Monday, August 8, 2011

Economy - Standard and Poor - #3147 - S & P Downgrades Fannie Mae and Freddie Mac CNBC (2) Democrats Ignore AAA Countries' Experience - American Thinker (3) Obama Administration Blames the Messenger - American Thinker (4) Obama in Bunker Mode After Downgrade? - Update: Statement Coming at 1 P.M. - Hot Air

Standard & Poor's downgraded the ratings of government-sponsored enterprises Fannie Mae and Freddie Mac Monday, citing their reliance on U.S. government. Both Fannie and Freddie were lowered to AA+ from triple-A. The Federal Home Loan Banks were also cut to AA-plus. Fannie and Freddie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans worth more than $5 trillion. As part of a nationalized system, they account for nearly all new mortgage loans. Their downgrade might force anyone looking to buy a home to pay higher mortgage rates. The downgrade came amid a number of other ratings actions that are rippling from S&P's decision late Friday to cut the credit rating of the United States one notch from triple-A to AA+. S&P also cut ratings for several of the main arteries of the US financial system—the Depository Trust Co., National Securities Clearing Corp., Fixed Income Clearing Corp. and the Options Clearing Corp.—were cut one notch to AA-plus.  Read more........

Democrats Ignore AAA Countries' Experience - American Thinker - Call me crazy, but if I wanted my AAA debt rating back, I would do what other AAA-rated countries do.  Strangely, Democrats are pushing for higher tax rates as a way to address our debt rating woes. See Dick Durbin's statement:  S&P's decision to downgrade the US credit rating due to our ongoing debt crisis is unfortunate and underscores the need for a balanced, bipartisan and comprehensive solution to the problem. In the coming weeks, a Joint Committee of Congress will begin its work to just such an agreement. Their work will be incredibly important and must balance spending cuts with revenue increases.  And, Harry Reid's recent comment:  This makes the work of the joint committee all the more important, and shows why leaders should appoint members who will approach the committee's work with an open mind - instead of hardliners who have already ruled out the balanced approach that the markets and rating agencies like S&P are demanding.  These recommendations are nonsense, because all of the countries with AAA-rated debt (as compared to the United States' AA+-rated debt) already have lower corporate tax rates than the US does. Specifically, Australia, Austria, Canada, Denmark, Finland, France (yes, France), Germany, Luxembourg, Netherlands, Norway, Sweden, Switzerland and the United Kingdom all have lower corporate tax rates than the US.  The average corporate tax rate in these countries is 27.5% versus the current US tax rate of 39.2%. The US tax rate is 42% higher in relative terms and almost 12% higher in absolute terms. The Democrats are recommending increasing that disparity. I am confused but not surprised by this.

Obama Administration Blames the Messenger - American Thinker - The Obama administration wants to "pivot" to jobs. A bit late, I would say. They wasted a year pushing health care reform. That passed with zero Republican votes in the House and Senate, and about the same number of Republican ideas. When the Democrats controlled both branches of Congress and the White House, they shoved their approach down the throats of Republican in Congress, and an American public that opposed it then, and still opposes the legislation by a 3-to-2 margin..........  The Democrats had their spokespeople on the Sunday TV news programs to respond to the S&P downgrade of U.S. sovereign debt, and to provide the talking points we can now repeat from memory: we need a balanced approach to deficit reduction; that means revenues from taxing the ill begotten gains of millionaires and billionaires, oil companies, yacht and jet owners, and hedge fund managers. And by the way, they noted, S&P was a major contributor to the subprime collapse, and they made a two-trillion-dollar error, so they have no credibility. We now need to spend hundreds of billions more on jobs and to raise taxes.  Read more........

Obama in Bunker Mode After Downgrade - Update: Statement Coming at 1 P.M. - Hot Air - One might think that after a historic shock to the American economy in the first serious downgrade of our credit rating in decades, an American President would want to speak to a worried nation about the future and his plans to address the situation. Instead of taking an opportunity to demonstrate leadership, Barack Obama instead spent the weekend away from public scrutiny at Camp David. ABC News reports this morning that Obama won’t talk publicly today, either:  President Obama will spend today in closed-door meetings at the White House, no doubt tackling the fallout from Standard & Poor’s decision Friday to downgrade the nation’s credit.  After spending a low-key weekend at Camp David, the only item on the president’s schedule this morning is his daily briefing in the Oval Office.  Well, that’s not entirely true. Obama will make two public appearances this evening, Mary Bruce notes … at two fundraisers. With no cameras allowed.  Meanwhile, the White House sans its President plans to make war on S&P over the downgrade:  The Treasury Department and the Federal Reserve have already revealed what their strategy toward Standard & Poor’s will be now that the agency has stripped the U.S. government of its AAA rating: to destroy S&P’s credibility. Update: Almost four days after the S&P downgrade, the White House announces that Obama will address the nation at 1 pm ET today in a statement — as I predicted.  Read more........


  1. Very complex thinking if politics combined by business.

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