U.K. Downgraded, Stripped of AAA rating

Credit ratings agency Fitch on Friday announced its decision to revise the U.K.’s credit rating AA+, down from its previous AAA rating.

Here’s the full text of the agency’s announcement:

Fitch Ratings-London-19 April 2013: Fitch Ratings has downgraded the United Kingdom’s Long-term foreign and local currency Issuer Default Ratings (IDR) to ‘AA+’ from ‘AAA’. The Outlook is Stable. At the same time, the agency has affirmed the UK’s Short-term foreign currency rating at ‘F1+’ and the Country Ceiling at ‘AAA’.

The rating actions follow the conclusion of the review of the UK’s sovereign ratings initiated on 22 March and resolve the Rating Watch Negative. The previous Negative Outlook on the UK’s sovereign ratings had been in place since 14 March 2012.

KEY RATING DRIVERS
The downgrade of the UK’s sovereign ratings primarily reflects a weaker economic and fiscal outlook and hence the upward revision to Fitch’s medium-term projections for UK budget deficits and government debt. Despite the loss of its ‘AAA’ status, the UK’s extremely strong credit profile is reflected in its ‘AA+’ rating and the Stable Outlook.

- Fitch now forecasts that general government gross debt (GGGD) will peak at 101% of GDP in 2015-16 (equivalent to 86% of GDP for public sector net debt, PSND) and will only gradually decline from 2017-18. This compares with Fitch’s previous projection for GGGD peaking at 97% and declining from 2016-17 and the ‘AAA’ median of around 50%.

- Fitch previously commented that failure to stabilise debt below 100% of GDP and place it on a firm downward path towards 90% of GDP over the medium term would likely trigger a rating downgrade. Despite the UK’s strong fiscal financing flexibility underpinned by its own currency with reserve currency status and the long average maturity of public debt, the fiscal space to absorb further adverse economic and financial shocks is no longer consistent with a ‘AAA’ rating.

- Higher than previously projected budget deficits and debt primarily reflects the weak growth performance of the UK economy in recent years, partly due to headwinds of private and public sector deleveraging and the eurozone crisis. Fitch has revised down its forecast economic growth in 2013 and 2014 to 0.8% and 1.8%, respectively, from 1.5% and 2.0% at the time of the last review of the UK’s sovereign ratings in September 2012. The UK economy is not expected to reach its 2007 level of real GDP until 2014, underscoring the weakness of the economic recovery.

- Despite significant progress in reducing public sector net borrowing (PSNB from a peak of 11.2% of GDP (GBP159bn) in 2009-10, the budget deficit remains 7.4% of GDP (excluding the effect of the transfer of Royal Mail pensions) and is not expected to fall below 6% of GDP and GBP100bn until the end of the current parliament term. The slower pace of deficit reduction means that the next government will be required to implement substantial spending reductions (and/or tax increases) if public debt is to be stabilised and reduced over the medium term.

The Stable Outlook on the UK’s sovereign ratings reflects the following factors.

- Under Fitch’s baseline economic and fiscal scenario, which assumes a continued policy commitment to reducing the underlying budget deficit and medium-term annual growth potential of 2%-2.25%, government debt gradually falls as a share of national income in the latter half of the decade.

- The long average maturity of public debt (15 years) – the longest of any high-grade sovereign -exclusively denominated in local currency and low interest service burden implies a higher level of debt tolerance than many high-grade peers.

- The international reserve currency status of sterling and the ability and willingness of the Bank of England to intervene in the UK government debt market largely eliminates the risk of a self-fulfilling fiscal financing crisis.

- The gradual improvement in the UK banking sector’s capital and liquidity position has further reduced contingent liabilities arising from this sector.

The UK’s ‘AA+’ rating is underpinned by its high-income, diversified and flexible economy as well as a high degree of political and social stability. The monetary policy framework as well as sterling’s international reserve currency status afford the UK a high degree of financial and economic policy flexibility. Strong civil and policy institutions and a high degree of transparency enhance the predictability of the business and economic policy environment that compares favourably with peers in the ‘AA’ category.

Weak economic performance and growth prospects, relatively high levels of private and foreign as well as public debt, along with sizeable twin fiscal and current account deficits, are weaknesses relative to rating peers.

RATING SENSITIVITIES
The Stable Outlook indicates a less than 50% chance of a change in the UK sovereign ratings over the next two years.

The main factors that could lead to a negative rating action, individually or collectively, are:
– Failure to stabilise the government debt to GDP ratio over the medium term.
– Increased threat to macro-financial stability, for example arising from an intensification of the eurozone crisis or an erosion of confidence in the UK’s policy commitment to price stability.

The main factors that could lead to a positive rating action, individually or collectively, are:
– Stronger economic recovery and rebalancing of the UK economy than currently forecast.
– Government budget deficits and debt declining at a faster pace than currently projected so that GGGD is on a sustainable path towards 90% of GDP and below.

KEY ASSUMPTIONS
A key assumption underpinning Fitch’s medium-term fiscal projections reflected in the ‘AA+’ rating and Stable Outlook is that the growth potential of the UK economy is around 2%-2.25% pa. This assumption is based on the UK’s labour market and demographic outlook and expectation that labour productivity will revert to its long-run trend of around 2% pa. In the event that productivity and hence economic growth is permanently lower than its long-run historical average prior to the financial crisis, the fiscal outlook would be materially worse than currently assessed with adverse implications for the UK’s sovereign credit profile and ratings.

For the purposes of its economic and fiscal forecasts, Fitch assumes a current ‘output gap’ of 2.7% of potential GDP that gradually declines over the forecast horizon. However, there is considerable uncertainty over the extent and future evolution of productive spare capacity in the UK economy. According to Fitch’s simulations, in a ‘no output gap’ scenario GGGD would remain above 100% of GDP until 2018 in the absence of further structural deficit-reduction measures.

The strong institutional framework for control of public expenditure and effective tax administration alongside the broad-based political and public commitment to deficit reduction underpins Fitch’s assumption that fiscal consolidation will be sustained beyond the term of the current parliament through a combination of spending and tax measures. 3.5pp of the 6.9pp total reduction in expenditure as a percentage of GDP for the 2009-10 to-2017-18 period fall outside the term of the current parliament.

Fitch assumes that no contingent liabilities arising from the financial sector and other government interventions to ease constraints on the availability of bank credit to the private sector will have a material impact on the path of UK government debt over the projection horizon.

Fitch’s current global economic forecasts (published in the March 2013 edition of the Global Economic Outlook) are incorporated into its near-term economic forecast for the UK including the assumption that severe tail-risks to the global economy, including a break-up of the eurozone, do not materialise and oil prices remain broadly at current levels.

Fitch will publish early next week an update of its medium-term economic and fiscal projections for the UK that will supplant those published by Fitch in September 2012 (‘UK Public Finances Update’, 28 September 2012).

The ratings of related entities and transactions will be reviewed in light of today’s sovereign rating action and any changes announced shortly.

h/t The Blaze

According To Obama If Budget Sequestration Happens

president-obama-the-great-divider
obama along with a willing media, are daily calling out a list of things that will happen when a mere $85 billion worth of budget cuts takes place in 2013 due to the agreement he signed into law and was gleefully for back in November 2011.
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White House Press Corps Outraged at Being Shut Out of Obama’s Entire Weekend

obama mysteryPublisher’s Note: Why would Obama shut the press out of a simple weekend of golf? Our logic is that he wouldn’t. So what exactly is he doing down in Florida? Why the lack of transparency? Yet another mystery of the Obama administration. -PBN

The White House press corps has been almost entirely shut out of President Obama’s weekend in Florida, and the journalists who make a living recording the president’s every move aren’t happy about it.

The Washington Post relates (all subsequent emphasis added):

[Obama] disappeared late Friday evening behind the gates of the Floridian, a lush golf and residential compound off limits to the public. Neither the public outside those gates, nor the media, has seen him since.

A photo of Obama on the course with someone as famous as Woods is commonly a moment the “traveling pool” of about a dozen journalists is allowed to witness. White House officials declined to allow that Sunday.

For the long weekend, the pool has been permitted just inside the Floridian gates, where reporters have used as their “filing center” a mirror-ceilinged party bus, the kind used for shouldn’t-be-driving evenings of bacchanalia like bachelor parties.

Because the president’s motorcade has not left the compound, White House officials have explained, there is no reason for the pool to track the president’s activities or to know who he is spending time with on a personal vacation.

White House Correspondents Association’s president Ed Henry released a statement condemning the lack of transparency Sunday:

“Speaking on behalf of the White House Correspondents Association, I can say a broad cross section of our members from print, radio, online and TV have today expressed extreme frustration to me about having absolutely no access to the President of the United States this entire weekend.  There is a very simple but important principle we will continue to fight for today and in the days ahead: transparency.”

But White House Principal Deputy Press Secretary Josh Earnest maintains:

“The press access granted by the White House today is entirely consistent with the press access offered for previous presidential golf outings. It’s also consistent with the press access promised to the White House Press Corps prior to arrival in Florida on Friday evening.”

h/t The Blaze

Dirty Liar Harry Reid Lies About $2.6 trillion cuts in ‘This Week’ interview [VIDEO]

http://campaigntrailreport.com/wp-content/uploads/2012/08/dirty.jpgSenate Majority Leader Harry Reid (D-NV) answers a reporters questions after the Democrat’s weekly policy luncheon, at the US Capitol, January 29, 2013, in Washington, DC. The leaders discussed pending immigration reform, bipartisan issues and the recent Supreme Court ruling on President Obama’s recess appointments. UPI/Mike Theiler
Even the liberal leaning FactCheck.org called out Senator Harry Reid for being doubly wrong in his claim that Congress has already cut $2.6 trillion from projected future deficits by reducing non-defense programs alone.

The site explained that not only did the legislation he referred to applied to both security and non-security spending, but that a considerable part of the deficit reduction came from tax increases and not spending cuts.

The worst part? The senator made the same erroneous statement twice. Reid made the affirmations on ABC’s “This Week” on Feb. 3rd, were he also added that further deficit reduction should include more tax increases and cuts in military spending.

“The American people need to understand that it’s not as if we’ve done nothing for the debt. $2.6 trillion, $2.6 trillion already we’ve made in cuts. And all those cuts have come from non-defense programs. We need to keep our eye on the prize and continue doing something about spending, but I think that what we need to do is do some of the things that Mitt Romney talked about. He said there’s some low-hanging fruit; there are a lot of tax loopholes that should be closed. I agree with him. We haven’t done that.,” he said.

Later on, after host George Stephanopoulos probed the Senator on the issue, he repeated his claim saying,

“I repeat: $2.6 trillion already, all coming from non-defense. If we’re going to have a sequester, defense is going to have to do their share”

According to FactCheck.org Reid inflated the $2.6 trillion figure for the show. The senator referred to the same figure as being $100 billion less, three days before on the Senate Floor.

“We have already made nearly $2.5 trillion in historic, bipartisan deficit reduction,” he said on the floor Jan. 31.

Ph.D.’s on Food Stamps, the Glass is Shattered, Gov’t Has Stopped Working

Supporter of Keynesian economics believes it is the government’s job to smooth out the bumps in business cycles. Intervention would come in the form of government spending and tax breaks in order to stimulate the economy, and government spending cuts and tax hikes in good times, in order to curb inflation.

 

http://www.lewrockwell.com/north/north427.html

America's PhDs on Food StampsOnlineColleges.net

The Real Unemployment Rate 14.4% Here’s the Technical Breakdown

UPDATE: The Labor Department reported this morning that initial jobless claims last week rose by 4,000 to 371,000.

The truth is not close to the numbers the pundits and politicians share in public. Underemployment must be part of this mix.  Please read and share the article by Markos Kaminis, aka the Wall Street Greek. -PBN

Nonfarm Payrolls increased by 155,000 on net in December 2012, a number that perfectly matched against the consensus of economists surveyed by Bloomberg. The Unemployment Rate was likewise perfectly placed against economists’ expectations at 7.8%, and it was unchanged from November. But America wants to know what the real rate of unemployment is.

Years ago, we were one of the first to shed light on the concept of an underemployment rate, which incorporates people who are not satisfied with their less than full employment and also includes those desperate Americans detached from the labor force. Ahead of the presidential election, Mitt Romney was talking about another version of unemployment that we also suggested Americans consider. That figure used a labor participation rate from when President Obama took office, though we would look back further to when unemployment was under 5.0% instead. It makes sense to use such a participation rate, if you believe population growth and the maturing of Americans at least matches the number of seniors retiring by choice and Americans passing away prematurely. Obviously there are demographic trends at play as well, like the aging of the baby boomers, but so much so soon? Because of the relevant issue of long-term unemployment in America today and workers falling off the labor force radar screen while still interested in working, these figures are likely closer to reflecting the true state of American labor.

Under-Employment

The calculation of the under-employment rate, or the U-6 by government notation, takes into account the number of Americans working part-time for economic reasons and the detached workforce. Working part-time for economic reasons is equivalent to folks who would prefer full-time employment but have had their hours cut or have had to otherwise settle for part-time work. Detached workers are those Americans who have not recently looked for work, sometimes because they do not believe work exists for them today. In getting to the U-6 “underemployment” figure, we’ll need to include these groups of workers with unemployed Americans. If we add back the excluded 2.614 million displaced workers to the labor market, and include the 7.918 million underemployed part-timers in the unemployed count, December adjusted unemployment is found to be ((12.206M + 2.614M + 7.918M) / (155.511M + 2.614M)) * 100 = 14.4%. In November, the rate was ((12.042M + 2.505M + 8.138M) / (155.319M + 2.505M)) * 100 = 14.4%, or the same misery.

This data can be skewed by any of its components. Starting with the denominator, the labor force count increased in December, which would dilute the numerator and moderate the unemployment rate. Note, however, that in December the number of detached workers increased by 109K and the number of forced part-timers decreased by 220K. It’s hard to say whether detached workers disappeared off the radar screen and part-timers got fired, or if these folks found work of some sort. Most importantly, the number of people reporting unemployed status was up by 164,000. The end result of the changes in the categories netted into something less than significant enough to change the underemployment rate, matching the message of the unchanged unemployment rate in December.

Historically speaking, U-6 unemployment is improved, as you can see by the table here. However, this improvement may be for another reason which is unaccounted for by this data, which we discuss in the paragraphs below.

Monthly Period U-6 Unemployment Rate (Seasonally Adjusted)
December 2009 17.1%
December 2010 16.6%
December 2011 15.2%
December 2012 14.4%

What About the Forgotten?

I often talk about the great degree of long-term unemployment plaguing our nation today and how this has uniquely impacted reported employment data. The number of Americans unemployed for 27 weeks or longer was relatively unchanged in December at roughly 4.8 million. This represented 39% of the total unemployed count.

The proportion is down from recent history, though it continues to reflect poorly on the state of labor. That’s because the longer people remain unemployed, the harder it gets for them to find jobs in their specialty fields due to eroding and outdated skill sets. Many of us fear that improvement in the proportion of long-term unemployment is partly due to Americans simply falling out of the labor force count rather than finding new employment.

For this reason, some, including yours truly and more notably Mitt Romney, have been considering what the unemployment rate might be at labor force participation rates of the past. The labor force participation rate was 63.6% in December 2012. That compares against 66.4% in December 2006, which was the high for December since 2002. Now, maybe that participation rate reflected the excesses of the mortgage, construction and finance industries that resulted from greed and the fault of the rating agencies and those industries. Those faults are still bearing out in layoffs, like the significant cuts announced last year by Bank of America (BAC) and again late this year by Citigroup (C). Still, let’s calculate what the unemployment rate would be at such a participation rate, because if the economy had not been so disrupted by the financial crisis, perhaps those employed in the synthetically fattened fields might have found other work.

Applying the 66.4% rate to the civilian noninstitutional population count in December 2012, we get a civilian labor force count of 162,248,400, versus the 155,511,000 reported (Note calculation error exists because of the seasonal adjustment to the labor force count. I’ve attempted to back into that adjustment and apply it to the theorized labor force count, resulting in this figure for the adjusted labor force: 162,357,396). After that adjustment, the difference from this December’s workforce count is 6,846,396 million Americans who would be added to the unemployed count as well. So, the real unemployment rate could be 11.7% (not 7.8%) if those nearly 7 million Americans have simply fallen off the radar. Likewise, the real underemployment rate could be as high as 17.9% today.

Those are much more significant figures reflecting a poorer state of health for American labor and the economy. Now, the trend would still seem to be improving, but the data would argue for continued stimulation of the economy by the Federal Reserve and through fiscal policy. The theme of this article is to simply show what real unemployment might be, and not to get deeper into resulting fiscal and monetary policy consequences and strategy, but perhaps we’ll expand upon this in upcoming work for you. It’s clear that we need to continue to stimulate job creation in America so that we can support and grow consumer spending and personal income, and in so doing raise revenues to support our nation’s needs and growth.

If we can accomplish this while at the same time reining in excess spending and gaining control of our debt, then we might maintain an environment supportive of business. An environment supportive of business is an environment supportive of the stock market. Thus, dignified decision-making must overtake dysfunctional politics in Washington D.C. if we are to see the historical average gains of the market continue over the next several decades. Therefore, we must demand more from our politicians. Otherwise, the performance of the broader indexes, reflected in the SPDR S&P 500 (SPY), SPDR Dow Jones Industrial Average (DIA) and the PowerShares QQQ (QQQ) will diverge from their historical gains. For this reason, today’s market is a stock-pickers’ market, but one burdened by the heavy weight of macroeconomic issues. To help to lighten that burden, we must continue to seek to spur job creation, because the situation is worse than it seems as indicated by the real unemployment rate.

Tim Scott Tea Party Patriot Favorite Succeeds DeMint

Rep. Tim Scott, a South Carolina Republican backed by tea-party groups, made history Monday when he was appointed to fill the seat of departing Sen. Jim DeMint.

Mr. Scott, who will be the first black senator from the South since Reconstruction, instantly became the GOP’s highest-profile African-American, as the party isn’t represented by any other black members of Congress or any black governors.

South Carolina Republican Gov. Nikki Haley said she chose Mr. Scott because he was a successful small-business man and fiscal conservative with the same philosophy as Mr. DeMint.

Ms. Haley said it was important to her as an Indian-American to say that she chose Mr. Scott for his merits, adding that he “earned this seat for the person that he is.”

Mr. Scott said he would seek to uphold Mr. DeMint’s record, and shares his hard-line approach on negotiations on the fiscal cliff, looming year-end spending cuts and tax increases. Mr. Scott said raising taxes on the nation’s wealthiest people would damage business owners and cause jobs to be lost.

“That’s not the right direction,” he said. read more

Communist Party Parties Hearty USA ~ Thank Obama :(

Transparency: Walk the Walk, Mr. President

http://3.bp.blogspot.com/_vmpSO2BbYCE/TMyEsqFSD2I/AAAAAAAANDs/Eh3cALIcq8Y/s1600/obama+testy.jpgConservatives are worried that the negotiations that will begin this week to avoid the “fiscal cliff” will end in disaster. Tax increases that will weaken the economy could be combined with spending cuts that never materialize in an agreement that will leave many Republicans — especially those who have signed the “no net new taxes” pledge promoted by Americans for Tax Reform — vulnerable to public outrage, and indeed to primary challenges in the midterm elections. read more

Obama Spend As I Say, and Not As I Spend VIDEO


House Oversight and Government Reform Committee Chairman Darrell Issa today demanded that Secretary of State Hillary Clinton turn over documents concerning what he called “excessively lavish” spending for official White House state dinners.

Issa also released a video titled “All the President’s Parties” comparing President Obama’s promises to cut wasteful federal spending with examples of extravagance drawn from the dinners for foreign dignitaries.

“During these tough economic times, Americans are reining in their spending wherever possible,” Issa said in the Nov. 1 letter to Clinton, citing recent reporting by The Washington Examiner. “The executive branch should be mindful of this. Reports of excessively lavish events, however, indicate the opposite.” (See the complete letter in the embedded viewer beneath this story.)

The Examiner reported on Oct. 26 that a May 2010 Obama state dinner for Mexican President Felipe Calderón cost nearly $1 million, or $4,700 per attendee. Three other Obama state dinners since 2009 cost half a million or more, according to official documents cited by the newspaper.
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Fact Check: Washington Post Calls Romney Jeep Ad Correct

While the left are busy attacking Romney over his Jeep ad, calling him a liar, the truth is popping up all over the place, end results? Romney is telling the truth!!! The Washington Post Fact Checker has declared that Mitt Romney’s television ad about Jeep production being moved overseas, which has “hurt” the “feelings” of the Obama campaign and the left, is “factually defensible” and “technically correct.”

Actually, the Fact Checker’s Glenn Kessler gave the Jeep ad four Pinocchios, somehow conveying a verdict of gross dishonesty, despite the fact that no statement in Romney’s ad is incorrect. But my headline conveys the “overall impression” of Kessler’s article–which is the standard he uses to attack Romney.

American taxpayers should prepare themselves for another slap in the face, courtesy of the much-ballyhooed Obama auto bailouts. After spending about $85 billion to bail out Chrysler, General Motors and Ally Financial (formerly known as GMAC), taxpayers are being rewarded by Chrysler’s parent company, Fiat, announcing that it is preparing to build its Jeep brand vehicles in China. http://nlpc.org/stories/2012/10/23/bailed-out-chrysler-build-jeeps-china

Taxpayer Funding of Chevy Volt to Create Jobs – In China
http://nlpc.org/stories/2011/09/25/chevy-volt-production-create-green-jobs-%E2%80%93-china

In fact you can check out all the attacks on Romney and how they have  been fact checked only to prove he is telling the truth.
http://www.washingtonpost.com/blogs/fact-checker

Obama ad uses children to sing Romney will let people ‘just die,

obama has finally reached a new low, he is using children, brain washing them and having them to sing that Romney will let people die…I question the parenting in this also, are these parents so beaming with the hopes their child might be in the spot light for the president for a few minutes they are willing to allow their children to be used this way…

You might say wait a minute this doesn’t mention Romney, well not his name but visit the web site and it tells you elect obama, click here..now you know they are talking about Romney…
Full lyrics:

Imagine an America
Where strip mines are fun and free
Where gays can be fixed
And sick people just die
And oil fills the sea
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