By Bonnie K. Goodman
Ms. Goodman is the Editor of History Musings. She has a BA in History & Art History & a Masters in Library and Information Studies from McGill University, and has done graduate work in history at Concordia University.
OBAMA PRESIDENCY & THE 112TH CONGRESS:
G7 says committed to ensure liquidity, support markets: The Group of Seven nations is committed to taking coordinated action to ensure liquidity and to support financial market functioning, financial stability and economic growth, G7 finance ministers and central bank governors said in a statement…. – Reuters, 8-7-11
“These actions, together with continuing fiscal discipline efforts will enable long-term fiscal sustainability. No change in fundamentals warrants the recent financial tensions faced by Spain and Italy. We welcome the additional policy measures announced by Italy and Spain to strengthen fiscal discipline and underpin the recovery in economic activity and job creation.” — G7 Statement
“It takes awhile. Our concerns are centered on the political side and on the fiscal side. It would take a stabilization of the debt as a share of the economy and eventual decline, and it would take, I think, more ability to reach consensus in Washington than what we’re observing now.” — John B. Chambers, the managing director of Standard & Poor’s
“Raising taxes is what ‘balanced plan’ means, that is plain to every American by now. The administration wants to raise taxes so they can permanently implant a larger level of spending. They have increased domestic discretionary spending 24 percent in two years. This is unthinkable. So we’ve got a problem — we’ve got to bring that spending down, not increase the burden on the private sector.” — Senator Jeff Sessions of Alabama, the top Republican on the Senate Budget Committee
“One has to find understandable their pessimism about our inability to come together on the most important issue facing our country, which is how do we create jobs. We need a balanced approach and the extremism, the Tea Party obstructionism here in Washington, is keeping us from restoring that balanced approach America has always used of investing in the future, investing in job creation, and also being fiscally responsible at the same time.” — Gov. Martin O’Malley of Maryland, the chairman of the Democratic Governors Association on the ABC program “This Week”
“Republicans are having to respond to this very, very strident group that is pulling them away and believes that compromise is a dirty word. That is a prescription for failure.” — David Axelrod, Obama’s longtime political adviser on the CBS program “Face the Nation”
“The Tea Party hasn’t destroyed Washington — Washington was destroyed before the Tea Party got there. The hope is that the Tea Party and middle-of-the-road people can find common ground to turn this country around before we become Greece. I hope we can.”
“People are not creating jobs in this country because they think Howard Dean is going to raise their taxes. If you want to create jobs, don’t raise anyone’s taxes. Try to lower spending like the Tea Party and other people up here want.” — Senator Lindsey Graham, Republican of South Carolina
“I think the Standard & Poor’s downgrade is a good thing because I think it underlines the fact that you cannot get out of this without raising revenues. You cannot get out of this without raising revenues. It is impossible, and the vast majority of the American people want us to raise revenues — particularly on all those gazillionaires the Republican tax cuts mostly benefit.” — Howard Dean, the former Vermont governor and former chairman of the Democratic National Committee
“Clearly, I’m not very surprised by this downgrade. We more or less saw this coming because we’re on the wrong fiscal path. We’ll find out tomorrow what kind of spike in rates we’re going to get. But, obviously, not only does it hurt the federal government in its ability to close the deficits, but it hurts people. You know, car loans, home loans, all these things are going to go up. And so, it’s because Washington has not gotten its fiscal house in order. To me, this is more vindications of our action.” — Representative Paul D. Ryan of Wisconsin, the Republican chairman of the House Budget Committee on “Fox News Sunday”
“I think it’s really — it’ll sound strange for me to say it — an outrageous move. The government can pay its debts. It’s legally obligated to do so. It’s got the wherewithal to do it. In a larger sense about the economy, I think the U.S. economy is in a perilous state. This recovery has been the worst from a severe recession since the Great Depression, but I am surprised S.& P. would play politics. The U.S. government can pay the interest and principle on the bonds.” — Steve Forbes, the chief executive of the company that publishes Forbes magazine and a former Republican presidential candidate on the CNN program “State of the Nation”
Candidates Give Obama an F for AA+ Rating: The Republican presidential candidates on Saturday seized on the first-ever downgrade of the nation’s credit rating as a new line of criticism against President Obama, suggesting that ultimate responsibility rested in the Oval Office even though the rating agency, Standard & Poor’s, cited the overall political gridlock in Washington as a major cause for its decision…. – NYT, 8-6-11
“It happened on your watch, Mr. President. You were AWOL. You were missing in action…. I’m calling on the president of the United States to come back to the White House, address the American people before the markets open on Monday and give us his positive plan for putting the ratings back up to the AAA rating…. Last night, we had our day of reckoning. Eventually it hits the fan…. “The responsibility is of those in Washington, D.C., who put the deal together. But the real problem in all of this is that President Obama has failed to give leadership on this issue.” Michele Bachmann, the Minnesota representative and Tea Party caucus leader
“What we should be talking about is downgrading Barack Obama from president of the United States.” — Former Gov. Tim Pawlenty of Minnesota campaigned in Grinnell on Saturday
- At a glance: The US credit downgrade: Markets around the world are set to react Monday to the downgrade of the U.S. credit rating Friday. A look at the downgrade, why it happened and what it means:
Credit rating agency Standard & Poor’s lowered the U.S. government’s credit rating for the first time Friday, from the top AAA rating to AA+. That affects long-term debt, which means government securities that have terms of more than one year.
WHY THE DEBT WAS DOWNGRADED:
S&P blamed political deadlock in Washington that threatens to keep the country from dealing effectively with its debt.
WHAT IT MEANS FOR THE GOVERNMENT:
In theory, a lower credit rating should lead to higher interest rates for U.S. debt. Buyers of government securities can demand higher rates because the lower rating means they are taking on more risk. In reality, Treasury bonds will still be considered among the safest and most liquid investments in the world, and any rise in rates is likely to be muted…. – AP, 8-7-11
- Asian stock markets sink after US credit downgrade: Asian stocks nose-dived Monday as the first-ever downgrade of the U.S. government’s credit rating jolted the global financial system, reinforcing fears of a rapid slowdown in economic growth.
Oil prices extended recent sharp losses, trading below $84 a barrel on expectations that weaker global growth will crimp demand for crude. The dollar was lower against the yen and the euro.
Among the major Asian markets, Hong Kong’s Hang Seng tumbled 4 percent to 20,100.20 and South Korea’s Kospi crumpled 6.7 percent to 1,814.100. Japan’s Nikkei 225 stock average dropped 2.5 percent to 9,067.88.
Futures pointed to losses on Wall Street when it opens Monday. Dow futures were off 258 points, or 2.3 percent, at 11,144 and broader S&P 500 futures shed 28.8 points, or 2.4 percent, to 1,169.00.
“It’s not Armaggedon, but it feels like it,” said Hong Kong-based analyst Francis Lun, adding that he foresees the territory’s Hang Seng index to sink below 19,000 — a decline of a further 5 percent — before making any kind of comeback…. – AP, 8-8-11
- Asian stocks slide after US debt downgrade: Asian stocks fell on Monday after last week’s historic downgrade of the United States’ credit rating, which compounded concerns over the world’s biggest economy as well as the global outlook.
The falls were echoed by big losses in oil while gold surged to another record as investors moved out of risky assets…. – AP, 8-8-11
- Geithner says he will stay at Treasury: Timothy Geithner has told President Barack Obama that he will remain on the job as Treasury secretary, ending speculation he would leave the administration…. – AP, 8-7-11
- U.S. Stock Futures Fall on S&P Downgrade: U.S. stock futures declined, following the biggest weekly drop in the Standard & Poor’s 500 Index since 2008, amid concern that a downgrade of the nation’s credit rating by S&P may worsen an economic slowdown.
S&P 500 futures expiring in September declined 2.1 percent to 1,172.3 at 7:03 a.m. in Tokyo. Dow Jones Industrial Average futures lost 253 points, or 2.2 percent, to 11,149.
The downgrade threatens to extend a rout in U.S. stocks that wiped out $1.94 trillion in market value and erased the S&P 500’s gain for the year. S&P lowered the U.S. long-term rating one level to AA+ after markets closed on Aug. 5 while keeping the outlook at “negative” as the ratings company becomes less confident Congress will end Bush-era tax cuts or tackle entitlements…. – Businessweek, 8-7-11
“This is a problem that has to be addressed by the full spectrum of political parties. You’ve got a position here where the debt is on a rising share if you measure it against GDP. The plan that has been put forward and we think will be adopted gets you part of the way there but it doesn’t get you all the way there. And we don’t see in the next few years a consensus forming that will get you the rest of the way.” — John Chambers, chairman of Standard & Poor’s sovereign debt committee
- S&P’s Chambers Says U.S. Debt Problems Need Bipartisan Solution: U.S. lawmakers need to come together as they did for a 1980s overhaul of Social Security and compromise on the medium-term consolidation of the country’s fiscal position, said John Chambers, chairman of Standard & Poor’s sovereign debt committee…. – Bloomberg, 8-7-11
- G7 gives first sign ready to battle crisis: Political and financial leaders gave their first sign of readiness to battle a debt crisis gone global when the European Central Bank signaled on Sunday it would start buying Italian and Spanish debt, a critical move to quell a bond rout that has rocked financial markets.
The European Central Bank decision would be aimed at calming markets grown increasingly doubtful about Europe’s ability to deal with its debt issues, a strikingly parallel concern to that which led ratings agency Standard & Poor’s to knock U.S. debt down from “risk free” AAA status to AA-plus.
Meanwhile, finance chiefs from Group of Seven industrial nations were to confer by telephone late on Sunday– and possibly issue a statement afterward — to try to soothe anxious investors after a week in which $2.5 trillion of market value was wiped out…. – Reuters, 8-7-11
- Dollar Weakens to Record Versus Franc as S&P Lowers U.S. Rating: The dollar dropped to a record low against the Swiss franc and fell for a second day versus the yen after Standard & Poor’s downgrade of the U.S. added to concern the fiscal health of the world’s biggest economy is slipping.
The greenback weakened against the euro before the Federal Reserve meets tomorrow on monetary policy after S&P cut the U.S. one level on Aug. 5. The euro also advanced after the European Central Bank signaled it’s ready to start buying Italian and Spanish bonds to curb the region’s debt crisis. The yen gained against most major peers as Asian shares slid for a fifth day, supporting demand for Japan’s currency as a refuge…. – Bloomberg, 8-8-11
- U.S. 10-Year Treasury Yield Retraces Decline: Benchmark 10-year U.S. Treasury bonds retraced early losses Monday to rise above Friday’s closing levels, despite the unprecedented downgrade by Standard & Poor’s of its rating on U.S. government debt.
Analysts said a pledge early Monday from the Group of Seven industrialized nations to prevent market volatility, along with concerns about the euro-zone debt crisis and the possibility of a global economic downturn, was keeping demand for Treasurys strong…. – WSJ, 8-8-11
- What the Move on U.S. Credit Means for Everyday Investors: The move by Standard & Poor’s to cut the U.S. credit rating to double-A-plus added more uncertainty to global markets already buffeted by concerns over debt crises and slowing economic growth. Here are answers to some of the most important questions facing investors…. – WSJ. 8-7-11
- How to Get That AAA Rating Back: Reagan inherited economic problems and fixed them. Obama’s strategy is to blame Bush and Standard & Poor’s…. – WSJ, 8-7-11
- S&P executive: 1 in 3 chance of future downgrade: A top political adviser to President Barack Obama blamed the downgrade of the U.S. credit rating on tea party Republicans, whom he said were unwilling to compromise on how to reduce the federal debt.
Obama campaign strategist David Axelrod told CBS’ “Face the Nation” on Sunday that the decision by the Standard & Poor’s credit agency to downgrade the U.S. from AAA to AA+ for the first time was strongly influenced by weeks of standoff between Democrats and Republicans over the debt…. – AP, 8-7-11
- Greenspan sees stock market drop after downgrade: Former Federal Reserve Chairman Alan Greenspan says he expects the stock market slide to continue in the wake of a decision by credit rating agency Standard & Poor’s to downgrade the U.S. credit rating.
Appearing Sunday on NBC’s “Meet the Press,” Greenspan said markets will take time to bottom out and that he expects a negative reaction on Monday to the S&P action…. – AP, 8-7-11
- Kerry, McCain say bipartisan work needed post-S&P downgrade, differ on who to blame: Two senators and former presidential candidates say Standard & Poor’s decision to downgrade the U.S. credit rating speaks to the need for more bipartisan compromise — but they also say the blame lay with the other party.
John Kerry was the Democratic nominee for president in 2004, and John McCain was the Republican nominee in 2008.
Appearing Sunday on NBC’s “Meet the Press,” Kerry called S&P’s decision a “tea party downgrade.” The Massachusetts Democrat says he believes that tea party supporters in the House are holding up progress.
McCain says he too would like to see more cooperation, but the Arizona Republican says President Barack Obama is at fault. McCain says the president failed to lead and did not present a clear plan during the debt-ceiling debate…. – AP, 8-7-11