Egan Jones Downgrades USA From AA+ To AA, Outlook Negative

Lets be honest it was only a matter of time till the US had another
cut in its ratings.

Inflection point - when debt to GDP exceeds 100%, a country's financial flexibility becomes increasingly strained. For the first time since WWII, US debt exceeds 100%. From 2008 to 2010, debt rose a total of 23.6% while GDP rose a total of 1.6%. Unfortunately, with an annual federal budget deficit in the area of $1.4T, debt is likely to reach $16.7T as of the end of 2012 while assuming GDP grows 2.5%, total GDP is likely to reach $15.7T. Therefore, as of the end of 2012, debt to GDP is likely to be in the area of 106%. Assuming the federal deficit for 2013 remains at $1.4T and GDP growth is 2.5%, the total debt will rise to $18.1T and GDP will rise to $16.1T, resulting in debt to GDP of 112%. In comparison, France's and Italy's debt to GDP are 81% and 117% respectively. Regarding efforts to address budget problems, the Super Committee was seeking spending cuts of $1.5T over 10 years or merely $150B per year, and was a failure. Obviously, the current course is not enhancing credit quality.

Egan Jones is one of the better rating agencys and was one of the first to downgrade the US from
its AAA well before the others so expect them to follow soon.

ZEROHEDGE

Right now US debit is at $15,624,142,000,000 and is going up so fast i had to change the amount
twice in this sentence to keep up with it.

US DEBIT CLOCK

But dont worry everyone more QE will fix that and all that debit will just go away as well as the
value of our pay and saving via inflation.

reply to post by skuly

But dont worry everyone more QE will fix that and all that debit will just go away as well as the
value of our pay and saving via inflation.

I feel better now.

so should i stock up on beans and rice or what? God just what I need I just got back on my feet and comfortable again.

reply to post by skuly

Either we get Ron Paul into office, or the United States will collapse like Russia, Europe, Zimbabwe etc.

It's sad this country doesn't elect good Presidents like Paul... Seriously, after this election i've lost all hope for anything good coming from this country other than greedy, and corrupted politics. Although, I hope the government isn't as evil as they look, and have a plan to keep us ahead of the rest of the world. But who knows.

Originally posted by skuly
Lets be honest it was only a matter of time till the US had another
cut in its ratings.

You got that right. Everyone knows our credit is total crap, but everyone is afraid to say "the emperor has no clothes". Now that someone has finally taken the first baby step towards exposing our nonexistent creditworthiness we can expect more to do so as well.

Originally posted by gladtobehere
Either we get Ron Paul into office, or the United States will collapse like Russia, Europe, Zimbabwe etc.

That's a pipe dream. Paul can't fix the unfixable. Just look at the numbers:

usdebtclock.org...

The national debt works out to 138k for every single taxpayer in this country. Total US debt per family is 691k. That's right, over half a million dollars PER EVERY SINGLE FAMILY. Now tell me what kind of magic beans Paul or anyone else can plant that will fix this. We need to wake up and realize that there is no fixing it. Financial collapse is inevitable, that's what we need to prepare for.

The US economy will never be able to recover itself... unless they decided to do some sort of debt cut like greece did, if that would even be possible.

More and more countries are developing/boosting their trade now, while America is just getting sucked down the debt hole and slowly shrinking.

Originally posted by EmperorXyn
It's sad this country doesn't elect good Presidents like Paul... Seriously, after this election i've lost all hope for anything good coming from this country other than greedy, and corrupted politics. Although, I hope the government isn't as evil as they look, and have a plan to keep us ahead of the rest of the world. But who knows.

Lol, that plan you are hoping for is most probably - more war

Originally posted by SavedOne
Now tell me what kind of magic beans Paul or anyone else can plant that will fix this. We need to wake up and realize that there is no fixing it. Financial collapse is inevitable, that's what we need to prepare for.

The only impact any future presidency could have would be to severely cripple the military's budget. The US simply cannot continue being the global policeman. That notion is pretty much a pipe dream considering the massive NSA expansions underway. Given the numbers presented I agree with you that it is still one hell of a challenge if not beyond all hope.

brill

I don't believe that QE 1 or 2 ever was used to pay down any of the US debt and therefore unless its mode of operation is altered any new QE wont be used to pay down the debt either. But what the earlier QE did was increase the money supply and while that did help boost stock market prices it also inflated commodity prices including those commodities used by the general voting public on a daily basis. However what QE never did was boost the income of the average worker that now has to pay for those inflated commodity prices. Fortunately some of the knowledge of what QE has done to the average persons cost of living has reached the masses and as a result rendered unpopular any further QE stimulus by the FED. Bernanke and the Fed effectively have there hands tied and are out of fiscal stimulus alternatives since the interest rate is already at near zero and can't be lowered much further, and oil and food prices are also too high to risk further inflation via more quantitative easing (QE).

The question then arises of how we are supposed to pay down such an enormous debt when the projected costs to the government are expected to rise due to the retiring baby boom generation tapping into entitlements while at the same time all of those same retirees will be leaving the workforce and thus not contributing to the income tax revenue? I think the answer is, without drastic changes to our whole economic system in terms of government revenue, payment & money supply creation, paying down the debt will be impossible. And the last thing our current so-called representatives in Washington are doing is coming up with dramatic and drastic plans to fight off the looming US government debt crisis. Rather, we are all in the same boat where the bilge pump is broken, we are taking on lots of water and the US congressmen are patting themselves on the back as they use thimbles to try and bail us out.

Given our current trajectory and lack of resolve on the part of those with the prerogative to change our course, I'm not sure I'd give the US anything better than junk bond status; AA is just way too generous.

Do not forget that UK debt to GDP is over 1000%.

The entire UK government and economy should have collapsed long before the crisis in Europe and US. But it didn't because one of the puppet masters is living in UK.

Now, US debt situation is much bigger than entire Europe, and real US unemployment figure has been tweaked by government and mainstream media. If US economy does not collapse before Europe, then I say that one of the puppet masters is living in USA too.