S&P has maintained the US rating at “AAA” but cut the outlook to negative.
Um, about those nasty facts I’ve been writing on the for the last four or so years……
Last week I revised the Tickercon condition to “2” from “3” on Obama’s speech in which he basically told the world that we were going to run trillion dollar deficits as far as the eyes could see, along with identical statements from Representative Ryan, despite his protests to the contrary of claimed primary surpluses thirty years from now.
This morning you have a series of reactions that are especially nasty as a consequence of this announcement:
Futures markets and dollar down. There goes Ben’s ability to “manage” this mess.
I have long said that the hubris of our government is unprecedented – and unwarranted. That the world and markets would not wait for 30 years or more to see us “turn a fiscal corner”, as Ryan and the so-called “Tea Party” seemed to think they had.
Well, now the truth is in front of your face. S&P wants to see fiscal restraint right now and a defined timeline on those changes – and not Ryan’s timeline either:
We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.
Fix it now gentlemen and have actual results by 2013 or we lose our “AAA” rating.
CONGRESS AND THE ADMINISTRATION MUST STOP THE DEFICIT SPENDING.
NOT PROMISE TO DO IT IN 2040 BY WHICH TIME ALL THE CLOWNS WHO MADE THE PROMISE WILL BE OUT OF OFFICE OR DEAD – YOU MUST INSTEAD PUT IN PLACE VERIFIABLE AND SERIOUS PLANS TO DO IT RIGHT NOW WITH ACTUAL IMPLEMENTATION NO LATER THAN 2013.
That’s what was just said by S&P. Ignore it if you wish, but the fact of the matter is that all the money-printer games and lies from Congresspeople just ran into a problem: The door got slammed closed on your kleptocratic fingers.
As I have been warning would happen if we continued to play with ticking fiscal nuclear devices in the form of attempting to prevent recognition of economic contraction by transferring risk to our sovereign balance sheet: Taping over the window does not stop the timer from counting to zero.
Congress and The White House must accept the economic consequences that will come from cessation of deficit spending now. We cannot compound any more debt and interest into the federal budget to protect those who were imprudent on Wall Street. The losses happened when the bad loans and credit extensions happened – they cannot be avoided.
Time’s up gentlemen.
Update: As the day has gone on the fear indication has gone due north. Fear, that is, that Congress is utterly incapable of dealing with what has to be done – that is, getting us to a position of halting additional sovereign debt accumulation and removing some of what’s there. That means primary surplus gentlemen – period. The carry unwind and run into the Treasury curve is exactly what one would expect. Best-a-luck on ignoring this one in DC…. (and you know they’ll try with more platitudes and lies!)