Just the Facts: S&P's $2 Trillion Mistake
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Just the Facts: S&P's $2 Trillion Mistake
1–10 of 242 posts
Re: Just the Facts: S&P's $2 Trillion Mistake
#2Mistake or deliberate market manipulation?
Re: Just the Facts: S&P's $2 Trillion Mistake
#3I suppose this is a good bit of posturing, but it seems disingenuous. The White House and Treasury should know better than anyone else how broken our political system is.
Re: Just the Facts: S&P's $2 Trillion Mistake
#4I hate it when students whine about the unfairness of their lousy grades and how they really deserved a higher one.
It's even worse when the Treasury Department does it.
Re: Just the Facts: S&P's $2 Trillion Mistake
#5Mistake or deliberate market manipulation?
One could argue the two are not mutually exclusive; I think the timing of the downgrade was selected by S&P committee to encourage a QE3 push. I think the facts of the downgrade (less revenue then spending for the foreseeable future) have been true for a long time.
Re: Just the Facts: S&P's $2 Trillion Mistake
#6It's odd that there's so much emphasis being placed on short-to-medium-term numbers when it comes to bond ratings in the first place. Especially at current interest rates, it has relatively minor implications for debt sustainability: $4 trillion in debt, at real interest rates hovering just above 1%, is maybe $50b a year extra interest in real terms. Surely the federal government's solvency doesn't turn on questions of +/- $50b a year, so the bond-serviceability picture is pretty similar whether you move things $4t one way or another.
He's a bit of a partisan, but in this case I think Paul Krugman's analysis is basically correct, that real questions of debt sustainability aren't +/- $4trillion in the next 10 years, but longer-term insufficiently funded liabilities in healthcare and pensions: http://krugman.blogs.nytimes.com/2011/08/06/the-arithmetic-o...
Re: Just the Facts: S&P's $2 Trillion Mistake
#7Mistake or deliberate market manipulation?
Uhh, neither. The Treasury claims it was a "mistake", but personally I can't see how anyone could possibly still consider US bonds to have the highest possible rating.
However, if for some reason you did think that, then Hanlon's Razor would apply.
Re: Just the Facts: S&P's $2 Trillion Mistake
#8It's odd that there's so much emphasis being placed on short-to-medium-term numbers when it comes to bond ratings in the first place. Especially at current interest rates, it has relatively minor implications for debt sustainability: $4 trillion in debt, at real interest rates hovering just above 1%, is maybe $50b a year extra interest in real terms. Surely the federal government's solvency doesn't turn on questions…
He's a bit of a partisan, but in this case I think Krugman's analysis is basically correct, that real questions of debt sustainability aren't +/- $4trillion in the next 10 years, but longer-term insufficiently funded liabilities in healthcare and pensions:
Krugman is a Democrat partisan, but complaining about unfunded liabilities in healthcare and pensions is exactly what the Republicans are doing too. If Krugman and the Republicans agree that it's a big problem then... damn, it must be a big problem.
Re: Just the Facts: S&P's $2 Trillion Mistake
#9I hate it when students whine about the unfairness of their lousy grades and how they really deserved a higher one. It's even worse when the Treasury Department does it.
I would whine if a teacher's mistake sent me from a D to an F if a D would let me "pass".
Re: Just the Facts: S&P's $2 Trillion Mistake
#10According to the CBO last week's budget agreement cuts $2.1-2.4T in spending [1]. S&P's guidance was that we cut $4T. So either the CBO is off as well, or this typical Washington budgetary spin.