fiscal Monitor, the IMF stated:

    Especially in advanced economies, substantial further adjustment will be required over the remainder of the decade to eventually restore debt ratios to prudent levels. The challenge is even greater when the impace of trends affecting entitlement spending is taken into account. Indeed, rising spending on health care is the main risk to fiscal sustainability, with an impact on long-run debt ratios that, absent reforms, will dwarf the financial crisis.

    To put things into perspective, the required adjustment between 2010-2020 is projected by the IMF to amount to 11.3% of GDP in the U.S. Only Japan (13.3% of GDP) and Ireland (12.4% of GDP) face larger fiscal adjustment. Greece is at 10.5% of GDP. For the 2010-2030 timeframe, the projected U.S. adjustment is 17.5% of GDP. No country faces a greater 20-year adjustment.
    I think I now understand why S&P, Moody's & Fitch didn't get spanked butgood! for their ratings on those mortgage bundles....

    Bolded above is big-big-big. Seems like everybody on earth gets this but Congress...
    Last edited by MaggieD; 04-18-11 at 12:18 PM.
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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    IMO, this decision, with which I agree, makes it even more important that a credible fiscal consolidation path be tied to the forthcoming increase in the debt ceiling. To get there, Republicans will need to compromise on taxes and Democrats will need to compromise on entitlement reform. In its April 2011 Fiscal Monitor, the IMF stated:

    There ya go a man with common sense with a plan I can get behind and support...this Ryans plan to cut taxs on the wealthiest americans and corporations and sock it to the middleclass just sucks. Your plan is what ive been saying all along.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by donsutherland1 View Post
    From Reuters:



    S&P cuts U.S. outlook to negative on fiscal worry | Reuters

    IMO, this decision, with which I agree, makes it even more important that a credible fiscal consolidation path be tied to the forthcoming increase in the debt ceiling. To get there, Republicans will need to compromise on taxes and Democrats will need to compromise on entitlement reform. In its April 2011 Fiscal Monitor, the IMF stated:

    Especially in advanced economies, substantial further adjustment will be required over the remainder of the decade to eventually restore debt ratios to prudent levels. The challenge is even greater when the impact of trends affecting entitlement spending is taken into account. Indeed, rising spending on health care is the main risk to fiscal sustainability, with an impact on long-run debt ratios that, absent reforms, will dwarf the financial crisis.

    To put things into perspective, the required adjustment between 2010-2020 is projected by the IMF to amount to 11.3% of GDP in the U.S. Only Japan (13.3% of GDP) and Ireland (12.4% of GDP) face larger fiscal adjustment. Greece is at 10.5% of GDP. For the 2010-2030 timeframe, the projected U.S. adjustment is 17.5% of GDP. No country faces a greater 20-year adjustment.
    But Don, you know that they won't do it later. They probably won't do the right thing now. We have known this was coming for 30 years and they kept kicking this can down the road. They don't want to face the political and electoral wrath of the American people (who have the entitlement mentality). The senior citizens, of which Baby Boomers joined for the first time this January, will not stand for a single change to their benefits, because the left has drilled it into their heads that they are entitled to every single penny. They supposedly "paid in" all their working careers, and now they are due their benefit. And to make matters worse, the Left is pleased by this. They are hysterically happy by the prospect of maintaining entitlements right where they are, and not a penny less. It's all about controlling the "General Welfare" of the United States.
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    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Following S&P's move to place the U.S. on negative outlook, the White House criticized the measure as a "political judgment." According to CNBC, Austin Goolsbee, the White House's top economist declared, "What the S&P is doing is making a political judgment and it is one that we don't agree with." The tendency by governments to dismiss ratings decisions with which they disagree is not new.

    For example, in December 2009, S&P downgraded Greece's debt drawing a quick reaction from the Greek Government. The Financial Times reported that Greece's Finance Minister, George Papaconstantinou stated that the downgrade did not 'reflect' the measures the Greek government was taking to stabilize its finances. On April 23, 2010, the Greek government formally requested EU/IMF assistance.

    IMO, rather than passing off S&P's decision as a political matter, the White House should have used the decision to highlight the increasing urgency of dealing with the nation's fiscal imbalances. Attempting to dismiss the decision as merely a "political judgment" does not create the image of a government that is working aggressively to address the nation's fiscal imbalances. In short, it is a bad public relations strategy that can only undermine the nation's credibility with respect to its fiscal challenges.
    Last edited by donsutherland1; 04-18-11 at 02:00 PM.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by donsutherland1 View Post
    Following S&P's move to place the U.S. on negative outlook, the White House criticized the measure as a "political judgment." According to CNBC, Austin Goolsbee, the White House's top economist declared, "What the S&P is doing is making a political judgment and it is one that we don't agree with." The tendency by governments to dismiss ratings decisions with which they disagree is not new.

    For example, in December 2009, S&P downgraded Greece's debt drawing a quick reaction from the Greek Government. The Financial Times reported that Greece's Finance Minister, George Papaconstantinou stated that the downgrade did not 'reflect' the measures the Greek government was taking to stabilize its finances. On April 23, 2010, the Greek government formally requested EU/IMF assistance.

    IMO, rather than passing off S&P's decision, the White House should have used the decision to highlight the increasing urgency of dealing with the nation's fiscal imbalances. Attempting to dismiss the decision as merely a "political judgment" does not create the image of a government that is working aggressively to address the nation's fiscal imbalances. In short, it is a bad public relations strategy that can only undermine the nation's credibility with respect to its fiscal challenges.
    House Republican leader Eric Cantor on Monday called the S&P downgrade "a wake-up call" against those seeking to "blindly increase" the U.S. debt limit.
    "I don't think that we should make too much out of that," top White House economist Austan Goolsbee said on MSNBC, referring to the S&P downgrade.

    "What the S&P is doing is making a political judgment and it is one that we don't agree with," he said on CNBC.
    Could the difference between the attitudes of the parties be more stark? Democrats are voted into office to maintain the status quo.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by donsutherland1 View Post
    Following S&P's move to place the U.S. on negative outlook, the White House criticized the measure as a "political judgment."
    the white house is in its own little world

    from athens to sacramento, it's a tsunami

    an irrestible wave of realization

    there's no stopping it, it's physics

    the obama administration is the last holdout against the wave, and it's not operating on hi ground

    leadership, anyone?

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by donsutherland1 View Post
    IMO, rather than passing off S&P's decision as a political matter, the White House should have used the decision to highlight the increasing urgency
    this white house, for several fundamental reasons, most of them political, can not and will not EVER move to reign in entitlements

    budget reform, for this administration---because of its character---is all outta bounds and off limit

    it's the character of the occupant, it's the man, his dna

    he can do no other

    if obama were serious about restructuring the accounts which are killing us, he'd have passed a 2011 budget, his senate would have acted (up, down or sideways) on hr1 which it's been sitting on for months, his 2012 budget published in february would not look the way it does

    if obama were sincere about fixing our finances, he'd be legislating insteada stumping

    sorry

    leadership, anyone?

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    Re: S&P cuts U.S. outlook to negative on fiscal worry

    Quote Originally Posted by The Prof View Post
    the white house is in its own little world

    from athens to sacramento, it's a tsunami

    an irrestible wave of realization

    there's no stopping it, it's physics

    the obama administration is the last holdout against the wave, and it's not operating on hi ground

    leadership, anyone?
    Class warfare is a proven strategy........when power is your only goal.
    "He who does not think himself worth saving from poverty and ignorance by his own efforts, will hardly be thought worth the efforts of anybody else." -- Frederick Douglass, Self-Made Men (1872)
    "Fly-over" country voted, and The Donald is now POTUS.

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