The Goat Pen

AA!

why buy U.S. treasuries when worried about global finance downturn? Perhaps it's because they feel that the issue in the U.S. is not about its ability to pay its debt down but about an unwillingness to service its debt short-term.

Apparently tea-partiers are upset with this photo Michelle Bachmann. They say it makes her look crazy.

[img2]http://l.yimg.com/bt/api/res/1.2/6Opxm2 ... wsweek.jpg[/img2]

I hadn't thought anything at all about the photo until the uproar about it.

Next they are going to complain that news outlets playing audio of her husband are making him look gay.

It does make her look crazy, but that doesn't necessarily mean they went out of their way to make it that way like somebody did with Condaleeza Rice by giving her crazy alien eyes that one time.

It makes her look crazy because she is fucking crazy. Batshit crazy in fact.

"if you want to make statements countering the S&P press release"

gee and the S&P is right so much of the time--why it was just 2008 before the mortgage bubbles popped they told me all those banks were AAA rated. I guess those mean folks at the S&P think trimming 2 trillion in spending wasn't good enuf and had to punish those bastard tea party folks along with the rest of us.

seriously a rating agency politicizing causing a panic on wall street--real good stuff.

gee and the S&P is right so much of the time--why it was just 2008 before the mortgage bubbles popped they told me all those banks were AAA rated. I guess those mean folks at the S&P think trimming 2 trillion in spending wasn't good enuf and had to punish those bastard tea party folks along with the rest of us.

OK. I'm a little confused by your post here. So, I'm going to go step by step detailing my understanding of this and see if we can get on the same page. I'm a little unconfident this will solve anything, or keep the topic purely on what the root of the conversation centered, but I have to try.

This all started with you saying that it was "hilarious" that anyone would blame the Tea Party for this. Somehow it was all on Obama, Pelosi and Reid (red flag #1 that the core of your position is partisan, not actual). I tried to quickly pivot away from that post of your's by asking you to refute the S&P's statement.

Now, I've never said that the S&P was some great organization. I never said the downgrade was warranted (I think I used the terms "erroneous" and "excessive" in my early posts). Regardless of the S&P's fuckery regarding rating structured products during the housing bubble, THEY ARE THE ONES WHO DOWNGRADED THE CREDIT WORTHINESS OF THE US GOVERNMENT. As a result, I HAVE to take their words of WHY they downgraded as the TRUE REASON for the downgrade. With that said, I will go back to my original point. If you want to lay this downgrade at the foot of Obama, Pelosi and Reid, then you have to show me where (in the statements of the agency that provided the downgrade) that blame is spelled out. You can't do that. However, I can show you direct quotes from the S&P press release that speak to what they view the problem is and it's not simply Obama, Reid and Pelosi.


If you want to have a conversation on the viability of S&P as a rating agency, or if the credibility of any of the agencies that rate credit worthiness are legit, that is a separate conversation outside of anything I've posted on here regarding our current economic state. I'm willing to have that talk, but let's call a separate convo a separate convo and not try to misdirect the original point because you don't have facts to back up your assertions.

Are we saying that the U.S. government was downgraded because of rhetoric?.....

Rhetoric combined with certain actions can lead to belief. There were significant number of tea party congressmen and women who's rhetoric and votes suggested that they have no problem with not paying the short term debt of the United States. I have a problem with the S&P waiting until after a deal to drop this rating.

But all of the above is enough for investors to believe that the United States as a whole may not pay it's short term debt (at the same time, they are not nearly as scared of the longterm debt of the United Statess, hence the purchase of U.S. t-bills)

S&P is saying they downgraded the US because of "[their] opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in [their] view, would be necessary to stabilize the government’s medium-term debt dynamics. More broadly, the downgrade reflects [their] 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 [they] envisioned when [they] assigned a negative outlook to the rating on April 18, 2011.

"Since then, [they] have changed [their] view of the difficulties in bridging the gulf between the political parties over fiscal policy."

So, it's not exactly about rhetoric, in a vacuum. The downgrade was about intractable positions that make the S&P feel the US more likely to not honor its debt obligations than any time in the history of the country. We all know that the US is 100% able to financially honor its debt obligations in the short term. Moody's knows it. Fitch knows it. S&P sure as shit ought to know it. What they did not know, and what S&P decided to allow a major role in its reasoning for a downgrade, was whether we would willfully default because of politics. That was caused by rhetoric, with the threat of real action (inaction?).

Words do matter but more than that, when you couple those words with a steely resolve indicating a willingness to not pay the bills you promised to lenders and a belief that it won't matter, then some may take you seriously...and react accordingly.

The tea party never talked about the US not paying its bills to lenders. Leaving an old woman without social security, yea, maybe but not about defaulting.

The people that wanted the debt ceiling passed are the ones that opened up the idea that the US would choose to default.

True, that is how it was couched. I forgot about that.

However, I can only tell you what the S&P saw in the statements. As a result, when it's all down in ink, the Tea Party will get a good deal of the credit/scorn, even if the Dems and Old School GOP deserve more blame for making it about defaulting on debt.

I do think the Reagan speech asking for no default from the 1980s was a genius touch

It's a nice try, but the Republicans had an economist come into their caucus to explain to them that not raising the debt ceiling would leave approximately only 50 cents on the dollar and how it wasn't just the hated projects that wouldn't be hit hard. They booed this republican economist out of the building.

The idea that you will tell Visa, look, I am going into bankruptcy, but I'll pay you but not my mortgage isn't supposed to make Visa nervous?? That dawg won't hunt. Visa will immediately raise your interest rates and classify you as a bad risk.

Even more, don't pay your Bed, Bath and Beyond credit card bill for 3 months and see what Visa who you've been paying on time for 10 years does to your interest rate they charge.

"The idea that you will tell Visa, look, I am going into bankruptcy, but I'll pay you but not my mortgage isn't supposed to make Visa nervous?? That dawg won't hunt. Visa will immediately raise your interest rates and classify you as a bad risk."

Difference is that we weren't saying none of our creditors were not going to be paid.

Also, before the deal, S&P stated that they wanted $4 trillion in deficit reduction over 10 years or they would downgrade. They didn't get it so they downgraded. The rhetoric could have been venomous and the deal could have been done last minute, if they would have cut $4 trillion, we'd still be AAA.

Except in their reasons, they didn't say the size of the deal was the problem. But they did say that politics played a role (something that Moody's somewhat gave backhanded criticism of).

Also, before the deal, S&P stated that they wanted $4 trillion in deficit reduction over 10 years or they would downgrade.

Hmmmm. Show me.

funny that the press release stated myriad reasons for the downgrade, with the political climate being major...but you say it was purely a quantitative move. Doesn't smell right