Saturday, August 6, 2011

U.S. Credit Rating - #3140 - S & P Strips U.S. of Top Credit Rating - Wall Street Journal

A cornerstone of the global financial system was shaken Friday when officials at ratings firm Standard & Poor's said U.S. Treasury debt no longer deserved to be considered among the safest investments in the world. S&P removed for the first time the triple-A rating the U.S. has held for 70 years, saying the budget deal recently brokered in Washington didn't do enough to address the gloomy outlook for America's finances. It downgraded long-term U.S. debt to AA+, a score that ranks below more than a dozen governments', including Liechtenstein's, and on par with Belgium's and New Zealand's. S&P also put the new grade on "negative outlook," meaning the U.S. has little chance of regaining the top rating in the near term.  The unprecedented move came after several hours of high-stakes drama. It began in the morning, when word leaked that a downgrade was imminent and stocks tumbled. Around 1:30 p.m., S&P officials notified the Treasury Department that they planned to downgrade U.S. debt and presented the government with their findings. Treasury officials noticed a $2 trillion error in S&P's math that delayed an announcement for several hours. S&P officials decided to move ahead, and after 8 p.m. they made their downgrade official.  S&P said 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." It also blamed the weakened "effectiveness, stability, and predictability" of U.S. policy making and political institutions at a time when challenges are mounting.  Read more..........

Jobless Rate Dips to 9.1%, 117K Jobs Added in July, Update: Dip Comes From Labor Force Exodus - Hot Air - The US economy produced a net gain of 117,000 jobs in July, cutting the jobless rate a tenth of a point to 9.1%, according to today’s report from the Bureau of Labor Statistics. That beats economists’ predictions of a net gain of 85,000 jobs and maintaining the 9.2% jobless rate from June. The news comes as a welcome, if very mild, positive surprise after yesterday’s falloff on Wall Street.  Unfortunately, the government reporting sites were down this morning, so I’ll update in a little bit with the numbers. However, a Reuters headline from earlier in the morning captured the essence of the reporting on today’s figures: “Make or break jobs report as markets fear recession.” If they expected the numbers today to ease those fears, they will come away disappointed. While this job creation number is the best we’ve seen in a few months, it barely makes the maintenance level — the number of jobs we have to add to keep up with population growth. The fall in the jobless rate moves the number in the right direction, but only if it didn’t come from more flight of workers from the workforce.  Reuters also notes at the same link (the headline has changed) that May and June numbers were revised to add 56,000 more additional jobs in those months:  Read more.......

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