S&P Downgrades US To AA+

It's about time. The full report is at http://www.standardandpoors.com/home/en/us

creditworthiness, or the ability to repay debt... how is there a risk when this is paid in dollars, and we print dollars?

Try S&P for treason.

So US credit is rated lower to a portfolio holding BBB mortgages?

I think McGraw Hill is considering splitting into two. I wonder what goes with S&P?

the golden age of U.S.A is over, sad.

Ten year Japanese bond yields 0.144% If this is what AA means I don't think it matters.
S&P's move is PR.

S&P is looking to regain their clout after missing sub-prime and messing up the ratings of virtually every AAA rated MBS bond. And while our gov't has not managed its books as well as it should we're still the least dirty shirt in the hamper.

As long as the U.S. is the world reserve currency we can't default since we can always print more dollars. U.S. bonds still represent safety.

This move will hurt S&P'S business. They wont' be able to offer a AAA rating for any securitized debt , muni debt or corporate debt.

Earlier today, Standard & Poor's rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations).

For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board's Regulation W, will also be unaffected.

http://www.federalreserve.gov/newsevents/press/bcreg/20110805a.htm

So how all of this will affect NYC RE? Price down and Rate up?

The rating is relative to our peers, not to munis or corporations.

We may not take this seriously, but the rest of the world does. It'd be silly for keep rating us AAA along with other AAA countries that manage better. Maybe S&P should've left us AAA but made a new AAA+ rating for Canada (34% debt to GDP ratio,) Germany, France, the UK.... "The amp goes to 11!"

Or left us AAA because ... just because we're us.

S&P'S analysis and past track record of what AAA means is laughable. Not that this decision is without merit, but it really means nothing.

Meaningless.

Permit me to back track on my last post. There will clearly be political ramifications.
Republicans will go on the attack pointing out Obama is the first President to preside over a AA rated country. They Republicans will blame Democrats for not cutting programs and Democrats will return the mud slinging by saying the Republicans refused to permit higher taxes. If the market goes down on Monday I think it may have more to do with our elected leaders acting incompetent and not working toward anything.

Well, point taken that it may be a political issue.

I say meaningless in the sense that it signals no real new substantive information.

not sure if the rental providers must hold on their pricing so tight. It's about time they must slash the rental prices to lowest given that the downgrade has happened.

Timmy called it.

http://www.youtube.com/watch?v=q7Z0L-NYFlE

Hell, treasuries will probably rally on the news.

RS - Classic Austrian Economics at work. Read you Ayn Rand.

"Lowering the nation%u2019s rating to one notch below AAA, the credit rating company said %u201Cpolitical brinkmanship%u201D in the debate over the debt had made the U.S. government%u2019s ability to manage its finances %u201Cless stable, less effective and less predictable.%u201D It said the bipartisan agreement reached this week to find at least $2.1 trillion in budget savings %u201Cfell short%u201D of what was necessary to tame the nation%u2019s debt over time and predicted that leaders would not be likely to achieve more savings in the future." -Washington Post

Time to enact term limits on congress. If they (n.b. both parties) hadn't grandstanded and postured for months they might have been able to find a reasonable solution to this mess. Now we're holding the bag.

"(CNN) -- A senior Obama administration official is calling Standard & Poor's move to downgrade U.S. credit "a facts-be-damned decision," saying the rating agency admitted to an error that inflated U.S. deficits by $2 trillion.
U.S. Treasury officials received S&P's analysis Friday afternoon and alerted the agency to the error, said the administration official, who was not authorized to speak for attribution.

The agency acknowledged the mistake, but said it was sticking with its decision to lower the U.S. rating from a top score of AAA to AA+."

http://www.cnn.com/2011/BUSINESS/08/06/credit.rating.reaction.cnn/index.html?hpt=hp_t2

Is it just me or does that S&P guy sounds like he's shaking nervously?

Try S&P for treason.

how remarkable that even something this important would still be released as part of a friday newsdump. ok, anyone want to explain using very small words?

"They Republicans will blame Democrats for not cutting programs and Democrats will return the mud slinging by saying the Republicans refused to permit higher taxes."

interesting that these are always the only options, but what about streamlining the accounting for what already exists? the GOA puts out very informative reports on waste in government spending, there are probably ways to save significant amounts money while keeping most of the programs and honoring existing govmnt obligations just by cleaning up the books and doing a thorough audit, right? but i suppose who would have that authority. sometimes the benefits of an enlightened despot just can't be denied. but seriously, you guys are awfully upbeat.

"the golden age of U.S.A is over, sad."

cheer up, it's not so much our decline as the rise of the rest of the world. people like to pretend if we didn't outsource manufacturing the us would still be the manufacturing giant it once was. but those countries would have risen with or without us. unless you WANT to keep other nations down at the expense of our prosperity, but most people who do don't actually understand that this is what they want, nor do they understand the very ugly ways that sort of thing is achieved. eh. happy weekend.

life is a cabaret, old chum
come to the cabaret

Why did the S & P wait until after the debt-ceiling deal to make the announcement? Wasn't the S&P's overall performance one of the reasons we ended up with the sub-prime catastrophe which resulted in the Bush/Paulson bailouts followed closely by the stimulus package resulting in the national debt that they are now concerned about.

It takes us a while to absorb what the word "unsustainable" means.

One CBO director after another has told House and Senate committees that we can't go on like this. It's still there, nicely archived on C-Span, along with all the chart shows by Spratt and Durbin.

Why did take so long to state the obvious: the US have been bankrupt for so long. But again Enron was downgraded 5 days before bankrucy filing to allow wall street to bail out and small naive investors to hold the bag.
A country does literally go bankrupt: its currency does.
A massive move away from the paper dollar is on its way: got gold?

Hell, treasuries will probably rally on the news

Good chance you are right on the money. We're still the least dirty shirt in the hamper.

Wen is Eric Holder going to indict S&P and their criminal mastermind John Chambers? I assume he has the criminal complain on his desk just waiting to be filed in federal court on Monday morning, right?

Just read a post that summarizes the zeitgeist of the announcement.

http://kiddynamitesworld.com/irony-is-that-the-same-people-who-rated-a-flaming-bag-of-crap-aaa-have-downgraded-us/

Yes, that's what I've been saying.

And so lets try them for treason.

"S&P Downgrades Fannie And Freddie, As Stocks Tumble To Their Lows Of The Day"

"S&P has (expectedly) downgraded Fannie and Freddie from AAA to AA+.

Given that these are appendages of the US government, this can't be at all surprising."

"The downgrades of Fannie Mae and Freddie Mac reflect their direct
reliance on the U.S. government. Fannie Mae and Freddie Mac were placed into
conservatorship in September 2008 and their ability to fund operations relies
heavily on the U.S. government. In addition to the implicit support we factor
into our ratings, the U.S. Treasury has demonstrated explicit support by
providing these entities with capital quarterly, as necessary."

http://www.businessinsider.com/sp-downgrades-fannie-and-freddie-as-stocks-tumble-to-their-lows-of-the-day-2011-8

"KABOOOM: BERKSHIRE HATHAWAY INC OUTLOOK TO NEGATIVE FROM STABLE BY S&P"

"Standard & Poor's Ratings Services lowered to 'AA+' from 'AAA' its long-term counterparty credit and financial strength ratings on the member companies of five U.S. insurance groups: Knights of Columbus, New York Life, Northwestern Mutual, Teachers Insurance & Annuity Assoc. of America (TIAA), and United Services Automobile Assoc. (USAA). The outlooks on the ratings on all of these companies are negative. In addition, Standard & Poor's lowered the ratings on approximately $17 billion of securities issued by New York Life, Northwestern Mutual, TIAA, USAA, and their affiliates.

At the same time, Standard & Poor's affirmed the 'AA+' ratings on the members of five other insurance groups--Assured Guaranty, Berkshire Hathaway, Guardian, Massachusetts Mutual, and Western & Southern--and revised the outlooks on ratings on these companies to negative from stable."

http://www.zerohedge.com/news/kabooom-berkshire-hathaway-inc-outlook-negative-stable-sp

The dominoes! They're falling!

The next step is to go on the attack and discredit S&P. I think that is the strategy of defense.

"Senate Probing S&P Downgrade"

"According to flashing headlines, the idiots in the Senate now have S&P firmly set in their sights. Reuters adds that, "the Senate Banking committee has begun probing last week's decision by Standard and Poor's to downgrade the U.S. credit rating, a committee aide told Reuters on Monday. The aide said the panel was gathering information about the S&P move but no decision had been made on whether it will hold hearings into the downgrade. But, the aide added, all options were being weighed."

http://www.zerohedge.com/news/senate-probing-sp-downgrade

Bob, you're like a prophet or something...

Any day now the FBI should be breaking down S&P's door.

ha ha these guys got nothing better to do. Just shows you how the gov't is involved in all ratings. They should stay the hell out of it. The so called shit has it the fan and not a minute too soon. S&P may be my new favorite company. So sick of the sucker uppers and they sucked and Fkcked up a just a few short years ago.

Meanwhile, investors flee to gold, silver, and.... US Treasuries. Good call, S&P.

>Socialist
about 4 hours ago
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Any day now the FBI should be breaking down S&P's door.

Socialist, I'm in complete agreement with you on this one. They should be tried for treason.

President Obama sought to reassure jittery investors yesterday following a credit rating downgrade, declaring that the United States "always will be a triple-A country"

The S&P guys are just trying to regain some credibility after giving worthless mortgage securities AAA/aaa ratings. They're blithering fools, and they looked like idiots after recommending a pile of crap.

So, because they are selfish morons, they decided to play this grandstanding game of one-upmanship.

S&P is owned by McGraw Hill, the people who sell your kids textbooks for $800 each. The new CEO (a Mr McGraw the Third) has been there for about 3 years and is an English Lit major. Downgrading the US is a big step, and doesn't get done without his A-okay. And he's a Republican idiot, trying to look better than his predecessor (his Dad, I think).

This is a moronic game, and is completely irresponsible. If I were the Department of Education, I would consider another textbook company right about now.

Remember, they said all those mortgage securities were AAA/aaa. They are idiots.

Actually, now that I think about it, S&P should have been prosecuted for fraud and falsifying information on all those mortgage securities.

That's the problem with not putting away the criminals; they're still around to do more damage.

This genius McGraw CEO that went on national television and leaked the iPad like a blatherring idiot?

http://tech.blorge.com/Structure:%20/2010/01/28/mcgraw-hill-ceo-shunned-by-apple-after-ipad-leak

"The S&P guys are just trying to regain some credibility."

Given the massive rally in treasuries yesterday, I don't think they gained any credibility with the market.

http://www.ritholtz.com/blog/2011/08/on-the-sp-downgrade-of-the-united-states-of-america/

There is great debate among financial experts and economists regarding the propriety of rating agencies’ providing sovereign ratings to begin with. After all, it places unregulated, and – given recent history – demonstrably fallible companies in a position to enter and influence the political process of countries by affecting their access to, and cost of, debt financing. Because a wide spectrum of institutions that hold government debt buy, hold and price it based on the ratings assigned thereto by otherwise unaccountable “publishers” of opinion (as they fancy themselves) the ratings agencies are now in the thick of the fiscal austerity frenzy and regional debt bailouts that have dominated the developed world.

as the “owner of the printing press” of the world’s reserve currency, the U.S. has ample ability to monetize its own debt pretty much any time it chooses. And, in fact, the country has been doing just that during years of quantitative easing policy.

No, the issue of ability of the United States to pay its debts is unquestionable by even Standard & Poor’s. And the propensity or willingness to pay its debts, despite the recent political debate, must be assessed relative to the entire history of the Republic. The federal government of the United States has always paid its obligations – for hundreds of years.

The fact of the matter amounts to nothing more or less than that a private company elected to deliver a verbal spanking to the congress, executive and – by extension – the people of the U.S. for the messiness of its political process and its confused electorate. Effectively – the S&P pronouncement last evening amounted to not much more than a guest in your house telling your children to clean up their rooms “or else.” I don’t know about you, but in my case, at least, I would ask such a guest to apologize or leave.

I’m all for first amendment rights, but there is the issue of appropriateness of speech. And having a company that nearly blew up the financial world with its miss-assessments of private mortgage backed, CDO and other obligations telling the U.S. to clean up its room or else is not only inappropriate, it is – in many respects – the pot calling the kettle black.

Notwithstanding the fact that S&P is predominantly comprised of people who I am reasonably certain are good, patriotic Americans – they seem not to understand the nature of their own government and its processes. In the United States – as Churchill so profoundly put it – we always do the right thing….after trying everything else.

Our government is clearly populated with numerous politicians who act like petulant children rather than getting together to lead. But we will spank our own children for their misbehavior; it’s not the job of ratings agencies to do so.

And, by the way Standard & Poor’s, before you go about decrying the messiness of your country’s legislative houses, clean up your own house.

The rating went from AAA to AA+, not BB+. Is it that surprising that AA+ is considered very safe?

"S&P Cuts AAA Ratings on Thousands of Municipal Bonds After U.S. Downgrade"

"Standard & Poor’s lowered the AAA ratings of thousands of municipal bonds tied to the federal government, including housing securities and debt backed by leases, following its Aug. 5 downgrade of the U.S."

"Top-rated state and local governments wouldn’t automatically lose their top scores, the company said. It rates the general-obligation debt of nine states AAA. The country’s “decentralized governmental structure” calls for an independent review of state and local government credits, 3.9 percent of which have AAA ratings, S&P said in a report."

http://www.bloomberg.com/news/2011-08-07/muni-market-prepares-for-loss-of-aaa-ratings-as-s-p-downgrades-u-s-credit.html

NYC munibonds next?

well, that settles it then. all is well. of course, s&p just became a hero and a martyr to anyone who has a problem with the american government, as well as "proof" that our system is no better than any other and when kicked where it hurts will just call you bad and maybe dismantle you. but that's ok. in the existence of the american republic it's always done the right thing. the fact that the "right thing" sometimes ends up being "right" by default because it is often the only "thing" not burned to the ground is really not that important.

"And having a company that nearly blew up the financial world with its miss-assessments of private mortgage backed, CDO and other obligations telling the U.S. to clean up its room or else is not only inappropriate, it is %u2013 in many respects %u2013 the pot calling the kettle black."

EXACTLY.

Grandstanding ninnies at S&P.

"Standard & Poor's Credit Rating for each country"

"This map shows Standard & Poor's Credit Rating for each country."

http://chartsbin.com/view/1177

interesting chart

Jordan BB
and
Syria AA-

I'll take door number 1 please.

NYTIMES ARTICLE: Why S.&P.%u2019s Ratings Are Substandard and Porous

http://fivethirtyeight.blogs.nytimes.com/2011/08/08/why-s-p-s-ratings-are-substandard-and-porous/?utm_source=twitterfeed&utm_medium=twitter

"Spain, which markets now posit has about a three-in-ten chance of default or restructuring, also had a AAA rating, which it maintained until January 2009. Today it still has a AA rating, one notch higher than Japan%u2019s."

S&P thinks the Japanese will default before Spain? Are they nuts? Oh . . . wait . . . yes they are!

s&p has decided not to enforce their sovereign debt cap. It's always been understood that a corporation or municipality cannot have a higher debt rating than the country it resides in. So what does that say?

Debt-to-GDP ratio alone is a better predictor of default risk than an S&P rating (meaning that the rating subtracts information provided by the debt-to-GDP ratio).
S&P ratings have almost no correlation with future default risk.
S&P rates European countries higher than other countries, all other things being equal—and look where that got us.
S&P ratings are serially correlated, which means they incorporate new information especially slowly.

http://baselinescenario.com/2011/08/09/sp-ratings-destroy-information/

Five years ago, if you were an investor looking for guidance on which country’s debt was the safest to invest in, Standard & Poor’s ratings wouldn’t have done much to help you navigate the headwinds of the financial crisis.

Investors now think that Ireland has more than a 40 percent chance of a default or debt restructuring at some point in the next five years. The country is penalized with double-digit interest rates when it wants to borrow money. But in 2006, Standard & Poor’s had Ireland’s debt rated with its top-of-the-line, AAA rating. It didn’t downgrade Ireland until March 30, 2009, long after its financial problems had become obvious, and the price to buy insurance on its debt had increased tenfold from a year earlier.

S.&P. ratings tend to lag, rather than lead, the market. That is, in cases where the market’s view of default risk is misaligned with S.&P.’s, S.&P. is a good bet to change their rating to catch up to market perception.

As I mentioned, for instance, investors had already determined that Irish debt and Greek debt had become quite risky long before S.&P. downgraded those countries. We can also study this in a slightly more formal way. Suppose that we’re trying to predict what S.&P.’s rating for a country would be today based on two factors: S.&P.’s rating on June 30, 2009, and the market’s perception of default risk (as determined through credit default swap prices) on the same date.

If you place these variables into a regression equation, the market price of credit default swaps is a statistically significant predictor of what S.&P.’s rating would be two years later. What that implies is that the markets pick up on salient information about the countries’ default risk before S.&P. does.

n fact, the evidence from the past five years suggests that it may be worthwhile to adopt a contrarian investing strategy that specifically bets against S.&P.’s ratings. If you were trying to predict a country’s default risk today, based on the market’s perception of its default risk two years ago as well as its S.&P. rating at that time, you would find that accounting for S.&P. ratings actually subtracted value from your model. That is, if the market had priced two countries as having a 20 percent default risk in 2009, but one of them had a AA rating from S.&P. and the other had a BB rating, the country with the worse S.&P. rating is likely to have proven to be the safer bet.

The giveaway is that S.&P.’s rating changes are serially correlated — that is, downgrades tend to follow downgrades, and upgrades tend to follow upgrades. According to the company’s internal analysis, once a country is downgraded it has a 52 percent chance of being downgraded again in the next two years. By contrast, there is just a 9 percent chance that S.&P. will reverse course and upgrade the country.

What this implies is that S.&P.’s ratings are inefficient about how they incorporate new information. If a country is downgraded from AAA to AA, and that implies that the country is quite likely to be downgraded again in the near future, the question is why S.&P. didn’t apply a steeper downgrade in the first place.

I’m not an efficient markets hypothesis guy. I think that markets can misprice commodities, and that canny investors can profit from them. But relying on the consensus of the market is almost certainly better than relying on Standard & Poor’s, whose advice has more often than not led investors toward the losing side of bets. The fact that billions of dollars in wealth are tied up in the judgments of a company with such a poor record is all the proof you should require that the global financial system is in need of reform.

http://fivethirtyeight.blogs.nytimes.com/2011/08/08/why-s-p-s-ratings-are-substandard-and-porous/

"The SEC Is Investigating Possible Insider Trading At S&P"

"The Securities and Exchange Commission is launching a preliminary examination into whether an Standard & Poor's employees insider traded ahead of the downgrade, according to a report in the Financial Times."

" "At issue, in part, is a 2006 statute — the Credit Rating Agency Reform Act — that says a credit rating agency could have its license registration revoked if it leaked information about its pending downgrade decision before making that information publicly available. It also said that the rater must have policies and procedures to prevent such a disclosure." "

http://www.businessinsider.com/sec-probing-insider-trading-at-s-and-p-2011-8

What's the insider trading? That stocks would decline or treasuries?

You knew this was going to happen. It's over for S&P. The govt is relentless when they want to get ya and they have the technology/resources to do it......"The feds can hear a snake fart in Egypt"

lets get real here, you think GS execs dont get inside information and trade on it?

yes Noah but GS doesn't downgrade the govt.

Lots of downgrades coming. More extreme volatility. Unfortunately, we're headed for the Great Recession Part II.

Retail sales came in under expectations but up - up not because of volumes, but inflation.

This week marked the most extreme volatility in the S&P ever. That is not a good sign. Some retracement up is to be expected after a 15% fall in 15 days, but what we have been seeing is not healthy.

Everything setting up like 2008. Maybe it won't be - we can only hope. But short-sale bans: remember?!

"( ) Consumers Are Confident Of Recession"

"And that my friends is the nail in the economic "recovery." August consumer sentiment was just reported at 54.9 from 63.7 in July. This is the lowest level since May 1980. The chart below shows the correlation with sentiment and the consumer component of GDP which is about 70% of the economy and why I say the "recovery" is over."

http://www.zerohedge.com/news/guest-post-consumers-are-confident-recession

May of 1980....

May of 1980....

yes and remember what happened in the decade that followed. Big hair and big money.

Yes, pulaski, but stocks and commodities are back up again on that news, on bad employment news, on bad European news, on bad US news, on bad retail sales news.

Oil headed back up to $90 a barrel - even though the economy is slowing to a stall.

Make sense? No. Would I be involved in this market? No.

Right now it's all speculation, nothing to do with fundamentals. I wouldn't be surprised to see stocks make a complete about-face and try to surpass the previous 52-week high. Of course the higher oil and food go, the slower the economy gets. The Fed doesn't seem to understand that - which will only make the crash, when it comes (and it's started) worse.

Oh - besides the volatility, volume on up days is about half of volume on down days.

lets get real here, you think GS execs dont get inside information and trade on it?

As opposed to how the Fed tells the banks which treasuries it's buying and when?

so now we shift from a media focused on/obsessed with the latest pronouncements by the Federal Reserve to a new focus - S&P's credit ratings

"so now we shift from a media focused on/obsessed ...

As long as we don't focus on jobs, then the President is happy.

These uncertain times cry out for the clear-headed analysis of Apt23.

>These uncertain times cry out for the clear-headed analysis of Apt23.

Which sky falls faster? A sky filled with cumulus clouds, or a sky filled with rain clouds?

"Fitch affirms U.S. at AAA, outlook stable"

"The affirmation of the US 'AAA' sovereign rating reflects the fact that the key pillars of US's exceptional creditworthiness remains intact: its pivotal role in the global financial system and the flexible, diversified and wealthy economy that provides its revenue base," Fitch said in its statement.

"Monetary and exchange rate flexibility further enhances the capacity of the economy to absorb and adjust to 'shocks'."

http://www.reuters.com/article/2011/08/16/us-usa-rating-fitch-idUSTRE77F3B320110816

These are the same companies that rated Liar Loans AAA?

"S&P Slashes US Growth Forecast, Says Current Crisis Is Worse Than 2008 As US At "Risk Of Default", Ridicules "Transitory" "

"First they cut the rating of the US, then the went and downgraded Google, now S&P is going for the "treason trifecta" by just releasing a report which literally takes the US to the toolshed. Among many other things, the rating agency just cut US growth for the next 3 years. To wit: "While July data finally showed a slight improvement in the U.S. economy, it's not enough to support expectations that the second half of the year will see a bounce in growth. We now expect to see an even slower recovery than the half-speed we earlier expected. We now expect just 1.9% growth in the third quarter and 1.8% in the fourth, to bring 2011 calendar year growth closer to 1.7% instead of 2.4% we earlier expected. We also downwardly revised growth expectations for 2012 and 2013, as a more drawn-out recovery is factored into our forecast." "

"Look for S&P to make the FBI's most wanted list very shortly."

http://www.zerohedge.com/news/sp-slashes-us-growth-forecast-says-current-crisis-worse-2008-us-risk-default-ridicules-transito

Gotta say the volume (or lack thereof)for the DJI is kinda scary.
Eye of the hurricane, or just vacation?

Hurricane.

Excellent analysis:

http://www.cnbc.com/id/44177294

This is and always was a bubble.

The United States is fighting back. The gov't "suddenly" decided to not look the other way on mortgage ratings. I'm not sure how much to believe this began before the U.S. AAA downgrade as lots of investigations begin drag and end without real support or reaching their logical conclusion/ fruition.

http://www.nytimes.com/2011/08/18/business/us-inquiry-said-to-focus-on-s-p-ratings.html?_r=1

The Justice Department is investigating whether the nation’s largest credit ratings agency, Standard & Poor’s, improperly rated dozens of mortgage securities in the years leading up to the financial crisis, according to two people interviewed by the government and another briefed on such interviews.

n the mortgage inquiry, the Justice Department has been asking about instances in which the company’s analysts wanted to award lower ratings on mortgage bonds but may have been overruled by other S.& P. business managers, according to the people with knowledge of the interviews. If the government finds enough evidence to support such a case, which is likely to be a civil case, it could undercut S.& P.’s longstanding claim that its analysts act independently from business concerns.

During the boom years, S.& P. and other ratings agencies reaped record profits as they bestowed their highest ratings on bundles of troubled mortgage loans, which made the mortgages appear less risky and thus more valuable. They failed to anticipate the deterioration that would come in the housing market and devastate the financial system.

Ratings experts also said that a successful case could hamper the agencies’ ability to argue that they were not liable for ratings that turned out to be wrong.

“Their story is that they should be protected by full First Amendment protections, and that would be harder to make in the public arena, in Congress and in the courts,” said Lawrence J. White, another professor at New York University’s Stern School of Business, who has testified alongside ratings executives before Congress. “If they mixed business and the ratings, it would certainly make their story harder to tell.”

The NYT story clearly says that the investigation did begin before the downgrade, so S & P was engaged in a payback with the downgrade. How can would you cite to the story, but only choose to believe the part that fits your view?

Sorry, "how can you," not "how can would you." Not enough coffee yet.

MidtownerVirginEast, get get back to your paralegaling before the summer associates get angry at you.

"MOODY'S ANALYST BREAKS SILENCE: Says Ratings Agency Rotten To Core With Conflicts, Corruption, And Greed"

"In short, Harrington describes a culture of conflict that is so pervasive that it often renders Moody's ratings useless at best and harmful at worst.

Harrington believes the SEC's proposed rules will make the integrity of Moody's ratings worse, not better. He also believes that Moody's recent attempts to reform itself are nothing more than a pretty-looking PR campaign."

http://www.businessinsider.com/moodys-analyst-conflicts-corruption-and-greed-2011-8

I know a higher-up at one of the agencies. Completely incompetent, alcoholic, close to an imbecile.

Otherwise, a fine human being.

Midtowner--you are a fool to, after all this time, assume redbaiter reads what he pastes---

Bottoms -- You are right. And it's not like pointing it out stops him. I just post things so H'burg can give us his witty comebacks.

oh snap?

USTs at 2%= market taking opposite view from S&P.

Not necessarily. Could also mean market has over-riding concerns.

What do you pay for AAA rated French, UK, or German bonds? More than for the US bonds, that is for sure.

Japan lost their AAA a long time ago. and look at their yields?

it will be AAA before next summer

"Following years of pandering to client demands, and assigning trillions of dollars in fixed income securities with whatever rating money bought (among other things, a factor to the credit bubble and its subsequent implosion) S&P finally tried to do the right thing and tell the truth. However in this case it picked if not the worst, then certainly the most hypocriticial credit in the world to expose - the US itself. Sure enough two weeks after the downgrade, someone made the phone call and the CEO Deven Sharma is no more. As for the kick square in the gonads: Sherma will be replaced with the COO of...you know it... the bank which demanded tens of billions in secret Fed bailout loans itself, Citibank. The only question left in this entire farce is how long before S&P issues the following upgrade of the US: "Great service, AAA rating, immediate payment, would do business again!!!"

"So let us get this straight: in America when you dare to tell the truth, your career is over, while if you are a corrupt, lying, incompetent tax evader you not only get to be Treasury Secretary but likely will be on for life as long as you do the one duty you are entrusted with: pander to the interests of the Too Big To Fail financial institutions"

"S&P Board Fires CEO For Telling The Truth, To Be Replaced With COO Of Citibank"

http://www.zerohedge.com/news/sp-board-fires-ceo-telling-truth-be-replaced-coo-citibank

Unbelievable.

Peterson became COO of Citi in 2010. Before that, he was at Citi in Japan. Hard to blame him for problems in the U.S.

And they didn't appoint Franklin Raines, Angelo Mozillo, Stan O'Neill, or Jimmy Cayne.

By the way, what was the truth that S&P told?

Oh hunters burg

If only we could all be as smart as you are.

So clever

So witty.

Oh colu mbiacounty

If only we could be as grouchy as you are.

So nasty

So irrelevant.

How do you do it?

What's your secret?

Thousands of posts from hundreds of posters

All more clever and witty than the next.

Teach us, great one.

I'm too humble.

Is that the great secret?

That's how you do it?

So much to keep straight.

What else can you tell us?

Teach us, wise one.

Who is "us"?

What's it like to be you?

Do you think of yourself as the sherriff or the Marshall of this site?

Who is "us"?

Your worshippers.