Thursday, June 13, 2013

The Intimidation Factor In S&P's Sunnier Outlook

     In August of 2011, Standard and Poor's, the oldest credit ratings agency in the U.S., downgraded the financial worthiness of the United States government under the Obama administration, it was the first time in history the U.S. lost its triple A rating. Just last week, S&P upgraded its outlook for the U.S. government's credit worthiness, stopping short of returning it to its former triple A status. Its sunnier outlook has more to do with government intimidation than it does with sound fiscal principles. The credit worthiness of the U.S. government is in no better shape than it was two years ago, and a good case can be made that it has continued to deteriorate.
     The federal government has added two trillion more dollars in debt over the last two years, the federal reserve has been buying 85 billion dollars a month in government bonds to keep the rates historically low and the Obama administration has still not shown that it is anywhere close to being serious about submitting a responsible budget. Not to mention that the economy has over 8 million fewer workers participating in it over the last four and half years. Over that same period, the U.S. economic growth rate on average is less than two percent, which is not enough to keep the government from borrowing billions every day, let alone paying off the 17 trillion dollars it has racked up in total, almost half of which has come since Barack Obama took the oath of office in January of 2009.
     In addition to the aforementioned bad news, the ticking time bomb that Federal Reserve Chairman, Ben Bernanke, has set in motion is about to explode. When the trillions of dollars in printed money he has pumped into the markets will have to be pulled out in the next six to eighteen months, interest rates will skyrocket along with inflation. The faltering economy, driven by a weak employment market, will falter even more as ObamaCare is fully implemented and kills even the pathetic job growth we currently have, as companies will trim work forces to avoid the ObamaCare requirements.
     I fail to understand why Standard and Poor's sees any of this as reason to upgrade the outlook of  the U.S. credit health. Maybe their sunnier outlook is a result of the government investigations that they have had to endure since their downgrade of U.S. credit worthiness in 2011. It was an embarrassment for the Obama administration that they could not blame on their predecessors, they owned the first U.S. credit downgrade in history lock, stock and barrel. At the time of the historic downgrade, the Obama administration had been in charge for two and a half years and had added almost as much debt during that period as President Bush had added in eight years. To make matters worse, the Obama White House had not submitted a budget during their entire time in office (and after some 54 months, still have not fulfilled their Constitutional duty to do so).
     When S&P rightly saw the danger in the administration's handling of the nation's finances, the Obama gang said it was politically motivated and used the power of the government that they controlled to investigate the agency. And this use of government bureaucracies to intimidate private citizens and organizations, seems to be the modus operandi for this administration. And the banana republic Barack Obama is creating feeds on the hollowed out carcass of what use to be a free nation that was a safe haven for liberty.

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