Comments on: Will the U.S. ever get its triple-A back? A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 By: Danny_Black Sat, 06 Aug 2011 14:43:19 +0000 Sorry private sector ABS. Obviously GSE issued MBS were implicitly wrapped by the government and now are explicitly backed by the US.

By: Danny_Black Sat, 06 Aug 2011 14:40:55 +0000 TARP would have done nothing to stop MBS tranches defaulting. The government intervention that MAY have stopped any defaults would be the “conservatorship” of the GSEs and bringing the rates down so low that people could still make their payments.

By the way ABS is not a huge part of the AAA market.

By: randymiller Sat, 06 Aug 2011 13:18:28 +0000 If none of the AAA rated MBS traunches defaulted, it is because TARP kept them from defaulting. S&P, Moody’s, and Fitch still have not restored our trust in ratings agencies.

I work for a very successful company; one of the reasons we are successful is because we realize that we can still screw up enough to go broke. If this S&P downgrade reminds us that the US can go broke, and we take action, then the downgrade is a good thing.

There is a lot of low hanging fruit when it comes to the budget. WE can cut military spending, we can cut farm subsidies, we can rationalize our health care system. On the revenue side, we can go to a $12,000 standard deduction, close loopholes like the mortgage interest deduction, simplify all our lives, and raise a lot of revenue.

Obama has been very good at getting elected, but he has been a weak leader. He deferred to the dems in congress on health care, and we got a weak bill. He still defers all the time. Bush was a much stronger leader, and could get Congress to comply with what he wanted. Unfortunately he was leading us in the wrong direction.

And when I look at the crop of Republicans running, I do not see a strong leader who will lead us in the right direction.

So maybe S&P is doing us a favor in firing this warning shot across our bow.

By: Danny_Black Sat, 06 Aug 2011 11:33:42 +0000 TFF, I actually don’t know the figure. Would be genuinely interested in knowing but not enough to actually do any serious research, I would be shocked if by amount issued it is more than 2% and by any measure even close to double figures. Maybe an intrepid reporter will bother to check these figures rather than shreking about how the credit agencies got it all wrong.

There is a reason why I “harp on this particular statistic” and that is because credit ratings are meant to be a measure of exactly one thing and that is the default rate. Contrary to what people seem to think it doesn’t measure anything else. Doesn’t mean “safe”, except in the technical sense that it will meant its contractual obligations. Most certainly does not mean that the price will not be volatile or you will not lose alot of money “investing” or trading it.

TonnyZ, I can see you are yet another one of these people who has difficulty reading. You made a very specific claim – ie that ratings agencies only very recently jumped on this band wagon within months. That claim is simply false and that was all the links I posted were meant to demonstrate. Spouting a load of other gibberish doesn’t make it any less false. Have fun arguing with what you apparently think i said and not what i actually said.

By: TFF Sat, 06 Aug 2011 11:21:47 +0000 “johnhhaskell, and the percentage of debt marked as AAA by the agencies in 2001-2007 that defaulted is?”

I don’t know, Danny_Black. If you elaborate on this, I would be interested in the answer. (Debt that was ORIGINALLY rated AAA that EVENTUALLY defaulted, I presume? Downgrading the debt a month before the default doesn’t fix the problem.)

By: TonnyDZ Sat, 06 Aug 2011 11:06:26 +0000 Look Danny, I am tiring of your suggestive rhetorical questions. If you have answers then provide them.

I don’t care what percentage of AAA rated debt actually defaulted, because I know that billions of dollars of such paper ended up being worth pennies on the dollar at best. If you are arguing that the rating agencies didn’t rate billions of dollars as triple A only to have them lose almost all their value, then make the argument already, it would be wrong but you are allowed to try of course.

The percentage of all the paper rated as triple A which technically defaulted is irrelevant and could be highly misleading. Which presumably is why you harp on this particular statistic.

I pointed out that the very article you linked to stated the exact same points I made. Yes, you disagreed with me by linking to… an article that agrees with me completely. Thank you, you really are too kind. Who needs facts when I have this kind of competition?

Once again, the rating companies suddenly got worried about the US debt right after a Democrat took office. Before that, they made nary a peep about US debt, while Bush and Co. spent wildly, all on US credit.

Now, they have downgraded the US ostensibly because of the brinksmanship of the GOP. But, conveniently, downgrading the US will hurt the current administration more than the GOP.

By: Danny_Black Sat, 06 Aug 2011 08:32:34 +0000 TonnyZ, I have zero sympathy for Rating Agencies who are an anachronism held over from the 30s. I was simply pointing out your claim that they were making noises about the US credit rating in the last few months was factually incorrect. Of course, you then proceed to prove that facts are not important to you.

Who exactly got “huge bonuses” at the rating agencies for “rating crap as triple A”? Also what percentage of AAA rated debt between 2001 and 2007 actually defaulted?

By: TonnyDZ Sat, 06 Aug 2011 05:01:11 +0000 Danny_Black:

You might want to read the links you provide:

“Professor Peter Spencer, chief economic adviser to the highly regarded Ernst & Young Item Club, added: “They completely missed the financial crisis and are trying to regain some credibility. But at the end of the day, when the next problem occurs, they’ll be asleep at the wheel again.”

He said investors would most likely ignore S&P’s warnings.”

Further, I am unimpressed by a statement from S&P’s own website. You do know they have a pr department that is fully capable of getting whatever news they want right into the national newstream, right? A page on their website is weak sauce indeed.

They are playing the same game as all the GOP. The economy was great until Obama won the election. Unfunded wars, Medicare Plan D, unfunded tax cuts, pushing down interest rates to absurd levels to try and goose the economy for political gain, killing the M3 calculation (if memory serves) because it made the Bush Admin look bad, everything but everything was a-ok.

Then, suddenly, once Obama won, we developed serious economic problems. Oh, the seniors are getting older! Well where were they in 2007? Were the seniors not approaching retirement age then? Oh that’s right, S&P was busy rating complete crap as triple A and getting huge bonuses for doing it.

By: Danny_Black Fri, 05 Aug 2011 14:59:06 +0000 johnhhaskell, and the percentage of debt marked as AAA by the agencies in 2001-2007 that defaulted is?

By: Danny_Black Fri, 05 Aug 2011 14:57:53 +0000 TonnyZ, not sure what “months of this game going” means but 5 seconds search finds an Oct 2010 report talking about the threats to US AAA rating: articles/en/us/?assetID=1245230849292

and there was mutterings about a US downgrade in 2009: usiness/article-23697332-oecd-attacks-sp

But hey who cares about facts right?