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U.S. Credit Rating Downgraded to AA

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Bocefish

I did bad things, privileges revoked!
In the Dog House
Mar 26, 2010
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Usually somewhere between flippant and glib.
Well done Obama! He's amazingly silent on the issue too... maybe that's because he's been busy fundraising for his re-election campaign, closing streets and airspace in Chicago and now chillin' at Camp David. Meanwhile, Congress is on vacation. Wonderful leadership there POTUS!

Rant over
 
I hope Obama doesn't mind constant calls from debt collectors if the credit rating slips further :(

BTW, why even have AAA and AA, why not just have the top one be A, then B, etc lol.
 
Possibly the same reason eggs are rated AAA, AA, A, B. A grade "A" egg isn't bad in any way, it just has a slightly different composition. So while a "B" isn't bad, it looks a lot worse than an "AA" which is a silly reason, but it's just how people look at it.
 
It is not AA, but AA+. When it comes to calculating the interest you can charge on your debt, the calculations can go a ways to the right of the decimal point and small differences can add up to real money.

Anyway, the US hasn't deserved a AAA rating for a few years by any sane measure. It had kept it because of politics and now it has lost it because of politics.
 
Reminds me of cigarettes....every pack I've ever seen has stamped on it "Class A Tobacco". If there's a class b I've never seen or heard of it lol.
 
Sevrin said:
It is not AA, but AA+. When it comes to calculating the interest you can charge on your debt, the calculations can go a ways to the right of the decimal point and small differences can add up to real money.

Anyway, the US hasn't deserved a AAA rating for a few years by any sane measure. It had kept it because of politics and now it has lost it because of politics.

Wow nice so they have AAA, AA+, AA, AA- (?), A+, A, A-...lol

I heard one economist say this morning that it's still not that bad since "China really doesn't have anywhere else reliable to spend their money" :lol: He was totally serious too lol
 
Jupiter551 said:
Sevrin said:
It is not AA, but AA+. When it comes to calculating the interest you can charge on your debt, the calculations can go a ways to the right of the decimal point and small differences can add up to real money.

Anyway, the US hasn't deserved a AAA rating for a few years by any sane measure. It had kept it because of politics and now it has lost it because of politics.

Wow nice so they have AAA, AA+, AA, AA- (?), A+, A, A-...lol

I heard one economist say this morning that it's still not that bad since "China really doesn't have anywhere else reliable to spend their money" :lol: He was totally serious too lol

He was also correct. If the US economy is in trouble, then everyone else's is also. China's own rating is AA-.
 
Sevrin said:
If the US economy is in trouble, then everyone else's is also.

Very true...for now.

Events like this and the fact that the US economy is, in relative terms, in a more rapid decline than most other developed countries can sometimes be an indication that things are changing.

Or not, only time will tell, but the illusion of permanency that people buy into regarding the USA's cultural and economic dominance over the last 50 years is just that - an illusion.

This next bit is OT and not directed at you or anyone Sevrin, just my thoughts:

Throughout history one thing has remained constant - the rise and fall of civilizations. And don't get me wrong here, I certainly don't wish the USA or its people any harm, economic or otherwise, nor do I mean "rise and fall" in any kind of cataclysmic or violent sense.

I just think the attitude of invincibility is naive, and a little condescending to imply other nations and cultures will collapse if America goes broke.
 
I just think the attitude of invincibility is naive, and a little condescending to imply other nations and cultures will collapse if America goes broke.

Okay, then. I'm not an American, and my country's AAA rating is pretty secure, compared to, say, that of the UK. Which nation will benefit from the economic collapse of the United States? Not mine. Whose life will be made better if that happens? Not mine. Who is ready to take over as the guardian of the world's reserve currency? The Germans? As if anyone would trust them. The Swiss? The Norwegians? Singapore? Isle of Man? Are the people starving in the Horn of Africa snickering at the thought that one of their largest donor countries is going down the tubes? No one is on the sidelines here.

As a point of information: Markets in the Middle East are down 2.5 to 5% this weekend. You'd think they'd be celebrating the humiliation of the infidels in the streets, wouldn't you?
 
Jupiter551 said:
Wow nice so they have AAA, AA+, AA, AA- (?), A+, A, A-...lol

These are Standard & Poor's ratings for debt, and the company's definition for each rating.

Ratings below can have a "plus" or "minus." The U.S. rating was lowered from AAA to AA+.

AAA — Extremely strong capacity to meet financial commitments. Highest Rating.

AA — Very strong capacity to meet financial commitments.

A — Strong capacity to meet financial commitments, but somewhat susceptible to adverse economic conditions and changes in circumstances.

BBB — Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.

BBB- — Considered lowest investment grade by market participants.

BB+ — Considered highest speculative grade by market participants.

BB — Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.

B — More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.

CCC — Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.

CC — Currently highly vulnerable.

C — Currently highly vulnerable obligations and other defined circumstances.

D — Payment default on financial commitments.
 
Sevrin said:
I just think the attitude of invincibility is naive, and a little condescending to imply other nations and cultures will collapse if America goes broke.

Okay, then. I'm not an American, and my country's AAA rating is pretty secure, compared to, say, that of the UK. Which nation will benefit from the economic collapse of the United States? Not mine. Whose life will be made better if that happens? Not mine. Who is ready to take over as the guardian of the world's reserve currency? The Germans? As if anyone would trust them. The Swiss? The Norwegians? Singapore? Isle of Man? Are the people starving in the Horn of Africa snickering at the thought that one of their largest donor countries is going down the tubes? No one is on the sidelines here.

As a point of information: Markets in the Middle East are down 2.5 to 5% this weekend. You'd think they'd be celebrating the humiliation of the infidels in the streets, wouldn't you?

I know you're not American, and I'm not suggesting anyone would benefit from US economic collapse (well some countries probably would) but most people don't take pleasure in the misfortunes of others and by-and-large most people, myself included, consider the US an entity that champions freedom and honour.

Pretty OT but I'm kind of a pre-WW1 German (Prussian) history buff so if you're interested, read on.

As for the Germans though...come on, you can't judge Germany's financial management based on the crazed madman they had in power back in WW2. This is a whole other debate, but it was partly the Treaty of Versailles at the conclusion of WW1 and the fairly outrageous reparations they were forced to make that ended the German Empire and drove the country to its economic knees, paving the way for a charismatic lunatic to re-ignite their pride and outrage, and target a wealthy minority as a political tool.

Germany didn't start WW1 either, it was a series of escalating events that saw them drawn in through treaties with allies.

In fact it's eerily similar to the justifications of the 'war on terror'. A Bosnian Serb freedom-fighter (in today's terms a terrorist) assassinated an Archduke of Austria-Hungary, the heir (who was a strong advocate of better treatment of various ethnic minorities in the empire), and his wife.

The couple were visiting Sarajevo and a grenade was thrown at their car, the prince deflected it but it bounced into a crowd of innocent bystanders. Later that day the couple insisted on visiting the wounded in hospital, and on the way back to the palace afterwards, were shot and killed.

His last words to his wife, also deliberately shot at short range were 'Don't die darling, live for our children.'

The attack was ordered and executed through a chain of command originating from the Serbian military leadership.

Austria issued an ultimatum to the Serbian government (kind of like the US did to Saddam), and if an American head of state and his wife were assassinated while visiting say, Afghanistan on the orders of high officials in the Afghan government, ask yourself if the following ultimatum would be reasonable. Serbia was given one month to comply, they refused, Austria went to war and through a series of treaties just about every major power in Europe involved themselves in something they really had nothing to do with.

This was the ultimatum regarding the assassination of Franz Ferdinand and Duchess Sophie:

The Austro-Hungarian ultimatum demanded from the Serbian state to formally and publicly condemn the "dangerous propaganda" against Austria-Hungary, the ultimate aim of which, it claimed, is to "detach from the Monarchy territories belonging to it". Moreover, Belgrade should "suppress by every means this criminal and terrorist propaganda".
Moreover, the Serbian government should

1. Suppress all publications which "incite hatred and contempt of the Austro-Hungarian Monarchy" and are "directed against its territorial integrity".
2. Dissolve the Serbian nationalist organisation "Narodna Odbrana" ("The People's Defense") and all other such societies in Serbia.
3. Eliminate without delay from schoolbooks and public documents all "propaganda against Austria-Hungary".
4. Remove from the Serbian military and civil administration all officers and functionaries whose names the Austro-Hungarian Government will provide.
5. Accept in Serbia "representatives of the Austro-Hungarian Government" for the "suppression of subversive movements".
6. Bring to trial all accessories to the Archduke's assassination and allow "Austro-Hungarian delegates" (law enforcement officers) to take part in the investigations.
7. Arrest Major Voja Tankosić and civil servant Milan Ciganović who were named as participants in the assassination plot.
8. Cease the cooperation of the Serbian authorities in the "traffic in arms and explosives across the frontier"; dismiss and punish the officials of the at Shabatz Loznica frontier service, "guilty of having assisted the perpetrators of the Serajevo crime".
9. Provide "explanations" to the Austro-Hungarian Government regarding "Serbian officials" who have expressed themselves in interviews "in terms of hostility to the Austro-Hungarian Government".
10. Notify the Austro-Hungarian Government "without delay" of the execution of the measures comprised in the ultimatum.

Basically they wanted a complete and open investigation of the assassination, thorough trial of those involved, and and removal of anti Austro-Hungarian propaganda. Serbia refused, and so began WW1. Fuck you Serbia.

Ask yourself - would the US act any differently than Austria did? And would their allies stand with them (like Germany and the Ottoman Empire did)? It's lucky for everyone that Iraq and Afghanistan didn't have superpower allies or we might have had WW3.

Sorry for the long post...but I do find it interesting.
 
I thought it was a semi "political" type move.

Kinda like when Obama won the Nobel Peace Prize. Was it for what he'd done at the time? No, what he was doing was talking rhetoric at the point of winning. The Nobel Peace Prize appeared (at least as an observer) to be an attempt to guilt, or force, or twist him to actually achieve what he said he would.

Likewise, can't help but feel the credit rating down grade is an attempt to pressure the US into being more aggressive in reducing its debt. In other words "you're failing to achieve any reduction - we are watching" kinda thing.

If that makes sense :p
 
I heard it was largely blamed on the Tea Party followed by everyone else for dragging their feet and not willing to do anything to work something out.
 
Everyone's to blame for this shit...

Obama and the Democrats for not having any balls.

Republicans for kowtowing to the Teabaggers and their corporate and rich fuckwad puppeteers. And for not getting rid of the tax cuts passed 10 years ago when we had to go into wars after 9/11 (let's PLEASE not make this into a war debate, I'm just saying that repealing the tax cuts would help pay for those wars and have put this off by a few years).
 
Yeah, my amateurish take on it is that the teabaggers were making a somewhat valid point (that it's unsustainable to continually spend more than you make), but they also did it as a political powerplay and did it in such a manner that it damaged their own economy even more.

I also think the key lies in taxes. You simply claw your way out of debt, continue to provide essential social services (which start to cost more and more as the economy worsens) without collecting more revenue.

People are often selfish and get pissed off at the thought of paying an extra cent they earn in tax (but on the other hand think nothing of complaining that their local roads need resurfacing). I don't remember precisely but I remember reading somewhere that the highest income tax rate in the US is at a fairly modest income level? It seems to me only fair that people who earn 150k+/year pay more tax per dollar than people who earn 50, and those at 200 pay slightly more and so forth. People cry that it's unfair to be penalized for being successful, but those who earn less are still penalized more since it's no great hardship not to be able to afford that extra summer house in the Hamptons.

My take on tax is this - we live in a society, a community, and if I earn more I'm happy to pay a little more than my neighbour who digs ditches for a living and struggles to buy christmas presents for his kids. Otherwise we may as well just build a wall around our houses and return to the medieval era.
 
Jupiter551 said:
People are often selfish and get pissed off at the thought of paying an extra cent they earn in tax (but on the other hand think nothing of complaining that their local roads need resurfacing). I don't remember precisely but I remember reading somewhere that the highest income tax rate in the US is at a fairly modest income level? It seems to me only fair that people who earn 150k+/year pay more tax per dollar than people who earn 50, and those at 200 pay slightly more and so forth. People cry that it's unfair to be penalized for being successful, but those who earn less are still penalized more since it's no great hardship not to be able to afford that extra summer house in the Hamptons.

Capital Gains are taxed at 15% (the lowest tax rate). This is basically unearned income (basically-ish) that usually only rich people get regularly and in large values, so naturally we should tax it less than earned income that poor people are using to struggle to eat off of (...right). Hedge Fund Managers (billions of dollars) have a nice little loophole. All of their income is based on these unearned sources (although they work to earn them just as you work to earn that check from burger king) so they get taxed at 40%!!! Just shitting you, they get the 15% taxes.
 
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