Once we were concerned about the PIIGS as Portugal, Ireland, Iceland, Greece and Spain battled to stay afloat and were bailed out one by one but now as well as the PIGS we have a new animal in the failing economy stakes the US has received an unfavourable rating. One would say they are too big to fail but there have to be some deep pockets to bail the US out of its appitite for debt. Will the US have to yield to the same austerity measures as have befallen the European states and begin to cut back its welfare spending and start to have a realistic taxation regime. Will it bite the bullet and cut into the extraodinary level of military spending. I expect there will be no more PIIGUS in spaceWall Street plunges on US debt fears (http://www.smh.com.au/business/wall-street-plunges-on-us-debt-fears-20110419-1dm1u.html)

The clueless Obots weighed in yesterday and said that S&P rating was 'politically motivated' .

What did they expect ? They think budget cuts are slight reductions in the rate of spending increases.

An S&P rating isn't politically motivated it actually works on how many times the interest bill is covered so you can't borrow more and reduce taxes and expect your rating not to suffer. What it also means is that if the Fed won't bring interest rates back to realistic levels in the US, the market mechanism, which everybody loves, will eventually kick in and do it for them.

The nasty part of this is that it isn't only the US who is affected, the rest of us will be dragged down with them

The reason they think it is politically motivated is because one of the factors in S&P's evalutation was the President's address last week .S&P made it clear that a major part of their analysis is the complete lack of seriousness the
President showed regarding deficit reduction.

The outlook reflects our view of the increased risk that the political negotiations over when and how to address both the medium- and long-term challenges will persist until at least after the national elections in 2012
Some compromise that achieves agreement on a comprehensive budgetary consolidation program--containing deficit reduction measures in amounts near those recently proposed, and combined with meaningful steps toward implementation by 2013--is our baseline assumption and could lead us to revise the outlook back to stable. Alternatively, the lack of such an agreement or a significant further fiscal deterioration for any reason could lead us to lower the rating.

S&P Text: Outlook On U.S Ratings Revised To Negative -2 | iMarketNews.com (http://imarketnews.com/node/29612)

S&P is only telling Washington what the Tea Party has been saying for over a year.

You are right,if the rating lowers then investors will demand better interest rates . I'm surprised they aren't anyway . They know the Obots are panicking over the possibility that the Republican House may balk on raising the debt limit they need so the government can beg investors to purchase more US IOU's.

They see the Ryan plan ,which proposes to take 25 years to balance the budget being mocked by the President as being a plan that destroys the fabric of our society... and the Obots wonder why S&P doesn't take them seriously.

Yes S&P take advice on future direction when considering ratings so obviously whatever BO said is taken into account and obviously S&P don't want more junk bonds to rate so they will be cautious. Look, we all know the US is bankrupt but no one is going to shout it, they will just take their time rachetting up the preasure one notch at a time. That way they can say we warned you and we gave you time to respond.

I have to laugh; 25 years to balance the budget and over here we have a Treasurer set on doing it in two no matter what pain he inflicts and that from what you might call a "liberal" government. Perhaps we should export him to the US to show you how it is done

It won't be long before other rating firms like Moodys follows suit.

Here is the text of the President's speech .
http://www.nytimes.com/2011/04/14/us/politics/14obama-text.html

This from the guy who proposed a budget with a deficit of $1.6 trillion , 3x the largest one President Bush ever had.
White House Expects Federal Deficit to Spike to $1.65 Trillion - WSJ.com (http://online.wsj.com/article/SB10001424052748703361904576143253522341850.html?m od=WSJ_hp_LEFTTopStories)

Bush's last deficit was $458.6 Billion

Tom why do you send me rhetoric to read?

Reflecting on it I see the difference between your system and mine

We have an executive who says to the legislature you have considered this and this is what you want to do, OK. Whereas you have an executive who says this is what I want to do and your legislature says this is the way you will do it. The difference lies in what we call consensus which I see as lacking in the BO approach.

I think your public expenditure suffers from the same problems as our social welfare system, no social welfare appropriation is ever repealed but in our case there are some very big changes in the way it is implemented

no social welfare appropriation is ever repealed

Exactly... we end up calling them 'entitlements' ,and even speaking seriously of reform is a political death sentence.

Meanwhile ;a glimpse into our future can be found in the 'G' part of PIGUS .
To attract investors their bonds are now paying 21.37% ,and that still doesn't guarantee they won't default.
FT.com / Capital Markets - No relief for soaring Greek borrowing costs (http://www.ft.com/cms/s/0/ce94cd44-6a75-11e0-a464-00144feab49a.html#axzz1K4ErdOZH)




Strategists predict yields will continue to climb as the average price of Greek bonds remains at about 70 per cent of par. Most strategists expect a haircut of at least 50 per cent in the event of a restructuring – meaning prices would have to fall to 50 per cent of par before a default was fully priced in.

To date ,the US Treasury has been largely immune from "haircuts " . But if ratings agencies like S&P act on their warning the US could see similar rate climbs.

I started as a young adult in the late 1970s . Unemployment ,inflation ,energy crisis ,a flat economy ,and high interest rates were the norm. I never thought I'd see those days again.

We have all been through the high interest rates Tom I had a house loan at 18% at one stage in the 80's countesy of the international market. I cannot see the US getting as bad as the tiny states of Europe but it needs to take the warning seriously because what that poor S&P rating does is jack up the cost of funds to government making the deficit worse

Now we find out that the President knew S&P was going to make it's downgrading statememt and the President tried to pressure them out of it.
http://www.washingtonpost.com/business/economy/obama_administration_officials_tried_to_keep_sandp _rating_at_stable/2011/04/19/AFfAeO8D_story.html

now we find out that the President knew S&P was going to make it's downgrading statememt and the President tried to pressure them out of it.
Obama administration officials tried to keep S&P rating at ‘stable’ - The Washington Post (http://www.washingtonpost.com/business/economy/obama_administration_officials_tried_to_keep_sandp _rating_at_stable/2011/04/19/AFfAeO8D_story.html)

Well of course, what use is the Presidency if you can't use a little muscle. Perhaps BO doesn't know what independent means

Have you noticed; unemployment 29% in Spain, does this mean all the Africans have gone home or are they counted in the statistics?

The US could solve all its unemployment problems by sending all the hispanics home

Well now we start round 2, it started with Greece the G in PIGUS and now we are back to Greece which has suffered a further down grading in its credit rating and needing a new bailout to meet its obligations, the dominoes are starting to fall, Europe, which means Germany and France either coff up or abandon the EU. The UK is on the ropes, Iceland has already defaulted, but two pennith of nothing is nothing, Ireland has little hope and Spain is nowhere to be seen, and the US not very healthy either.


The lesson is here, this is what you get when you overextend yourself and pay yourself more than you are worth, so time for some austerity, which means more tax and less expenditure

The lesson is here, this is what you get when you overextend yourself and pay yourself more than you are worth, so time for some austerity, which means more tax and less expenditure

Been having the same issues here ;and as you see in Wisconsin ,and the debates over the US budget ;we have the same intractability .

we have the same intractability .

So you are saying unemployment is rising and the dollar is failing and america can't meet its debts? Better cut back on some adventurist wars and bring the boys home. We have just had a nice budget delivered which will bring us into surplus within two years, or so the story goes, no intractability here, just lack of traction. It's what can be done when the military doesn't control your thinking

better cut back on some adventurist wars and bring the boys home.

Wouldn't make a dent in the imbalance. But talk entitlement reform ,where the real problem is ;and you sign your political death warrant . It will take a crisis like Greece for the US to get our collective heads out of our arses.

Wouldn't make a dent in the imbalance. But talk entitlement reform ,where the real problem is ;and you sign your political death warrent . It will take a crisis like Greece for the US to get our collective heads out of our arses.

Well Tom I'm glad it is you who said that about the people of america

But you see Tom what is impossible in one place is possible in another
Federal Budget 2011 | Wayne Swan (http://www.smh.com.au/business/federal-budget/swan-outlines-plan-for-working-nation-20110510-1ehkn.html) Now that should give you hope, if a socialist, the term liberal means something different here, government can do this sort of thing

Yeah I get it ;you've already been to the mountain top and have seen the land of milk and honey. Eventually the nanny state falls under the weight of it's obligations unless it does some serious reneging of it's promises .

yeah I get it ;you've already been to the mountain top and have seen the land of milk and honey.

No you haven't really got it. I have crossed over the Jordan and live in the land of milk and honey and guess what? We have discovered there are no giants in the land, they were just an illusion put up by conservatives who wanted to keep us out and keep all the money for themselves.

Wouldn't make a dent in the imbalance. But talk entitlement reform ,where the real problem is ;and you sign your political death warrent . It will take a crisis like Greece for the US to get our collective heads out of our arses.

Well Tom the crisis has come and gone and yet you still have your head stuck up your collective arses. As the world financial markets melt down once again are you proud of the performance of your leaders? My calling on this one has been prophetic it is indeed PIGUS or is it just USPIG

Clete this crisis did not reach Greek levels [or any of the other PIGS... yet ] .

We still get to print phoney currency .The Greeks need the good will of the rest of the EU to print phoney money. The Fed meets next week to crank up the printing presses again.

Our giverment blew it by not cutting deep enough . These arses are proud of slowing the rate of increase of the debt ;which now exceeds 100% GDP.

Clete this crisis did not reach Greek levels [or any of the other PIGS..........yet ] .



Tom YET is the operative word but S&P don't share your optimism for another round of quantitative easing, a euphonism for printing money, and in anticipation they have downgraded the US. I expect that money will now pour into Australia as a safe haven for AAA investment
S&P downgrades U.S. credit rating - CNN.com (http://edition.cnn.com/2011/BUSINESS/08/05/global.economy/index.html?hpt=hp_t1)

Read it and weep because there is much pain coming because your republicans couldn't see the wood for the trees. We expect interest rates to fall here while they increase there. When that happens we will be looking for some skilled people in our construction industry. Happy days are here again
http://www.youtube.com/watch?v=iL0Qt7IF8Q4

because your republicans couldn't see the wood for the trees.

You are reading it wrong. The conservative and TP Republicans got it 100% correct. The market is reacting to the minimal debt reduction in the final bil ; and the prospect that they did nothing to address that in the future. The Republicans passed 2 bills out of the House that addressed it . The Democrat Senate and do nothing Democrat President stopped that and brought us to the brink.

By the way S&P's rating may force some instituions to sell off US bonds. Most more likely will change their bylaws so they can hold US debt . Compared to other options US Treasuries are still the safest bet in the world .

you are reading it wrong. The conservative and TP Republicans got it 100% correct. The market is reacting to the minimal debt reduction in the final bil ; and the prospect that they did nothing to address that in the future. The Republicans passed 2 bills out of the House that addressed it . The Democrat Senate and do nothing Democrat President stopped that and brought us to the brink.

btw S&P's rating may force some instituions to sell off US bonds. Most more likely will change their bylaws so they can hold US debt . Compared to other options US Treasuries are still the safest bet in the world .

No Tom S&P have said it themselves, it was the process, the delay in approving the limit. They don't care about the facts your government want to present, you can't spin yourselves out of this one. They know you can't do the hard yards, lift tax and drastically cut programs the way you would have to in an IMF intervention. Your problem is that talkfest that mascarades as a parliament. You see the system requires everyone not just one house to approve bills. The idea is there is some sort of consensus, a word very foreign to US politics. Those checks and balances were placed there for a reason. The idea is no one rules by decree; not the President, not the house and not the Senate and in this case (2) the house decree was unacceptable. This is because the house is not all powerful

That's correct ;NEITHER side balked until the end when the Repubics in the House caved . But the House did the responsible thing . It passed legislation twice before a very watered and insufficient bill was passed by all parties.


"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,"

They are right .Spending cuts in the compromise don't come close to solving the fiscal mess. They are a joke to what is needed . The interest on the debt is greater than the cuts agreed to .
The PresidenWhen the Bush era tax rates expire ;the President will get his beloved tax increases .

Tom I think you see this the wrong way, tax as some sort of imposition or democrat plot, in reality Bush went too far giving tax cuts at a time of expanding expenditures, pandering to his electorial base and now the chickens have come home to roost. This is unpalitiable but a real solution requires hard yards. If you don't like the scenario, migrate, but don't think Obama is doing anything other than trying to restore some sort of status quo. You can get out of this by expanding your economy or by reducing expenditure, two mutually exculsive alternatives at the moment or you can man up, kick those girly men republicans in the nether regions and do what you know you must do to turn things around.

The Repubics don't have the power to do anything on their own until the Obots are defeated in 2012 .

Then perhaps real spending reductions ;regulatory and tax reform will be the tools to begin expanding the economy .

What we are told by the dems is to ignore the scores of business leaders around the country who almost uniformely say that it is government hostility to business and the uncertainty of the business climate that prevents economic expansion.

Tom, Tom, here we go again, as the business climate has been the same here for 15 years or more and the cats have gotten really fat. Don't be mad because the middle, and the left just isn't rolling over to the right, and cutting what you have been trying like heck to destroy, the socialist programs for ordinary people while preserving the golden goose for the fat cats. Of course shrinking governments, jobs, revenues, and the economy, makes debt, and deficits loom larger. Simple math tells you that. Doesn't mean you guys are right... er... correct, at least not all the way.

It's the unwillingness to meet in the middle and make progress that holds this country back, nothing else, not one side or another getting its way. Heck a bigger debt to keep the states going without tax cuts of the first stimulus, we wouldn't be having this argument.

But half stepping it with watered down tactics is why we are. Simple, math.

That we have proven inflexible is our problem, because now we get nothing done. Simple math, the Tea party cannot take over the world, or the country, so I see compromise and debate, real debate, not ideology coming back in 2012. Sorry Clete, you guys are growing for sure, but you will be a long time in understanding that every fart we make here is not the end of the world, and Standard and Poors can rattle the cage, but their credibility, and motives are deeply suspect.

Believe it or not, rumors of the American demise are greatly exaggerated, even if one of three rating houses think so.

Sorry Clete, you guys are growing for sure, but you will be a long time in understanding that every fart we make here is not the end of the world, and Standard and Poors can rattle the cage, but their credibility, and motives are deeply suspect.

Believe it or not, rumors of the American demise are greatly exaggerated, even if one of three rating houses think so.

Tal, I think you miss it, america is in decline and there is no coming golden age, you have actually had it and the greedy stole the golden apple. The big problem of being a reserve currency is that, in fact, every fart you make does affect the rest of the world, if in nothing else than erroding confidence. S&P have rattled your cage and they are protecting their arse because someone wanted to blame them for the last GFC. At that time they were considered too lenient in their views, perhaps even negligent, so this time they are making sure they are not the ones caught short. In doing so they may have precipitiated a crisis by pointing out the obvious, your political climate does affect your soveriegn credit rating. So you can blame a certain group of ****heads for this one, the opportunists who wanted to force an issue from opposition. It is a great pity that in your system those who control the house don't form government. In other democracies if this situation arose the government would change and the issues would be less emotive