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US, Europe Face More Ratings Downgrades in Coming Years

Posted by WARREN MOSLER on January 21st, 2012

Morons:

US, Europe Face More Ratings Downgrades in Coming Years
The US tops the list of downgrade candidates because its debt and deficit troubles are unlikely to be resolved with the political infighting in Washington, a new study says.

17 Responses to “US, Europe Face More Ratings Downgrades in Coming Years”

  1. Jacob Goense Says:

    They expecting a political showdown over the statutory debt limit again? Ah, well, there is only a thin line between default and a property tax on treasuries.

    Reply

    Jonf Reply:

    @Jacob Goense, It is really crazy. These guys could trigger a default and then MMT will be said to be wrong.

    Reply

    rodney Reply:

    @Jonf,

    No. That wouls fall under what is consisered a self imposed constraint. They can always CHOOSE to LESS than what is possible.

    Reply

  2. Adam (ak) Says:

    These problems will all disappear immediately when the Republicans install their own President, Congress and Wendi Deng-Murdoch as the new Statue of Liberty.

    Don’t worry you will still have a Disneyland.

    Reply

  3. RobertKelly Says:

    Here is the article. Wasn’t there rumblings that Carney was coming around? I think he’s stirring the pot.

    http://www.cnbc.com/id/46072354

    Reply

    Jonf Reply:

    @RobertKelly, They don’t make any distinction between Europe and sovereigns. What happens if they downgrade everyone to junk?

    Reply

  4. Jonf Says:

    If they are saying we cannot agree on anything, then by all means they should downgrade. If the fed allows the rate to go up just a bit, it will confirm it and Rick Santelli will say I told you so.

    Reply

  5. Dan Kervick Says:

    The reporting on this issue continues to muddy the difference between the US and Europe. The non-currency-sovereign European countries could conceivably default because they can’t roll over their debt. The US could only default because some brazen Congress decides it won’t pay it’s debt.

    In the end, holders of dollars need the US government more than the US government needs the holders of dollars.

    Reply

    jonf Reply:

    @Dan Kervick, How come we can’t get congress to understand that? These guys could trigger a default out of pure ignorance.

    Reply

    rodney Reply:

    @jonf,

    I have often wonder this myself. Take health care for example. If people knew that government could make all the payouts necessary and take profit out of the equation alltogether, the health insurance industry would be destroyed. Congressman who take the sort of views that expose stuff like this probably do not get fat contributions to their re-election campaign. THat and sheer ignorance and a lack of any motivation to try to understand how it works. Most that try probably ask guys like greg mankiw.

    Reply

    SteveK9 Reply:

    @rodney,
    Most countries already have a National Health Plan, with a small or nonexistent role for private health insurance companies. The US is the exception, so this is not exactly a big secret.

  6. pebird Says:

    AAA = An obligor rated ‘AAA’ has extremely strong capacity to meet its financial commitments.

    Clearly S&P does not understand their own definitions of credit risk.

    Reply

    jonf Reply:

    @pebird, But there is the little matter of political risk.

    Reply

  7. Brian Says:

    Maybe next time Obama will just do the 2 trillion dollar coin thing, or some 14th amendment option.

    Reply

    SteveK9 Reply:

    @Brian,
    Not needing to run again could overcome his natural timid nature.

    Reply

  8. Tyler Says:

    Speaking of morons: http://www.cepr.net/index.php/blogs/beat-the-press/educating-steven-rattner-on-government-debt

    Reply

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