Daily Lessons from Life 17-18 April 2011 - S&P ranks US debt outlook "negative"

I missed 17 April 2011 night blog writing as I was on the way from Hong Kong to Jakarta in the early morning of 18 April 2011!!

"S&P ranks US debt outlook "negative" - CNA 18 April 2011

WASHINGTON: Ratings agency Standard & Poor's cut the outlook on US sovereign debt to "negative" Monday, sending stocks plunging as it doubted Washington's ability to tackle its huge debt and fiscal deficits.

"The path to addressing these (problems) is not clear to us, (so) we have revised our outlook on the long-term rating to negative from stable," S&P said in a statement announcing its first ever downgrade of the US outlook.

The move sent US borrowing costs sharply higher in bond markets, and the government, which faces a grinding political battle over how to address the deficit, immediately rebuffed the powerful rater.

"We believe S&P's negative outlook underestimates the ability of America's leaders to come together to address the difficult fiscal challenges facing the nation," the Treasury Department said in a statement.

S&P's outlook cut came as Democrats and Republicans gird for a huge fight over rival plans to cut the deficit, offering starkly different visions of how the US should fix its finances.

After resolving a skirmish over cuts to the current year's budget on April 8 just minutes before the government would have had to shut down, the next battlefield is over a ceiling on government debt."

It is strange to be reading the news report called S&P, the powerful rater, when it failed miserably with the mortgage crisis or debt crisis of 2008! In fact, many subsequently said the top 3 rating agencies were incestuous, improper and even incompetent! Of course, these were not proven in the court of laws anywhere in the world! Still the suspicions always exist.

Lessons for me are:

1. USA is going down with the mountainous debts. It ignored the law of nature that you cannot spend what you do not earn! What could happen is that people decide to delude themselves while others choosed to be blind to the pink elephant in the plain open view of everyone!!;

2. if it is not USA, it would have gone bankrupt long time ago and the American government needs to beg others to hold US$! Even this exalted position cannot be sustained if the nation is going down the path of 'I am addicted to debts and I cannot tear myself from it', so let me continue forever! Well. Forever it will sure NOT be!!;

3. why should people care about a discredited 'credit rating agency'? The obvious answer is: there is current NO replacement to do this. So people are continuing to rely on the known devil vs. the unknown deep blue sea?

Go back to basic America! Put heed to what your grandmother said to you when you were young: earn your keep. Spend within your means. Credit is evil if you become addicted to it!!