Monday, April 18, 2011

Timmy Hides in the Closet When the Debt Collectors Call

A trader emails:
White House, etc., response to S&P possible downgrade, already sounding like Gree​ce.
Here's the statement from the Treasury on S&P's move.
This morning, S&P affirmed the AAA rating of the U.S., but emphasized the importance of timely bipartisan cooperation and action on fiscal reform. In addition, Moody’s commented today that ‘we view the changed parameters of the debate, with broadly similar goals as to government debt levels, as a turning point that is positive for the long-term fiscal position of the U.S. federal government.’

As the President said last week, addressing the current fiscal situation is well within our capacity as a country. He has initiated a bipartisan process that will allow us to make progress on a balanced approach to restoring fiscal responsibility. The U.S. economy is strengthening as it emerges from the recent recession. Both political parties now agree that it is time to begin bringing down deficits as a share of GDP.

S&P assumes that the U.S. will enact ‘a comprehensive budgetary consolidation program – combined with meaningful steps toward implementation by 2013,’ but 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.
Of note, the Treasury identifies the above statement as coming from Assistant Treasury Secretary for Financial Markets Mary Miller. Maybe the Treasury is thinking that if Treasury Secretary Timothy Geithner doesn't address the debt problem directly, it will just go away. Putting Mary Miller's name on this statement is like having your eleven year old answer the phone and telling the debt collectors that you are not home.

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