published Sunday, January 29th, 2012

Debt harms credit ratings in United States, Europe

The credit-rating agency Standard & Poor’s recently downgraded the ratings of several European nations — for much the same reason it earlier downgraded the United States’ credit rating for the first time in our history: runaway spending and debt.

Portugal’s rating fell to so-called “junk status” — scarcely an enviable position. France lost its top-notch rating. Austria, Malta, Slovenia and Slovakia all saw their ratings drop one level. And Italy’s, Spain’s and Cyprus’ ratings declined by a painful two notches each.

These drops make it more costly for the countries to borrow money.

As in the United States, there are hopes in Europe for economic growth that could expand the tax base. But in our country in particular, low consumer demand in the weak economy, the imposition of new regulations, and persistent threats of higher taxes are making it even riskier than usual for companies to expand operations. They simply have no certainty about where the economy is going, and as a result, they are not making many large investments.

What the credit downgrades here and abroad point to is the need to reduce government spending and borrowing, as well as other government intrusions in the market. Nothing from the past few years of breakneck federal spending in the United States shows that such reckless fiscal policy is beneficial. It’s time to cut, not expand, the reach of government.

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The same ratings agencies who a few years ago were giving bundled instruments of questionable nature solid ratings?

You know they aren't objective, but are actually manipulators themselves. The past few years should have taught guys a lesson about not letting the astrologers run the kingdom. At the best, they are just guessing, at the worst, their predictions are for sale.

January 29, 2012 at 12:45 a.m.
EaTn said...

The world money system has developed into such a purposely complicated tangled web that only a few really understand it. The real wealth of a country lies in it's human and natural resources. In the past few years America has been the consumption capital of the world, but this is a shortsighted dead-end without us providing tangible goods in return.

January 29, 2012 at 6:34 a.m.
acerigger said...

From statement of Standard&Poor's down grade; "Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics any time soon"

NOT,as you say,"runaway spending and debt."

In other words,"Republican obstructionism!

January 29, 2012 at 7:02 p.m.
AliceSmith said...

I think that now the time has come when these so-called credit rating agencies should be regulated. They are not good for anything apart from creating panic in the market. Are these the same credit ratings agencies that confirmed their legitimacy by successfully predicting the value of junk securities held by banks that were one of the major contributory factors to the biggest financial crisis since the Great Depression? If I had given the power, I would rather ban them. The entire financial market is corrupted! Alice from

July 11, 2012 at 4:37 p.m.
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