Moody's threatens US AAA rating

[Topspin]

Reducing Deficit Key to US Rating: Moody's
Published: Thursday, 22 Oct 2009 * 4:07 AM ET Text Size By: Reuters
The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday.


The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances.

The White House has forecast deficits of more than $1 trillion through fiscal 2011.

"The Aaa rating of the U.S. is not guaranteed," said Steven Hess, Moody's lead analyst for the United States said in an interview with Reuters Television. "So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy."


Source: usdebtclock.org
--------------------------------------------------------------------------------


Moody's [MCO 25.11 0.17 (+0.68%) ] has a stable outlook on the U.S. rating, which indicates a change is not expected over the next 18 months.

Earlier this year, financial markets were spooked by concerns about the risk of the United States losing its top rating after Standard & Poor's revised its outlook on Britain to negative from stable, indicating the risk of a downgrade.

Hess said that reducing the budget deficit would be a challenge.

"Raising taxes is never popular and difficult politically so we have to see if the government can do that or cut expenditure," he said while adding it would be tough to reduce expenditure.

 

[Bonestorm]

Fuck Moody's.

WASHINGTON -- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets."

As Congress tackles the broadest proposed overhaul of financial regulation since the 1930s, however, lawmakers still aren't fully aware of what went wrong at the bond rating agencies, and so they may fail to address misaligned incentives such as granting stock options to mid-level employees, which can be an incentive to issue positive ratings rather than honest ones.

The Securities and Exchange Commission issued a blistering report on how profit motives had undermined the integrity of ratings at Moody's and its main competitors, Fitch Ratings and Standard & Poor's, in July 2008, but the full extent of Moody's internal strife never has been publicly revealed.

Moody's, which rates McClatchy's debt and assigns it quite low value, disputes every allegation against it. "Moody's has rigorous standards in place to protect the integrity of ratings from commercial considerations," said Michael Adler, Moody's vice president for corporate communications, in an e-mail response to McClatchy.

Insiders, however, say that wasn't true before the financial meltdown.

"The story at Moody's doesn't start in 2007; it starts in 2000," said Mark Froeba, a Harvard-educated lawyer and senior vice president who joined Moody's structured finance group in 1997.

"This was a systematic and aggressive strategy to replace a culture that was very conservative, an accuracy-and-quality oriented (culture), a getting-the-rating-right kind of culture, with a culture that was supposed to be 'business-friendly,' but was consistently less likely to assign a rating that was tougher than our competitors," Froeba said.

After Froeba and others raised concerns that the methodology Moody's was using to rate investment offerings allowed the firm's profit interests to trump honest ratings, he and nine other outspoken critics in his group were "downsized" in December 2007.

* * *

Read the whole thing here:

http://www.mcclatchydc.com/227/story/77244.html

 

[DamnYankee]

Its been way below AAA for about 6 months now. The dollar is no longer the monetary standard that it once was. US investment companies have been trying to prop it so once it falls it will fall fast.

 

[Cancel 2016.2]

Reducing Deficit Key to US Rating: Moody's
Published: Thursday, 22 Oct 2009 * 4:07 AM ET Text Size By: Reuters
The United States, which posted a record deficit in the last fiscal year, may lose its Aaa-rating if it does not reduce the gap to manageable levels in the next 3-4 years, Moody's Investors Service said on Thursday.


The U.S. government posted a deficit of $1.417 trillion in the year ended Sept. 30 as the deep recession and a series of bank rescues cut a gaping hole in its public finances.

The White House has forecast deficits of more than $1 trillion through fiscal 2011.

"The Aaa rating of the U.S. is not guaranteed," said Steven Hess, Moody's lead analyst for the United States said in an interview with Reuters Television. "So if they don't get the deficit down in the next 3-4 years to a sustainable level, then the rating will be in jeopardy."


Source: usdebtclock.org
--------------------------------------------------------------------------------


Moody's [MCO 25.11 0.17 (+0.68%) ] has a stable outlook on the U.S. rating, which indicates a change is not expected over the next 18 months.

Earlier this year, financial markets were spooked by concerns about the risk of the United States losing its top rating after Standard & Poor's revised its outlook on Britain to negative from stable, indicating the risk of a downgrade.

Hess said that reducing the budget deficit would be a challenge.

"Raising taxes is never popular and difficult politically so we have to see if the government can do that or cut expenditure," he said while adding it would be tough to reduce expenditure.

given that Moody's is one of the rating agencies that rated the bulk of the CDO's 'AAA' I don't think anyone should bother paying attention to them any more. How the hell can we trust them with ratings? I am shocked the idiots at Moody's and S&P haven't been tossed in jail for that bullshit.

 

[Topspin]

given that Moody's is one of the rating agencies that rated the bulk of the CDO's 'AAA' I don't think anyone should bother paying attention to them any more. How the hell can we trust them with ratings? I am shocked the idiots at Moody's and S&P haven't been tossed in jail for that bullshit.

I'm with you 100%, I posted it as a bit of Irony. Obama wants more realism in ratings. And one of the first things he gets is a threat of a downgrade of our debt based on his drunken fleet of sailors spending.

 

[FUCK THE POLICE]

Its been way below AAA for about 6 months now.

Stupid.

 

[Bonestorm]

I'm with you 100%, I posted it as a bit of Irony. Obama wants more realism in ratings. And one of the first things he gets is a threat of a downgrade of our debt based on his drunken fleet of sailors spending.

There is no irony. Moody's threat is a direct response to the latest information on how they were pumping up the bubble when they should have known better and the government and others may hold them to account for their deceptive ratings.

 

[Topspin]

There is no irony. Moody's threat is a direct response to the latest information on how they were pumping up the bubble when they should have known better and the government and others may hold them to account for their deceptive ratings.

Please change your name to Captain Obvious.

 

[Bonestorm]

Please change your name to Captain Obvious.

Well, you are either confused about what is or it wasn't obvious to you. Pick one.

 

[Topspin]

Well, you are either confused about what is or it wasn't obvious to you. Pick one.

I'm calling it Ironic that the first thing I hear from Moody's after the gov berates them is a downgrade of the gov debt.
If you dissagree fine, I find it quit Ironic.

 

[TuTu Monroe]

Its been way below AAA for about 6 months now. The dollar is no longer the monetary standard that it once was. US investment companies have been trying to prop it so once it falls it will fall fast.

Yep....and it will fall with a big bang.