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Saturday, August 6, 2011

Credit Rating Lowered -- President Obama Owns it!

All through the debt ceiling debate we were told by the elected elite in D.C. how important it was to protect the credit rating of our country. Many did not want to hear the call of a strong few in D.C, supported by us so-called crazy & uneducated Tea Party people, that the only way to save the credit rating from being lowered was to cut spending and NOT through raising the debt ceiling.

The media, always including the latest GOP  "Tea Partier's are Hobbit's" attacks, continually hammered home the beltway blab from President Obama and his band of befuddled bureaucrat's on how we must raise the debt ceiling in order to keep us from going into default and to save our credit rating from being lowered.  

After stomping his feet,  using quotes from Ronald Reagan to beat House Speaker John Boehner into capitulation, and in the name of "saving our credit rating" by threatening to veto anything that he did not approve of, President Obama held strong and got what he thought was best for the American people to save our credit rating.

And the Credit Agencies responded...

From JS Online -- (Emphasis Added)
The U.S. had its AAA credit rating downgraded for the first time by Standard & Poor's on concern spending cuts agreed on by lawmakers to raise the nation's borrowing limit won't be enough to reduce record deficits.

S&P dropped the ranking one level to AA+, after warning on July 14 that it would reduce the rating in the absence of a "credible" plan to lower deficits even if the nation's $14.3 trillion debt limit was lifted. The U.S. was awarded the top credit ranking by New York-based S&P in 1941. It kept the outlook at "negative."

"The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government's medium-term debt dynamics," S&P said in a statement today.

Demand for Treasuries has surged even with the specter of a downgrade as investors saw few alternatives to the traditional refuge during times of risk as concern increased global growth is slowing and Europe's sovereign debt crisis is spreading. The action could still hurt the U.S. economy over time by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries. JPMorgan Chase & Co. estimated that a downgrade would raise the nation's borrowing costs by $100 billion a year.

"It's a reflection of the fact that we haven't done enough to get our fiscal house in the order," Anthony Valeri, market strategist in San Diego at LPL Financial, which oversees $340 billion, said in an interview before the downgrade. "Sovereign credit quality is going to remain under pressure for years to come." »Read Full Article
So it looks like, once again (Stimulus, TARP, Bailouts, etc...), the financial and fiscal wisdom of President Obama has failed to live up to what he said it would be, or should we say for what some people "hoped".

Mr. President -- you own this one!

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