Not enough that S&P introduced a $2T error into its original analysis, it then went ahead...


Not enough that S&P introduced a $2T error into its original analysis, it then went ahead and downgraded the U.S. anyway by "changing their principal rationale... from an economic one to a political one," Treasury says in a blog post. Meanwhile investors' collective judgment proves, "that the U.S. has the means and political will to make good on its obligations."

Comments (34)
  • Spin
    , contributor
    Comments (244) | Send Message
     
    Did this really come as a surprise to you?

     

    This is just another consequence of our politicians playing out their party's crap.
    7 Aug 2011, 01:40 PM Reply Like
  • The Enterprising Value Inve...
    , contributor
    Comments (571) | Send Message
     
    No offense but that Treasury response says it all.

     

    With an already not credible reputation, S&P surely destroyed whatever amount it had left over after this.
    7 Aug 2011, 01:40 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
     
    Seems the Treasury is switching their agit-prop from a downgrade due to fiscal irresponsibility to a political one, not the S&P.
    7 Aug 2011, 01:44 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    The 2T error sure raises some doubt in my mind. How thoroughly did they research this? Apparently not thoroughly enough. Why now? Wouldn't it have been more prudent to have waited until the Super Committee made their recommendations and the vote was taken? I am not going to say the rating isn't correct; but, I sure do question S&Ps methods and timing. Continuing the downgrade after discovering the error appears to me to have been a face saving move. They jumped the gun and they don't want to admit it.
    7 Aug 2011, 01:51 PM Reply Like
  • tjohn1
    , contributor
    Comments (151) | Send Message
     
    Does the U.S have the means and political will to make good on its obligations? I believe it is wishful thinking. We have come to this current situation with that kind of wishful thinking. Let us keep on thinking like that until Nirvana! Or is it Armageddon?
    7 Aug 2011, 01:54 PM Reply Like
  • TomasViewPoint
    , contributor
    Comments (4911) | Send Message
     
    The larger question is why are we running deficits at this level and piling up this much debt where it becomes so critical to measure so accurately? The answer is because we want to pile up more debt. That alone should warrant a downgrade. The trajectory is wrong and the inability of WDC to cut anything is the heart of the issue. Again Federal spending has not went down in 30 to 40 years.

     

    It is also a bad sign when the Treasury is blogging the below about their view on the downgrade. If WDC would take care of business we would not have this kind of rhetoric. And I disagree with the blog in that the demand for our securities has waned at current price points and secondly the market place is not always entirely accurate at pricing although the best pricing mechanism. Case in point why would anyone be buying MBS before the big crash in 2008?

     

    "there is no justifiable rationale for downgrading the debt of the United States. There are millions of investors around the globe that trade Treasury securities. They assess our creditworthiness every minute of every day, and their collective judgment is that the U.S. has the means and political will to make good on its obligations"
    7 Aug 2011, 01:55 PM Reply Like
  • CautiousInvestor
    , contributor
    Comments (3090) | Send Message
     
    BS.

     

    From what I have been able to read it has to do with assumptions and time frames with treasury arguing that debt/gdp in ten years would not be as high as what S&P was estimating. S&P countered that its decision to downgrade debt was based upon analyses showing that the fiscal position of the US would deteriorate over the intermediate (3 to 5 yrs) term and its conclusion political gridlock and ideological divides would prevent a "bridging" of entrenched political positions.

     

    From this point forward, we need to enhance revenues through eliminating pointless deductions and exemptions, implementing a VAT and reducing marginal tax rates. More importantly, though, we need to reduce or contain entitlement spending which is really below the radar transfer spending, making it the contested issue it is. One political party buys its votes through transfer payments.
    7 Aug 2011, 01:55 PM Reply Like
  • IgnisFatuus
    , contributor
    Comments (2736) | Send Message
     
    Implementing a VAT along with an Income Tax is similiar to the sheep asking to be sheared.
    If you think Gov't spending is out of control now, just wait until a VAT is implemented
    7 Aug 2011, 04:09 PM Reply Like
  • coolslug
    , contributor
    Comments (14) | Send Message
     
    The main reason the US had a AAA rating was because the US was able to print money out of thin air. That is about to change and when the US loses the privilege of being the world reserve currency we will see the true value of it's monopoly money and further downgrades.
    7 Aug 2011, 01:56 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    In 2001 the CBO estimated that by 2011 the US would have debt of $3-4Trillion and be running a surplus per year of ~$800 Billion. So they missed the debt by $10 Trillion and the deficit by $2 Trillion.

     

    Why isn't the CBO off again? the assumptions going into these projections are rather bold.
    7 Aug 2011, 01:56 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    What the CBO could not for see was the election of Geo Bush and he and Cheney's war and Geo's idiotic tax breaks. Why do Repuiblicans never mention the cost of Iraq and Afghanistan as contributing factors in the deficit. When Teabaggers and Republicans in general use the words "spending cuts" they mean "social security and medicare cuts" and in no way mean military cuts. I read somewhere that the Treasury owes the Social Security fund 2.5T dollars. If this entitlement program is contributing to the defict where did it get the money to loan to the Treasury?
    7 Aug 2011, 02:16 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    I'm not a fan of the TP..but they have been in existence less than the president has been in office. They have caused nothing except express the frustration of a portion of the voting population. Dems and repubs have failed this country…political divisiveness is the tool of an oligarchy. Dems and Repubs spend out of control equally.

     

    If you would like to see a comparison of congress and deficit/debt to gdp spending..see the below graph.

     

    en.wikipedia.org/wiki/...

     

    The fact is we are here…no portion of pointing fingers will change that. What can change is the voter doing what we haven't been. We haven't done our job and kept an eye on the bank account. We now need to make sure that the govt stops the insanity. Unfortunately it mean some very uncomfortable decisions and alot of pain….but we let it get there. Time to nut up or shut up.
    7 Aug 2011, 02:58 PM Reply Like
  • Ove Sentlig
    , contributor
    Comments (32) | Send Message
     
    It's about forecasts to year 2021. Why is the Treasury's number correct? How do they know that?
    7 Aug 2011, 01:58 PM Reply Like
  • wkl
    , contributor
    Comments (315) | Send Message
     
    My view is the 2 trillion dollar error was with the treasury and the administration's projections. The extra 2 trillion they have comes from projections that the economy will grow 5% annually through 2016. And an average unemployment rate of 6%. Now tell us again. Do you beleive Obama & Little Timmy? Or S&P?
    7 Aug 2011, 02:02 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    S&P admitted their figures were in error! They then changed their reason for the downgrade to political reasons instead of fiscal reasons.
    7 Aug 2011, 02:19 PM Reply Like
  • wkl
    , contributor
    Comments (315) | Send Message
     
    This is true. But the difference still lies in using the Treasury's projections. The question is do you beleive GDP will grow, on avereage, of 5% through 2016? And unemployment will only avereage 6%?
    7 Aug 2011, 02:50 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    No. The deal is S&P made a mistake. They based the downgrade on their erroneous figures. When the mistake was discovered, they changed the reason for the downgrade. S&P admitted they made a mistake. The original reason for the downgrade was based on calculations that were wrong. Admit it, S&P screwed up. Like I said before. I'm not for sure if the US deserves a AAA rating or not; but, pure and simple S&P F'd up. There are many that think it's not the first time. Just the fact they made a mistake on such an important rating, tells me they aren't taking care of business.
    7 Aug 2011, 04:32 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
     
    Bear Bait,

     

    With Obama in charge the S&P mistake gap should be filled by next week anyway.

     

    Just a minor rounding error

     

    www.washingtontimes.co.../
    7 Aug 2011, 04:39 PM Reply Like
  • JohnLocke
    , contributor
    Comments (383) | Send Message
     
    Blame anybody but ourselves... The finger pointing continues.

     

    Criminalize any counterpoint by using terms like "Teabagger" or of all things Terrorists. The first step is to change the language used in the debate...

     

    S&P stated before this sideshow that they wanted 4T in cuts, not over 10 years but 4T in immediate cuts to diffuse the current situation, what did they get? "Compromise" 2T over 10 years, which based on past experience with differed cuts = zero dollars in real world cuts.

     

    S&P is not drinking the cool-aid on the cuts that MAY happen but is judging simply on what has happened, If they were to lay it all out in plain english the markets would tank worse then they already are (see israel, Dubai ect...).

     

    The same folks that are attempting to prop the market up are the same folks that pulled their money out of the market Thursday (remember the 500 point drop before the S&P downgrade). These same vultures will pick the carcases of the markets after the shock shakes out in a few days.
    7 Aug 2011, 02:09 PM Reply Like
  • Madone Rider
    , contributor
    Comments (2) | Send Message
     
    Papaswamp - It is not quite correct to say that the CBO was wrong in its projections in 2011. They were made prior to 2 senseless wars, that for the years prior to President Obama's first budget, the costs were "off budget." So those costs were not included in the budgets in the last years of the Bush administration. Additionally, they were made prior to the tax cuts in the early years of President Bush's administration. Had there not been these senseless wars or the tax cuts those projections likely would have been much more accurate.
    7 Aug 2011, 02:18 PM Reply Like
  • Papaswamp
    , contributor
    Comments (2241) | Send Message
     
    The revenue was before the tech bubble popped and 9/11 occurred. You speak as if the tech collapse and 9/11 never occurred. I won't get into the right and wrong of the various conflicts (now 5) that the US is involved in. But it seems you tend to overlook a few events.

     

    The system becomes more volatile as time advances. This is due most notably to more people being on the planet.

     

    Making any projection and claiming that another projection over the same time period is wrong is pure silliness…the unknown factor is just too high and it continues to get higher.
    7 Aug 2011, 03:28 PM Reply Like
  • youngman442002
    , contributor
    Comments (5123) | Send Message
     
    Why are these people fighting it....It makes me laugh...from one side of their mouths ..we need more money to spend..print it and borrow it....the other side we will try to save some in ten years...lol....they just don´t get it....that does not matter...what does matter is that China, Russia, India, Asia, Latin America all do GET IT....and are starting to change their investing strategies concerning the US dollar and its treasuries....it won´t happen over night...but it could....but it will happen over time....I think in three years we will no longer be the world reserve currency
    7 Aug 2011, 02:20 PM Reply Like
  • 1980XLS
    , contributor
    Comments (3360) | Send Message
     
    No big deal S&P over estimated the debt by a piddley $2T.

     

    Within 12 mos there will be another $2T added anyway, making the S&P's call simply a bit more forward looking.

     

    Given all the assumptions fail to even figure future revenues at a recession rate, we may even get there sooner as GDP growth appears to be contracting a bit more each day.

     

    Potential Cap gains taxes on $2T of market cap has evaporated the last 10 days alone.

     

    But then again, maybe that's the motive. Force everbody to realize any gains they have left so they immediately become taxable for fleecing.

     

    Either way, I don't trust any of them. S&P, the Gov't nor the Banksters. They are all in bed together.
    7 Aug 2011, 02:25 PM Reply Like
  • Karen Consumer
    , contributor
    Comments (155) | Send Message
     
    You guys can fight all you want about the downgrade, but here this: I can't afford $3.66 (when its fluctuating to the low end) gas and increasing electricity and increasing food costs. And the EPA is giving Texas 6 months to get 3 of our energy (coal) plants clean or we'll have to shut them down. That's not going to reduce my rates, but it may reduce our states overall ability to compete in business. So the US has a lower rating, this administration is just going to insist I still have too much money and they need more of it (I still remember the 'energy prices will have to be much higher' priority of POTUS. $2T, $3T, it doesn't matter. This government keeps thinking that any minute, we're all going to get tired of doing with less and start spending money.

     

    Well you SOB's, I'm not sitting on a mattress of money. Neither are the rest of my friends, family, or co-workers. Neither are the places we're working for.

     

    I'm also really surprised that Verizon's got 45k workers on strike for health benefits. Doesn't the union remember they lost that bargaining chip when Obamacare passed? Those workers better get real or there's gonna be a shift (not a gain or a loss) but 45k workers will get on unemployment while 45k workers take what they can and are damn grateful for it.

     

    I'm sick and tired of being broke. I'd take a Rich Republican looking out for big business in a heartbeat, I was doing 37% better financially when the rich guys were looking out for each other.
    7 Aug 2011, 03:03 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    I guess you are hoping for the return of the Robber Baron's of the early 1900s.
    7 Aug 2011, 04:36 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
     
    Damn straight.
    7 Aug 2011, 10:39 PM Reply Like
  • Wyatt Junker
    , contributor
    Comments (4498) | Send Message
     
    Damn straight on the RB's too. They did a hell of a lot better for the working man than Big Blubbermint.
    7 Aug 2011, 10:40 PM Reply Like
  • RJKRJK
    , contributor
    Comments (190) | Send Message
     
    You can often tell what is really going on by looking at who is protesting what. Greeks said no bailout was necessary, Irish said no bail out was necessary, result, Greek and Irish bailout. If they say it, the opposite is true. Treasury says we are not in trouble so we must be in trouble. Even if S&P made accounting errors (& it's only spin by those with an agenda), the fact that Treasury is trying to shoot the messenger should tell you something. Besides, just look around you. You don't need the FED to tell you what's going on.
    7 Aug 2011, 03:46 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    Karen
    The progressive tax n spenders will be ran out next fall. There won't be much left to save by then but at least the terms liberal and progressive will become dirty words, to be shunned for generations.

     

    Bear Bate Ooooo, another TP caucus or right wing conspiracy. You poor guy.
    Your isms seem to be eating away at your gut. You can get help for that.
    7 Aug 2011, 04:15 PM Reply Like
  • Bear Bait
    , contributor
    Comments (926) | Send Message
     
    Mad Max it could happen. But you guys are going to have to massage your approval ratings lconsiderably between now and then.
    7 Aug 2011, 04:38 PM Reply Like
  • Mad_Max_A_Million
    , contributor
    Comments (1175) | Send Message
     
    Bear - Thanks, I appreciate the advice. There's a new Sheriff coming to town. And it ain't Clinton (soiling poor Monica's black dress) or Bush who started one unnecessary war, or Obama who gave us an additional war and the most expensive Social welfare HC program ever devised (2000+ pages of pure B.S.). You can take that to the bank.
    7 Aug 2011, 04:56 PM Reply Like
  • ChrisDates
    , contributor
    Comments (10) | Send Message
     
    Federal Government = You make $50,000 a year and you spend $80,000 a year. You owe $350,000 on your credit card. Are you ever going to pay that off? You should probably consider filing bankruptcy...These are actual numbers I "crunched" down to an understandable level. I took the 2010 budget numbers and the national debt number accordingly. S&P is WRONG. The US should have a BBB rating :)
    7 Aug 2011, 04:16 PM Reply Like
  • Poor Texan
    , contributor
    Comments (3527) | Send Message
     
    The credit worthiness of the U.S. is really the credit worthiness of its companies and its peoples. As long as our companies stay fiscally strong, the national credit should be o.k. But with off-shoring of labor, depreciation of the dollar, an unfavorable regulatory environment and other problems sapping the energy of the business community and the consuming population, we may be entering a death spiral in the economy. Stay tuned and stay flexible.
    7 Aug 2011, 04:29 PM Reply Like
  • Nelson_Lai1975
    , contributor
    Comments (31) | Send Message
     
    S&P loses it Standard, left with Poor only. (Poor Judgement, Poor rational, Poor everything.
    8 Aug 2011, 12:15 AM Reply Like
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