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U.S. Credit Rating Downgraded Again, QE3 Cited as Cause

Sep. 14, 2012 3:48pm Becket Adams

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Ratings agency firm Egan-Jones on Friday downgraded the U.S.’s credit rating to “AA-” from “AA,” citing the Federal Reserve’s decision to go through with a third round of quantitative easing (or QE3).

The agency claims QE3, which is open-ended and unlimited, will drive down the value of the dollar, raise commodity prices, and do little to increase real gross domestic product.

Here’s the statement:

… the FED’s QE3 will stoke the stock market and commodity prices, but in our opinion will hurt the US economy and, by extension, credit quality. Issuing additional currency and depressing interest rates via the purchasing of MBS does little to raise the real GDP of the US, but does reduce the value of the dollar (because of the increase in money supply), and in turn increase the cost of commodities (see the recent rise in the prices of energy, gold, and other commodities).

The increased cost of commodities will pressure profitability of businesses, and increase the costs of consumers thereby reducing consumer purchasing power.

Hence, in our opinion QE3 will be detrimental to credit quality for the US.

[...]

From 2006 to present, the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.

We are therefore downgrading the US country rating from “AA” to “AA-”.

Not familiar with Egan-Jones? You may recall they were the firm that downgraded the U.S. last July even before Standard & Poor did.

“Regardless of who does the downgrade, you have to pay attention — maybe they’re not as well known, but Egan Jones has been ahead of the pack for a while,” Joe Saluzzi, co-manager of trading at Themis Trading told CNBC.

Moody’s Investors Service rates the U.S. “Aaa,” Fitch “AAA,” and Standard & Poor’s rates the U.S. “AA-plus.” Each rating has a “negative outlook.”

Follow Becket Adams (@BecketAdams) on Twitter

(H/T Zero Hedge). This story has been updated.

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Comments (200)

FaithfulFriend
Posted on September 14, 2012 at 4:01pm
We’re FICO’d.

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- Detroit paperboy
  Posted on September 14, 2012 at 4:10pm
  Blame bush………..
  
  Report this comment
- contkmi
  Posted on September 14, 2012 at 4:15pm
  And, apparently, we’re doomed to repeat history.
  
  The Bernank and Obama are running us down the road ruin. Quickly. Intentionally.
  
  Report this comment
- Detroit paperboy
  Posted on September 14, 2012 at 4:20pm
  Our founders gave us the tools to take control, both parties hate the tea party for a reason, they will stop the gravy train……….VOTE TEA PARTY ONLY……..it’s not to late to fix this……..have faith , be strong for your kids and grandkids…….
  
  Report this comment
- The_Jerk
  Posted on September 14, 2012 at 4:23pm
  Bernanke, like Rothschild, is a Shylock. They are the chosen, the biblical moneychangers beat with a stick by Christ, who live by the motto: “Give me control of a nation‘s money and I care not who makes it’s laws”
  
  Hyperinflation is coming. Bernanke knows that if Romney wins, he’s fired. Bernanke is attempting to do a quick fix, temporary fix, of the economy before the election. The Fed does not have the best interests of America or Americans in mind when it sets policy. It must be concerned about their shareholders.
  
  Report this comment
- Rothbardian_in_the_Cleve
  Posted on September 14, 2012 at 4:26pm
  It will be really interesting once the ratings start to breach institutional risk covenants. Wait until pensions and the like are forced to sell holdings. The Fed going to buy all that too in the secondary market?
  
  Report this comment
- MCDAVE
  Posted on September 14, 2012 at 4:32pm
  Its the next attack by the Fed Against us http://www.infowars.com/new-banker-bailout-disguised-as-qe3/
  
  Report this comment
- Rothbardian_in_the_Cleve
  Posted on September 14, 2012 at 4:38pm
  @Detroit,
  
  Don’t be naive. Sorry to be harsh or rude, but this doesn’t get fixed at the ballot box. We are far too gone.
  
  Report this comment
- justangry
  Posted on September 14, 2012 at 4:41pm
  @Detroit, I’m with you if we get rid of those fake 2010 Tea Party hacks who trash our Constitution every chance they get. The 2010 crop was a complete failure and they should have their “Tea Party” tags removed.
  
  Report this comment
- Rothbardian_in_the_Cleve
  Posted on September 14, 2012 at 4:45pm
  Anybody notice as the news is getting more serious the trolls have not been around? Hmmmmm.
  
  Report this comment
- My Two Cents
  Posted on September 14, 2012 at 4:57pm
  The Monday press conference should go something like this:
  
  Obama Media Lapdog: Mr. Carney, does the President claim any resposibilty for the downgrade?
  
  Jay Carney: Actually, the credit rating agency became offended when they watched a movie called Wall Street starring Micheal Douglas as Gordon Gekko. The government diddn’t make this movie and is in no way resposible for………
  
  Report this comment
- The_Jerk
  Posted on September 14, 2012 at 4:58pm
  This Ponzi scheme will collapse, not if, only when. We will wake up and there will have been the largest transfer of wealth in global history. Lead or gold, don’t know which will be more valuable?
  
  Report this comment
- resme
  Posted on September 14, 2012 at 4:59pm
  We must end the federal reserve. I’m sure they will contract the money supply and cause a depression… Like they’ve done time and time again in the past(or start a major war to distract). If we ended the federal reserve tomorrow, I bet Europe would declare war on America.
  
  Report this comment
- Walkabout
  Posted on September 14, 2012 at 5:00pm
  I’ve seen JZS & 3rd Archon. The_Jerk is here but he is not a troll.
  
  Report this comment
- Banter
  Posted on September 14, 2012 at 5:12pm
  @Detroit
  
  I understand what you are saying, however, most of the Tea Party candidates swept into office in 2010 have eaten from the forbidden tree.
  Check out how many of them voted to extend the illegal and unconstitutional wiretapping bill.
  
  Shameful.
  
  Report this comment
- soybomb315_II
  Posted on September 14, 2012 at 5:42pm
  This whole thing sucks. I have a good bit of money saved in the bank, but there is NOTHING worth buying. But the longer it sits in the bank, the less it is worth.
  
  Any ideas?
  
  Report this comment
- Rothbardian_in_the_Cleve
  Posted on September 14, 2012 at 5:46pm
  Wait for it….no way the WH, SEC, and Timmay(!) will let this stand. EJ is now going to understand the full power of the dark side. Audits, SEC investigations, A-hole POTUS labeling them a threat to national security. You name it, it’s coming for them.
  
  Report this comment
- resme
  Posted on September 14, 2012 at 5:53pm
  @soy, I’d buy silver. The gold market is manipulate. I’d think deeply about buying platinum. You can never go wrong with ammo.
  
  Never forget our great Governor of Virginia, Patrick Henry.
  
  “Guard with jealous attention the public liberty. Suspect everyone who approaches that jewel. Unfortunately, nothing will preserve it but downright force. Whenever you give up that force, you are inevitably ruined.”
  
  “For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it.”
  
  Report this comment
- black9897
  Posted on September 14, 2012 at 6:00pm
  Get hard assets. This will cause the dollar to be 100% worthless. Gold, silver, guns/ammo.
  
  Report this comment
- Rothbardian_in_the_Cleve
  Posted on September 14, 2012 at 6:01pm
  @RESME,
  
  I don’t think there is a right or wrong answer. I’ll say whatever you do make sure you’re physical…no paper. But silver has industrial demand as well and this can exert price volatility. Given recent industrial data it is likely downward. However, Silver is a better mechanism of barter than Gold or Plat.
  
  Yes, Gold is manipulated, but if you are physical your exposure is less. Platinum is a tough buy right now until that South African miner situation gets resolved. It too has industrial demand.
  
  Good luck anyhow.
  
  Report this comment
- tootsie roll
  Posted on September 14, 2012 at 7:36pm
  get some facts stupid its called FDIC that means if everything fails the F= Federal which means our Gov
  .How can you be insured if the country is BROKE STUPID. YOU MUST BE A DEMOCRAT.
  
  Report this comment
- jhaydeng
  Posted on September 14, 2012 at 10:22pm
  I know basic finance, but why can I understand that QE 3 will be really bad, but the people with the elite degrees F it up!
  
  Report this comment
- PoliticalTs.com
  Posted on September 15, 2012 at 1:27am
  Here we go again. This will cause gas prices to go even higher, and food prices as well. Everytime they spend money they do not have, the money in your pocket, and in your paycheck will buy less goods. Imagine if there were 27 million copies of “The Mona Lisa”, it would not be worth the canvass it was painted on, that is what they are doing with the dollars in your pocket.
  
  Report this comment
- tuckerghost
  Posted on September 15, 2012 at 8:08pm
  detroit paper you made my day fukin funny just two words says it all at least for the puke liberals
  
  Report this comment
- Jaycen
  Posted on September 16, 2012 at 4:22am
  I guess the Tea Party and Republicans in Congress have caused yet another Down Grade…..wait, there’s no budget battle? No Tea Partiers are currently being intransigent? Quick, make something up!
  
  People can’t start blaming the President.
  
  Report this comment
- Dragonfire
  Posted on September 17, 2012 at 11:26am
  And for this cause God shall send them strong delusion, that they should believe a lie: TH 2:11
  
  Report this comment
OldGeek72
Posted on September 14, 2012 at 4:01pm
Don’t worry, by the end of the day it will be all GW Bush’s fault along with that anti-mooslum film he secretly funded. Just wait for Jay C. to get the word from him divine saviour.

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- doomytram
  Posted on September 14, 2012 at 4:08pm
  A rude, crude, Rick Santelli youtube video caused the downgrade.
Living In NYC
Posted on September 14, 2012 at 4:01pm
Geez,,,,What do you expect when you only focus 10% your working hours on your job!

The snowball has been rolling down this hill since Prez Cool moonwalked into the Oval Office. After 3 1/2 years that snowball has picked up some serious steam!

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Individualism
Posted on September 14, 2012 at 4:01pm
crystal night coming soon brought to you by the angry middle class.

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- title_of_liberty
  Posted on September 14, 2012 at 7:12pm
  I don’t see how that is a smaller government pro-freedom statement. From your choice of words it is clear you understand what you are referring to. “Krystall Nacht” or crystal night. Despite your name your comments are not individualistic but socialistic. The fact that you are taking pointers from the nazis doesn’t help your case. For those of you who don’t know Krystall Nacht was a night when nazis and their sympathizers destroyed dozens of stores and small businesses owned by Jews. Poor choice of words.
  
  Report this comment
- Individualism
  Posted on September 14, 2012 at 7:49pm
  it has nothing to do with the nazis, it has to do with what people do when they are mad, its history even before the nazis, USSR it was done during the bolschevik and even in the American revolution, stuff like that was destroyed. it might be the name given by them or someone else, but its just what will happen to the rich, people will come destroy their place and steal their stuff. the occupiers have done a bit of that already or the black bloc version of it. there not all socialists, some are anarchists. just because the nazi’s did it, doesn’t mean it relates only to them. if your worried about nazism try to get judges to stop some of the legislation going through the congress and whitehouse.
  
  Report this comment
- The_Cabrito_Goat
  Posted on September 14, 2012 at 9:31pm
  Ever played Mass Effect 3, Indi? You remind me so much of the illusive man, right around the end.
  
  Report this comment
drrgb
Posted on September 14, 2012 at 4:00pm
And still close to 50% of the people are bent on self destruction by Obama’s folly!

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- Dragonfire
  Posted on September 17, 2012 at 11:29am
  And for this cause God shall send them strong delusion, that they should believe a lie: Th. 2:11 They are in a stupor as prophesied. Another coincidence from a book some call a fairy tale. Silly wabbits, God shall not be mocked. Proceed on your present course and you WILL see God’s wrath.
  
  Report this comment
The-Monk
Posted on September 14, 2012 at 4:00pm
Jay Carney’s spin for this will be;

“This is a fairly volatile situation, and it is in response not to United States policy, obviously not to the administration, not to the American people. It is in response to a video, a film, that we have judged to be reprehensible and disgusting — that in no way justifies any violent reaction to it.”

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Detroit paperboy
Posted on September 14, 2012 at 3:59pm
Wow, 87 trillion in unfunded ponzi schemes ? And 16 trillion in debt ? What’s the problem here……hmmmmmmmm…….. We have a federal criminal cartel bankrupting our future generations, wake up………

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Rothbardian_in_the_Cleve
Posted on September 14, 2012 at 3:59pm
This is really a big deal, E-J is actually a good agency unlike Moody’s/S&P which shill for the Fed/Govt.

Here we go folks. Look at these false flags this week. Look at the fed fronting liquidity for what…a war? Look at the economic data. Owebama is going to win this thing and the wheels are going to come off and we are heading to a crossroads…real soon. I pray for my country and my children and all other constitution loving Patriots. God speed and I’ll see you in a FEMA camp soon enough.

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- woodyee
  Posted on September 14, 2012 at 4:18pm
  Not me – I’ll be on the outside looking to get you guys out.
  
  Report this comment
Lothmar
Posted on September 14, 2012 at 3:59pm
Now I understand why all this terrorist crap is happening, they’re distracting us from the downgrade! Sneaky buggers.

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truthseekerusa
Posted on September 14, 2012 at 3:59pm
FreePak Rally in Ohio on Saturday, September 16, 2012. Make your voice heard to save the Constitution, Bill of Rights and the Republic. Internet access available. Register now.

http://www.meetup.com/The-Central-Ohio-912-Meetup-Group/events/77699992/

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- CatB
  Posted on September 14, 2012 at 4:05pm
  Thanks for posting this .. I registered yesterday .. everyone should see this!
  
  Report this comment
- The-Monk
  Posted on September 14, 2012 at 4:22pm
  @truthseekerusa
  
  Isn’t Saturday the 15th?
  
  Report this comment
- Dalady
  Posted on September 14, 2012 at 5:04pm
  I’ve got my ticket to FreePac and looking forward to hearing some powerful voices for freedom. Long live the USA!
  
  Report this comment
- The Jewish Avenger
  Posted on September 14, 2012 at 10:52pm
  A few nobodys are killed and the goons pulling the puppet strings just turned us into pre-collapse Russia? Sounds about right.
  
  Report this comment
nickc66
Posted on September 14, 2012 at 3:58pm
it’s all that video’s fault for this too.

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- CatB
  Posted on September 14, 2012 at 4:00pm
  Brilliant .. no doubt … Send in the clown Carney.
  
  Report this comment
- CatB
  Posted on September 14, 2012 at 4:08pm
  btw … Romney was RIGHT!
  
  http://www.industryweek.com/global-economy/romney-feds-qe3-stimulus-just-sugar-high
  
  Report this comment
welovetheUSA
Posted on September 14, 2012 at 3:58pm
Perfect……………we are completey destroyed by this radical foolish Obama………this is not good..printing play money to try to say our economy is the dummest thing I have ever seen….who is in charge of this nation…? My God……..Impeach this fool Obama before he gets us all killed…..and starts a world war…which I know is what he and george soros wants………..call out the troups arrest the whole bunch ..including soros for Treason!!!!!!!!!!!

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- frednerk
  Posted on September 14, 2012 at 4:03pm
  Bring all the troops home (‘ YOUR sons & daughters) ‘suround THE WHITEHOUSE & tell all ‘the bastards to come out with their hands up’…………………
  
  Report this comment
IMCHRISTIAN
Posted on September 14, 2012 at 3:58pm
Didn’t work the first two times so why not try again to give Obama a little more time to flim flam his base and leave the evil deed of sharing the debt with future generation.

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right field
Posted on September 14, 2012 at 3:58pm
The American ‘free loaders’ do not have a clue about what is going to happen to their “goodies.”

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- JohnQTaxpayer
  Posted on September 15, 2012 at 11:15am
  The really sad fact is the persons responsible for these bad policies, more than anyone else understand exactly the outcome will devastate the economy in the near future, but they do it anyway, for the piteous political gains of today, they flush the entire country down the crapper tomorrow.
  
  Remember
  
  To our oppressors aka Politicians and Governments
  Now as you urinate on the small remaining flame of the torch of freedom, lit by our forefathers, “we the people” do hold you accountable, for you had many other nobler choices, you chose to enslave the people.
  “We the people” will come for you, just as others have come for their destroyers in the past, and you will pay for your deception, corruption, treachery, abuse, thievery and incompetence.
  I do not stand alone; you forget, I am “We the people”
  
  Report this comment
MrButcher
Posted on September 14, 2012 at 3:56pm
Forward….

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- Wildblue3
  Posted on September 14, 2012 at 4:04pm
  More like Foreclosure.
  
  Report this comment
- CatB
  Posted on September 14, 2012 at 4:08pm
  OVER CLIFF
  
  c
  
  Report this comment
- REETZBEE
  Posted on September 14, 2012 at 4:13pm
  Bend over!
  
  Report this comment
myway
Posted on September 14, 2012 at 3:56pm
We are not only down graded we are rolling down hill like a bat out of hell.

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thegreatcarnac
Posted on September 14, 2012 at 3:56pm
This is further proof that this kenyan is destroying this nation. What will prove to some of these people that obama is a traitor? This also proves the democrat party is NOT loyal to America.

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- wvernon1981
  Posted on September 14, 2012 at 4:05pm
  Obama has no control over the monetary policy decisions made by the members of the Federal Reserve Board.
  
  Report this comment
- Balthazor
  Posted on September 14, 2012 at 4:28pm
  @wvernon1981
  
  Ha ha haaaa ha ha!!! Sorry, I mean you’re right, technically-speaking; and what you say WOULD be true were it not for the fact that Bernanke is just an Obama toadie who knows full well that he’ll be out of a job should Obama lose reelection.
  
  Report this comment
Lothmar
Posted on September 14, 2012 at 3:55pm
Moneymoneymoneymoney~ MONEY! ~Chokes on worthless paper~

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jfreak13713
Posted on September 14, 2012 at 3:55pm
Just a matter of time now! No need to put away cash it wont be worth anything.

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- USACommoner
  Posted on September 14, 2012 at 4:53pm
  That’s right. Use your cash to buy hard assets. Guns, ammo, tools, nonperishables…if nothing happens, you won’t be wasting your money if it’s something you can actually use or get your money out of later if need be.
  
  Report this comment
- anothercomment
  Posted on September 16, 2012 at 3:02pm
  Clearly, the federal government believes in the ammunition “standard”.
  They have purchased billions of rounds of hollow point ammo (approximately 3.5 rounds per citizens in the United States) for such departments as:
  Social Security Administration
  National Oceanic and Atmospheric Administration (????)
  IRS
  Department of Homeland Security
  And probably other federal entities that are yet to be revealed….
  The feds have responded that this is ‘normal’ and was purchased simply for training!
  OMG 2012
  
  Report this comment
myway
Posted on September 14, 2012 at 3:55pm
Here we go again! I hate to say it is good for R & R, but it is. It is horrible for America. I also downgraded the Pretender and Chief to a hat fill of a–holes.

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honestynow
Posted on September 14, 2012 at 3:55pm
Who’s surprised?
The last few days have been truly depressing.

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PilgrimStuckInBizarroWorld
Posted on September 14, 2012 at 3:55pm
Forward straight off the cliff.
OMG

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AverageBear
Posted on September 14, 2012 at 3:53pm
Wow. All of President Obama’s chickens seem to be coming home to roost today.

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- CatB
  Posted on September 14, 2012 at 3:58pm
  He couldn’t have done it without the “help” of Ben Bernanke … hummm … so we print more money to keep interest rates low .. then our credit rating is downgraded .. so presumably we would be paying higher interest rates …. Sounds about right .. liberal logic.
  
  Report this comment
- DownWithDems
  Posted on September 14, 2012 at 4:00pm
  When are the people in this country going to wake up and vote Obama out of office?
  
  They are allowing him to ruin this country and they do not seem to care?
  
  Why is Obama ahead in the polls.
  
  Can people possibly be that stupid?
  
  Report this comment
- NurseHatchetRN
  Posted on September 14, 2012 at 4:01pm
  But he’s doing so well in the polls… :D
  
  Report this comment
- Living In NYC
  Posted on September 14, 2012 at 4:05pm
  Did these two bozos ever have to make a payrolll or much less understand a balance sheet!!
  
  Report this comment
- The-Monk
  Posted on September 14, 2012 at 4:09pm
  @AverageBear
  “Wow. All of President Obama’s chickens seem to be coming home to roost today.”
  
  Can you say Hen Bernanke?
  
  Report this comment
- jadams1214
  Posted on September 14, 2012 at 4:12pm
  @DOWNWITHD The answer to your questions is Mitt Romney!
  
  Report this comment
alamb
Posted on September 14, 2012 at 3:52pm
I am sure Obama and company are going to spin this, like all the rest, as something good for America and that Obama should be re-elected!

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- CatB
  Posted on September 14, 2012 at 3:59pm
  They will have a LOT of help from the MSM.
  
  Report this comment
- Snowleopard {gallery of cat folks}
  Posted on September 14, 2012 at 4:05pm
  Unfortunatly, he will try to pin the blame on the credit agencies and probably threaten them as well.
  
  Report this comment
- Living In NYC
  Posted on September 14, 2012 at 4:15pm
  Snow…I am sure Eric is down in his office working on a lawsuit right norw….did someone say Gallup?
  
  Report this comment
caleejr
Posted on September 14, 2012 at 3:51pm
Let’s see how they can pin that one on Bush.

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