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Politics : Formerly About Advanced Micro Devices

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To: bentway who wrote (623032)	8/5/2011 8:15:15 PM
From: tejek	Read Replies (2) of 1579694

Its so good to have a competent WH in power. Had this been the Bush WH, their first question would have been: What's a downgrade? Their second: What is the S & P? S&P said to back away from U.S. downgrade By Steve Goldstein, MarketWatch WASHINGTON (MarketWatch) — Standard & Poor’s has reportedly backed off a plan to downgrade the prized Triple-A debt rating of the United States on Friday after White House officials challenged the analysis and said the credit rater was “trillions” off in its analysis. According to multiple reports, McGraw-Hill /quotes/zigman/233490/quotes/nls/mhp MHP -0.87% unit S&P told the government Friday afternoon of an imminent downgrade. But officials told the agency that they were “trillions of dollars” off in their analysis, in part because of the complicated “baselines” that are used to compare long-term government spending and revenue projections, according to reports. The rumored S&P downgrade was cited as a factor in Friday’s wild 416-point intraday swing in the Dow Jones Industrial Average. See Market Snapshot. It’s not clear what the impact of an S&P downgrade of the U.S. would be, as fellow rating agencies Moody’s /quotes/zigman/267181/quotes/nls/mco MCO -0.63% and Fitch Ratings have affirmed their Triple-A ratings. (Moody’s has warned that it may downgrade the U.S. in the future.) Investors that are required by their mandates to only invest in Triple-A debt may still be able to own Treasury bonds if only one firm downgrades the debt rating. It’s also unclear whether Treasurys pledged as collateral in various derivatives trades as well as to secure Federal Reserve lending would be impacted. In any case, investors have flocked to Treasury bonds this week, rising this week by the most in two years, which shows that investors have brushed off concerns that they won’t be paid back. S&P has staked out the most hawkish position of the agencies in the recently concluded debt ceiling debate. On July 14, S&P said it would take $4 trillion worth of deficit reduction over a decade for the U.S. to secure its AAA rating. The deal signed into law this week achieves, at best, $2.1 trillion of deficit reduction, according to estimates by the nonpartisan Congressional Budget Office. The rating agencies have been heavily criticized for their role in the credit crisis for not downgrading mortgage-backed securities, but there are few alternatives to their role.

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