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:

Most scenarios would take the U.S. further into risk of a downgrade using the rating agencies’ stated criteria (for instance, Moody’s has in the past indicated that the edge of its “reversibility band” for a downgrade from AAA is an interest to revenue ratio of 14%; the definition and coverage of the measures in the chart may differ somewhat but the implication is similar).  … Most official forecasts show greater deterioration of these measures. Interestingly, the highest profile reform proposals, from the co-chairs of the President’s Fiscal Commission, Sen. Alan Simpson (R-WY) and Erskine Bowles (D) and, separately, from Rep. Paul Ryan (R-WI) would result in a much more benign path for the debt/GDP ratio, but would still allow the interest to revenue ratio to increase to levels that the rating agencies would likely view as problematic.

spchart

One comment

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You always do a great job at taking this complex topic and turning it into something understandable.
This graphing that you do should be on all three nightly news stations, educating the public that only watch advertisements to make their judgements on econ issues.

I’ve been hearing about these large money holders that are planning on turning “vigilante,” if the US government starts getting political with this serious issue of US survival formatting plan.

One “soft vigilante” that is included in this is China. Since February last year, they have been rolling back– slowly, as to not jolt the US too much. They are most definitely divesting themselves of our debt in search of less risky foreign markets. It is a slow, deliberate “protest” that they do not like the way Obama is operating….spending 1 & 1/2 years on a giant unaffordable, spending bill instead of working on changing Wall Street’s damage-bent behavior and repairing pure misery.
And now, Obama’s off campaigning, promising that the next term will be just like the first two years, totally oblivious to what the crisis at hand is.

I’m glad the S & P is getting tough. Hello, Administration….time to stop show-boating and time to get real!

Will the Administration get serious and on task?
Well, the vigilantes are ready to pounce.

I moved all my stuff into safe savings accounts to wait it out. I’d suggest everyone else does that too.

Posted by limapie | Report as abusive