Is anyone else disturbed by the S&P threatened downgrading of U.S. credit?

It seems there is a major fight going on...those who are attacking the S&P's credibility (especially in investment circles) and those who are in near hysterics by the S&P threatened downgrading America's credit rating for the first time since 1917.

I’m not a hysterical person but the S&P is a largely apolitical entity, so I guess I’m worried. If the U.S. credit rating is downgraded we’re looking at a crap storm if D.C. doesn’t make emergency spending cuts and fast… Higher interest rates on U.S. credit will of course result in all manner of nastiness, higher taxes among them.

 

We need to get our budget under control. That means spending cuts, and deep significant ones. If the current leadership doesn't understand that now, they likely never will.

 

It could be, but the thing is you're young and the market always improves over the long term. My advice, pay into the IRA and don't pay much attention to it. That's a sure fire way to get jumpy and make some poor decisions. I have a Roth IRA that I've contributed the max $5k to the past three years on top of the 5% match I get at work. 80% of my retirement is in highly rated mutual funds and I have no intention of messing with them. The other 20% is just individual stocks I manage myself. I'm not letting this get me to jumpy, but I will be paying closer attention to that 20% of my portfolio.

 

That's the beauty of mutual funds, you're diversified.

 

Someone in the Obama administration may have some understanding of this balance-sheet recession mess; just not Obama. And moreover, it’s not Treasury Secretary Tim Geithner either who’s never worked as a trader or in credit, or even had operational responsibility in a bank. In my view, Obama isn’t really into the Presidential job and the duty /responsibility it carries, but he does truly enjoy the celebrity along with its perks…

 

seriously?
you don't think he understands balance sheets? credit ? and how a bank works ?

"After graduation from Dartmouth, Geithner attended the Johns Hopkins School of Advanced International Studies, where he earned a master's degree in International Economics and East Asian Studies in 1985"

"Geithner moved to the International Monetary Fund in 2001 as director of the Policy Development and Review Department. In this role, he approved the fund's financial programs and worked on its crisis management."

"He assumed his position as the ninth president and chief executive officer of the New York Federal Reserve Bank on November 17th, 2003. "

"In addition to his role at the Federal Reserve, Geithner serves as the chairman of the G-10s Committee on Payment and Settlement Systems of the Bank for International Settlements; a member of the Council on Foreign Relations and the Group of Thirty; a trustee of the Economic Club of New York; a member of the board of directors of the Center for Global Development in Washington, D.C"

Timothy Franz Geithner Biography - Biography.com

you may not agree with their point of view, but its just ridiculous to say they don't understand what's going on

 

Geithner is a moron who demonstrates that it's who you know, not what you know. The guy can't even do his own taxes properly.

 

First and foremost, I don’t give a hoot about Geithner’s point of view. What I do care about this Country and the financial disorder it’s in. Geithner, in my observation, is a politico economist and political hack. And his pedigree via Dartmouth and Johns Hopkins (seemingly you’re quite impressed with this) doesn’t make his point of view any more valuable than yours or mine; or his economics perceptive necessarily credible, nor his interventions constructive or fiscally sound.

Geithner’s tax issue ($25,979 re WSJ) alone should have disqualified him for the Treasury Secretary appointment since the Internal Revenue Service is part of Treasury and makes up by far the largest piece of the Treasury's budget. What message, as regards tax responsibility, did the appointment of Geithner send to the American people? There’s more: Geithner was in charge (as you bring up; nonetheless in a public service capacity, neither as a banker or investment banker) at the Federal Reserve Bank of New York at the time of the AIG bailout (under the Bush presidency). Recall that AIG staff thought they could get banks to agree to settle for 60 cents on the dollar. Geithner said no, pay the banks in full. That decision (via his point of view) cost the American taxpayers $37 billion.

More as regards Geithner’s “extensive” banking experience:

At a hearing in April 2009 of the panel Congress created to monitor the financial bailout program, Damon A. Silvers, a labor lawyer and panel member, remarked to Mr. Geithner, "You have been in banking."

Mr. Geithner interrupted: "I have never actually been in banking. I have only been in public service."

His questioner persisted: "Well, a long time ago. A long time."

Geithner: "Actually, never.”

Silvers: "Investment banking, I meant."

Geithner: "Never investment banking."

Silvers: "Well, all right. Very well then."

Moreover, while Geithner was at the helm of the New York Fed, Wall Street ran amok. As New York Fed chief during one of Wall Street’s greatest bull markets ever, Geithner shared authority over some of the country’s largest commercial banks along with the Comptroller of the Currency. “While the banks loaded up on mortgage-backed securities and derivatives, Geithner failed to use his power to force the firms to build adequate capital cushions and risk controls”, per Allan Meltzer, a professor at Carnegie Mellon University in Pittsburgh who monitors the Federal Reserve. Citigroup Inc. led the buying frenzy on Wall Street, holding $544 billion in securities and derivatives by 2007 before unraveling under their weight. “The oversight of Citi was shamefully lax,” says Janet Tavakoli, American author and structured finance expert, “If they didn’t see the problems beforehand, we don’t have the right people. If they did see them but didn’t care to do anything, then again we have the wrong people.” In particular, she criticizes the Federal Reserve Bank of New York, headed by Timothy Geithner at the time, for deciding to pay Goldman Sachs and other financial firms 100 cents on the dollar for billions of dollars of troubled AIG credit default swaps, while other bond insurers have settled similar contracts for as little as ten cents on the dollar (re Commentary: "What Wall Street owes you", CNN, July 15, 2009). In April of 2009, Steve Forbes called Geithner "the most formidable impediment to an economic recovery."

If you have 59-minutes, please watch this C-Span Q&A Brian Lamb interview with structured finance expert Janet Tavakoli. She addresses “Tim Geithner's cozy relationship with beneficiaries of the bailout, Hank Paulson's role as an interested man, Robert Rubin as an interested man, financial meth labs, incompetence at the SEC, backdoor bailouts, and more…” (re Tavakoli Structured Finance, Inc.).

C-Span Q&A: Brian Lamb Interviews Janet Tavakoli about Dear Mr. Buffett

 

Yeah, what Major said. That's what I was getting at in my post, but Major was using "facts" and "sources" to defend his position. Interesting approach...

 

AUTiger,

Regrettably, Geithner is merely one more illustration of another government / Washington insider whose history, if examined beyond job /position title, will more often than not; reveal their level/s of true competency. Too often we tend to give credence to those merely due to their professional positions. I was merely trying to make a logical argument as to my understanding as regards Geithner’s genuine economic and/or financial abilities. It was perhaps too wordy (believe me the abstract could have been far more extensive), but in the end, your summation was both succinct and more importantly … absolutely on target regarding this particular, in far over his head, actor.