• S&P cuts US credit rating from AAA to AA+ for first time • Xinhua says China has ‘every right to demand’ US action • Barack Obama repeats call for parties to work together The United States has lost its top AAA credit rating for the first time, in a move that could severely undermine the recovery of the world’s largest economy and prompt further calamitous falls on world stock markets next week. Ratings agency Standard & Poor’s decision to cut the debt rating after another dire day on the world stock markets on Friday could increase the cost of borrowing for the US and set off more panic selling when stock markets reopen on Monday. The downgrade is an embarrassment for the Obama administration, coming less than a week after protracted wrangling among Republicans, Democrats and the White House took the US to the brink of default. In his weekly radio address, Obama appealed to politicians from both parties to set aside partisanship and refocus on efforts to stimulate the stagnant economy. “Congress reached an agreement that’s going to allow us to make some progress in reducing our nation’s budget deficit. And through this compromise, both parties are going to have to work together on a larger plan to get our nation’s finances in order,” Obama said. China, the world’s largest holder of US debt, condemned the “short-sighted” political wrangling in the US and said the world needed a new and stable global reserve currency. In a comment article the official Xinhua news agency said China had “every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets. International supervision over the issue of US dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.” S&P had held back cutting the rating earlier on Friday after the US government reportedly questioned its maths. But the agency insisted it was going ahead with the downgrade to AA-plus, saying the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilise the debt situation. It is the first time S&P has issued a “negative” outlook on the US government since it began rating the credit-worthiness of railroad bonds in 1860. Michael Hewson, a market analyst at CMC Markets, warned: “This crisis will run and run, and could make Lehmans look like a Tupperware party.” The dramatic reversal of fortune for the world’s largest economy means that US treasuries, once seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany or France. The move is likely to raise borrowing costs for the US government, companies and consumers. Unnamed US officials had been telling the media that S&P’s analysis was deeply flawed, but S&P said in a statement: “The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilise the government’s medium-term debt dynamics.” Britain’s stock market suffered another major sell-off on Friday, ending its worst week since the collapse of Lehman Brothers in 2008 with almost £150bn wiped off the value of the country’s top 100 companies. After a calamitous five days for stock markets on both sides of the Atlantic, the FTSE 100 closed 146 points lower at 5247 to record its third day of triple-digit declines – a trading pattern last witnessed in the immediate aftermath of Lehman’s bankruptcy in September 2008. Better-than-feared US employment figures failed to calm the markets. A rally prompted by news that America’s economy generated an extra 117,000 jobs last month fizzled out within an hour in London, after the German government ruled out providing extra money for Europe’s bailout fund, and rumours about the impending S&P move swirled around Wall Street. After the European markets closed, Wall Street – which had suffered a 512-point fall on Thursday in one of its worse performances since 2008 – was encouraged by remarks from the Spanish government that the prime minister, José Luis Rodríguez Zapatero, agreed with the French president Nicolas Sarkozy’s desire for greater co-ordination. Even so, the Dow Jones Industrial Average, on a day of wild fluctuations, ended just 60 points higher. Tensions were also eased after Italy’s prime minster, Silvio Berlusconi, promised to accelerate austerity measures by a year, and summoned a meeting of G7 finance ministers as soon as possible. His comments followed rumours that the European Central Bank could reverse its hardline stance and begin buying Spanish and Italian government bonds in return for quicker reforms. Dealers have been frustrated by the lack of urgency shown by the ECB in supporting Italy and Spain. During Thursday’s market mayhem, they had bought only bonds issued by Ireland and Portugal. Amid fears of an escalation in the crisis, Mervyn King, the governor of the Bank of England, held a conference call with David Cameron and the chancellor, George Osborne – both on holiday – to discuss the impact of the financial crash on Britain’s banks and the struggling UK economy. The Bank is likely to cut its growth forecast for the UK when it publishes its latest quarterly inflation report on Wednesday. “They discussed the financial situation and the chancellor asked the governor for his judgment,” a Treasury source said. “They agreed to monitor the situation.” The source said the chancellor was keeping up the pressure on eurozone leaders to carry through the terms of the second bailout of Greece, which was intended to calm the markets when announced on 21 July but has failed to do so, with concerns widening to Italy and Spain. “What we are communicating to our European counterparts is you must deliver on what you have promised,” a Treasury source said. The US jobless rate went down from 9.2% to 9.1%. Analysts said the increase in non-farm payrolls was bigger than the 85,000 jump expected by Wall Street, but the figures were not good enough to make traders feel less gloomy about the possibility of a global double-dip recession. Glenn Uniacke, senior dealer at Moneycorp, said there was relief at the US jobs figures. “With employment growth in the world’s top consumer market an indicator of the future strength of the global economy, today’s non-farm payroll figures gave the markets a modest upside surprise and President Obama some short-term reprieve following the blood-letting of the past week,” he said. “However, the data won’t stop the rot and is not sufficient to change the bearish outlook from traders, with a sustained figure of 200,000-plus needed for any major positive impact on the unemployment rate. The markets were seen swinging wildly straight after the data, unsure how to interpret the ray of light in an otherwise gloomy week.” The British economist Baroness Vadera, a former Labour minister and G20 adviser who played a role in devising a rescue package for the international banking system at the time of the 2008 crash, said the current crisis could be even worse. She told BBC Newsnight: “It feels as scary, but it is different. The reason it is potentially worse is that governments stepped in [in 2008-09] all over the world and saved the banking system in order to save their economies, but now who is going to step in to save governments? “When we went into that crisis, interest rates were quite high, so we did have monetary policy to use as a tool and now we are at the outer limits of that. Lastly, we are currently facing quite a lot of inflationary pressures, particularly coming from commodities and emerging markets, so our room for manoeuvre is a lot more limited.” US economy Ratings agencies Market turmoil Stock markets Global economy Economics Obama administration US politics United States China Larry Elliott Jill Treanor Dominic Rushe David Batty guardian.co.uk
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UK ambassador says four people injured in polar bear attack in which a British teenager died are responding well to treatment Four victims of a polar bear attack on a remote Arctic island that left a British teenager dead are recovering in hospital, the UK’s ambassador to Norway has said. Jane Owen, who visited the survivors in hospital in the northern city of Tromso, said they were responding well to treatment. “I have been to see all the people affected and they are talking, they are responding and they are receiving excellent medical care at the moment,” she told the BBC . Investigations are under way after Horatio Chapple, 17, from Wiltshire, was mauled to death in the bear attack on Friday morning at a campsite on the Von Postbreen glacier on the island of Spitsbergen, in the Svalbard archipelago. The bear was shot dead by one of the leaders of the party of 13, who were with a group of 80 taking part in a five-week Arctic expedition run by the British Schools Exploring Society (BSES), a youth development charity based at the Royal Geographical Society in London. His friends Patrick Flinders, 16, and Scott Smith, 17, were injured fighting off the bear, as were the expedition guides Michael Reid, 29, and Andrew Ruck, 27. The four, two of whom were severely hurt, were helicoptered to a hospital 25 miles away in Spitsbergen’s capital, Longyearbyen, after the group raised the alarm by satellite phone at 7.30am. They were later flown to University hospital in Tromso where they were described as being in a stable condition. A spokeswoman said they would be transferred to a British hospital as soon as they were strong enough to be moved. The first account of the attack came from Flinders’s father, Terry. “The bear got into the tent where Patrick was with two friends, and he just, for some reason, grabbed hold of the other boy and just killed him,” he told ITV Channel Television. “There were three of them in a tent and I don’t really know too much, why he chose the other boy – perhaps he was the closest one. If he looked at Patrick, he was the chubbiest one, he probably had more meat on him, bless him. “Patrick, I think, was probably in the middle, because he grabbed hold of his head next, and then his arm, and I don’t know how Patrick got out to be honest. Unless it was when the guy came in and shot the bear and maybe that’s how Patrick got away with it, because they actually shot the polar bear, but the young lad was already dead.” Flinders said a warning tripwire system – used to scare off polar bears by triggering a flare – had failed to activate. “This time it didn’t happen apparently, and one of the other chaps came out with a rifle and tried to kill the polar bear and didn’t do it,” he said. “And then the leader tried to kill the polar bear, but just before he killed him apparently, the bear mauled him and he’s really, really bad.” The BSES chairman, Edward Watson, said Chapple had been a “fine young man”. He said the society had been in touch with his family, who live near Salisbury, and had offered “our utmost sympathy”. Tributes have been paid to the teenager on Facebook, and a group called RIP Horatio Chapple has been set up on the site. His aunt Rachel Chapple described him as an “astonishing nephew”, adding: “I remember the day you were born. You were so sick and we all cried. And you fought and grew and filled your family with so much love. “We miss you so. You have such excellent brothers and we are thinking of you both and sending you Horatio sized hugs. Love Aunt Rachel x.” The teenager’s grandfather is understood to be Field Marshal Sir John Chapple, a former chief of the general staff, the professional head of the British army. Sir John is an ambassador for the WWF and was formerly president of BSES. The Arctic Adventure expedition began on 23 July and was scheduled to run until 28 August, with students told they would “venture into the untouched beauty and wilderness of Svalbard”. Kyle Gouveia, who was on the expedition, told Sky News the group was given shooting practice on the second day of the trip in case a polar bear attacked. They also took on “bear watches” at their base camp in Svalbard and practised using “bear flares”, said the 17-year-old. Liv Asta Odegaard, a spokeswoman for the governor of Svalbard, said campers in the area normally laid down tripwire around tents when they went to sleep, to set off an emergency rocket if crossed by an animal. She said it was unclear whether the BSES campers’ wire had worked properly, adding that police were investigating the incident. “It is not unusual to camp here, but it is necessary to carry weapons,” she said. She confirmed one of the campers had shot the bear dead. Earlier this year the Svalbard governor issued a warning after several polar bears were seen close to Longyearbyen. Dwindling sea ice in recent years has led the bears, which usually hunt seals, to look inland for food, including from the eggs of barnacle geese on the island. Norway Arctic Europe David Batty guardian.co.uk
Continue reading …Title: Song Of India Artist: Danny Gatton and Buddy Emmons Let’s get the weekend started! Here are musical wizards Danny Gatton and Buddy Emmons putting their spin on the opera classic by Rimsky-Korsakov. Enjoy.
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Click here to view this media As John already posted in the breaking news story , S&P has went ahead and downgraded the United States credit rating from AAA to AA+. Rachel talked to Rep. Barney Frank who is the Chair of the House Financial Services Committee and the Washington Post’s Ezra Klein about tonight’s news, but first she went through some of the details that went on this evening. Rachel Maddow read some of this part of S&P’s decision to go ahead with the downgrade: In its statement, S&P said that it had changed its view “of the difficulties of bridging the gulf between the political parties” over a credible deficit reduction plan. S&P said it was now “pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics anytime soon.” Click here to view this media Barney Frank blasted Standard & Poor’s for their poor record during the meltdown of the financial service industries and felt that they were trying to over compensate now for past mistakes. He also criticized them for being too lienent with their ratings on private enteprise, while being too harsh with their ratings of government from the federal level right on down to the states and local governments. When asked if the recent debacle by our politicians in Washington over raising the debt ceiling was responsible for this happening, Frank pushed back and said if anything, this proved that ultimately the full faith and credit of the United States was not something that could be allowed to be defaulted on. Ezra Klein wasn’t quite as charitable about Congressman Frank’s assessment on whether our politicians were at all responsible for this happening and here’s more from his column from just before this decision was made — Five thoughts on the potential S&P downgrade : Tyler Cowen has six useful thoughts here . I’d add a few more: 1) S&P is downgrading their estimation of our political system, not our actual ability to pay our debts. Indeed, the past 36 hours offered a stunning demonstration of the market’s faith in our ability to pay our debts. The panic sent investors rushing to buy Treasuries, sending yields on 10-year Treasuries to 2.4 percent — that’s almost nothing — and demonstrating that American debt is still considered the safest bet in the world. That vote of confidence under real world conditions is far more important than anything S&P says. 2) Of course S&P is downgrading our political system. Did you see the nonsense we pulled over the past few months? The Republican Party took the country to the brink of default, and for what? A smaller and less certain deficit-reduction deal than they could have gotten if they had been willing to compromise with the Democrats. And then Senate Minority Leader Mitch McConnell said these default-driven deals would be the norm around Washington from now on . Why shouldn’t S&P downgrade our debt? Read on… Click here to view this media
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As has been expected, despite the recently reached debt deal, America's debt got downgraded tonight by credit ratings agency Standard and Poor's. In an analysis posted on its website , S&P explicitly stated that it “takes no position on the mix of spending and revenue measures,” however that is a fact that will likely be glossed over by the self-described mainstream media. There is much more in the analysis, but since you won't likely see this info in the big media outlets, I am reproducing portions of the report which repeatedly mention excessive spending as a problem: The outlook on the long-term rating is negative. We could lower the long-term rating to 'AA' within the next two years if we see that less reduction in spending than agreed to , higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case. We lowered our long-term rating on the U.S. because we believe that the prolonged controversy over raising the statutory debt ceiling and the related fiscal policy debate indicate that further near-term progress containing the growth in public spending, especially on entitlements , or on reaching an agreement on raising revenues is less likely than we previously assumed and will remain a contentious and fitful process. Republicans and Democrats have only been able to agree to relatively modest savings on discretionary spending while delegating to the Select Committee decisions on more comprehensive measures. Standard & Poor's takes no position on the mix of spending and revenue measures that Congress and the Administration might conclude is appropriate for putting the U.S.'s finances on a sustainable footing. As you can see above, so-called “entitlement spending” on Social Security and Medicare is mentioned as a major concern in the piece. For reference, see the following chart from the Government Accountability Office: Also for reference, please also see a graph from the Heritage Foundation which illustrates U.S. spending under former president George W. Bush and current president Barack Obama:
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enlarge Heather Mills – Sir Paul isn’t amused either. Click here to view this media The latest revelations in the ever-growing Phone Hacking scandal may have less to do with Rupert Murdoch than the Standard Operating Procedure so much used by the Murdoch Empire. This time it’s via The Daily Mirror, whose editor at the time was CNN’s Piers Morgan and who later became Editor at News Of the World and now Scotland Yard would like to have a word or two with him. As was disclosed by Heather Mills , the former Mrs. Macca on an episode of BBC2′s Newsnight this past Wednesday, she was approached by a writer for the Daily Mirror and asked for a statement about a recent spat she had with then-boyfriend Paul. When the journalist gave her a verbatim rundown of a phone call the two had, Heather promptly blew a gasket and threatened legal action if the gist of the conversation was ever made public. When informed of this two days ago, Sir Paul expressed shock, horror and a bee-line visit to Scotland Yard when he finishes his latest tour. There have been numerous phone hacking allegations associated with Morgan, who of course denies them all. But since he did disclose in a recent book a somewhat cavalier attitude towards the practice, it certainly prompts many questions and begs many answers. enlarge Piers Morgan – former Editor of The Daily Mirror. “Scotland Yard’s jus’ dyin’ to meet ya”. And then there’s the disclosure of letters written between Rupert Murdoch and First Minister of Scotland Alex Salmond , taking on a friendlier-than-usual air between Mr. Murdoch and Mr. Salmond right up to June of this year. Maybe nothing, but a curious batch of coincidences surrounding a sudden shift in support from News Of The World of Mister Salmond in a recent election and the presence of News International printing plants springing up in Scotland shortly after. Fancy that. enlarge Alex Salmond. Allegedly in that fine tradition of one hand washing the other. Click here to view this media And next week? Anybody’s guess.
Continue reading …Standard and Poor’s has downgraded US Treasury Bonds from AAA to AA+. They claim the downgrade is based on the GOP’s refusal to raise revenues. Maybe. But I doubt it. The first question I have is which hedge fund managers stand to profit. That’s an answer I want right now. Not ten months from now. NOW. On July 25th, someone placed a ONE BILLION dollar bet that our credit rating would drop. It’s time for them to be identified. It’s time for us to name the terrorists and know they are us. I am tired of the manipulation. The tea party is rejoicing over this. They believe they will break Medicare and Social Security by breaking the country. If ever there was a time to stand in the streets, in our communities, in our towns and call for them to be held to account. Enough. this rant brought to you from my vacation. I will be back next week.
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Statement from conglomerate says she suggested it would be ‘inappropriate’ for her to join board of father’s company Elisabeth Murdoch will not be joining the board of her father Rupert Murdoch’s News Corporation conglomerate, despite expectations that she would do so. The company said in a statement that she had suggested to its directors it would be “inappropriate” for her to make the move. She had been expected to join the board after News Corp bought Shine Group, the television production company she runs, in a deal worth £415m. Viet Dinh, chairman of the nominating and corporate governance committee of the News Corporation board of directors, said: “Elisabeth Murdoch suggested to the independent directors some weeks ago that she felt it would be inappropriate to include her nomination to the board of News Corp at this year’s AGM, as had been announced by chairman and CEO Rupert Murdoch at the time of the acquisition of Shine Group earlier this year. “The independent directors agreed that the previously planned nomination should be delayed. Both Elisabeth and the board hope this decision reaffirms that News Corp aspires to the highest standards of corporate governance and will continue to act in the best interests of all stakeholders, be they shareholders, employees or the billions of consumers who News Corp content informs, entertains and sometimes provokes every year.” Murdoch founded Shine, which has produced shows such as The Tudors, Ashes to Ashes and Masterchef, a decade ago, and built it into a powerhouse in the British independent television sector and a transatlantic business. Other popular programmes for the group include Merlin, and Spooks. It is understood Murdoch, who owned a 53% stake in the company, with Sony holding 20% and BSkyB a further 13%, made £153m after completing the sale to News Corp. She is is married to the public relations executive Matthew Freud. Reports have suggested that some shareholders believe the 16-member board of News Corp is too beholden to Rupert Murdoch. The Murdoch family controls nearly 40% of the company’s voting shares through a family trust, and Murdoch’s sons James, 38, and Lachlan, 39, already sit alongside him on the board. In February, after announcing News Corp’s plans to buy Shine, Rupert Murdoch said: “Shine has an outstanding creative team that has built a significant independent production company in major markets in very few years, and I look forward to them becoming an important part of our varied and large content creation activities. I expect Liz Murdoch to join the board of News Corporation on completion of this transaction.” Elisabeth Murdoch News Corporation Media business Rupert Murdoch Television industry Newspapers Newspapers & magazines Damien Pearse guardian.co.uk
Continue reading …US stripped of AAA credit rating by S&P as agency blames political weakness
August 5, 2011 No Comment
The US government’s credit rating has been lowered to AA+, the first downgrade in modern US history, despite furious lobbying The credit rating agency Standard & Poor’s has stripped the US of its top-notch AAA credit rating, downgrading it to AA+ and warning of further future downgrades because of political and economic uncertainty. The downgrade and negative outlook came late on Friday night, after news surfaced of a furious rearguard attempt by the White House to convince S&P that its calculations were flawed. The move shifts long-term US government debt into the same level as Britain, Japan and other countries, but below that of Canada, Australia and France. As a rule, a lower credit rating means higher borrowing costs for debtor nations. But because of the size of the US and its deep capital markets, it remians to be seen what impact the move will have when financial markets reopen on Monday. Republicans were quick to highlight the downgrade – the first in modern US history – as a humiliation for President Obama. But S&P’s statement explaining the move blamed both parties for the US fiscal mess – and had harsh words for the Republican party for ruling out any taxes increases. “We have changed our assumption … because the majority of Republicans in Congress continue to resist any measure that would raise revenues,” S&P said. S&P also said the budget savings agreed by Congress at the start of the week were too feeble, and blamed political weakness and instability for triggering the downgrade: More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon. The credit rating agency also said the outlook on its long-term rating was negative, warning that it could lower the long-term further rating to AA within the next two years “if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume”. S&P notified the US Treasury on Friday afternoon that it was planning to downgrade the credit rating, according to government officials, and the company sent a draft of its analysis to the White House. White House officials then claimed to have discovered a $2tn-sized hole in S&P’s calculations, and briefed journalists. But it failed to wring a delay out of the agency, which went ahead with the downgrade. US economy Ratings agencies Obama administration Republicans Market turmoil Economics US politics United States Richard Adams guardian.co.uk
Continue reading …They are not monsters. They are human beings who don’t think CNN completely sucks eggs. And they have found each other. As has been well-documented on this site, Piers Morgan embodies much that is detestable about old media. Corruption , arrogance , and just plain sucking seem to be his standard MO. John King is, well, John King . So, perhaps the fact almost no one watches their crap programs is beside the point. The point is that some people do. And those people deserve each other. And if those people ever find that magic spark called love, they would probably spend a portion of their free time recreationally assaulting those less fortunate than themselves. I just think that’s probably how that demographic rolls.
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