Trump adds $1 trillion to the national debt in record time and S&P Global underscores its own irrelevance by maintaining the U.S. AA+ credit rating

 Trump tariff revenue expected to offset tax bill impact, S&P says in U.S. credit rating hold

... "We could lower the rating over the next two to three years if already high deficits increase ..." lol.

 These people are afraid of Trump.

They don't want to be singled out for Trump's daily Two Minutes Hate.

They don't want to be the next Jerome Powell, or Lisa Cook, or Volodymyr Zelensky.

Meanwhile year to date the Trump deficit is running $112 billion ahead of Biden's last deficit. DOGE so-called spending cuts and Trump Tariffs have done nothing to reduce it.

 

 

 

The Golden Age isn't AAA

 

USA loses last AAA rating, from Moody's, perfectly timed for after GOP can't move a budget out of committee lol

Moody’s downgrades U.S. credit rating, citing rise in government debt

... Moody’s had been a holdout in keeping U.S. sovereign debt at the highest credit rating possible, and brings the 116-year-old agency into line with its rivals. Standard & Poor’s downgraded the U.S. to AA+ from AAA in August 2011, and Fitch Ratings also cut the U.S. rating to AA+ from AAA, in August 2023.

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s analysts said in a statement. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.” ...

“... we expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending and relatively low revenue generation,” Moody’s said. ″We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024.″⁣ ...

Moody’s officially rated U.S. bonds in 1993 for the first time, but had assigned a “country ceiling rating” of Aaa on the U.S. since 1949.

Get ready for America to lose its AAA credit rating entirely under Trump

 ... The agency said in a report that the country's fiscal health deteriorated further since Moody's lowered its outlook on the U.S. triple-A rating in November 2023. ... 

Moody's is the last among major ratings agencies to keep a top, triple-A rating for U.S. sovereign debt, though it lowered its outlook in late 2023 due to wider fiscal deficits and higher interest debt payments.

Fitch cut the U.S. sovereign rating by one notch to AA+ from AAA in 2023, citing fiscal deterioration and repeated down-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills. It was the second major rating agency to strip the United States of its top triple-A rating, after Standard & Poor's did so after the 2011 debt ceiling crisis. ...

More.

Former S&P sovereign bond unit executive who participated in the Obama era 2011 credit downgrade basically calls Trump's America a banana republic, and DOGE not a proper government department

 WSJ: What about DOGE’s accessing the Treasury Department’s payment system?

Kraemer: We don’t have all the details of what they took and on what basis. It seems highly irregular. People from a department, which is not even a proper government department, that have gone and gotten access to data, that we have to assume is quite, I should say sensitive, which doesn’t belong in the hands of unelected individuals. 

WSJ: Have you ever seen anything like this before?

Kraemer: Yes, I think I have seen this. Regimes that don’t respect checks and balances. But they tend to be more in the emerging markets. This is exactly what sets rich and poor countries apart, right? It’s the qualities of institutions, the rule of law, the transparency of decision-making. 

So have I seen this? Yes. But have I seen it in an advanced economy, in an OECD member country? No, I have not.

The whole thing is here.

Trump's a Democrat now lol

 

Making chumps of us all.

President-elect Donald Trump said Thursday that Congress should get rid of the debt ceiling, a day after he came out against a deal reached by congressional lawmakers to fund the government before a shutdown occurs.

In a phone interview with NBC News, Trump said getting rid of the debt ceiling entirely would be the “smartest thing it [Congress] could do. I would support that entirely.”

“The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge,” Trump added. 

Trump suggested that the debt ceiling is a meaningless concept — and that no one knows for sure what would happen if it were to someday be breached — “a catastrophe, or meaningless” — and no one should want to find out. 

“It doesn’t mean anything, except psychologically,” he said. ...

In his call Wednesday for Republicans to ditch the negotiated bipartisan short-term spending bill, Trump also demanded that lawmakers increase the debt ceiling — something that hadn’t been on the table at all.

More. 

I can't wait for Moody's to downgrade the USA from Aaa to Aa, to make it a Trinity of lost AAA.

And why not? It's only pSyChOlOgIcAl.

Your reminder that each of the US credit downgrades occurred seven months after each of Nancy Pelosi's disastrous House Speakerships during which she spent in excess of revenues by 251%, the worst deficit spending on record

Pelosi was Speaker of the House Jan 3, 2019-Jan 3, 2023 and Jan 4, 2007-Jan 3, 2011.

 

US House Democrat minority leader Hakeem Jeffries crows over passage of more of the same old, same old bloated spending by continuing resolution

Looking forward to a Moody's downgrade, if they've got the guts. Congress certainly doesn't.

 

Senate sends funding bill to Biden’s desk, averting a government shutdown :

WASHINGTON — The Senate passed a stopgap funding bill Wednesday night, punting the GOP’s spending fight and the threat of a government shutdown until after the holidays.

The bipartisan vote was 87-11, with 10 Republicans and one Democrat — Sen. Michael Bennet of Colorado — voting against the bill. ...

The short-term bill, known as a continuing resolution, or CR, cleared the House on Tuesday on a lopsided 336-95 vote, with all but two of the no votes coming from Republicans. The funding bill next heads to President Joe Biden’s desk for his expected signature. ...

“No spending cuts, no right-wing extreme policy changes, no government shutdown, no votes tomorrow, Happy Thanksgiving,” he said. “That is a type of report that, when you are able to give it, means morale is very high.”

Ahead of another government funding deadline November 17th, Moody's lowers its US government ratings outlook

 

Moody’s Investors Service on Friday lowered its ratings outlook on the United States’ government to negative from stable, pointing to rising risks to the nation’s fiscal strength.

More.

Multimedia journalism major with a minor in Spanish says it's a good time to buy bonds

It's a Good Time To Buy Bonds. Just Know What You're Getting Into

At least she doesn't have degrees in English literature and philosophy like that John B. Chambers bond expert who downgraded the USA from AAA for S&P back in 2011.

I mean, she's a Wall Street Journal Fellow after all, where they still have some standards.

It turns out that former S&P Sovereign Ratings Committee Chair John B. Chambers, who presided over the AAA downgrade in 2011, is a partisan wackadoodle

 Here commenting about today:

“The external position is about the same, but I think the governance has weakened and the fractiousness of the political settings is much worse, and that has led to government shutdowns, it’s led to fears that the government might default on its debt because of the debt ceiling, and it’s led to a failed coup d’état on the 6th [of] January, 2021.”

And here a couple years ago:

"I don’t think the chance of a default because of a debt ceiling is that high as long as the Democrats control both Congress and the White House, that won’t always been the case. That could reemerge."

 Because, this:

The Wall Street bean counter who trashed America’s global credit reputation is a New Yorker who never studied economics, majored in literature and philosophy, and has a master’s in English lit. ...

Chambers grew up outside Kansas City, Kan., and went to liberal Grinnell College in Iowa, where he was a star on the swim team, ranking eighth in school history in the 1,000-meter freestyle. After graduating in 1977 with a bachelor of arts in literature and philosophy, he went Ivy League, enrolling at Columbia University, where he got a master’s degree in English literature.  ...

S&P was found to have made an estimated $2 trillion error in its 10-year deficit projection but brushed that aside, citing instability in Washington and the fact that the deficit-reduction cuts fell short of S&P’s recommended $4 trillion.

This week's lucky number is 2

There's only one Speaker of the House who ever spent more than 300% of current tax revenues twice.

And there's only one Speaker of the House who has ever spent more than 300% of current tax revenues twice after both of which events the ratings agencies downgraded the U.S. debt.

 

 

The US debt downgrades of 2011 and 2023 have one thing in common: Nancy Pelosi's record of the four most fiscally irresponsible years in the post-war

Nancy Pelosi owns the record for the four most fiscally irresponsible years in the post-war, spending 316% of tax receipts in 2020, 276% in 2021, 310% in 2009, and 296% in 2010.

Her four years as Speaker 2007-2010 averaged current expenditures as a percent of current tax receipts of 251%, highest for any Speaker ever.

S&P downgraded the debt in August 2011.

The Boehner/Ryan interregnum averaged 219%.

Pelosi's next four years as Speaker 2019-2022 averaged 252% in overspending.

Fitch has now downgraded the debt in August 2023.

Taken all together, Pelosi's Speakership produced the worst overspending in the post-war at 251% of revenues. The excess has to be borrowed, ballooning the debt.

The ratings agencies sound the alarm bells no one else will ring, but they are mocked by all the experts, whose livelihoods depend on the scam continuing. 

 All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.     

-- US Constitution, Article One, Section Seven

 

Some people say they don't understand why Fitch Ratings downgraded the US to AA+ from AAA

 Debt to the penny: July 31: $32,608,585,072,666.14 May 31: $31,464,457,465,522.98 Debt increase in 2 months: $1,144,127,607,143.16, about $18.76 billion per day.

Fitch downgrades U.S. long-term rating to AA+ from AAA :

“In Fitch’s view, there has been a steady deterioration in standards of governance over the last 20 years, including on fiscal and debt matters, notwithstanding the June bipartisan agreement to suspend the debt limit until January 2025,” the ratings agency said. ...

This isn’t the first time a rating agency has downgraded the U.S. Standard & Poor’s cut the nation’s credit rating to AA+ from AAA in 2011 after Washington managed to avoid a default. At the time, the agency highlighted political risk as part of its reasoning.

 

Moody's missed not only Signature Bank's problems, but Silicon Valley Bank's as well

On Wednesday March 8, Moody’s still had an A3 rating on SVB Financial, owner of the now defunct Silicon Valley Bank, as it was already collapsing for all to see. Four notches into investment grade – a very respectable rating!

More.

The fools at Moody's have just cut their outlook for American banking to negative, but don't take it too seriously

The story is here.

As recently as the end of January, Moody's had rated Signature Bank, the bank which failed spectacularly over the weekend, investment grade.

Moody's completely missed the problems with Signature.

Their sweeping warnings in the wake of this miss should be taken with a truckload of salt. They're just trying to save face.

 

The US Treasury crash is epitomized by what's happened to Vanguard's long term Treasury mutual fund VUSTX

 

 

 

 

 

 

 

 

 

 

 

 

The fund is down to $8.36 tonight, 2 cents away from its all time low set on October 19, 1987 at $8.34. That was 35 years ago last night, when the stock market fell 20% in one day.

The 30-year US Treasury back then paid 10.25% on that date. Tonight it pays just 4.24%.

This Vanguard fund, which invests in such securities, year to date has returned -33%. Given the yield discrepancy, it would seem foolhardy to believe that the bottom is in. I wouldn't be surprised if the fund makes dramatic new lows, never before seen.

Meanwhile imagine losing money like that on America's safest of investments.

It's truly appalling and ranks right up there with America losing its AAA status under Barack Obama. I guess it's fitting that it's happening under his former Vice President.

The contagion of the record low 10-year Treasury yield of July 2016 has spread to the 30-year in August 2019

U.S. 10-Year Treasury Yield Closes at Record Low:

The yield on the U.S. 10-year Treasury note settled at 1.367% Tuesday, breaching the previous close low of 1.404% set in July 2012 when investors rushed into haven debt amid the depth of the eurozone’s sovereign debt crisis. Yields fall as bond prices rise. ...

On an intraday basis, the U.S. 10-year yield touched as low as 1.357%. It was 1.446% Friday and 2.273% at the end of last year. The U.S. bond market was shut Monday for a holiday.

Traders say the 10-year yield still has room to fall. Investors and analysts say bond yields are in uncharted waters now and that it is hard to predict how low yields could go in this environment.

Few in the financial markets have foreseen a period of negative interest rates touching off globally. The total of sovereign debt with negative yields jumped to $11.7 trillion as of June 27, up $1.3 trillion from the end of May, according to Fitch Ratings.

The pool is likely to expand further in the months ahead due to ongoing purchases of government bonds by the European Central Bank and the Bank of Japan. ...

The 30-year Treasury bond has been the market darling, and the buying spree has pushed down its yield to record lows lately. The 30-year bond’s yield settled at 2.138%, falling below its record close low of 2.226% Friday.

The 30-year bond was usually the playground for pension funds and insurance firms. But it is now being bid up by a broader investor base due to the global hunger for income. Analysts say it wouldn’t surprise them if the 30-year yield falls below the 2% mark in the weeks ahead.

Three years later:

U.S. 30-year bond yields hit record low, curve inversion grows:

In late Wednesday trading, the yields on 30-year government bonds were 1.939%, down 2.2 basis points from late Tuesday. They hit an all-time low of 1.905% earlier Wednesday.

GE's Obama champion Jeff Immelt took its bonds from AAA to one notch above junk, just like its products

From the story here, which never once mentions the problem of declining product quality:

It’s a bad day for a CEO when he announces he’s retiring and the stock goes up. That was Jeff Immelt’s day on June 12, 2017. ... Its bonds, rated triple-A when Immelt became chief, are now rated five tiers lower at A2 and trade at prices more consistent with a Baa rating, one notch above junk.

Did Immelt run GE into the ground?

Look no further than its light bulb business. While GE-branded lightbulbs shifted to compact-fluorescent technology and then to LED with big promises of longevity which never panned out (trust me, I have BAGS FULL of expensive, failed examples of each), it somehow stopped knowing how to make incandescent lightbulbs which worked, too.

I discovered this with its appliance bulbs. A couple of years ago I had to replace an oven bulb after a few years of service from the original one. None of the GE replacement bulbs lasted more than a day. When I went online I discovered the problem wasn't mine alone. Customers all over the country were having the same problem.

I've had a similar experience with another GE appliance component: gas oven igniters. The OEM part lasted just six years. The OEM replacement? Less than two.

Additionally, GE's long-term care insurance business appears to be tracking the same history. It sold off some of that business not long after 911, and what business it has kept in that line has been in the (bad) news lately as well. GE over-promised on some plans it issued and undercharged for them, not realizing that claims would exceed expectations, making the plans unprofitable. I'm sure that's unsettling to policy holders who trusted GE. How long before the long-term care plans of older customers stop working altogether?

And is it just a coincidence that the Fukushima nuclear reactors were of GE design?

Yeah, sure. Just a coincidence.

Euro Group creditors made a bundle off Greece's problems in 2014: 13 billion EUR

Moody's on Greece indicated today that the debt/GDP burden was already 177% before Syriza was even elected in 2015, but one man's debt burden is another man's opportunity.

Seen here:

'We assess Greece’s Fiscal Strength as `low’, because of the country’s high debt burden, which stood at around 177% of GDP at the end of 2014, one of the highest debt burdens in the universe of Moody’s-rated countries. Moreover, the potential to meaningfully improve the debt trend over the next 3-5 years is highly uncertain given that the large-scale reforms that could spur growth are currently hampered by ongoing political uncertainty.'

-------------------------------------------

Eurostat shows Greek GDP in current euros was just shy of 179.1 billion in 2014, down 26% from the 2008 peak. Greece is in a long, severe depression. Central government debt rose to 324 billion EUR at the end of 2014 and actually dropped to 313 billion EUR in the first quarter of 2015. Syriza was elected to power on January 25, 2015.

Those awful conditions developed under years of austerity government, after years of profligacy,  which Syriza promised to end. Now that Syriza has been forced to double down on austerity, expect conditions in Greece to worsen dramatically without debt forgiveness or a generational period of grace from repayment obligations. 

Little discussed in that regard, however, is the fact that in 2014 Greece is said to have paid an interest rate on its debts of 4% nominal and 2.6% effective.  This is happening in a world where the ECB has just decided to keep the headline lending rate at the record low level of 0.05%.

Whatever else may be said, Euro Group creditors by comparison are making a killing off Greece's predicament: almost 13 billion EUR in debt service revenues in 2014 alone.

If Europe is serious about keeping Greece in the Group, maybe it could start by stopping the profiteering.