US Creditworthiness Downgraded - Again

[Guest]

The United States has had its credit rating cut again, from AA to AA-, by credit the rating firm Egan-Jones.

"By who, again?," you ask.... Not Moody's, or Standard & Poors, or A.M. Best, or Fitch... But by Egan-Jones...

The difference - for what it means - is this....

Moody's, Standard & Poors, and all the others are paid by the company that wants to get their creditworthiness rated. That is to say, if PlumBob Inc. (PBI) thought it needed to issue debt, and wanted a Moody's rating, I'd have to pay Moody's to investigate PBI, and give me a rating.

Egan-Jones, on the other hand, is paid by the investors who are considering buying PBI's debt. In other words, if Zondervan wanted to invest in PBI, they could pay Egan-Jones to investigate PBI and tell them whether PBI was a good investment.

Egan-Jones claims that their model eliminates any bias to rate companies higher than they might actually deserve. Some folks disagree.

So - there ya go - a little For What It's Worth for the day. Isn't it good to know that somebody thinks our little country here is not quite so good an investment (as it used to be?) Less trustworthy. More likely to be a good little second-rate country during the trib. Etc.

If I hadn't read ahead, I'd really be worried about the plot of this story!

[Guest]

Re: US Creditworthiness Downgraded - Again

That's it!
I'm going to do something about this whole mess.
Tomorrow I'm going to help "spend our way out of this", by buying a bit extra at Walmart.
That of course gets me no closer to 1 Million dollars in the bank, than it does 1 Million left on our debt.
Sounds good though, to those who don't know any better...

[Guest]

Re: US Creditworthiness Downgraded - Again

That's it!
I'm going to do something about this whole mess.
Tomorrow I'm going to help "spend our way out of this", by buying a bit extra at Walmart.
That of course gets me no closer to 1 Million dollars in the bank, than it does 1 Million left on our debt.
Sounds good though, to those who don't know any better...

Ok, I'll second this idea. Normally, I wait until October to start buying candy corn, but this year, I'm going to go ahead and buy a bag early. That ought to get things going. Candy Corn to the rescue.

[Guest]

Re: US Creditworthiness Downgraded - Again

That's it!
I'm going to do something about this whole mess.
Tomorrow I'm going to help "spend our way out of this", by buying a bit extra at Walmart.

Many, including Bernanke, absolutely believe spending is the best way to get ourselves out of debt. I believe that is why he unleashed QE3 yesterday, to raise the stock market, giving people the impression that they are wealthy, even though they really don't have the money, so they go out and spend. Just watch. Retail profits will be up over the next month.

Spending money we don't actually have is insanity. But Gregstien, you're welcome to spend as much as you like at Walmart, buying something for me.

wlnf

[Guest]

Re: US Creditworthiness Downgraded - Again

Just eggs (including a container of egg whites) protein bars, taco shells, hot sauce, and Arby's Curly Fries (to accompany steak on Sat night). Other than that, most of the other items are for my wife.
$125 each week almost on the money each time. Someone else can spend us out of oblivion.
I agree though, MANY in the upper ranks actually believe this spending idea. Of course they are all for YOU and I to spend the money, while they keep theirs. Oh was I supposed to tell that part?

[Issachar]

Re: US Creditworthiness Downgraded - Again

Many, including Bernanke, absolutely believe spending is the best way to get ourselves out of debt. I believe that is why he unleashed QE3 yesterday, to raise the stock market, giving people the impression that they are wealthy, even though they really don't have the money, so they go out and spend. Just watch. Retail profits will be up over the next month.

Mostly agree. Especially about people spending in their pseudo wealth state. But I disagree, at this time, with the idea that Mr. Bernanke & Co. believe anything about getting out of debt. He knows full well that in a fiat system, the money IS the debt. Get rid of the debt and you effectively eliminate "money." This is why no politician will try, or be allowed to try, to lower the debt. They would actually be pulling "money" (it's not real money) out of the system and people would have less. This is something I've been attempting to articulate for a long time. We have Federal Reserve Notes.



Issachar

[Guest]

Re: US Creditworthiness Downgraded - Again

. . . Bernanke . . . believe(s) spending is the best way to get ourselves out of debt. I believe that is why he unleashed QE3 yesterday, to raise the stock market . . .

. . . so that it will appear that the economy is doing well, in the hope that some people will incorrectly think that the incumbent president's fiscal policies are making the economy recover, and will vote for him in the upcoming election.

So that Bernanke can stay in his job a bit longer.

[Guest]

Re: US Creditworthiness Downgraded - Again

Mostly agree. Especially about people spending in their pseudo wealth state. But I disagree, at this time, with the idea that Mr. Bernanke & Co. believe anything about getting out of debt.

I agree Issachar. I don't believe I said that Bernanke wants to get us out of debt. But I do believe his actions were politically motivated, to get people feeling good about the economy and themselves, so he can keep his job, because he knows if Romney wins, he's finished. Just like PlumBob said.

wlnf

[Issachar]

Re: US Creditworthiness Downgraded - Again

Very true. Though I wonder (unless someone has heard?) who would replace him? I'll have to see if I can find again, but I remember seeing somewhere, that though the president chooses a candidate for chairman of the Fed, it is from a list given him by the Fed. Not positive though ...

Issachar

[Guest]

Re: US Creditworthiness Downgraded - Again

Wiki gives a pretty good description of the process. http://en.wikipedia.org/wiki/Chairma...ederal_Reserve

As stipulated by the Banking Act of 1935, the President appoints the seven members of the Board of Governors of the Federal Reserve System; they must then be confirmed by the Senate and serve for 14 years. Once appointed, Governors may not be removed from office for their policy opinions. The chairman and vice-chairman are chosen by the President from among the sitting Governors for four-year terms; these appointments are also subject to Senate confirmation.

Of course, you can also read about it at http://www.federalreserve.gov/faqs/about_12591.htm

Then there is the full FAQ at http://www.federalreserve.gov/faqs/about-the-fed.htm

[SAT]

Re: US Creditworthiness Downgraded - Again

I saw this article and had to add it here.

One of the reasons for market nonchalance so far is that many believe pre-election attacks on the Bernanke Fed are just bluff on the hustings. Faced with the market implications of shackling the Fed at such a sensitive time, they would likely back down when in office.

But unless a new administration's stance was clarified quickly, there could be considerable speculation and uncertainty.

http://news.yahoo.com/post-election-...jlhNg--;_ylv=3

[cornerstone33]

Re: US Creditworthiness Downgraded - Again

I don't believe the markets that's for sure, they are not a true and reliable indication. One of the economists stated that Greece's stockmarket was up also, so you can't go by it due to Greece being in the mess they are in.

Secondly the so called job and unemployment figures that just came out today, in my opinion, someone is trying to make o look good, so that he can be elected again. To me, there is evil lurking and his worshippers are trying to manipulate anyway they can. The numbers are false, many still looking for a full time job, and many have just given up looking so who are they kidding? It's unreal and again, there is a lot manipulating going on, evil in high places that's for sure.

They make me sick that's for sure

[SAT]

Re: US Creditworthiness Downgraded - Again

I confess cornerstone, I try but usually a big part of my brain goes blank when I listen to experts talk economics. I have to put it in the context of the bigger picture and not the nitty gritty stuff. Which is probably why I read this one.

The assumption being made in the article it seems is based on the fact the economies are soooooo intermingled now it would require the US to depart from the practices of the OWO economic system, which in turn would crash the US??????

So the assumption there would be a quick reversal before investors withdraw?????

[SAT]

Re: US Creditworthiness Downgraded - Again

To me, there is evil lurking

I do agree. But I tend to believe he is manipulating both sides to what is most advantageous.

[Guest]

Re: US Creditworthiness Downgraded - Again

PlumBob: where do we sign up for some of this PBI debt? I am willing to be your Canadian rep..we could use a few more ponzi operations up here. A few years ago I spoke with my secretary and informed her I had read on the weekend an article about the lottery operations in Ontario. The average "return on investment" as prizes amounted to 32%. The rest was eaten up with administrative and government duties. I told her that I was prepared to personally take over the "lottery pool" that she managed for the secretaries, and I would guarantee a minimum return of 50% on the tickets bought, about half better than they were getting from the government. I told her every Monday I would inform her of the "winnings"...maybe hundreds of dollars or maybe only peanuts that week. But I assured her the secretaries would get a 50% return. She was thrilled and so happy that I would do that for them..... Then I had to explain that I was only joking. At that time there was no website like WEDG with insightful analysis from Issachar to which to refer her...so I really danced around for a while. And people wonder how we ever got into the mess we are in!!!