Egan Jones cuts U.S. credit rating again, this time from AA to AA-

Story from CNBC.

Excerpt:

Ratings firm Egan-Jones cut its credit rating on the U.S. government to “AA-” from “AA,” citing its opinion that quantitative easing from the Federal Reserve would hurt the U.S. economy and the country’s credit quality.

The Fed on Thursday said it would pump $40 billion into the U.S. economy each month until it saw a sustained upturn in the weak jobs market.

In its downgrade, the firm said that issuing more currency and depressing interest rates through purchasing mortgage-backed securities does little to raise the U.S.’s real gross domestic product, but reduces the value of the dollar.

In turn, this increases the cost of commodities, which will pressure the profitability of businesses and increase the costs of consumers thereby reducing consumer purchasing power, the firm said.

In April, Egan-Jones cuts the U.S. credit rating to “AA” from “AA+” with a negative watch, citing a lack of progress in cutting the mounting federal debt.

Moody’s Investors Service currently rates the United States Aaa, Fitch rates the country AAA, and Standard & Poor’s rates the country AA-plus. All three of those ratings have a negative outlook.

Could this have anything to do with the decision to print $40 billion a month to “stimulate” the economy? Once you’ve given up on letting businesses create jobs by lowering their taxes and removing burdensome regulations, then printing money is all you have left. But no one mistakes that for economic growth, least of all credit rating agencies.

8 thoughts on “Egan Jones cuts U.S. credit rating again, this time from AA to AA-”

  1. you can drop a business’s taxes to zero and they still won’t create any new jobs unless there’s increased demand. It’s business 101 – if you can meet the current demand with the current workforce, don’t hire. So business tax is a red herring. If there’s opportunity for profits, business will hire as many people as they need to create those revenue dollars as our country provides many means to adjust the gross income (think corporate bonuses).

    Anyways, these are the exact same credit agencies that gave mortgage backed securities that failed to register the mortgages (often given to people with no jobs/under-employed) with the county recorder of deeds and failed to give proper legal notice of assignement Triple A ratings!! Wow!! Why is what I just mentioned important?? Because without doing so, under current law, the securities technically have no collateral and no bank has legal authority to forclose, hence the reason banks like wells fargo had to robo-sign forclosures – no one knew who properly owned the mortgage.

    Not very trustworthy…

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  2. side note: I do agree that America needs to cut its spending, notably in the area that we spend more than every other nation on earth combined: defense and war and half of the 441 billion and constantly growing interest payments that are on past military spending we couldnt’ afford, so it’s a gift that just keeps on giving…

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      1. I don’t want to give obama another 4 years, but here’s the American publics options:

        healthcare
        Obama: obama care
        Romney: romney care

        defense
        Obama: auto cuts to decrease spending
        Romney: would increase spending

        bush tax cuts:
        Obama: expire top 2%
        Romney: keep them all

        The major issues that are affecting our deficit will be made worse by romney…there are no people worth voting fo

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        1. You want another $6 trillion added onto the national debt. The last six trillion wasn’t enough for you. You want another six trillion. Spending is your favorite issue and you want lots and lots and lots of spending. Especially on Solyndra! Although they are bankrupt now, there are lots more Obama fundraisers who need some taxpayer dollars!

          I’m being mean. I think that Paul Ryan is the biggest spending hawk and entitlement reformer out there. You need to vote Romney/RYAN to get the RYAN.

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          1. The vice president is a figure head only (he does vote in case of ties…). Additionally, the defense budget is the largest cause of our debt and Ryan has pledged not to cut it in any shape or form. The interest on our old debt is over 20% of our budget – most of this has come from old defense budgets. We won’t get ourselves out of a spending problem by continually electing people who want to continue unsustainable spending on items we can’t afford.

            As for Solyndra, it was a bad company to spend on but the direction was sound. All of the major oilfields we extract from were found in the 1930-1960’s. No new major oilfields have been found since. The tens of millions of barrels of oil we use daily come from approximately 10,000+ oil fields the world over. The international energy agency published a paper in 2010 named World Energy Outlook that settled (as in no one disagrees) the peak oil argument – 2006. Yes, global oil production will likely never surpass 2006 numbers. They did say harder to refine sources like bitumen, tar sands, etc will increases slightly until 2035, the return on energy investmen (ROEI) is just a fraction of what it was 20 years ago. So we know we have a looming energy problem, both in oil and coal (all of the good stuff as been used, most of the coal mined now is harder to extract hence costing more to do so and produces less energy per unit burned) yet we are doing nothing to address this issue. Its why the right favors attempting to drill in storm prone waters 3000+ ft down or in arctic areas only accessible a couple of months a year…not sound policy would you say?

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          2. I’m not sure if you know about this, but if you actually look at Romney’s plan, it’s got a 20% of GDP spending cap. Right now, that would mean that the budget would be limited to about 3.2 trillion dollars, instead of the 3.8 trillion we are spending now.

            Now tell me why Solyndra is better than a 20% of GDP spending cap.

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          3. Solyndra is no good in my opinion if memory serves me correctly as it’s bankrupt. but keeping spending at some artificial level is still no good if your spending policy is aimed only at corporate welfare for the military industrial complex while ignoring the pressing issues for society because they’re too unpleasant to address…and because addressing them will upset the large donors for those already established and dying sectors.

            But no, I didn’t know that was part of his plan…I’m still upset that he plans no cuts in military spending despite the fact that many of our military leaders are claiming that many of the projects we keep funding are no longer needed or ineffective.

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