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S&P downgrade: was there a two trillion dollar error or not?

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spanone Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:44 PM
Original message
S&P downgrade: was there a two trillion dollar error or not?
i really can't find anything that confirms or denies this.

if it's true, two trillion is serious money.
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Poll_Blind Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:47 PM
Response to Original message
1. From what I read the "error" was actually S&P predicting that the Bush tax cuts will be extended.
WH claimed that was not going to happen. Conflict, hilarity and knife-fighting ensue. I only heard one conflicting report, which was very vague, and said "there was an error in calculating Americans' discretionary spending"- which might very well be a fancy way of talking about the Bush Tax Cuts eating into America's pocketbook- I dunno.

PB
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Uncle Joe Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:57 PM
Response to Reply #1
5. Then it will depend on the 2012 elections because if the Republicans, particularly
the Astroturf Tea Party maintains or increases their hold on Congress, those tax cuts on the mega-wealthy will be extended and the S & P analysis will be correct.

As a side note I wonder how well United States Congressman Cantor's shorting of U.S. Treasuries investment is doing?
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daa Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:50 PM
Response to Original message
2. Absolutely, they used the wrong baseline. After they were told
about it they changed the reason for the downgrade and went ahead.

They are crooks. They caused the crisis and have zero credibility. Do you think that the UK is triple A and the US is not? S&P is almost never correct.
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Rosco T. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:51 PM
Response to Original message
3. Yes, there was, yes S&P admitted it, yes they downgraded anyway... n/m
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former9thward Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:32 PM
Response to Reply #3
12. No they did not admit it. The head of S&P, Beers, said on the news there was no error.
Edited on Mon Aug-08-11 01:34 PM by former9thward
http://am.blogs.cnn.com/2011/08/08/standard-poors-beers-we-stand-by-our-decisions-to-downgrade-u-s-debt/
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Rosco T. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 03:09 PM
Response to Reply #12
13. Yes, they did
http://www.pressdisplay.com/pressdisplay/viewer.aspx

"Sources familiar with conversations between S&P and the Obama administration, who spoke on the condition that they not be otherwise identified, said S&P acknowledged the error but issued its downgrade nonetheless. "
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former9thward Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 03:43 PM
Response to Reply #13
14. You have given an anonymous third hand source
I gave a video and statement from the head of S&P. Believe whom you want.
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Rosco T. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 05:00 PM
Response to Reply #14
17. Were his lips moving?
answer your own question.
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former9thward Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 05:14 PM
Response to Reply #17
18. Who is your gutless anonymous source?
That's right we can't see what his lips are doing at all, can we?
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Rosco T. Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 05:33 PM
Response to Reply #18
19. What is your fricking problem? Defending S&P for fracking up???
Try googling, it's all over the grid

THEY MADE A MISTAKE, then changed their 'reasoning' from finacial to 'policy actions' to cover their asses.
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former9thward Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 06:53 PM
Response to Reply #19
21. I'm not defending anyone. I just like facts once in a while.
You posted they "admitted" they made a mistake. They simply made no admission and I showed that. You may not like their math but that is not the point. Moody's just issued a strong statement. They will be next to do a downgrade. Will you say they are screwed up too? All this S&P crap is just a shoot the messenger of bad news instead of having the guts to deal with the problem.
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originalpckelly Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 12:53 PM
Response to Original message
4. No, it's just a way the government wants people to look at its books.
S&P chose not to look at it that way, and even with the error, their chief sovereign debt analyst reports the same downgrade would have happened.

It's just our government trying to put a hole in a legit assessment.
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Riftaxe Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 04:31 PM
Response to Reply #4
16. Which one is doing the Arthur Anderson
standards of accounting though?
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dipsydoodle Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:00 PM
Response to Original message
6. Does it matter.
:shrug:
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spanone Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:06 PM
Response to Reply #6
9. it might be useful to know if we're going down for the truth or a lie
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dipsydoodle Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:15 PM
Response to Reply #9
10. What I meant
was that the maths error may be incidental.
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dtexdem Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:05 PM
Response to Original message
7. A $2 trillion error? No, a multitrillion dollar terror campaign.
Standards are Poor has shown how ideology trumps its economic calculations.
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lonestarlib Donating Member (178 posts) Send PM | Profile | Ignore Mon Aug-08-11 01:06 PM
Response to Original message
8. Doesn't matter. It's not an economic downgrade--purely
political.
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Yo_Mama Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 01:23 PM
Response to Original message
11. S&P Was working off CBO material
Use your own judgment - here is the 4-15 analysis of President Obama's proposed budget:
http://www.cbo.gov/ftpdocs/121xx/doc12130/04-15-AnalysisPresidentsBudget.pdf

Now here was what CBO found:

As a basis for analyzing the President’s budget, CBO updated its baseline budget projections, which were last issued in January 2011. Unlike its estimates of the President’s budget, CBO’s baseline projections largely reflect the assumption that current tax and spending laws will remain unchanged. Under that assumption, CBO estimates that the deficit will total $1.40 trillion in 2011— $81 billion less than the agency estimated in January. For the following 10 years (2012 to 2021), CBO now projects a cumulative deficit of $6.7 trillion—$234 billion less than the amount in the previous baseline.


So CBO's baseline, which includes the expiration of the Bush tax cuts, no Alternative Minimum Tax fix, etc, yields cumulative deficit of 6.7 trillion over the next decade.

So now we come to the CBO scoring of the president's proposal:

In all, deficits would total $9.5 trillion between 2012 and 2021 under the President’s budget (or 4.8 percent of total GDP projected
for that period)—$2.7 trillion more than the cumulative deficit in CBO’s baseline. Federal debt held by the public would double under the President’s budget, growing from $10.4 trillion (69 percent of GDP) at the end of 2011 to $20.8 trillion (87 percent of GDP) at the end of 2021.


Now since President Obama didn't propose letting the Bush tax cuts expire, and since in fact he pushed for and signed a bill to extend them until 2013:
http://www.washingtonpost.com/wp-dyn/content/article/2010/12/16/AR2010121606200.html

I think S&P would have been a bit dumb to assume that the Bush tax cuts would expire. Also S&P's estimates of Debt/GDP were higher because of recent GDP revisions.
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Unvanguard Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Aug-08-11 03:46 PM
Response to Original message
15. Yes. The motive for the downgrade was political, not economic.
They're not even wrong about their political analysis; they just failed to realize that the economic fundamentals of the situation outweigh the political factors.
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True Earthling Donating Member (373 posts) Send PM | Profile | Ignore Mon Aug-08-11 05:41 PM
Response to Original message
20. The error was $2T difference in the deficit in 2020 which is projected to be around $79T
It's like being pissed at a cop for saying your car was clocked at 96 mph in a 55 zone and you insisting you were only going 94 mph.
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