Credit Rating agency Standard and Poors downgraded their forecast on the U.S. economic outlook, sending a clear message to Anti-President Obama and lawmakers to address America′s massive debt issues. Reaction to the downgrade sent stock and bond markets reeling, gold soaring to a new all-time high of $1497+ and the Volatility Index, a.k.a. The Fear Index, up 17% in one day. While S&P did not lower the country′s bond rating from its AAA status, the message is obvious that such is the next step if Washington does not act on reducing spending and restrictive regulations.
Meanwhile, Obama spent the day in the White House talking with local TV anchors from a series of cities as he prepares another day on the campaign trail tomorrow. Obama continues to push his message of class warfare by increasing taxes on those who work and create wealth and jobs. This despite the fact that in order to balance the federal budget, tax rates would have to be increased to 88% on those earning more than $250,000 a year, and 65% on everybody else. Just taxing the rich and confiscating all corporate profits will not solve the problem.
While U.S. Treasury rates showed little change today, the volume of sales was anemic. Those buying any sovereign debt still prefer U.S. bonds over those of Europe and others indicates that America is still winning the ‘Ugly Contest’, being slightly less ugly than the rest. Other news from the World Bank warns that inflation in China will begin spilling over to other markets. Chinese workers are demanding higher pay to keep up with the rapid rise in fuel and food costs. In the U.S., gasoline prices inched upwards again to the nationwide average of $3.83 per gallon. With news from Saudi Arabia that they are slashing production, due to their anger over U.S, policy in North Africa and the Middle East, the only thing keeping crude oil prices down is the apparent lack of demand as all indicators point to a double-dip recession by the summer.
With Standard and Poors downgrading the U.S. economic forecast, the message is clear that they see little optimism that Washington will act in time to lower budget deficits or adopt pro-growth policies. Anti-President Barack Obama is certainly a leading factor in their assessment as Obama refuses to consider reducing spending. Gold prices hit a new all-time high flirting with $1497 an ounce briefly. The Volatility Index, VIX, jumped 17% in just one day as markets scramble to find shelter.
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S&P Discusses Its Decision To Cut the U.S. Credit rating Outlook
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April 18th, 2011 at 2:06 pm
It is fitting that Glenn Beck returned from his nationwide tour on this day as the S&P gave the U.S. government a negative outlook. The reaction from the Obama White House was typical and expected. They are in complete denial over the tragedy they are bringing down on this great nation.
April 18th, 2011 at 2:25 pm
@ Beck Fan,
Yes, the White House response was ubiquitous. Obozo is actually glad that he is destroying the nation. He’s moving the game plan up as he knows that he is going to lose in 2012.
Expect the period between June and September to be very shaky. Looks like the next shoe will drop by October.
April 18th, 2011 at 5:36 pm
Lie, lie, lie. What do we expect?
“Those who work and create jobs?” Those who sit in corporate offices and suck all the money while jobs are overseas, rather.
Increase taxes? No, start taxing corporations and the super-wealthy the way they were taxed, the fair way, pre-eight year Bush disaster.
The CBO projects that eliminating the Bush tax cuts for the wealthy would cut the deficit in two.
S&P clearly states that the problem it sees with the US is not financial, it is political.
In other words, the problem is with the Republicans.
April 18th, 2011 at 5:42 pm
Lets see…
Your credit has just taken a dive but we still think you should own a house and us in the government will force the market to help you get the money for one…
Where have I heard this before ?
April 18th, 2011 at 5:46 pm
” start taxing corporations and the super-wealthy the way they were taxed, the fair way, pre-eight year Bush disaster.”
This is on your guy:
http://www.foxnews.com/opinion/2011/04/18/ge-got-break-taxes/
For everyone else:
http://www.wisefoodstorage.com/
April 18th, 2011 at 6:01 pm
“S&P clearly states that the problem it sees with the US is not financial, it is political.”
Really? Read (one of “your” sources):
http://money.msn.com/market-news/post.aspx?post=5c65cf72-1c96-4613-bd19-e5de89c0ee12
**See the last sentence in the third paragraph, “The ratings agency expressed concern that U.S. policymakers haven’t addressed critical fiscal issues.”
It’s not financial?
Oh, and by the way, Saudi Arabia has announced that it’s cutting back on oil production, yaaaaaay, we are going to be looking so good!
April 18th, 2011 at 6:11 pm
Klo;
“The CBO projects that eliminating the Bush tax cuts for the wealthy would cut the deficit in two.”
Sht ! How many fckin times do we have to go thru this ?
The CBO “projects”? What the fck is that worth ?
Also, did you notice theres no time frame put on this ?
Yea, ya know why ?
Because we could take every dime from the rich who already pay 38% ot our bills, for the next 50 years and it wouldnt put a dent in Washingtons “SPENDING/DEBT PROBLEM”
We have a spending problem Klo, not a revenue problem.
April 19th, 2011 at 2:40 am
“S&P clearly states that the problem it sees with the US is not financial, it is political.
In other words, the problem is with the Republicans.”
Yeah, Klo! The Republicans have had the House now for what, 103 days? Fancy-Nancy Pelosi and Harry Reid oversaw more than $5 Trillion in new debt in four years. Obama is spending an extra $1.5 Trillion this year and wants to add another Trillion a year for the next decade. Last time I checked they have D’s after their names, D is for Democrat, or Dummy!
April 19th, 2011 at 5:47 pm
we have both a revenue and spending problem. but on the positive side, if the unseen hand works in pushing people towards their self interest, and if most of us have enough common sense and self awareness not to get in too over our heads, usually things work out in a positive economic/wealth growth curve. I would say ideologues can get in big trouble though and sink the boat, the german national socialist party and its ultimate leadership, or some whacked out preacher bent on burning books, or some US senator filabustering the raising of the debt limit all pose “unmanageable” risks. But they all held trump cards that herded the rest of the cattle into their machine. But outside of that, where its just normal push and pull, tug and complain, etc, people do magically work towards the light. So that is where chance comes in.
April 19th, 2011 at 5:53 pm
The media as it is constructed today, and so instructed likes to push conflict and hype issues in such a way as to maximize eyeball time as the incentive is advertising dollars and notariety for career promotion. When you participate in the media, either passively or actively, you are feeding their machine that maximizes their potential to be seen, and thusly paid. So I would take all this fear mongering with a grain of salt. Perhaps the one unknowable is an ongoing leaking nuclear reactor with long half-life elements leaching into our oceans. that is new, and unknown, however its been shown that with known leaks as Chernobyl, and three mile island, while undoubtedly bad, they turn out not to be as toxic as predicted for some reasons. Biological life seems to have some degree of resistance and ability to survive even in contaminated enviroments, much more than the statistics, would suggest. Nobody knows why. It challenges the lethality models we accept as gossiple.
April 19th, 2011 at 6:33 pm
“So I would take all this fear mongering with a grain of salt. ”
Yeah, you take simple math with a grain of salt.
” more than the statistics, would suggest.”
WTF are you talking about ?
Chernobyl is a wasteland not be occupied for centuries
April 19th, 2011 at 6:38 pm
actually chernobyl has a regenerating biome where nothing was predicted and its been written about. There are biologists monitoring the biome and they can’t explain why its coming back so quick.
April 19th, 2011 at 7:08 pm
Sure Brian, whatever you say.
http://www.huffingtonpost.com/2011/02/02/chernobyl-25-years-after-_n_816902.html#s233577
April 19th, 2011 at 7:09 pm
Go ahead, pitch your tent there
http://www.world-nuclear.org/info/chernobyl/inf07.html
April 20th, 2011 at 3:58 am
Ron,
What I meant about the problem being “not financial” is that it is not related to the private sector/business cycle. The statement by the S&P clearly indicated that the reasoning behind their negative outlook on the government’s credit rating is due to the lack of a workable plan by our political masters.
April 20th, 2011 at 4:08 am
Brian, the problem is primarily a one of too much spending. When the economy crashed in 2008, GDP fell about 14%. We’re still down about 8% from pre-Crash levels. Meanwhile, Uncle Sugar/Obama is spending twice as much as Bush did. On top of that, the world is becoming cooler to buying our debt. China is only buying 1-year notes when they buy any at all. Japan won’t be buying any for a very, very, very long time.
Then you have the BRICS (Brazil, Russia, India, China and South Africa) talking about using their own currencies for trade amongst themselves. The U.S. dollar is going down the drain.
April 20th, 2011 at 4:13 am
On top of all of that is the harsh reality that we probably do not truly know the full extent of the debt problem. As I have posted elsewhere, when Greece hit the skids and a full audit was done, the actual debt they ran up was several times more than what was previously thought. Same was true for Portugal, Spain, etc. The same will be true for us I suspect.
We are like the clueless wife whose husband has squandered the kid’s college fund, the next 6 months of mortgage payments and the bank account on the No. 2 horse in the 7th race at Saratoga…and LOST! She won’t learn the truth until the process server shows up with an eviction notice. In America’s case, it will be some guy from China or the IMF knocking on our door.