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.

 

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.

 

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.

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.

Congressional Budget Office quietly predicts 1.5% real 2014 GDP one day before BEA.gov announcement

Is 2Q2014 GDP of 4% just a memory?

The Canadian Broadcasting Corporation (!) had the story here:

"The Congressional Budget Office on Wednesday forecast that the U.S. economy will grow by just 1.5 per cent in 2014, undermined by a poor performance during the first three months of the year."

Blaming negative GDP on the harsh winter is already forecast to get worse

The consensus estimate of the third and final report of 1Q2014 GDP, coming out on Wednesday next week, is already 60% worse than the actual second report at -1.6%. What, is the late winter suddenly become worse in the last month?

The first estimate, you will recall, came in at +0.1%, and was quickly downgraded in various places to something ranging between -0.2% and -0.4%. When the second estimate came in at a much worse -1.0%, just about everyone blamed the harsh winter for the pathetic print, including the White House, which incredibly credited GDP from spending on utilities at the same time it debited GDP because people weren't traveling (which isn't true--just examine the government's miles-traveled reports over the winter), weren't vacationing and weren't spending money on hotels and restaurants, and other such drivel.

Having it both ways, it seems, only applies south of the Canadian border, where real GDP was a negative almost $40 billion. North of it real GDP was actually positive, despite the winter, at about $4.7 billion US. A much smaller economy Canada's is, to be sure, but for that reason you'd think it more vulnerable to the harshest winter in decades whereas our much larger, more varied economy ought to be more resilient.

But up against an Obama, you would be wrong. He is secretly happy that things are going as poorly as they are, because it means that the middle class is steadily shrinking and soon will no longer be able to stand in his way, and the Democrat Party's way, of remaking America into a few haves and a lot of have-nots.

In this they are assisted by the libertarians who have successfully infiltrated the Republican Party as conservatives, who see this as their natural mission, too. Politically speaking, they are out to defeat Republicanism just as much as the Democrats are. The successful individual lone ranger is the sine qua non of their vision, after all, whose fabulous wealth is the only object of their affection. And the only thing standing in his way are people who believe in something bigger than themselves.

People who believe in something larger than themselves in America today occupy the extremes of the left and the right, and seem to be getting fewer in number as we speak, a fact noted in a recent article in The New Republic. Between them are a mass of social and economic libertines who are already the slaves of the elites, for whom neither the economic nor the moral restraint of the Protestant founders which built our country are a value. Unless we recover something of the latter the America of the past will cease to exist, if it hasn't already.

And persistently poor GDP proves it.

Charlie Gasparino Gets It Right: America Lost Its AAA Because Of Debt, Not Debt Ceiling

Charles Gasparino for The New York Post, here:

In fact, economic growth is barely existent on [Obama's] watch; millions of Americans have stopped looking for work and the country lost its Triple-A bond rating because debt isn’t the settled matter Obama pretends it is.

Three Dubious Firsts For Obama In Quick Succession In 2011

The dollar hit its all time low under Obama, on 5/2/11 at 67.97, but this has not been much discussed even though it is surely related to the following other firsts.

On 8/5/11 Standard and Poor's downgraded the US for the first time ever, from AAA to AA+, primarily because it was looking for $4 trillion in spending cuts over ten years and only got $1 trillion in the sequestration deal.

And then on 9/2/11 it was reported that for the month of August 2011 net zero jobs had been created, the first time since World War II that a month went by without job creation.

These are remarkable and dubious firsts, three of them in a row in the span of four months.

It is clear how much two of these still rankle Obama, who views them in purely political terms instead of as injuries to all of us. In a press conference on the debt ceiling almost a year and a half later, held this last Monday, Obama brought up both the AAA rating loss and the net zero jobs milestone, seeking to blame them both on Republicans:


"And they'd better choose quickly because time is running short. The last time Republicans in Congress even flirted with this idea [of not raising the debt ceiling], our triple-A credit rating was downgraded for the first time in our history, our businesses created the fewest jobs of any month in nearly the past three years, and ironically, the whole fiasco actually added to the deficit."

The revisionist history on the jobs number is noteworthy. Who would even remember the fact now unless he brought it up?

The fact of the matter is, however, that the weak dollar, which is not even on Obama's radar screen, is the root of the problem for both our out of control debt and deficits and the dearth of jobs.

And Jeffrey Snider, coincidentally, says just as much today, here, concluding this way:


"The politics of the debt ceiling really should be concerned with monetarism rather than focused solely on spending or deficits. But that is a hard position for either party to take. Democrats won't because their interests are aligned with monetarism, while Republicans have at many times embraced monetarism with equal passion. Neither seems to want to move outside conventional economics that salutes as policy success a 64% increase in total debt without any perturbation in interest costs.


"We have not just a fiscal problem, but a persistent and massive monetary imbalance through dollar debasement that is directly related to both the debt disaster and the weak economy. Without directly facing it and working toward currency stability, we will be stuck with both the continued debt trajectory and no real growth. Neither can be adequately solved without first solving the dollar by ending capital repression."

Dr. Strangeobama Blames Republicans Yesterday For Net Zero Jobs In August 2011?

It's like a scene out of Dr. Strangelove, where the delusional General Ripper blames fluoridation of the water supply beginning in 1946 on the Commies.

Here's Obama yesterday, finally blaming Republicans, not Bush, which is a sort of progress, I guess, for losing the AAA credit rating, adding in the zinger that the debt-ceiling showdown in summer 2011 somehow was responsible also for net zero jobs created in August 2011, the first time that's happened since World War II. Boy, that report must have really rankled him to bring it up now, a lot more than losing the AAA credit rating. Who even remembers that?!

From the transcript of Obama's remarks yesterday, here:

So we’ve got to pay our bills. And Republicans in Congress have two choices here. They can act responsibly, and pay America’s bills, or they can act irresponsibly and put America through another economic crisis. But they will not collect a ransom in exchange for not crashing the American economy. The financial wellbeing of the American people is not leverage to be used. The full faith and credit of the United States of America is not a bargaining chip. And they better choose quickly, because time is running short.

The last time republicans in Congress even flirted with this idea, our AAA credit rating was downgraded for the first time in our history. Our businesses created the fewest jobs of any month in nearly the past three years, and ironically, the whole fiasco actually added to the deficit.

Got that? "The fewest jobs of any month in nearly the past three years." He's not referring to last month, December 2012. He's referring to August 2011, and trying to rewrite that history by blaming it on Republicans and couching it in the context of the last three years when the news reported August 2011 as a sensational first in the post-war period. That's how keenly Obama feels the sting of his lousy job creation record. He's the worst president for jobs in 65 years, and he knows it.

OK, How Long Before The Ratings Agencies Downgrade Us Again?

I'd take bets, but that's illegal, so I'll just wager a hearty pat on the back that the next debt downgrade takes three months, tops.

Senate Passes Fiscal Compromise At 2 AM, 89-8

So reports CNBC and Reuters, here, noting that taxes go up only on the wealthy and that the sequester agreement cutting spending is post-poned for two months. I'm sure Standard and Poors is not amused.

Without agreement on spending cuts the US risks more downgrades of its debt rating, yet Democrats in particular seem not to care about that.

Separate reports indicated that taxes revert to the old Clinton era rates under the measure for individuals making $400,000 a year or more, which in 2011 included barely 0.3% of wage earners, or 586,000 people, and that new revenue expectations from the agreement amount to a laughable $60 billion per year. Expect this group to take even less ordinary income in the future, which came to barely $500 billion last year.

The expiration of the Bush tax cuts, combined with the sequestration cuts, was supposed to translate into ten times that new revenue per year, or $600 billion, a Pyrrhic victory for the president who was already gloating yesterday at an event clearly staged in advance for the purpose that he got Republicans to flip-flop on raising taxes.

If the House doesn't pass the bill today or tomorrow, that will complicate things, says the story:

"A new, informal deadline for Congress to legislate is now Wednesday when the current body expires and it is replaced by a new Congress chosen at last November's election."

If there is any virtue to the bill, it is that it makes a number of tax rates permanent, and permanently fixes the Alternative Minimum Tax.

The House would do well to take the deal, and press the spending cuts issue separately in two months on the sequestration, and again when the debt ceiling must be raised, but the extension of unemployment benefits yet again for another whole year could be a problem.

Like making the real thing, government sausage isn't pretty.

Transformation After Four Years: Lost AAA Credit Rating, 8.97% Average Unemployment, Average Report of GDP 0.825%, Housing Values Down 13%

"After decades of broken politics in Washington, and eight years of failed policies from George W. Bush, and 21 months of a campaign that's taken us from the rocky coast of Maine to the sunshine of California, we are five days away from fundamentally transforming the United States of America."

-- Sen. Barack Obama, October 2008, Columbia, Missouri

What Obama and Granholm Have In Common: Forward To State-Capitalism

Shikha Dalmia calls what former Michigan Governor Jennifer Granholm did in front of God and everybody at the Democrat National Convention a "political pole dance", for Reason.com here:

But even more bizarre than Granholm’s convention appearance was that she was invited to make one in the first place. She was arguably the worst governor of her time who, during her eight-year term, took Michigan’s teetering economy into her firm hands and gave it a good, hard push off the cliff.

On her watch, the state's ranking in per capita GDP plummeted to 41st place from 24th. Michigan became the only state to suffer a net out-migration during the past decade, and its credit rating was repeatedly downgraded.

But since unemployment is the topic of the day, how was Granholm’s job-creation record? Worse than Katrina-struck Louisiana’s. Unemployment jumped from 6.8 percent when she was elected to 14.1 percent at its peak in 2009 – although some believe it reached as high as 15.2 percent. 

Granholm has never looked more marvelous, but pace Dalmia, Granholm's appearance wasn't bizarre.

There has been much commentary saying as much, as if Granholm's performance was like some sort of meltdown, something almost crazy and beyond the realm of understanding, not unlike Howard Dean's a few years ago.

But from the point of view of ideology her selection and presentation made perfect sense. Like the true believer of a religion, Granholm's emotional display was characteristic but superfluous. It was the content of her remarks which were significant because they were entirely in keeping with the blindness of the ideological mindset of the new old liberalism which calls failure success. Indeed, today's liberalism thrives on failure in order to succeed, and the more failure it has the more success it has. The rightness and success of the bailout of GM, the substance of Granholm's paean to Obama, isn't a bug of this new old ideology, it's a feature. Obama himself has said so. And he's now on a mission to spread the government control of business around, not just the wealth:

“I said, I believe in American workers, I believe in this American industry, and now the American auto industry has come roaring back,” he said. “Now I want to do the same thing with manufacturing jobs, not just in the auto industry, but in every industry.

Therefore consider Jennifer Granholm as the prophet of the new religion, and indeed its forerunner.

Like Michigan's devastated GDP under Granholm, America under Obama has settled into dramatically lower GDP compared to the post-war average. It has descended to almost European proportions, which evidently was the whole point of Obama's 2009 European apology tour. It was as if he were announcing that under his leadership America was going to stop being the leader of the free world and become just like them, anemic and dependent social welfare states. At 1.7 percent currently, GDP in America has indeed been cut down to size, to less than half of the decades-long average of 3.5 percent. Meanwhile nearly one in six Americans are classified as poor, and almost half of all households receive some form of direct government assistance. Is it any wonder Europe wants Obama reelected?

Like Michigan's exodus not just of population but of businesses fleeing the dreaded "single business tax" under Granholm, the nation's only value-added tax, for the first time in living memory there has been a sudden appearance of wealthy "global" Americans actually renouncing citizenship to escape the growing worldwide reach of the Internal Revenue Service's Gestapo-like intimidation of foreign financial institutions, which no longer want the trouble of doing business with Americans. Talk of finding and going to a "back-up country" among the smart set is an alarming sign that the kind of people we need to attract the most in order to grow our economy are instead repelled by the political class' increasing repression of capital and its hatred of the rich.

Like Michigan's downgraded credit rating, America under Obama lost its gold-standard AAA rating, formerly probably the single most recognizable synonym for the country's reputation in the world as the one most likely to pay its bills.

And like Michigan's long period of unemployment under Granholm, America's 43 consecutive months of unemployment at 8.1 percent or higher under Obama speak for themselves.

One might even say that Jennifer Granholm in her eerie way prepared the way for the coming of the (slum) lord. It's only fitting that she should announce his second coming. 

All of this failure is success because it keeps Democrats in power. That's why Gov. Jennifer Granholm's appearance wasn't bizarre. Her governorship epitomized the failure of America under Obama.

And so the ideologues do rejoice, because it's all intended. Forward, to state-capitalism.