# Standard & Poor downgrades US credit: now AA+ not AAA **URL:** \ **Category:** Great Debates\ **Created:** [August 6, 2011, 1:46am UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676 "2011-08-06T01:46:32Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![PrettyVacant](https://avatars.discourse-cdn.com/v4/letter/p/49beb7/32.png) [@PrettyVacant](https://boards.straightdope.com/u/PrettyVacant)\ **Post date:** [August 6, 2011, 4:33pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/101 "2011-08-06T16:33:21Z")
> [@elucidator](#): > > They have every right to speak their minds and _try_ to influence American elections. As soon as they extend the same rights to thier own people, I will be suitably impressed. Why elections? Chinese opinion actually matter now - today - when the USA forms fiscal policy. This isn’t some future abstraction. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [August 6, 2011, 4:33pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/102 "2011-08-06T16:33:29Z")
> [@elucidator](#): > > They have every right to speak their minds and _try_ to influence American elections. The decision overruled restrictions in Austin v. Michigan Chamber of Commerce and McConnell v. Federal Election Commission that limited corporate spending to oppose or support political candidates. By removing the restrictions, corporations can spend whatever they want for whatever candidate or cause. Yes, it’s ‘trying’ to influence elections; but ‘trying’ yields better results when you have a huge bankroll. ---
**Author:** ![Euphonious\_Polemic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/euphonious_polemic/32/3002_2.png) [@Euphonious\_Polemic](https://boards.straightdope.com/u/Euphonious_Polemic)\ **Post date:** [August 6, 2011, 4:34pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/103 "2011-08-06T16:34:29Z")
> [@Simplicio](#): > > I dunno, if China says they think our debt is unsafe while at the same time buying hundreds of billions of dollars of it at near zero interest rates, I tend to think their actions speak louder then words. You’re looking in the rearview mirror while driving. I would not count on China buying hundreds of billions of dollars of your debt in the future: > [@](#): > > “The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone,” China’s official Xinhua news agency said in a commentary. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 4:38pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/104 "2011-08-06T16:38:13Z")
> [@Euphonious\_Polemic](#): > > You’re looking in the rearview mirror while driving. I would not count on China buying hundreds of billions of dollars of your debt in the future: I would. US debt remains the safest investment in the world in the eyes of the market, as demonstrated by its low interest rates. And China continues to want to keeps its currency artificially low to feed exports. Its also worth noticing that we’ve been asking China to buy _less_ of our debt for most of the last decade, because its keeping the Yuan high relative to the dollar. Its not like they’re doing us some awesome favor by buying it. Again, demand for US debt is high, we wouldn’t have problems selling it even if the Chinese reduced the amount they purchased. ---
**Author:** ![China\_Guy](https://avatars.discourse-cdn.com/v4/letter/c/779978/32.png) [@China\_Guy](https://boards.straightdope.com/u/China_Guy)\ **Post date:** [August 6, 2011, 4:38pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/105 "2011-08-06T16:38:44Z")
> [@elucidator](#): > > Reading Slander and Poop’s press releases is really starting to tick me off. It appears, upon reading, to be a critique of government inefficiency and ineffectiveness, which is all very well, but that’s not what they’re about, its not their job to make such judgments. Who asked them to? And by what right or credential do they claim expertise? > > And in the area of expertise they _are_ supposedly trustworthy, they have shown themselves to be either bumbling incompetent or corrupt. So why should anyone give a rat’s about what they think about our government? I think the rating agencies were fraudulently guilty in the run up to the great reset. That said, they are pretending to do their jobs again now. And political risk is a big factor in a sovereign debt rating. Without apportioning blame, the US has shown that government is gridlocked and unable to \*effectively \*address the current economic challenges. Be clear, it’s the political gridlock and not the level of debt that caused the downgrade. Not hard to understand. That said, the real bitch is that ratings are all predicated on the US being AAA. Theoretically at least, you can’t have corporate debt rated higher than sovereign debt. Implying that GE and Microsoft now are AA+. It’s also implicity, that since US is global fiat money, the only major debt market of sufficient liquidity and investment timeframe, and the biggest economy, rates other sovereign ratings as being equal or lessor than US sovereign ratings. At least moody’s and Fitch (although Fitch is much less important) still rate the US as AAA. Gives markets and risk managers wiggle room. ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [August 6, 2011, 4:38pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/106 "2011-08-06T16:38:57Z")
> [@Simplicio](#): > > I don’t really see any reason to hijack this thread. Not trying to hijack the thread. But we are dependent on foreign loans. Given that lowering the credit rating might very well increase interest rates, and given that China is a huge investor, the possibility is there for China to promote or oppose one candidate or another through their corporate proxies by putting out more ads for their position than their opponents do. ---
**Author:** ![BDBoop](https://avatars.discourse-cdn.com/v4/letter/b/5e9695/32.png) [@BDBoop](https://boards.straightdope.com/u/BDBoop)\ **Post date:** [August 6, 2011, 4:44pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/107 "2011-08-06T16:44:13Z")
Might be helpful. > **[CNN.com - Transcripts](https://transcripts.cnn.com/show/acd/date/2011-08-05/segment/01)** > [@](#): > > COOPER: Why did S&P downgrade the United States’ credit rating today? > > CHAMBERS: Well, I think there were two reasons. > > The first reason is the one that you have outlined, being our view of the political settings in the United States have been altered. We have taken them down a notch, the rating down a notch. The political brinkmanship we saw over raising the debt ceiling was something that was really beyond our expectations, the U.S. government getting to the last day before they had cash management problems. > > There are very few governments that separate the budget process from the debt authorization process. And we also think more broadly that this debate has shown that although we do have an agreement that will and we do believe will deliver at least $2.1 trillion of savings over the next decade, it is going to be difficult to get beyond that at least in the near term. And you do need to get beyond that to get to a point where the debt-to-GDP ratio is going to stabilize. ---
**Author:** ![Euphonious\_Polemic](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/euphonious_polemic/32/3002_2.png) [@Euphonious\_Polemic](https://boards.straightdope.com/u/Euphonious_Polemic)\ **Post date:** [August 6, 2011, 4:59pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/108 "2011-08-06T16:59:15Z")
> [@Simplicio](#): > > I would. US debt remains the safest investment in the world in the eyes of the market, as demonstrated by its low interest rates. And China continues to want to keeps its currency artificially low to feed exports. Try looking at the evidence instead of your feelings: > [@](#): > > “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country,” Xinhua said. In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the _de facto_ global reserve currency. But I don’t imagine your average Tea Partier understands even an iota of what that would imply. ---
**Author:** ![Whack-a-Mole](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/whack-a-mole/32/141_2.png) [@Whack-a-Mole](https://boards.straightdope.com/u/Whack-a-Mole)\ **Post date:** [August 6, 2011, 4:59pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/109 "2011-08-06T16:59:58Z")
> [@Stratocaster](#): > > That was your plan? Reduce unemployment and fix healthcare? No need for further details, that’s good enough for me. > > Why didn’t I think of that? Get President Obama on the phone, he’ll want to hear this. Problem solved, I can feel the debt evaporating as I type this! If your plan amounted to “spend less” then the detail I provided is commensurate with that. Are we to have a thread on methods to reduce unemployment and save healthcare? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 6, 2011, 5:02pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/110 "2011-08-06T17:02:34Z")
S & P also said that the decision did not address S.S, Medicare or allow for additional revenue. Since many rightys have signed a pledge to no raise in taxes, nothing will get better. ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [August 6, 2011, 5:09pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/111 "2011-08-06T17:09:22Z")
> [@Euphonious\_Polemic](#): > > In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the _de facto_ global reserve currency. > > But I don’t imagine your average Tea Partier understands even an iota of what that would imply. Starve the beast? ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [August 6, 2011, 5:16pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/112 "2011-08-06T17:16:50Z")
The Repubs are playing a dangerous game to defeat Obama. They are putting the country at risk to play political games. The world looks at us like an ungovernable mess . They were amazed that the Repubs would take the debt ceiling to the limit like they did. What would they do if they had presidency, House and Senate? Bush would be the good old days. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 5:23pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/113 "2011-08-06T17:23:58Z")
> [@Euphonious\_Polemic](#): > > Try looking at the evidence instead of your feelings: Umm, low interest rates are not “my emotions”. They’re far more concrete evidence then the diplomatic tit-for-tat statements of Chinese officials. > [@](#): > > In other words, China is seriously considering moving away from buying the US dollar, and instead creating a basket of international currencies as the _de facto_ global reserve currency. Except they’re not acting like they’re actually considering it. They’re just saying they’re considering it. Just as they did the last six times they’ve “considered it”. China is far more addicted to a low value Yuan then the US is to selling China treasury bonds. ---
**Author:** ![I\_Know\_Nothing](https://avatars.discourse-cdn.com/v4/letter/i/f04885/32.png) [@I\_Know\_Nothing](https://boards.straightdope.com/u/I_Know_Nothing)\ **Post date:** [August 6, 2011, 5:39pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/114 "2011-08-06T17:39:45Z")
> [@Omg\_a\_Black\_Conservative](#): > > > [@CaptMurdock](#): > > > > Really?? Do you really think everybody who styles himself as Left Of Center think that the national debt is paid with Monopoly money? Do you think The Left ™ has absolutely no understanding whatsoever of economics? That they’re a bunch of overage, tied-dyed, granola-eating hippies living in communes and listening to the Grateful Dead? > > I do. Um…nobody likes to be a stereotype. ---
**Author:** ![initech](https://avatars.discourse-cdn.com/v4/letter/i/439d5e/32.png) [@initech](https://boards.straightdope.com/u/initech)\ **Post date:** [August 6, 2011, 5:42pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/115 "2011-08-06T17:42:33Z")
> [@Clu-Me-In](#): > > At least now we know where you’re coming from with the above comment - straight out of left field with no gloves.:rolleyes: Whoosh. Also, I don’t really think the downgrade could’ve been avoided if Obama had slipped S&P a ten dollar bill. Just to avoid confusion. 🙂 ---
**Author:** ![The\_Other\_Waldo\_Pepper](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/the_other_waldo_pepper/32/12370_2.png) [@The\_Other\_Waldo\_Pepper](https://boards.straightdope.com/u/The_Other_Waldo_Pepper)\ **Post date:** [August 6, 2011, 5:42pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/116 "2011-08-06T17:42:55Z")
> [@I\_Know\_Nothing](#): > > Um…nobody likes to be a stereotype. Hey, that’s a stereotype! ---
**Author:** ![The\_Peyote\_Coyote](https://avatars.discourse-cdn.com/v4/letter/t/5f8ce5/32.png) [@The\_Peyote\_Coyote](https://boards.straightdope.com/u/The_Peyote_Coyote)\ **Post date:** [August 6, 2011, 6:02pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/117 "2011-08-06T18:02:13Z")
> [@](#): > > The Repubs are playing a dangerous game to defeat Obama. They are putting the country at risk to play political games. The world looks at us like an ungovernable mess . They were amazed that the Repubs would take the debt ceiling to the limit like they did. > What would they do if they had presidency, House and Senate? Bush would be the good old days. Posted by Gonzomax. I would imagine: Unlimited defense spending Privatization of Social Security per Shrub’s original attempt to do this Medicare replaced by a voucher system that benefits insurance companies Deep, deep cuts to Medicaid Religious persecution of Muslims and an attempt to limit the First Amendment to Christians only Deep cuts to Planned Parenthood Continuation of the War on Drugs ---
**Author:** ![Stratocaster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/stratocaster/32/16393_2.png) [@Stratocaster](https://boards.straightdope.com/u/Stratocaster)\ **Post date:** [August 6, 2011, 6:08pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/118 "2011-08-06T18:08:17Z")
> [@Whack-a-Mole](#): > > If your plan amounted to “spend less” then the detail I provided is commensurate with that. > > Are we to have a thread on methods to reduce unemployment and save healthcare? I didn’t offer a plan. I was commenting on the lack of one. And I think you should see if you can get your “just reduce unemployment and fix healthcare to eliminate the debt” plan onto [this program](http://www.youtube.com/watch?v=tNfGyIW7aHM), it will be be perfect, no need for a new thread. 😃 ---
**Author:** ![yorick73](https://avatars.discourse-cdn.com/v4/letter/y/b5a626/32.png) [@yorick73](https://boards.straightdope.com/u/yorick73)\ **Post date:** [August 6, 2011, 6:34pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/119 "2011-08-06T18:34:36Z")
> [@Simplicio](#): > > Again, my point is that revenues exceeded outlays. In my example total gov’t revenues exceeded outlays while total debt still went up. We can debate whether or not that should “count” as a surplus afterwords, but do you agree that it is the case? If not, can you point out the flaw in my example? If revenues exceed outlays then debt does not go up. The government borrowed money from the SS trust fund and counts that money as income. It is not income. It is money borrowed from a trust fund that must be paid back. It is nothing more than an accounting trick. The ONLY number you need to know is the national debt. If the national debt increases over a particular year then the government spent more than it collected in revenue. It is that simple. ---
**Author:** ![Simplicio](https://avatars.discourse-cdn.com/v4/letter/s/c37758/32.png) [@Simplicio](https://boards.straightdope.com/u/Simplicio)\ **Post date:** [August 6, 2011, 6:36pm UTC](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676/120 "2011-08-06T18:36:07Z")
> [@yorick73](#): > > If revenues exceed outlays then debt does not go up. The government borrowed money from the SS trust fund and counts that money as income. It is not income. It is money borrowed from a trust fund that must be paid back. It is nothing more than an accounting trick. The ONLY number you need to know is the national debt. If the national debt increases over a particular year then the government spent more than it collected in revenue. It is that simple. Then what is the flaw in my example? The SS Trust fund is funded by a tax. That tax is indeed income for the gov’t. [Previous page](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676.md?page=5) [Next page](https://boards.straightdope.com/t/standard-poor-downgrades-us-credit-now-aa-not-aaa/591676.md?page=7)