The Hill: Obama says serious deficit plan needed in wake of S&P downgrade

The move by ratings agency Standard & Poor's to downgrade U.S. debt underscores the need for a major agreement on deficit reduction, President Obama said Monday. ∴ The president said that U.S. debt was still world-class in the eyes of market despite S&P's downward revision ˜ from AAA to AA+ ˜ on Friday, but said it was up to the so-called "supercommittee" established by compromise debt-ceiling legislation to produce an agreement that would forestall a future slide in U.S. creditworthiness. Read more at The Hill...

UPDATE: The Hill - Dow plunges below 11,000 as downgrade fuels market turmoil Read More......

The End is Not Nigh!

CASCADE POLICY INSTITUTE/INSIDER, by Joseph Cox (guest) - Why not increasing the U.S. debt ceiling may not be the end of the world. “The end of days is nigh,” or at least that’s what you hear from President Obama when he says, “We would risk sparking a deep economic crisis….For the first time in our history, our country’s triple-A credit rating would be downgraded. Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people.” ∴ In fact, nobody knows the consequences of a debt deal – or of the absence of one. But maybe not raising the debt ceiling actually would benefit the economy. There are three reasons for this:

1. Treasury rates are not necessarily the lowest rates
   
2. A rise in inflation may release productive money
   
3. A drop in government support could reintroduce healthy moral hazard into financing and investment

Let’s go through these in detail: Read more at Cascade Policy Institute Read More......

Moore: Obama Is Just Wrong on Debt Ceiling

VISION2AMERICA, 6/4/2011, Re: Stephen Moore, Economist - The U.S. economy could cave in under a “mountain of debt” if Republican lawmakers “blink first” and agree to raise the government debt ceiling without taking concrete steps to reduce the ballooning deficit, a top economic reporter told Newsmax.TV. ∴ Stephen Moore, senior economics correspondent for The Wall Street Journal, said members of Congress and the American people need to realize the seriousness of the potential crisis as an Aug. 2 deadline looms for the government to raise its debt limit or default on its obligations. “I think the first thing people need to understand is this is not a fire drill — this is a real financial emergency,” Moore said. ∴ His comments came as credit ratings agency Moody’s said Thursday that it may cut the United States’ top-notch credit rating if lawmakers don’t make serious progress in their negotiations by mid-July. Read more at Newsmax (includes video)... Read More......

FOX: 'Negative' Rating Jolts D.C. Debt Talks

Top credit rating service demotes U.S. fiscal outlook from a 'stable' to 'negative' as politicians reaffirm their commitment to solving the debt crisis. Read more at Fox News... Read More......