United States credit rating

[Tug]

Well moodeys just downgraded our credit rating…..so much winning,wonder who trump is going to blame this on.

[Nick Carter icp]

Moodys warned about this in 2023

[impulse]

From Moody's:

 

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the rating agency said in a statement.

 

From the WH:

 

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

 

Of course they waited until the election was over and they had a chance to hurt the Bad Orange Man, though the debt buildup was years in the making.  Anyone who doesn't see that just isn't looking.

[TheAppletons]

2 minutes ago, impulse said:

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

 

Of course they waited until the election was over and they had a chance to hurt the Bad Orange Man, though the debt buildup was years in the making.

 

  Ah yes, "they".  

 

  Poor Trump, always the victim.  

[impulse]

3 minutes ago, TheAppletons said:

  Ah yes, "they".  

 

  Poor Trump, always the victim.  

 

You're the one with blinders on.  Look at my edited post with comment from Moody's.

[KhunLA]

Does anyone actually think that credit rating means anything ? 

 

Any country that can barely pay the interest on it's debt, gets any rating is mind boggling.  Any person or household with a debt to income ratio of most countries would be turned down for a loan or CC.

[Tug]

31 minutes ago, impulse said:

From Moody's:

 

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the rating agency said in a statement.

 

From the WH:

 

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

 

Of course they waited until the election was over and they had a chance to hurt the Bad Orange Man, though the debt buildup was years in the making.  Anyone who doesn't see that just isn't looking.

It happened on trumps watch he owns it.all stop but that being said he will try to weasel out of any responsibility….perhaps adding 23% to our debt during his first fiasco might have a tiny bit to do with it ehh?

[RuamRudy]

39 minutes ago, impulse said:

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

 

The overwhelming majority of Americans rejected the Trump crime family at the election - does that mean that only minority cultist rhetoric can be given credit?

[jas007]

17 minutes ago, KhunLA said:

Does anyone actually think that credit rating means anything ? 

 

Any country that can barely pay the interest on it's debt, gets any rating is mind boggling.  Any person or household with a debt to income ratio of most countries would be turned down for a loan or CC.

It's more of a political statement than anything.  Of course, the markets will overreact, as usual.  And then everyone will forget about it in a few days.  

 

Whatever problems now exist have been building over the last 50 years or so.  

 

Compared to much of the Western world, the USA is doing OK.  The debt to GDP ratio is bad, but not as bad as it is in some countries.  And the economy is doing better than many.  Finally, the US dollar is the world reserve currency, and that won't be changing anytime soon.  

[impulse]

9 minutes ago, RuamRudy said:

 

The overwhelming majority of Americans rejected the Trump crime family at the election - does that mean that only minority cultist rhetoric can be given credit?

 

What does that even mean? 

 

You do know that he won, right?

[RuamRudy]

2 minutes ago, impulse said:

 

What does that even mean? 

 

You do know that he won, right?

 

Of a total electorate of 186.5 million people, he received 77.3 million votes. 58% of Americans did not support him. That gives me hope. 

[tomazbodner]

1 hour ago, Tug said:

Well moodeys just downgraded our credit rating…..so much winning,wonder who trump is going to blame this on.

 

1 hour ago, impulse said:

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

There ya go.

[Lacessit]

1 hour ago, impulse said:

From Moody's:

 

“This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns,” the rating agency said in a statement.

 

From the WH:

 

President Trump’s spokesman Steven Cheung pointed out that the economist for Moody’s is an Obama/Clinton hack.

 

“Mark Zandi, the economist for Moody’s, is an Obama advisor and Clinton donor who has been a Never Trumper since 2016. Nobody takes his “analysis” seriously. He has been proven wrong time and time again,” Steven Cheung said.

 

Of course they waited until the election was over and they had a chance to hurt the Bad Orange Man, though the debt buildup was years in the making.  Anyone who doesn't see that just isn't looking.

Is attacking the messenger all that Trump's circle has got?

 

Mark Zandi has a PhD in economics. Steven Cheung studied computer and political science, but did not finish either course.

 

Yes, I understand. Steven Cheung is not a Trump hack

 

 

[impulse]

1 hour ago, Nick Carter icp said:

Moodys warned about this in 2023

 

And that's when they should have done any downgrade if one was to be done.  But that would have hurt Biden's chances in 2024.

 

[Lacessit]

5 minutes ago, impulse said:

 

And that's when they should have done any downgrade if one was to be done.  But that would have hurt Biden's chances in 2024.

 

Life is just one big conspiracy theory for you, isn't it?

[HappyExpat57]

6 minutes ago, impulse said:

 

And that's when they should have done any downgrade if one was to be done.  But that would have hurt Biden's chances in 2024.

 

Current administration is ALREADY blaming it on Obama and Clinton. This is just another weak attempt at avoiding accepting the truth. By any metric, the US economy was doing GREAT until January this year.

 

I wonder what happened to cause such a weakening of the economy?

[impulse]

5 minutes ago, Lacessit said:

Life is just one big conspiracy theory for you, isn't it?

 

Nope.  It's a bunch of them.  Mostly they're spoiler alerts.

 

[Airalee]

Moody’s lost all credibility during the GFC.

 

 

[HappyExpat57]

2 minutes ago, Airalee said:

Moody’s lost all credibility during the GFC.

 

 

 

Only to people who don't like their analysis. In this case, people wearing red hats don't like accepting this truth.

[Fat is a type of crazy]

6 minutes ago, Airalee said:

Moody’s lost all credibility during the GFC.

 

 

True - one would hope they've upped there game - but I don't hear them described as partisan as some suggest -  even if one party in their organisation has somewhat of a political background. Their own statement indicates it is a long term problem so now lets see Trump the great fixer fix it. Or not. 

[Cameroni]

Moody's also changed its outlook for the U.S. from negative to stable.

 

Presumably because Trump is now in charge?

[TheAppletons]

Just now, Cameroni said:

Moody's also changed its outlook for the U.S. from negative to stable.

 

Presumably because Trump is now in charge?

 

  I think they mean "stable" in the equine sense in that there's a horse's @$$ in charge.

[Airalee]

1 minute ago, Fat is a type of crazy said:

True - one would hope they've upped there game - but I don't hear them described as partisan as some suggest -  even if one party in their organisation has somewhat of a political background. There own statement indicates it is a long term problem so now lets see Trump the great fixer fix it. Or not. 

i wasn’t referring to partisanship in any way.  But you can see in the post above yours how the extreme left bring politics into it and seem to have conveniently forgotten how all the ratings agencies were held captive and subsequently gave AAA ratings to all the toxic mortgage securities.

 

Invest accordingly I suppose?

[KhunLA]

1 minute ago, HappyExpat57 said:

Only to people who don't like their analysis. In this case, people wearing red hats don't like accepting this truth.

The truth would be, the USA, like most countries, are basically bankrupt, but nobody is allowed to say that out loud.

 

Reality of, if debt ceiling raising and all the countries defaulting on their debt, would send central banking, and world economies into a tailspin.

 

Actually, I think it would be a good thing.  Every countries financial slate / budget, to start from scratch, no debt, and now only spend what they have.   What a concept, living within one's means.

 

Imagine having balanced budgets & no debt.  Might even end wars, as nobody could afford bullets & war toys.

[Cameroni]

5 minutes ago, Airalee said:

how all the ratings agencies were held captive and subsequently gave AAA ratings to all the toxic mortgage securities.

 

That's a good point, the rating agencies were highly complicit and instrumental in causing the sub-prime mortgage crisis because they peppered Cayman Islands vehicles that were newly created just to hold mortgage backed securities  with AAA ratings.

 

Nothing to do with the fact that the investment banks paid the rating agencies' humongous fees, I'm sure.

 

Worked out great for the world economy in 2008.

[RJRS1301]

2 hours ago, Tug said:

Well moodeys just downgraded our credit rating…..so much winning,wonder who trump is going to blame this on.

Oh he and his sycophants have already begun the personal attacks on individuals within Moody's & their professionalism 

The "stable many times bankrupted genuis" is worse than a 12 yr old school child, name calling

Very stable

[Airalee]

23 minutes ago, Cameroni said:

 

That's a good point, the rating agencies were highly complicit and instrumental in causing the sub-prime mortgage crisis because they peppered Cayman Islands vehicles that were newly created just to hold mortgage backed securities  with AAA ratings.

 

Nothing to do with the fact that the investment banks paid the rating agencies' humongous fees, I'm sure.

 

Worked out great for the world economy in 2008.

I gave your post a thumbs up but would like to point out one small detail.

 

You mentioned “subprime”.

 

Subprime was the diversion….the scapegoat.

 

Alt-A and Prime borrowers had the exact same loans (option-ARMs, Stated Income, etc) offered so no matter the credit score (which is what is used to designate subprime, prime, etc), the loans were destined to fail.  It was a mathematical certainty.

 

The housing bubble bloggers used the below charts from Credit Suisse to time their shorts.

 

 

[Cameroni]

36 minutes ago, Airalee said:

I gave your post a thumbs up but would like to point out one small detail.

 

You mentioned “subprime”.

 

Subprime was the diversion….the scapegoat.

 

Alt-A and Prime borrowers had the exact same loans (option-ARMs, Stated Income, etc) offered so no matter the credit score (which is what is used to designate subprime, prime, etc), the loans were destined to fail.  It was a mathematical certainty.

 

 

 

Thanks, I used the term sub-prime, because the 2008 crisis is generally called the "Sub-prime mortgage crisis"

 

It's important not to confuse the AAA ratings by the credit agencies with the Alt-A and other credit score ratings by FICO.  A-minus is traditionally defined as mortgage borrowers with a FICO score of below 660 while Alt-A is traditionally defined as loans lacking full documentation or with alternative documentation of ability to repay . This not the same as a A rating by the credit agencies.

 

it may well have been the case that the probability of mortgages going into default was high, even among non-sub-prime, however, what happened was that there were innumerable securitisations by banks which packaged these assets, including sub-prime loans into Cayman Islands vehicles that had no liabilities. By virtue of these vehicles having no liabilities at all the rating agencies gave them stellar credit ratings, usually AAA, because they only had assets. This was very clearly a grave mistake.

 

Because eventually when sub-prime borrowers defaulted the market started to lose confidence in these securities, issued by the Cayman vehicles, because they were backed solely by these assets, ie mortgages and also sub-prime mortgages, which potentially would be worthless when people stopped repaying them. 

 

This was never factored into the risk analysis by Moody's, Fitch and S&P, who gave out AAA ratings like confetti solely based on the fact that these Cayman vehicles had no liabilities. The rating agencies did not do their job and analyze what would happen if the mortgages don't get repaid.

 

Of course banks were to blame too because they gave mortgages to people who shouldn't have gotten one as they had no means to repay. Politicians like Bill Clinton were to blame too, because he pushed legislation that forced banks to give mortgages to people who cannot repay them, due to ideological reasons.

[Airalee]

7 minutes ago, Cameroni said:

It's important not to confuse the AAA ratings by the credit agencies with the Alt-A and other credit score ratings by FICO.  A-minus is traditionally defined as mortgage borrowers with a FICO score of below 660 while Alt-A is traditionally defined as loans lacking full documentation or with alternative documentation of ability to repay . This not the same as a A rating by the credit agencies.

Oh….sure….that’s a given.

 

Agree with everything else that you say.

 

Wouldn’t it be interesting to have some sort of way of peering into the (supposedly) Quadrillion dollar global derivatives market?  

[Cameroni]

13 minutes ago, Airalee said:

Oh….sure….that’s a given.

 

Agree with everything else that you say.

 

Wouldn’t it be interesting to have some sort of way of peering into the (supposedly) Quadrillion dollar global derivatives market?  

 

Yah, even if that market value is exaggerated it's still at least around 3.5 trillion which is still a "weapon of financial mass destruction" as Warren Buffet called Derivatives.

 

I actually worked on repackaged Derivatives, CDOs, as a securitization lawyer and none of us understood what underpinned the deals. I vividly remember the lead lawyer on the deal at a major law firm, screaming down the phone at the investment bank client "No I don't understand it! Explain it to me again!". Obviously he never understood it, since those epxlaining it to him clearly didn't understand it.