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softaire 18-Oct-12, 14:08	Pimco: US Will Be Downgraded Again Amid Fiscal ‘Theater' Here are more results of our disasterous last four years... can you imagine what it will be like after four more? ****************************************************************** The U.S.’s sovereign credit rating will be cut as “fiscal theater” plays out in the world’s biggest economy, according to Pacific Investment Management Co., which runs the world’s biggest bond fund. “The U.S. will get downgraded, it’s a question of when,” Scott Mather, Pimco’s head of global portfolio management, said at a briefing in Wellington, New Zealand. “It depends on what the end of the year looks like, but it could be fairly soon after that.” The Congressional Budget Office has warned the U.S. economy will fall into recession if $600 billion of government spending cuts and tax increases occur at the start of 2013. Financial markets are complacent about whether the White House and Congress will reach agreement on deferring the so-called fiscal drag on the economy until later next year, Mather said. In a “base case” of Barack Obama being re-elected and Congress becoming more Republican, there is a high likelihood an agreement “doesn’t happen in a nice way, and we have disruption in the marketplace,” he said. Policy makers probably will agree on cutbacks that would lower economic growth by about 1.5 percentage points next year, Mather said. They may roil markets by discussing scenarios that would lead to a 4.5 percentage-point fiscal drag, he said. Standard & Poor’s cut the U.S. credit rating to AA+ from AAA on Aug. 5, 2011. Since that time, benchmark Treasury yields have dropped to record lows. Credit-default swaps tied to U.S. debt, which typically fall as investors’ perceptions of creditworthiness rise and increase as they deteriorate, have dropped to 31.4 basis points from 55.4 basis points on the day of S&P’s downgrade and a record 100 in February 2009, according to data provider CMA. The firm is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. S&P last week cut Spain’s debt rating to BBB-, the lowest investment grade, and placed it on negative outlook. “Almost all sovereigns with poor debt dynamics are going to get downgraded, we’re just talking about the pace,” Mather said. Credit rating companies “have been slow in downgrading some sovereigns, but we think the pace probably picks up in the year ahead.” Pimco forecasts global growth of 1.75 percent in the year through September 2013, weighed down by a eurozone recession and a slowing pace of expansion in China. ‘Dismal Outlook’ “It’s a pretty dismal world growth outlook,” Mather said, adding that it will be difficult to return to former levels of growth in many of the world’s biggest economies because of the levels of debt, structural changes in the labor market and slower growth in the working age population. Those changes mean that a 2 percent expansion in the U.S. may in the future be seen as good growth, not the 3 percent that investors have been used to, he said. It is difficult to see China’s growth continuing at a 7 percent pace, considering demographic changes and the challenge of maintaining expansion as the economy moves to a domestic consumption model from one based on exports, he said. China’s economy probably expanded 7.4 percent in the three months ended Sept. 30 from a year earlier, slowing for a seventh quarter, according to the median estimate in a Bloomberg News survey of economists. Read more: Pimco: US Will Be Downgraded Again Amid Fiscal ‘Theater' www.moneynews.com
illinawek 18-Oct-12, 15:22	Let's hope Romney wins so that the "debt ceiling" can be raised without a lot of BS.
chaz5 18-Oct-12, 16:07	Illi ... ... so, you don't think the Dems won't create their own tit-for-tat hurdles?
deadofknight 18-Oct-12, 16:16	Chaz makes a very good point. Illi…are you saying you won't complain then? Because when Obama was running for office he called the debtand our deficits unpatriotic… now that they are his…it is all good… until we get a Republican president, when Dem's will return to the debt and deficit as an issue of enormous magnitude and it will once again be unpatriotic. Own the issue in one direction…because chaz hit the nail on the head. And I doubt Progs will remain fiscally stable on this issue. DOK
dmaestro 18-Oct-12, 22:36	Bush's deficits and economic collapse are what restrained the stimulus necessary to recover and grow the economy to gain revenue to bring down the deficit. Obama's plans required a sound economy to carry out. The GOP knew this in Dec 2008, and the GOP has totally played politics with the economy just as Obama was warned in Jan 2008 but blew off. IF only Clinton was in office they would have been outed because Clinton could have explained this in plain English, but Professor Obama let them get away with it. I realize conservatives will never admit the truth about Bush and are ignorant of mainstream economics and the damage he did. But eventually historians will rightly blame him for the American decline. If it takes tit for tat to block conservatives, absolutely, we have been far too passive in dealing with the right wing threat. If Romney wins, they will do the same thing every modern GOP president has done, stimulate the economy while pretending not to do so and falsely claiming conservative economics did it. Long term the US is headed for disaster. The defict was never patriotic, dok. I am disgusted you actually use such nonsense in arguments. But deficits are needed to stabilize the economy. The fact is that a better designed stimulus of twice the size, about $1.6T, was needed in Feb 2008 to get to a decent recovery, as even Jon Huntsman said in criticizing Obama. All this is a waste of time. Carry on...
illinawek 19-Oct-12, 05:14	DOK The Democrat party loves the country too much to destroy the full faith and credit of the United States over a pissing match. Only one party and one party alone would do such a thing.

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