Moody's threatens to downgrade US treasury bonds

Submitted by bizgrrl on Mon, 2010/02/08 - 1:16pm

Bond rating agency Moody's on Wednesday warned that the triple-A rating of U.S. treasury bonds could be in peril unless the U.S. reduces its federal budget deficit or the economy rebounds.

"Absolutely not," Mr. Geithner said in an interview with ABC News's "This Week" when asked about the prospect of the U.S. losing its top rating. "That will never happen to this country."

Why does Geithner not give me confidence? Why does Moody's want to manipulate the economy with scare tactics?

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Geithner

Submitted by EricLykins on Mon, 2010/02/08 - 2:03pm.

Why does this not give you confidence?

Regarding prospects for an overhaul of the financial regulatory system, Mr. Geithner said President Barack Obama was committed to ensuring that Congress enacts tough measures recommended by former Federal Reserve Board Chairman Paul Volcker to reduce risk-taking by the nation's largest banks. "I am very confident we're going to be able to do that," Mr. Geithner said.

Maybe because you realize that the ghost of Paul Volcker visited Congress Present last Tuesday.
crickets:

H(Sen. Shelby) also doesn't like how the administration "air dropped" the Volcker Rule into the mix when Capitol Hill is already working on the reforms presented by the Treasury Department. Sen. Dodd echoed this adding that the rule was "excessively ambitious" to the point that it could stall all reform.

Complaining about the timing is rich coming from a do-nothing legislature that has failed to move on those reforms more than 16 months after the failure of Lehman Brothers. Moreover, ambition – to create a response equal to the crisis we've endured – isn't stalling reform. It is real reform.

But that's how it is in Washington these days. Unlike the Congress of the 1930s this body is more beholden to politics than to reforming a broken system that has put the American economy in a hole so deep the competitiveness of every American industry is now in question.

History be damned, they told Mr. Volcker. Even if we're doomed to repeat it.

Moody's. Hmmm. Isn't that one

Submitted by R. Neal on Mon, 2010/02/08 - 2:07pm.

Moody's. Hmmm. Isn't that one of those bond/credit rating companies that gave AAA ratings to subprime mortgage backed junk bonds?

Isn't that one of those rating companies that gets paid by bond issuers to rate the issuer's own bonds?

Oh, wait. I believe it's also one of those rating companies that Congress is talking about regulating the hell out of, and, among other things, make it easier for investors to sue them for negligent bond ratings.

yup

Submitted by gonzone on Mon, 2010/02/08 - 2:24pm.

exactly what I was gonna say.

Just in case there are

Submitted by EricLykins on Mon, 2010/02/08 - 2:28pm.

Just in case there are readers that see what we're saying as cryptic:

Geithner and Obama can talk about cracking down all they want, but Congress has to act. If Congress doesn't "regulate the hell" out of Moody's, Moody's will stop threatening to downgrade the AAA rating of US treasury bonds and continue to enjoy privatized gains and socialized losses. Congress (mostly the Senate, there are many good Reps) works for them, not you, and you know how they're going to "act".

That "hope-y change-y stuff" has some more work to do this year when voting for Congresspeople.

and it's not just Moody's

Submitted by EricLykins on Mon, 2010/02/08 - 3:11pm.

Bankers threaten to once again fund the GOP if Obama continues saying mean things about them

stories like this ought to put to rest forever the notion that the Republican Party is some sort of haven for populist anger. As subservient as the Democrats have been to Wall Street -- note that, more than a year later, Wall Street can only complain about "rhetoric," not any actual legislation that has been passed -- the Republicans are out there promising Wall Street to be even more loyal servants if they're given the dog treats that have recently been going to the Democrats:

Senator John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said he visited New York about twice a month to try to tap into Wall Street’s "buyers’ remorse." "I just don’t know how long you can expect people to contribute money to a political party whose main plank of their platform is to punish you," Mr. Cornyn said.

Cornyn is not up for reelection until 2014. Attention Texans: If you are a real person and not a puppet, you have 4 years to drum up support while teaching yourself the things you need to know to do a better job than him as a Senator. Please consider running as a Democrat.

yup...

Submitted by fletch on Mon, 2010/02/08 - 5:46pm.

"mostly the Senate.."

It's not even all of the Senate, only 5 or 6 conservatives wearing the Democratic label that have stalled reform on every single issue. You could blame the Republicans I suppose which vote as Rush dictates but hell, there are 59 Democrats so the Democratic Party will take the fall this November. I just wish when folks would blame "Washington" or "Congress" for inaction, that they would be more specific as to the institution and a very few members in that institution. It's the Senate and its undemocratic, extra-constitutional rules that are hurting this nation as much as Wall Street, probably even moreso.