James Pethokoukis

Hacking Obama’s black box budget

April 20, 2011

On Wall Street, calling some strategy a “black box” is an epithet. The term implies financial flimflammery may be at play. Opacity may conceal trickery. Bernie Madoff had a black-box model that supposedly helped him pick winning stocks. The deception was in the details, or, rather, the lack of them.

Why U.S. debt shouldn’t be AAA rated: It’s actually worse than Spain’s

April 19, 2011

Credit rating agencies such as S&P really place a lot of emphasis on two financial metrics:  the ratio of net debt to GDP and the ratio of net interest payments to government revenues. When you look at those two factors, Goldman Sachs concludes “that the US is already at the outer edge of AAA territory. ” (Thank goodness for the supremacy of the dollar.) Look at the pretty chart from GS:

S&P doesn’t like any of the debt plans out there

April 19, 2011

Here’s the thing: S&P seems to want Washington to cut much faster than any of the plans currently circulating. As Goldman Sachs notes: