Per Pavel314:
The Best Summary Ever
Why the U.S. was downgraded:
• U.S. Tax revenue: $2,170,000,000,000
• Fed budget: $3,820,000,000,000
......
My understanding is that the reason that US T-Bills were
downgraded by S&P was explicitly stated in S&P's announcement.
Per S&P's web page at
http://tinyurl.com/42cc9nn:
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- We have lowered our long-term sovereign credit rating on the
United States of America to 'AA+' from 'AAA' and affirmed the
'A-1+' short-term rating.
- We have also removed both the short- and long-term ratings
from Credi****ch negative.
- The downgrade reflects our opinion that the fiscal
consolidation plan that Congress and the Administration
recently agreed to falls short of what, in our view, would
be necessary to stabilize the government's medium-term
debt dynamics.
- More broadly, the downgrade reflects our 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 we envisioned when we assigned a negative outlook to
the rating on April 18, 2011.
- Since then, we have changed our view of the difficulties in
bridging the gulf between the political parties over fiscal
policy, which makes us pessimistic about the capacity of
Congress and the Administration to be able to leverage their
agreement this week into a broader fiscal consolidation plan
that stabilizes the government's debt dynamics any time soon.
- The outlook on the long-term rating is negative. We could
lower the long-term rating to 'AA' within the next two years
if we see that less reduction in spending than agreed to,
higher interest rates, or new fiscal pressures during the
period result in a higher general government debt trajectory
than we currently assume in our base case.
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Seems to me like that statement concentrates more on the
impotence of Congress than anything else.
--
Pete Cresswell