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S and P Downgrades U.S. Credit Rating: “Hail Victory” for the SS Kampfgruppe Norquist


COMMENT: Well, folks, they’ve done it. The GOP’s Tea Par­ty fas­cists (with a gen­er­ous assist from an appar­ent­ly clue­less and def­i­nite­ly gut­less Barack Oba­ma) have suc­ceed­ed in caus­ing S & P to down­grade the U.S.‘s cred­it rat­ing from AAA–the first time in his­to­ry that this has been done.

In FTR #412, we out­lined the strat­e­gy of the GOP–run up mas­sive gov­ern­ment debt in order to force the rolling back of the New Deal-style social leg­is­la­tion that they despise. The point man for the “no new tax­es” mantra is lob­by­ist extra­or­di­naire Grover Norquist.

Some things to con­sid­er in this con­text:

  • Had the crim­i­nal­ly neg­li­gent U.S. media (and the appar­ent­ly clue­less, and def­i­nite­ly gut­less, Amer­i­can polit­i­cal estab­lish­ment) nailed tax-cut mani­ac Grover Norquist and The Dark Lord Karl Rove on their overt ties to Al Qae­da, the Mus­lim Broth­er­hood, Hamas and Pales­tin­ian Islam­ic Jihad, those front-run­ning fas­cist bas­tards would be in shack­les down at Guan­tanamo instead of guid­ing the U.S. into cat­a­stro­phe. Norquist him­self is mar­ried to a Pales­tin­ian Mus­lim woman and may well have con­vert­ed to Islam him­self.
  • Had the crim­i­nal­ly neg­li­gent U.S. media (and the appar­ent­ly clue­less, and def­i­nite­ly gut­less, Amer­i­can polit­i­cal estab­lish­ment) tak­en stock of the pro­found Nazi influ­ence on, and par­tic­i­pa­tion in, the GOP, the Repub­li­cans would be seen as the trai­tors and fas­cists that they are, and would not be able to cloak them­selves in a red, white and blue man­tle.
  • One can but won­der how many of the Tea Par­ty fas­cists are actu­al oper­a­tives for the Under­ground Reich and its eco­nom­ic com­po­nent, the Bor­mann cap­i­tal net­work. The events now unfold­ing will, if left unchecked, hand the man­tle of world eco­nom­ic lead­er­ship to Ger­many. It is deeply trag­ic that peo­ple have failed to use the work of Paul Man­ning, a true hero if ever there was one.

Now comes the word that S & P’s action was large­ly dri­ven by their belief that Oba­ma (the black man with the white flag) and the Democ­rats will fail to block the exten­sion of the Bush tax cuts.

“S & P Down­grades U.S. AAA Bond Rat­ing to AA+, Out­look Neg­a­tive” by Bri­an Beut­ler; TPM Muck­rak­er; 8/5/2011.

EXCERPT: As threat­ened, the rat­ings agency Stan­dard & Poors has down­grad­ed the coun­try’s AAA bond rat­ing, despite acknowl­edg­ing, accord­ing to mul­ti­ple reports, that their ini­tial cal­cu­la­tions includ­ed a $2 tril­lion error pro­ject­ing U.S.‘s debt-to-GDP ratio over time.
You can read the entire expla­na­tion below the fold. But the key is that the use of the debt lim­it as a leg­isla­tive bar­gain­ing chip, com­bined with grid­lock in Con­gress, led S&P to pub­licly con­clude that the coun­try will have a hard time restor­ing grav­i­ty to its debt tra­jec­to­ry.
How­ev­er, while they par­cel blame across Con­gress — imply­ing Democ­rats are rigid­ly opposed to cut­ting enti­tle­ment spend­ing — they hint that Repub­li­can intran­si­gence to rais­ing tax rev­enues is more trou­bling.
From the agen­cy’s press release:

. . . . 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. . . .



17 comments for “S and P Downgrades U.S. Credit Rating: “Hail Victory” for the SS Kampfgruppe Norquist”

  1. We’ve seen a mys­te­ri­ous “impaired oppo­nent” help Tea Par­ty fas­cist Jim DeMint pre­vail in South Car­oli­na — a bizarre “Demo­c­rat” who won with­out cam­paign­ing & with very mys­te­ri­ous “finan­cial sup­port” that was nev­er inves­ti­gat­ed (in the sum of thou­sands to get him on the bal­lot, when he was home­less & broke):


    We’ve already seen the GOP use overt­ly “fake Democ­rats” here:


    Is Oba­ma actu­al­ly clue­less and/or gut­less?

    As Rep. John Cony­ers (D‑MI) has point­ed out, it was Oba­ma and NOT the Rapepub­li­cans who took the extra­or­di­nary & gut­sy step to pro­pose cuts to Social Secu­ri­ty & Medicare.


    An op-ed in the NYTimes of Sun­day, August 7, 2011 reads:

    “In con­trast to FDR ... Instead of indict­ing the peo­ple whose reck­less­ness wrecked the econ­o­my, he put them in charge of it. He nev­er explained that deci­sion to the pub­lic — a fail­ure in sto­ry­telling ...”

    Maybe I’m way off base. I can’t buy that Oba­ma is “clue­less” — not when one of Rove’s key strat­a­gems is to “play dumb” when con­ve­nient & use polit­i­cal can­di­dates who excel at doing so. And, appar­ent­ly, to use “fake Democ­rats” shame­less­ly.

    Accord­ing to many sources, Stan­ley Ann Dun­ham (Oba­ma’s moth­er) worked for Peter Gei­th­n­er, father of Tim­o­thy Gei­th­n­er, when he ran the Ford Foun­da­tion (an orga­ni­za­tion with many CIA ties). Dun­ham mar­ried Lolo Soe­toro, a key lia­son between the U.S. oil indus­try and the Suhar­to gov­ern­ment (a right-wing gov­ern­ment installed via bloody coup with CIA sup­port).

    Dave has allud­ed in the past to Oba­ma being a “per­haps sec­ond gen­er­a­tion” intel­li­gence offi­cer.

    Was Birtherism a smoke­screen to dis­suade the curi­ous from inves­ti­gat­ing an intel “leg­end” (in the par­lance)?

    Is there a UNPO, Rus­sell Means-type, Fran­cis Park­er Yock­ey “Third Posi­tion” angle to Oba­ma?

    Posted by R. Wilson | August 7, 2011, 4:50 pm
  2. Not to men­tion, both Paul Krug­man & Dean Bak­er have stat­ed that there is zero sound eco­nom­ic basis for the S&P’s down­grade:



    Are there Bor­mann-con­nect­ed indi­vid­u­als run­ning the S&P?

    Where were S&P when banksters repack­aged mort­gage-backed secu­ri­ties and sold them as AAA-rat­ed?


    Moody’s, Fitch’s, and S&P direct­ly bear par­tial respon­si­bil­i­ty for the 2008 melt­down.

    Where were Moody’s, S&P, or Fitch for the past 10 years?

    Answer: Point­ing at the gov­ern­ment debt, shriek­ing “THEY are the prob­lem!” when, in fact, the PRIVATE SECTOR is the rea­son for the eco­nom­ic cri­sis. The gov­ern­ment debt is NOT the cause of the bank­ing cri­sis or the jobs cri­sis — Gold­man-Sachs & their ilk are, and S&P for giv­ing a thumbs up for 10 years.

    Mas­ter­ful­ly, the S&P explic­it­ly accus­es pre­dom­i­nant­ly Tea Par­ty fas­cists’ intran­si­gence — but is fair­ly low-pro­file with their accu­sa­tion, and leaves room for the FOX Wurl­itzer to blame Democ­rats.

    Mean­while, it appears that S&P made a $2 Tril­lion dol­lar error in their arith­metic:


    I’m point­ing fin­gers at all par­ties involved: Oba­ma, the S&P, the Koch-backed & Dick Armey-oper­at­ed fake “Tea Par­ty”, and the long-game GOP.

    Let’s not fall for a mas­ter­ful bit of verisimil­i­tude-in-sur­face-sto­ry­telling. This is all Kabu­ki The­atre.

    Posted by R. Wilson | August 7, 2011, 5:09 pm
  3. PIMCO CEO Mohamed El-Erian has a realpoli­tik pre­scrip­tion for the U.S., and a realpoli­tik nar­ra­tive to impose on the S&P down­grade:


    These guys are quick to impose a nar­ra­tive with­out ask­ing ques­tions.

    El-Eri­an’s sto­ry­telling would have us believe that “finan­cial sound­ness of the U.S. gov­ern­ment” is the cen­tral issue that affects the U.S. econ­o­my, but NOT pri­vate-sec­tor bankster secu­ri­ties fraud, NOT SEC fail­ure to reg­u­late, NOT the dereg­u­la­tion that mur­dered Glass-Stea­gall, NOT the 1999 Gramm-Leach-Bliley Act or the (Phil Gramm) 2000 Com­mod­i­ty Futures Mod­ern­iza­tion Act, NOT the $1.4 Quadrillion-dol­lar unsound­ness of the deriv­a­tives boom.

    One more time: Gov­ern­ment debt is not the issue. Gov­ern­ment debt is mis­di­rec­tion. Pri­vate sec­tor dereg­u­la­tion & bank fraud is the cause of the eco­nom­ic cri­sis.

    Posted by R. Wilson | August 7, 2011, 8:06 pm
  4. I too have been con­tem­plat­ing late­ly the pos­si­bil­i­ty of Oba­ma’s pres­i­den­cy being one big intel­li­gence oper­a­tion with Oba­ma being per­haps both a wit­ting and unwit­ting par­tic­i­pant or either/or. After the WSJ print­ed Karl Rove’s advice to Oba­ma, Oba­ma’s strat­e­gy changed to excat­ly that strat­e­gy advised by Rove for the Iowa pri­ma­ry. And he defeat­ed Hilary Clin­ton there and that changed the course of his cam­paign. I would­n’t leave out the pos­si­bil­i­ty of bla­tant threats from the intel­li­gence appa­ra­tus to bring pres­sure to bear on Oba­ma. It is well known that Rove him­self has made such bla­tant threats of harm and those threats have been car­ried out. Dav­e’s image of Oba­ma’s white flag seems fit­ting here.

    Posted by Sandra | August 8, 2011, 3:26 am
  5. Norquist in action:


    A few days after this arti­cle Norquist clar­i­fied his stance and said that he in no way sup­port­ed let­ting the Bush tax cuts expire and told Repub­li­cans not to give on this.

    Posted by Sandra | August 8, 2011, 3:55 am
  6. Read­ing a brief bio of Deven Shar­ma (Pres­i­dent of the S&P) I saw exact­ly why the mar­ket tanked after the S&P down­grad­ed the US, strip­ping it of the gold­en AAA rat­ing for the first time ever.

    Wikipedia says: Shar­ma worked with man­u­fac­tur­ing com­pa­nies, Dress­er Indus­tries and Ander­son Strath­clyde. After that he joined Booz Allen Hamil­ton where he worked for 14 years and led its strat­e­gy, oper­a­tions per­for­mance, sales and mar­ket­ing, and glob­al expan­sion engage­ments for service‑, mar­ket­ing- and infor­ma­tion-inten­sive com­pa­nies.

    He left the com­pa­ny as a part­ner and joined McGraw-Hill in 2002. He served as Exec­u­tive Vice Pres­i­dent of Glob­al Strat­e­gy of McGraw-Hill Com­pa­nies Inc., from Jan­u­ary 15, 2002 to Octo­ber 2006 and as Exec­u­tive Vice Pres­i­dent of Invest­ment Ser­vices and Glob­al Sales of Stan­dard & Poor’s, from Novem­ber 1, 2006. He was named pres­i­dent of Stan­dard & Poor’s in August 2007.

    If that’s not enough of a lead for you, noth­ing is. Those three major names are tied to inter­est­ing events in the past and have a habit of sit­ting qui­et ‚watch­ing and wait­ing to make their move. Shar­ma is obvi­ous­ly the point man of this “invis­i­ble hand group”, who will all sleep quite well tonight, and tomor­row...

    The faster we con­nect the dots and trace actions, the bet­ter. What we need is “Annony­mous” hack­ers that could trace the finan­cial and per­son­al com­mu­ni­ca­tions of inside play­ers to get some proof and clar­i­ty.

    Posted by Coogan | August 8, 2011, 11:51 am
  7. Stan­dard & Poor’s is a sub­sidiary of McGraw-Hill.

    It appears that the McGraw fam­i­ly are very, very old & close friends with the Bush fam­i­ly:


    Read­ing Between the Lines
    Stephen Met­calf
    This arti­cle appeared in the Jan­u­ary 28, 2002 edi­tion of The Nation.

    “...Both stan­dard­ized test­ing and text­book pub­lish­ing are dom­i­nat­ed by the so-called Big Three–McGraw-Hill, Houghton-Mif­flin and Har­court General–all iden­ti­fied as “Bush stocks” by Wall Street ana­lysts in the wake of the 2000 elec­tion.

    “While crit­ics of the Bush Admin­is­tra­tion’s ener­gy poli­cies have point­ed repeat­ed­ly to its inti­ma­cy with the oil and gas industry–specifically the now-implod­ing Enron–few edu­ca­tion crit­ics have not­ed the Admin­is­tra­tion’s cozy rela­tion­ship with McGraw-Hill. At its heart lies the three-gen­er­a­tion social min­gling between the McGraw and Bush fam­i­lies. The McGraws are old Bush friends, dat­ing back to the 1930s, when Joseph and Per­me­lia Pry­or Reed began to estab­lish Jupiter Island, a bar­ri­er island off the coast of Flori­da, as a haven for the North­east wealthy. The island’s orig­i­nal ros­ter of socialite vaca­tion­ers reads like a who’s who of Amer­i­can indus­try, finance and gov­ern­ment: the Meads, the Mel­lons, the Paysons, the Whit­neys, the Lovetts, the Harrimans–and Prescott Bush and James McGraw Jr. The gen­er­a­tions of the two fam­i­lies par­al­lel each oth­er close­ly in age: the patri­archs Prescott and James Jr., son George and nephew Harold Jr., and grand­son George W. and grand­nephew Harold III, who now runs the fam­i­ly pub­lish­ing empire.

    “The amount of cross-pol­li­na­tion and mutu­al admi­ra­tion between the Admin­is­tra­tion and that empire is strik­ing: Harold McGraw Jr. sits on the nation­al grant advi­so­ry and found­ing board of the Bar­bara Bush Foun­da­tion for Fam­i­ly Lit­er­a­cy. McGraw in turn received the high­est lit­er­a­cy award from Pres­i­dent Bush in the ear­ly 1990s, for his con­tri­bu­tions to the cause of lit­er­a­cy. The McGraw Foun­da­tion award­ed cur­rent Bush Edu­ca­tion Sec­re­tary Rod Paige its high­est edu­ca­tor’s award while Paige was Hous­ton’s school chief; Paige, in turn, was the keynote speak­er at McGraw-Hill’s “gov­ern­ment ini­tia­tives” con­fer­ence last spring. Harold McGraw III was select­ed as a mem­ber of Pres­i­dent George W. Bush’s tran­si­tion advi­so­ry team, along with McGraw-Hill board mem­ber Edward Rust Jr., the CEO of State Farm and an active mem­ber of the Busi­ness Round­table on edu­ca­tion­al issues. An ex-chief of staff for Bar­bara Bush is return­ing to work for Lau­ra Bush in the White House–after a stint with McGraw-Hill as a media rela­tions exec­u­tive. John Negro­ponte left his posi­tion as McGraw-Hill’s exec­u­tive vice pres­i­dent for glob­al mar­kets to become Bush’s ambas­sador to the Unit­ed Nations...”

    Posted by R. Wilson | August 8, 2011, 5:50 pm
  8. Police raid Milan offices of Moody’s and Stan­dard & Poor’s (S&P)

    As stock and bond mar­kets across the world tum­bled on fears about Italy and Spain, it emerged that police act­ing on orders from pros­e­cu­tors had raid­ed the Milan offices of rat­ing agen­cies Moody’s and Stan­dard & Poor’s as part of con­tin­u­ing inves­ti­ga­tions into their role in the recent finan­cial tur­moil.

    Ital­ian shares plunged on Thurs­day, with some lead­ing firms los­ing more than 10% of their val­ue. But the clos­ing lev­el of the bench­mark FTSE MIB index was not released for rea­sons that remained unclear more than an hour after the close.

    Among the fac­tors behind the share fall was a widen­ing of the risk pre­mi­um on Ital­ian state debt. The extra return demand­ed by investors for hold­ing bench­mark 10-year Ital­ian bonds rather than the Ger­man equiv­a­lents touched 3.7 per­cent­age points.

    Car­lo Maria Capistro – chief pros­e­cu­tor of Trani, a small Adri­at­ic port – told Reuters that his office was check­ing to see whether the rat­ing agen­cies “respect reg­u­la­tions as they car­ry out their work”. The raids took place on Wednes­day as Italy’s prime min­is­ter, Sil­vio Berlus­coni, addressed par­lia­ment on the mount­ing cri­sis.

    Arti­cle con­tin­ues at:

    Note: Con­sid­er­ing the boss of the Milan police is Berlus­coni, anoth­er fas­cist & Bush asso­ciate, it may be pre­ma­ture to take this sto­ry at face val­ue. Plant­i­ng excul­pa­to­ry evi­dence may not be far-fetched.

    Posted by R. Wilson | August 8, 2011, 6:04 pm
  9. http://www.bloomberg.com/news/2011–08-08/s‑p-seen-surrendering-to-tea-party-at-expense-of-u-s-taxpayer.html

    S&P Seen Yield­ing to Tea Par­ty at Expense of Tax­pay­er

    Stan­dard & Poor’s, the rat­ing com­pa­ny that down­grad­ed the debt of the Unit­ed States to AA+ from AAA for the first time, now finds itself assailed by investors led by bil­lion­aire War­ren Buf­fett for mak­ing a polit­i­cal deci­sion that has more to do with Tea Par­ty pol­i­tics than the finan­cial sta­bil­i­ty of the U.S.

    S&P offi­cials, shrug­ging off a $2 tril­lion cal­cu­la­tion error, blamed “uncer­tain­ty” in the pol­i­cy­mak­ing process on Aug. 5 when they cut the assess­ment of the U.S. government’s abil­i­ty to pay its debt, cit­ing Congress’s fail­ure to agree on as much long-term deficit reduc­tion as the cred­it-rat­ing com­pa­ny want­ed. Buf­fett, the world’s most suc­cess­ful investor, said S&P erred and the U.S. should be rat­ed “quadruple‑A.”

    The New York-based sub­sidiary of McGraw Hill Cos., whose inflat­ed grades of mort­gage-backed invest­ments — paid for by the banks that cre­at­ed the tox­ic debt — were blamed by Con­gres­sion­al inves­ti­ga­tors for fuel­ing the finan­cial cri­sis, rat­tled investors around the world and pro­vid­ed fod­der for Pres­i­dent Barack Obama’s rivals in the 2012 elec­tions. U.S. equi­ty futures and glob­al stock mar­kets tum­bled, oil sank and gold ral­lied to a record.

    “Clear­ly the rat­ings down­grade was a ‘polit­i­cal deci­sion’ in the sense that the pol­i­tics explained the tim­ing of this, because the num­bers have been irrefutable for a decade,” said Robert Litan, vice pres­i­dent for research and pol­i­cy at the Kauff­man Foun­da­tion in Kansas City, Mis­souri. “It gives an enor­mous amount of ammu­ni­tion to the Tea Par­ty. They said the deal didn’t go far enough and they’ll say ‘see.’”

    Posted by R. Wilson | August 8, 2011, 6:08 pm
  10. [...] Dave Emory on S&P down­grade [...]

    Posted by Right-wing useful fools: When Tea Partiers become Tea Baggers | lys-dor.com | August 9, 2011, 10:11 am
  11. Impor­tant con­text for the fol­low­ing news item:

    Robert Zoel­lick was named head of the World Bank in 2007. Zoel­lick was a long­time Bush crony & appointee. Zoel­lick was one of the orig­i­nal Neo­cons & sig­na­to­ries to PNAC (The Project for a New Amer­i­can Cen­tu­ry) that called on Bill Clin­ton in 1997 to invade Iraq & remake the Mid­dle East.

    Zoel­lick­’s Wikipedia entry adds some inter­est­ing infor­ma­tion: “Zoel­lick is con­sid­ered an influ­en­tial advo­cate of US-Ger­man rela­tions. Flu­ent in Ger­man, he pos­sess­es con­sid­er­able knowl­edge of Ger­many, the coun­try of his fam­i­ly back­ground.”

    In 2010, Zoel­lick pub­lished a not­ed call for the return of some form of gold stan­dard in a post-Bret­ton Woods II world.

    Zoel­lick worked in BOTH Bush Admin­is­tra­tions, was a man­ag­ing direc­tor at Gold­man Sachs, and “used his perch as U.S. trade rep­re­sen­ta­tive to advo­cate for Wall Street’s pol­i­cy goals abroad”. His var­i­ous posi­tions and duties under Pop­py Bush & Junior are too numer­ous to men­tion.

    Yet he has some­how been “reborn” as a respect­ed, “main­stream” eco­nom­ic voice, with con­sid­er­able clout, despite his pre­vi­ous Neo­con incar­na­tion.



    World Bank says ‘more dan­ger­ous’ times ahead

    August 14, 2011

    Robert Zoel­lick says the Euro­pean Union has not tak­en enough action on its debt trou­ble.

    World Bank chief Robert Zoel­lick has warned of a “new and more dan­ger­ous” time in the glob­al econ­o­my, with lit­tle breath­ing space in most devel­oped coun­tries as a debt cri­sis hits Europe.

    Mr Zoel­lick says the euro­zone’s sov­er­eign debt issues are more trou­bling than the “medi­um- and long-term” prob­lems which saw the US cred­it rat­ing down­grad­ed by Stan­dard and Poor’s last week, send­ing glob­al mar­kets into pan­ic.

    “We are in the ear­ly moments of a new and dif­fer­ent storm — it’s not the same as 2008,” said Mr Zoel­lick, refer­ring to the glob­al finan­cial cri­sis, in an inter­view with the Week­end Aus­tralian news­pa­per.

    “In the past cou­ple of weeks the world has moved from a trou­bled mul­ti-speed recov­ery — with emerg­ing mar­kets and a few economies like Aus­tralia hav­ing good growth and devel­oped mar­kets strug­gling — to a new and more dan­ger­ous phase.”

    Peo­ple were in less debt than dur­ing the cred­it crunch and cur­rent events did not have the same “sud­den shock” fac­tor, but Mr Zoel­lick said there was less room to manoeu­vre this time around.

    “Most devel­oped coun­tries have used up their fis­cal space and mon­e­tary pol­i­cy is about as loose as it can be,” he said.

    Mr Zoel­lick said the euro­zone’s struc­ture “could turn out to be the most impor­tant” chal­lenge cur­rent­ly fac­ing the world econ­o­my, with some hope for Spain and Italy but debt-crip­pled Greece and Por­tu­gal unable to deval­ue.

    Euro­pean Union action tak­en to date falls short of what is need­ed, the World Bank chief said.

    “The les­son of 2008 is that the lat­er you act, the more you have to do,” he said, ques­tion­ing whether the trou­bled Euro­pean nations could “ever get ahead of the prob­lems that have plagued them.”

    Mr Zoel­lick also urged British prime min­is­ter David Cameron not to be deterred from aus­ter­i­ty mea­sures by recent riots — the coun­try’s worst in decades — say­ing his spend­ing cuts were “real­ly nec­es­sary.”

    “My con­cern would be if the pol­i­tics knocked them off course,” he said.

    Mar­kets swung wild­ly this week on rumours of a French cred­it down­grade over the debt cri­sis, which start­ed in Greece and is now fuelled by fears Spain or Italy might default, spark­ing a break up of the 17-nation cur­ren­cy.

    Investors are ques­tion­ing whether France and Ger­many, the euro­zone’s two largest economies, can con­tin­ue to under­write oth­er states’ debts with­out los­ing their top cred­it rat­ings and falling vic­tim to the cri­sis them­selves.

    Mr Zoel­lick said pow­er, influ­ence and weight was shift­ing “very fast by his­tor­i­cal stan­dards” to devel­op­ing economies led by Chi­na, but he described the Asian super­pow­er was a “reluc­tant stake­hold­er” in the glob­al sys­tem.

    Aside from tack­ling over­heat­ing, Mr Zoel­lick said Bei­jing faced a num­ber of big domes­tic pol­i­cy ques­tions — keep­ing its indus­tri­al­i­sa­tion “green”, finan­cial sys­tem reform, and the bal­ance of state-owned firms with pri­vate enter­prise.

    Allow­ing the yuan to increase in val­ue would help curb infla­tion but also make for­eign goods cheap­er in Chi­na, a poten­tial­ly sen­si­tive issue.

    Bei­jing also want­ed to increase social pro­tec­tions for its pop­u­la­tion but did not want a Euro­pean wel­fare state mod­el, Mr Zoel­lick said.

    “They say to me ... it’s too expen­sive,” he said.

    Posted by R. Wilson | August 13, 2011, 11:35 pm
  12. http://business.financialpost.com/2011/10/23/u‑s-likely-to-get-second-rating-downgrade-merrill/

    U.S. like­ly to get sec­ond rat­ing down­grade: Mer­rill

    Reuters Oct 23, 2011 – 3:54 PM ET

    By Wal­ter Brandi­marte

    NEW YORK – The Unit­ed States will like­ly suf­fer the loss of its triple‑A cred­it rat­ing from anoth­er major rat­ing agency by the end of this year due to con­cerns over the deficit, Bank of Amer­i­ca Mer­rill Lynch fore­casts.

    The trig­ger would be a like­ly fail­ure by Con­gress to agree on a cred­i­ble long-term plan to cut the U.S. deficit, the bank said in a research note pub­lished on Fri­day.

    A sec­ond down­grade — either from Moody’s or Fitch — would fol­low Stan­dard & Poor’s down­grade in August on con­cerns about the government’s bud­get deficit and ris­ing debt bur­den. A sec­ond loss of the country’s top cred­it rat­ing would be an addi­tion­al blow to the slug­gish U.S. econ­o­my, Mer­rill said.

    “The cred­it rat­ing agen­cies have strong­ly sug­gest­ed that fur­ther rat­ing cuts are like­ly if Con­gress does not come up with a cred­i­ble long-run plan” to cut the deficit, Merrill’s North Amer­i­can econ­o­mist, Ethan Har­ris, wrote in the report.

    “Hence, we expect at least one cred­it down­grade in late Novem­ber or ear­ly Decem­ber when the super com­mit­tee crash­es,” he added.

    The bipar­ti­san con­gres­sion­al com­mit­tee formed to address the deficit — known as the “super com­mit­tee” — needs to break an impasse between Repub­li­cans and Democ­rats in order to reach a deal to reduce the U.S. deficit by at least US$1.2‑trillion by Nov. 23.

    If a major­i­ty of the 12-mem­ber com­mit­tee fails to agree on a plan, US$1.2‑trillion in auto­mat­ic spend­ing cuts will be trig­gered, begin­ning in 2013.

    Those auto­mat­ic cuts, most­ly in dis­cre­tionary spend­ing, would weigh fur­ther on a frag­ile U.S. econ­o­my, Mer­rill said. In the same report, the bank reduced its 2012 and 2013 growth fore­casts for the Unit­ed States to 1.8% and 1.4%, respec­tive­ly.

    If there were a down­grade, it was not clear which rat­ings agency would move first.

    Moody’s Investors Ser­vice, which has a neg­a­tive out­look on the Unit­ed States’s Aaa rat­ing, said it is look­ing at sev­er­al oth­er fac­tors, includ­ing the results of pres­i­den­tial elec­tions and the expi­ra­tion of the Bush-era tax cuts late in 2012, to decide on the rat­ing.

    “It’s not that we’re wait­ing just for this com­mit­tee to decide on the rat­ing,” Steven Hess, Moody’s lead ana­lyst for the Unit­ed States, told Reuters in an inter­view last week.

    Fail­ure by the com­mit­tee to come up with an agree­ment, he said, “would be neg­a­tive infor­ma­tion but it is not deci­sive in our view about the rat­ing.”

    To be sure, Hess did not rule out the pos­si­bil­i­ty of an ear­ly move on U.S. rat­ings if the country’s econ­o­my slips into reces­sion. So far, how­ev­er, the eco­nom­ic per­for­mance “is cer­tain­ly not super pos­i­tive but not a dis­as­ter either,” he said.

    Fitch Rat­ings, on the oth­er hand, still has a sta­ble out­look on its AAA rat­ing on the Unit­ed States, mean­ing it is more like­ly to revise that out­look to neg­a­tive before actu­al­ly down­grad­ing the rat­ing.

    In its lat­est report on the Unit­ed States, Fitch says a ”neg­a­tive rat­ing action,” which could be only an out­look revi­sion, could result from a weak­er-than-expect­ed eco­nom­ic recov­ery or by fail­ure by the bipar­ti­san com­mit­tee to reach agree­ment on at least US$1.2‑billion in deficit-reduc­tion mea­sures.

    Posted by R. Wilson | November 3, 2011, 9:14 pm
  13. Grover who?:

    A sim­ple yes or no would have suf­ficed, but when House Speak­er John Boehn­er was asked whether anti-tax cru­sad­er Grover Norquist was a pos­i­tive influ­ence on his cau­cus, he feigned igno­rance.

    “It’s not often I’m asked about some ran­dom per­son in Amer­i­ca,” he said.

    Posted by Pterrafractyl | November 3, 2011, 9:55 pm
  14. @R. Wil­son: Good info. TBH, though, I say that S&P can go kind­ly f*** them­selves with a hot brand­ing iron after the stunt they pulled. And frankly, I’ll be quite hap­py to say the same for any oth­er com­pa­ny pulling any sim­i­lar shenani­gans as well.

    Posted by Steven L. | November 4, 2011, 8:13 am
  15. @Steven L.: To trans­late the rat­ings agen­cies: “if you [via the Super-Com­mit­tee] don’t throw grannie and jr. under the bus we’ll do it for you and we might not stop at grannie and jr.”.

    It’s grim­ly fas­ci­nat­ing to watch a soci­ety’s lead­er­ship simul­ta­ne­ous­ly gut its past (bye bye Medicare) AND future (bye bye pub­lic schools). It’s like it’s some sort of metaphor­i­cal attempt to con­quer the pas­sage of time.

    Posted by Pterrafractyl | November 4, 2011, 11:09 am
  16. @Pterrafractyl: Sad but true. I have a feel­ing we may have a rough decade or decade-and-a-half ahead of us...... =(

    Posted by Steven L. | November 4, 2011, 3:13 pm
  17. Zero­hedge has an inter­est­ing post on a GOP debt trap like­ly to be sprung in the weeks lead­ing up to the Novem­ber elec­tions, with a down­grade assist from S&P and Moody’s. Sep­tem­ber Sur­prise?

    US Debt Ceil­ing D‑Day: Sep­tem­ber 14, 2012
    Sub­mit­ted by Tyler Dur­den on 03/28/2012 — 17:39

    Ear­li­er today, out­go­ing Trea­sury Sec­re­tary and tax chal­lenged part-time patho­log­i­cal liar (see here) Tim Gei­th­n­er said that any wor­ries of the US debt ceil­ing are mis­placed, and that at best such an event would occur “late in the year” (and to think the August 2011 extend­ed $16.394 tril­lion debt ceil­ing was sup­posed to last well into 2013). Nat­u­ral­ly, com­ing from Gei­th­n­er, it meant this state­ment was a flat out lief the sec­ond it left his mouth, which is why we decid­ed to do our own analy­sis of just when the lat­est and great­est debt ceil­ing would be breached. The answer is that at the cur­rent rate of debt issuance, which inci­den­tal­ly is going to accel­er­ate sharply due to the recent exten­sion of the pay­roll tax cuts which will require an incre­men­tal $100–150 bil­lion total debt to be fund­ed, and extrap­o­lat­ing future issuance sole­ly on his­tor­i­cal pat­terns, the US debt ceil­ing D‑Day will be Sep­tem­ber 14, 2012. This means that there will be just over 6 weeks for the GOP to hijack each and every pres­i­den­tial debate before the Novem­ber elec­tion with just this top­ic. Because there will hard­ly be any­thing more humil­i­at­ing for Oba­ma than to have to defend his plat­form even as the coun­try is once again past the verge of insol­ven­cy, and forced to “com­min­gle” retire­ment funds to keep Trea­sury oper­a­tions run­ning. Which inci­den­tal­ly is just as we pre­dict­ed would hap­pen when we explained why the GOP fast shelved the pay­roll tax debate so rapid­ly. It was noth­ing but a pre­lude to pre­cise­ly this. Because once it is raised, and it will be raised of course, next up will be yet anoth­er rat­ings down­grade by S&P and this time, Moody’s as well. All of which will most like­ly hap­pen before Novem­ber.

    Posted by Pterrafractyl | March 28, 2012, 6:47 pm

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