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Moody’s Wants 25% Less Debt – In 5 Years!

From Reuters:

Moody’s says U.S. needs to find more deficit cuts

By Walter Brandimarte
August 8, 2011

NEW YORK (Reuters) – Ratings agency Moody’s repeated a warning on Monday it could downgrade the United States before 2013 if the fiscal or economic outlook weakens significantly, but said it saw the potential for a new debt agreement in Washington to cut the budget deficit before then.

With U.S. markets still to open after rival Standard & Poor’s stripped the United States of its AAA rating late on Friday, Moody’s said in a statement its own decision to affirm the AAA rating on August 2 was on the condition that further cuts were found.

"Further cuts"? Where were the first cuts? Or does Moody’s call a reduction in spending increase ‘cuts’?

"For the Aaa rating to remain in place, we would look for further measures that would result in the ratio of federal government debt to GDP, for example, peaking not far above the projected 2012 level of near 75 percent by the middle of the decade and then declining over the longer term," Moody’s analyst Steven Hess wrote in a report

Given that the US debt to GDP ratio is currently 100%, this would require the US to reduce its debt by 25% in five years. Who believes that is possible?

Questions about whether U.S. lawmakers will be able to agree on further budget savings next year lie at the center of the disagreement between the two ratings agencies.

There really should be no question about this. Democrat lawmakers won’t agree on any (further) savings in an election year.

While S&P downgraded the United States to AA-plus after last week’s debt deal fell short of its expectations, Moody’s is willing to give the government more time tackle its debt problems.

Moody’s said the United States "continues to exhibit the characteristics compatible with a Aaa rating" despite the expected further deterioration in the government’s debt metrics in the next few years.

That’s funny. We would say the US exhibits characteristics that are more like Greece.

"Over time, this status could be threatened if further measures to address the long-term fiscal situation are not adopted, but it is early to conclude that such measures will not be forthcoming," Hess said.

Mr. Hess is delusional.

This article was posted by Steve on Monday, August 8th, 2011. Comments are currently closed.

6 Responses to “Moody’s Wants 25% Less Debt – In 5 Years!”

  1. untrainable says:

    “Moody’s Wants 25% Less Debt – In 5 Years!”
    And people in Hell want ice water. That doesn’t mean they’re going to get it. And please…it is early to conclude that such measures will not be forthcoming. Have these people stuck their heads out from under their rock recently? Unless the Obama administration is removed from office, I think that assuming no measures will be taken to reduce the debt is quite sound. In fact I think that assuming Obama will begin to promote more stimulus spending the moment his face hits TV screens is a pretty good bet as well. Then Moody’s can jump on the downgrade bandwagon with a clear conscience.

  2. Petronius says:

    Gold –– the ethical barometer of government mismanagement of our fiscal and monetary systems –– surged to another record high, over $1700 this morning, the first trading day after the S&P downgrade.

    Stocks are set to fall again at the opening bell.

    The US dollar is sinking.

    Muni bonds are in line for downgrades.

    Real estate values have been destroyed.

    Actual unemployment is at 20%.

    Americans are bracing for the next, deeper phase of the recession, while Nerobama plays golf.

    Where shall we go to line up for our daily ration of cabbage?

    Have you plugged the hole yet, daddy?

    Romanus orbis ruit.

    • proreason says:

      and the people who create jobs are scared shitless, as are the people who spend money

      Nothing they can do now will change it. Nobody will believe them except their brain dead supporters who control maybe 10% of the economy (and 100% of the underground economy).

      Even their fascist favorites are scared shitless. Immelt is the primary example. Shipping jobs offshore faster than he can count his tax-free profits.

  3. Chinnubie says:

    Can anyone with a brain that works honestly think this administration will do anything to curb spending? He is on the right track as far as he’s concerned. He’s correcting all of the evil that has been done to all of the minorities this country has been taking advatage of for 235 years. How dare we low-rent unwashed masses want all of these horrible rich folks to continue to keep on taking advantage of our good natures. Don’t we all want to live in complete and ever-loving mediocrity. We must all submit to all knowing government because we are far to ignorant to know how to manage our lives.

    • tranquil.night says:

      Chinnubie’s savvy to the game. They are a one note pony: taxes. That’s all their plan is, it’s all their interested in getting more of to redistribute among their discontented power bloc. The power to tax is the power to rule.

      When the regime puts out some talking point about the Boosh tax cuts for the rich costing the government xxx trillions of dollars, it’s faulty numbers based on static analysis that completely ignores basic human economic behavior when someone starts taking more and more of the product of their work away. They stop producing as much, or they hide their wealth.

      Class warfare, baseline budgets to insure that government always is growing (even as they say that they’re cutting it), static analysis to fool the rubes with the continuing illusion that they have any clue what they’re talking about when they don’t, and hidden taxation – from taxes in ObamaCare to absurd Corporate tax rates. It all gets passed on to you, the consumer.

      Doc0 has a great write up of the tactics we can expect from Barry and the Left over the course of the next year. More of the same: http://www.humanevents.com/article.php?id=45386

    • proreason says:

      Doc0’s article should be required reading, tn.

      But he missed a big one that is hardly ever discussed.

      There is a huge tax burden that is imposed totally separate from the tax code. There are plenty of ways the government taxes you in ways you are totally unaware of:

      – every medical service in the country is more expensive because medicare underpays providers. So the providers simply tack those costs onto everything else, which you then pay
      – states are required to fund most of medicaid. You don’t pay any federal tax for this at all. But somehow, within your state you are paying for it, either by state income tax, sales tax, or fees of some sort
      – the governments refusal to allow drilling increases the cost of energy by a huge amount. This alone probably approaches the entire amount of federal income tax collected
      – QE1,2,3,…..all are taxes. You will pay it tomorrow in increased prices for everything you buy.
      – The debt. Another undeclared tax. It will eventually be paid by you or your descendents. Don’t be fooled because it isn’t deducted from your paycheck today.
      – there must be hundreds of other slimey ways to get money out of you

      I believe the overall tax burden in this country is probably well over 50% right now. 3.8T in federal spending (which you MUST eventually pay). State and Local spending was about 3T in 2007 (guess what it must be now). The hidden taxes/burdens I described are at least 1T. GDP is about 15T. Government overhead = 7.8T / 15T = 52% (minimum).

      Now, if governement is spending 52% of the GDP, where do you think that money comes from? The air, Mars, the rich, other countries, Warren Buffet? No, it comes from you, via current or future taxes.

      We’re in deep dodo.


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