All Hail the credit rating agencies. Standards & Poor's just gave the good ole' USA a negative credit rating outlook, with a scolding on what we should do as a nation:
Standard & Poor’s put the U.S. government on notice that it risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt.
“If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns,” New York-based S&P said today in a report that maintained its top rating on U.S. long-term debt while lowering the outlook to “negative” for the first time.
S&P is giving the U.S. a 33% chance of losing it's AAA credit rating.
This is how the game is played to force a nation into austerity. The agenda is to destroy what is left of the working people and middle classes by dismantling what is left of social safety nets, under the claim of too much debt. In other words, it seems S&P is in on the game to make sure Americans have no Medicare, Medicaid and Social Security.
Indeed, it seems Republicans are jumping on this like flies on .....well, you know. All to destroy what is left of America's social safety nets.
Shock of all shocks, Obama's chief economics guy, Austan Goolsbee, is calling cash on S&P and implying this is political:
They are saying their political judgment is that over the next two years they didn’t see a political agreement” to reduce long-term deficits. don’t think that the S&P’s political judgment is right.
Slate seems to be one of the few media outlets noting S&P did not actually downgrade the U.S. credit rating:
Standard & Poor's has attached a "negative" outlook to the United States' sterling credit rating. The ratings agency did not actually downgrade America's debt, currently rated at AAA/A-1+. Rather, it said there is a one-in-three or better chance that it will downgrade it if the United States does not get its fiscal house in order, and quick.
The news wasn't all bad. S&P did not actually deign to change its rating. Its analysts praised the United States' "flexible and highly diversified" economy and its "effective monetary policies." They also noted a "consistent global preference" for the dollar over other currencies, helping to keep the government's borrowing cheap. But, they noted the obvious: The United States has big annual deficits, $14 trillion in debt, and, to put it gently, a bonkers political system that is making it close to impossible to do the responsible thing in a timely manner. The problem is not financial, S&P argued, at least not right now. The problem is political.
We've seen this pattern over and over in Greece, Ireland and now Portugal. Various forces, such as the IMF and conservative agenda groups, demand a country implement austerity. That is code speak to destroy social safety nets, lower wages and paychecks for workers, all under the guise of reducing national debt.
They scream from the rooftops, it's a crisis. The next thing that happens are sovereign bonds become more expensive to finance the existing debt, due to credit default swaps and other derivatives.
The cost to insure U.S. sovereign debt from default rocketed 16% Monday and Treasurys briefly swooned after Standard & Poor's revised its outlook on the nation's AAA credit rating to negative from stable, citing budgeting issues.
Insurance sold in the form of derivatives called credit default swaps were quoted around 50 basis points, or 50,000 euros ($71,000) a year to insure 10 million euros ($14.2 million) of the Treasury bonds over five years, according to data provider Markit, up from 43 basis points before S&P's announcement.
Next the credit rating agencies start issuing warnings and downgrades. Eventually the IMF and in the case of Europe, the ECB and EU step in and order that nation to reduce it's social safety nets and wages....in order to reduce their debt.
Never a defense budget or private sector ripoffs of the government and people are mentioned in this dialog. You also won't hear a word about increased revenues to the government. It's a script and it works really well against working people. Just ask Greece, Portugal, Ireland, Thailand....the list goes on and on.
America, it's time to wake up and smell the use of a crisis to destroy the services you paid into and plan to rely on in retirement: Social Security and Medicare.