S&P: U.S. Debt Could Reach ‘Junk’ Rating by 2030, Absent Entitlement Reform

  • Posted by a hidden member.
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    Jul 15, 2011 3:52 PM GMT
    Of course there are some who claim here that entitlement spending - particularly social security/medicare isn't a problem.

    http://www.cnsnews.com/news/article/sp-us-debt-could-reach-junk-rating-2030

    U.S. federal debt could potentially be downgraded to junk status by 2030 if the government does not significantly reform entitlement spending, according to a study by Standard & Poor’s, one of the three Wall Street credit ratings agencies.

    The S&P study, which shows the effects of rising entitlement-driven federal debt on the federal budget and debt rating, indicates that if entitlement costs are not brought under control soon, America will see its coveted AAA debt rating evaporate.

    S&P said that the weight of retiring Baby Boomers would drive government debt to unsustainable levels, forcing the ratings agency to severely downgrade its U.S. debt rating.

    “[I]n our hypothetical Base Case Scenario (absent policy and other changes), these drivers could potentially raise U.S. net general government debt to a level we would normally associate with a ‘A’ rated sovereign [government] by as early as 2020,” S&P said in the study, released June 21.

    “By 2025, it could be ‘BBB’, and by 2030, it could hypothetically be revised to speculative grade.”


    More here: http://online.wsj.com/article/SB10001424052702304203304576446332084493902.html?mod=WSJ_Opinion_LEADTop

    So the credit-rating agencies that helped to create the financial crisis that led to a deep recession are now warning that the U.S. could lose the AAA rating it has had since 1917. As painfully ironic as this is, there's no benefit in shooting the messengers. The real culprit is the U.S. political class, especially the President who has presided over this historic collapse of fiscal credibility.

    Moody's and the boys are citing the risk of a default on August 2 as the proximate reason for their warning. But Americans should understand that the debt ceiling is merely the trigger. The gun is the spending boom of the last three years and the prospect that Washington lacks the political will to reduce it in the years to come.
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    Jul 15, 2011 5:23 PM GMT
    Is this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?
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    Jul 15, 2011 6:02 PM GMT
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.
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    Jul 15, 2011 6:06 PM GMT
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.
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    Jul 15, 2011 6:07 PM GMT
    Christian73 said
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.


    Given the threat of retribution and investigations from the SEC and others, that seems the less likely reason. What is comical is that you accuse me of vapid Randian ideas and yet you dismiss credit agencies with such casual disregard. Do facts mean anything to you?
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    Jul 15, 2011 6:11 PM GMT
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.


    Given the threat of retribution and investigations from the SEC and others, that seems the less likely reason. What is comical is that you accuse me of vapid Randian ideas and yet you dismiss credit agencies with such casual disregard. Do facts mean anything to you?


    Oh please, when was that ever a problem for anyone in Wall Street?
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    Jul 15, 2011 6:14 PM GMT
    introjock said
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.


    Given the threat of retribution and investigations from the SEC and others, that seems the less likely reason. What is comical is that you accuse me of vapid Randian ideas and yet you dismiss credit agencies with such casual disregard. Do facts mean anything to you?


    Oh please, when was that ever a problem for anyone in Wall Street?


    I don't suppose you actually realize that the ratings agencies exist only because of federal regulations? http://online.wsj.com/article/SB10001424052702303499204576389973019552548.html?mod=wsj_share_facebook
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    Jul 15, 2011 6:43 PM GMT
    riddler78 said
    introjock said
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.


    Given the threat of retribution and investigations from the SEC and others, that seems the less likely reason. What is comical is that you accuse me of vapid Randian ideas and yet you dismiss credit agencies with such casual disregard. Do facts mean anything to you?


    Oh please, when was that ever a problem for anyone in Wall Street?


    I don't suppose you actually realize that the ratings agencies exist only because of federal regulations? http://online.wsj.com/article/SB10001424052702303499204576389973019552548.html?mod=wsj_share_facebook


    They were well aware of the legal issues involved with what they were doing during the years that led up to the economic crisis but that didn't stop them. It din't stop them because they know they would either: get away with it, pay a hefty fine and be done with it or send some poor guy to court to take the blame for the entire company.

    I will quote from the article you mentioned:


    "But the major ratings firms have largely avoided any regulatory crackdown and beaten back private lawsuits. Their business has rebounded as financial markets regained their footing."
  • Webster666

    Posts: 9217

    Jul 17, 2011 1:47 AM GMT
    U.S. debt could reach a junk rating by CHRISTMAS, if Congress doesn't raise the debt limit.
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    Jul 17, 2011 3:37 AM GMT
    riddler78 said
    Christian73 said
    riddler78 said
    Christian73 saidIs this the same S&P that graded Goldman Sachs' poison pill derivatives as AAA?


    Yes, so things could be far far worse than they've already state.


    Or, more likely, they're taking orders from the banks that pay them to threaten the government in order to force a raising of the debt ceiling and the evisceration the only social programs that remain out of the profit-making sphere.


    Given the threat of retribution and investigations from the SEC and others, that seems the less likely reason. What is comical is that you accuse me of vapid Randian ideas and yet you dismiss credit agencies with such casual disregard. Do facts mean anything to you?


    Facts mean plenty. The rating agencies' very existence is a conflict of interest and they should be nationalized or done away with completely.
  • GQjock

    Posts: 11649

    Jul 17, 2011 9:42 AM GMT
    All the more reason to get behind healthcare reform N'cest pas?

    Btw what did S&P say about allowing the government to shut down on Aug 2?
    Hint they said they'd downgrade our bond status