KUT News Brief 8/07/2011
The world will know by Monday morning how the international markets react to Standard & Poor’s decision to downgrade the U.S. credit rating to a “AA+,” a notch below what’s considered a risk-free investment.
Two other credit rating agencies had left the U.S. rate unchanged.
Standard and Poor’s based its decision on the political logjam in Washington, saying lawmakers did not seem able to overcome “a contentious and fitful process.”
While the Obama administration and Treasury Department were quick to point out that S&P analysts had also given positive debt ratings to mortgages that eventually spun the nation into its current financial woes, analysts agree nevertheless, that the longer Washington relies on partisan brinksmanship it will not be able to truly address the country’s budget situation.
Local economist Angelos Angelou, believes the downgrading will have short term impacts on both the U.S. and Texas economy – from driving interest rates higher to causing higher mortgage and credit card interest rates.
“At the same time,” he told KUT, “I don’t know that the downgrading of U.S. debt would have the same consequences as it had for European nations.”
Texas will be affected like any other state. As U.S. borrowing costs go higher that would eventually mean higher borrowing costs for banks, and those higher costs are eventually transferred on to the consumer.
“What I would say is though,” Angelou said, “given the paralysis in Washington it’s time that something is done seriously about our deficit. There is a lot more work to be done in Washington than what was just agreed to a week ago. And given our debt has gone from 35% of GDP to 100 percent by the end of this year… we deserve not just one downgrade but maybe one more or two and that will serve as a lesson that we need to seriously address this problem at the national level and not play politics.”
In other news this morning, the political world turned its eyes to Texas for Governor Rick Perry’s “Response” event in Houston yesterday. Today, they are watching Ausin. Analysts expect the Governor will launch a presidential campaign within the week.
The Department of Defense is still notifying families of the service members killed when the Taliban shot down a U.S. Chinook helicopter in Afghanistan Saturday night. Some 30 Americans were killed in that incident, including members of the elite Navy SEALS unit that killed Osama bin Laden earlier this year.
The Austin American-Statesman this morning is reporting that Austin’s police union is sending overtime hours to the state police union, and using the money for non work-related items.
“The result of the trade is that city taxpayers not only have picked up the yearly $143,000 full-time wages and benefits for Sgt. Todd Harrison while he works as the top official for the Combined Law Enforcement Associations of Texas; they also have paid as the local union cashes in on Harrison's service.”
On the weather front, what else? It’s going to be another scorcher! 103 with full sun. Break out the sunscreen and head to Barton Springs.