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over 13 years ago

A negative outlook almost always leads to a downgrade in the not to distant future. I do not see this as bad for the rest of the world at all as it may yet force some fiscal sanity on US government leaders which is world growth positive. The situation is clear the response by those at the FED and Treasury by their market interventions today are what is clearly misleading and manipulative.

There can be no way possible that this is anything but gold/silver positive and only intervention can explain the counter intuitive reaction. I note that gold and silver both shot higher initially with the US dollar getting weaker which of course is the correct response, then TPTB moved in to try and calm the situation and have made efforst to reverse the true market reaction. Nothing new as this has become common place in the last few years and shows the desperation. The crazy thing is this doesn't have to be a desperate situation if they will only do what is right and move to finally resolve the debt/credit situation, sure there will be pain but there will also be future opportunity as people and governments adjust to reality and lower standard of living.

S&P Affirms US AAA Rating, Cuts Outlook to Negative

Published: Monday, 18 Apr 2011 | 10:36 AM ET

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By: Reuters with CNBC.com

Standard & Poor's on Monday downgraded the outlook for the United States to negative, saying it believes there's a risk U.S. policymakers may not reach agreement on how to address the country's long-term fiscal pressures.

"Because the U.S. has, relative to its 'AAA' peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook on the long-term rating to negative from stable," the agency said in a statement.

In an interview with CNBC, David Beers, S&P's global head of sovereign ratings, said the agency has been "struck increasingly by the difference in how other governments are dealing with fiscal consolidation."

"The U.S. to us looks to be an increasing outlier in that context," Beers added.

Rival ratings agencies Fitch and Moody's [MCO 35.27 -0.59 (-1.65%) ] maintained their respective outlooks on the United States, according to statements made to CNBC.

"Moody’s is not reacting to S&P's move. Moody’s outlook for the US Aaa rating remains stable," Moody's spokesman Eduardo Barker said in an email.

The U.S. dollar fell broadly on word of the revision. Gold prices hit a new record above $1,496 an ounce, while the Dow Jones Industrial Average tumbled more than 200 points.

"The headline has enough of a shock value. The initial reaction is that this is negative for dollar assets across the board." said Lou Brien, a market strategist with DRW Trading in Chicago.

The S&P said the move signals there's at least a one-in-three likelihood that it could lower its long-term rating on the United States within two years.

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In an interview with CNBC, Austan Goolsbee, chairman of the Council of Economic Advisers, characterized the S&P move as a "political judgement."

"What the S&P is doing is making a political judgement and it's one we don't agree with, and it appeared to me that Moody's and some others don't agree with that judgement," Goolsbee said.

The U.S. Treasury also voiced disagreement with the S&P revision.

"...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," Treasury Assistant Secretary Mary Miller said in a statement.