Ostensibly Hess reconsidered and decided there was a good possibility that the cuts, in whole or in part, would become permanent.

A more likely cause of his change of heart (IMO) was the reaction in the bond market in the meantime:

After Obama announced his plan, Treasury prices fell sharply in volatile trade last week and yields have hit a six-month high, in part due to concerns over the effect the package will have on government debt levels.

As we are constantly told, “the market is never wrong.” /s

The answer is that these reports are written to serve the interests of the client. And the client in this case is the U.S. government. Last week the big concern was selling the tax cuts. Now that that’s done, Obama is pivoting to tax reform and deficit reduction. In each case, Moody’s produces a report tailored to the message.

Both right. Remember, these are forecasts, and they can say whatever client wants, until the bottom falls out (can anyone say Lehman Bros.?)

Assange is free!!!

3.25pm: Assange has been granted bail, to cheers from inside and outside the court.

I don’t think we’ll see Moody’s or any other rating service based in the US ever downgrade US Treasuries. It would cause a tremendous amount of financial loss and would leave Moody’s and its executives exposed to criminal prosecution. If I were Moody’s general counsel, I’d tell the CEO in no uncertain terms, Do Not Tug On Superman’s Cape.

14th Amendment, Sect. 5
the validity of the public debt of the United States, authorized by law… shall not be questioned

Criminal Mischief statute
18 US 1361. Government property or contracts

If the damage or attempted damage to such property exceeds the sum of $1,000, by a fine under this title or imprisonment for not more than ten years, or both; if the damage or attempted damage to such property does not exceed the sum of $1,000, by a fine under this title or by imprisonment for not more than one year, or both.

Answer to above: Because he’s Moody? Good as any, I guess.

He changed his mind, “No, skip that jelly donut, I’ll have a bagel, instead.”

Excellent news, ghost, now let us hope that he can be safe.

DW

Somebody made a phone call. Moody’s is implicated in bogus ratings of CDO securities, wouldn’t want anyone to investigate that or anything.

Since the Fed is monetizing the deficit now, it really doesn’t matter all that much what the ratings are.

Stage 1 : not much spending, not much taxing
Stage 2 : tax and spend
Stage 3 : borrow and spend
Stage 4 : deficits don’t matter
Stage 5 : buy our debt or else the world economy “gets it”
Stage 6 : banana republic – conjure money out of thin air to give everyone one last fling.

Re: “…they can say whatever (their) client wants…” – then they are without principles. They should say what they think is true. And Hess is a pollyanna if he didn’t consider from the start that extending the tax cuts would make them that much harder to do away with when the issue comes up again – right at election time.

It was a huge mistake to hold the vote AFTER the election. What were those guys thinking? Everyone knew for months that the Republicans would pick up big gains in the House and the Senate.

No wonder we’re in trouble…

Thanks for the story, Jane. Stay on ‘em…someone’s got to.

Ding.

Yipee. Love what he is doing.

Michael Moore, among others, posted Assange’s bail.

DW

Dear Jane: H.L. Mencken answered your question, some decades ago, when he said: “We’re a nation of mendacity.” (Today, he would say:
“We’re a nation of bullshit.”…which has a little more “ooomph” to it.)

Especially we’re that nation, when it comes to snarfing the goorple in favor of protecting the corporatist status-quo from the silly nonsense about truth, decency, and human kindness.

Being a moody guy, he just might have been in one of those moods.

Can someone tell us why Steven Hess won’t take Jane Hamsher’s call?

(Merry Christmas, Julian!)

Looks to me like a squeeze play. They saw Obama give the GOP what it wanted, in order to get unemployment benefits and some other things that he wanted.

Now, the way that I read this is: you didn’t give us enough. We saw that we could play you, and now until and unless you start cutting Social Security and other entitlements, we’ll grind you into dust.

Can someone tell me why the same guy, at the same ratings agency, does a 180 in less than one week, when the deal hasn’t changed an iota?

Jane: I assume your question is rhetorical, abeit thanks for pointing this out.

Shorter answer: Moody’s LIES.

(Happy Holidays, Julian…. be safe; watch your back.)

The bottom line:

The assholes (and I CERTAINLY include Obama in that group…) are walking a tightrope as they try to find the price-point for continuing the gains of the power-elite from all the recent presidents, without completely wrecking the last cosmetic vestiges of popular democracy. I mean, it’s tough to convince amurkans that we need to do away with wasteful programs that help feed, clothe, and shelter, lazy, shiftless workers, while we’re enriching “defense” contractors, funding Afghan druglords, and droning to smithereens any wogs who don’t want to become our 51st state…

But, Barack Obama & Co., are sho-nuff working on it.

Is this the same rating agency which rated CDO’s as triple AAA, later reduced to junk bond status, knowing full well that an increase in the cost of energy and living expenses would collapse the house of cards? Then we paid to cover their bets with AIG? Right on 4cdave@9

No credibility issue here?

Ding.

No credibility issue whatsoever (/s)

Ya know, you are probably right.

I’m adding that to the post.

Support for your comment:

Unless there are offsetting measures…

O prolly had a beer summit with Hess.

All the senior officers at Moody’s (and S and P) belong in jail. They are complete and utter failures, and moreover, deliberate failures which constitutes fraud. The only reason they aren’t already serving 15-20 stretches is that Eric Holder and his heroes of justice, inspired by the great successor to Hoover (with a whole lot worse besides thrown into the mix) has decided to “move on” and “look forward” – at least where the issues involve the criminally wealthy.

I just have to ask myself though. What sort of idiot would base any decision on any advice issued by these morons? And then of course, I remember that they are actually “legislated” into the very fabric of the economy because of things like pension funds with statutes “having” to buy whatever shite the plutocrats want to force them to that they’ve bribed these fraudsters to name “AAA” – and here’s the punchline – they do this with YOUR retirement money (ROFL); and of course, because of the “no conflicts” funding model that applies to ratings agencies in the first place.

Just crime in its purest form. Right before your eyes.

Thanks Jane.

From August 2010:

Update: SEC drops Moody’s fraud case

The Securities and Exchange Commission let Moody’s off the hook for failing to heed its own rating guidelines.

The SEC blamed “uncertainty” tied to the regulatory reforms enacted last month in dropping the widely watched case, which stemmed from Moody’s 2007 failure to fix some European debt ratings after it discovered an error in their calculations. The Dodd Frank Act limits the SEC’s jurisdiction to cases with a strong tie to the United States, the agency said.

But the securities regulator sternly admonished Moody’s and other officially favored rating agencies — known as nationally recognized statistical ratings organizations, or NRSROs — not to let it happen again.

“Investors rely upon statements that NRSROs make in their applications and reports submitted to the Commission, particularly those that describe how the NRSRO determines credit ratings,” said Robert Khuzami, director of the SEC’s Division of Enforcement. “It is crucial that NRSROs take steps to assure themselves of the accuracy of those statements and that they have in place sufficient internal controls over the procedures they use to determine credit ratings.”….

Moody’s just temporarily forgot about the payoff they got from the SEC.

The fix is in. Anybody working for the oligarchy (which includes most of the financial wizards quoted by the media and most of our politicians) will say exactly what they are told to say. Being a corrupt, hypocrite (in other the ability to lie with a straight face) is the only prerequisite one needs to succeed. Peace

The answer is that these reports are written to serve the interests of the client. And the client in this case is the U.S. government.

So if we peons took up a collection and hired Mooney’s . . . ./s

It was not a “mistake” to do this after the elections. Obama could have NEVER extended the Bush tax cuts before the elections. In fact, had the Dems had this debate in, say, October, it MIGHT have changed enough minds that they would have held on to the house.

And that would have screwed up the whole plan. No, the plan was massive electoral losses, Uncomfortable Shift To The Center (AKA right), extend tax cuts for oligarchs, Oh Goodness we have to DO SOMETHING about the deficit for the grandchildren, massive cuts, and then, as a denouement, TAX REFORM deficit commission style, meaning MORE PERMANENT tax cuts for oligarchs while we wait longer to retire, have meager benefits cut further, and huge tax increases for the middle class, which will be rectified by President Palin in 2013. CANT WAIT

I’m noticing something very interesting: I just got an e-mail from Udall titled “I Voted No,” and touting his vote against the Tax Give-Away. But his “reasoning” contained all sorts of phrases about the “run-away deficit.”

I think we can see where this is going.

And I note that Akaka, who “signed the letter” in opposition to the bill, didn’t vote against it. Why am I not surprised.

I agree with you

The USA has the economy of a 3rd world nation, and we also the have the crooked govt of a 3rd world nation, that caters only to the ultra rich.

Can someone tell me why the same guy, at the same ratings agency, does a 180 in less than one week, when the deal hasn’t changed an iota?
———————————–
Typical of small minded fools, flip flopping like a fish on a deck. They have no clue, really…

The United States still owns 25% of the world’s wealth. That’s hardly third world status. Peace

You are missing the third memo. The one that states that giving four trillion away in tax breaks is fine with Moody’s as long as the Catfood Commission is allowed to strip four million out of government programs. They published this third one not long ago.

You do know the top 1% of the USA owns more than bottom 90% Peace

The top 1% owns 34% of our wealth. The bottom 90% owns 32% of the wealth. The top 10% owns 68% of our wealth. That is why Obama and the Congress does what it does. And why the candidates that we get to vote for are chosen by the oligarchy. Peace

Because they are a criminal enterprise?

Same folks that gave subprime junk AAA ratings.

Same folks that downgrade European nations right before the financial raiders decend to loot and pillage the targeted nation.

Why are these rating agencies still in business? As others have pointed out, they are useful to the administration and it’s benefactors.

Moody’s is for sale of course.

“From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth. Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years,” Moody’s analyst Steven Hess writes.”

Jane, you miss the most important point from this statement, “unless there are offsetting measures”. Simply put, AUSTERITY is standing at the waters edge and entering the lexicon of America. Let’s not let the big picture of this rating article obscure the true meaning it intended. This is a signal to the government to begin the slashing of social services needed by the people who have suffered the most in this country. Here’s the question, when it happens will we be brave like the Europeans we see rioting in the streets, or will we continue with this bend over and take it mentality.

The reason this rating summary changed has simply to do with the fact that passage of this deal is secured, now the thing to do is to lay the groundwork for our legislators to begin the slashing and burning. If we progressives don’t start reading between the lines and not accepting the meme given us by the powers that be, we will continue to be lost in the woods of lies and deception, without knowing how to fight back. We also have to stop giving these politicians, including Obama, the benefit of the doubt. They are not interested in protecting the middle, working, and poor classes in America, they are interested in protecting the oligarchy running this nation, with few exceptions like Kucinich and Sanders.

As you know, there are other reasons why the Moody’s threat is silly. Moody’s can’t impact the interest rates we pay on Treasury bonds if the Fed decides it wants to target a particular interest rate. It’s completely within the power of the Fed and Treasury to determine what the rates will be and even drive them down to near zero. Some links on the issue of the ratings agencies and driving interest rates down to zero from Bill Mitchell are:

http://bilbo.economicoutlook.net/blog/?p=1731

http://bilbo.economicoutlook.net/blog/?p=1961

http://bilbo.economicoutlook.net/blog/?p=6857

In addition, there’s Mat Forstater and Warren Mosler: http://moslereconomics.com/wp-content/graphs/2009/07/natural-rate-is-zero.PDF

and Scott Fullwiler’s paper: http://www.cfeps.org/pubs/wp-pdf/WP53-Fullwiler.pdf

a government of the 0.01% for the 0.01% and by the 0.01%.

Moody’s is like every other bad actor in this clusterfuck of an economy: Wall Street, TBTF Banks, corporations outsourcing/investing in China and India, the Fed, and Obama’s Treasury, all of them serve the interests of the rich at the expense of the working and middle classes. It’s been this way for years, every time a major employer announces layoffs or “restructures”, their stock is rewarded and the DJIA goes higher. The majority of economic activity in America and the industrialized world seems to be a never-ending series of Ponzi schemes.

Bait & Switch. And the best part is that because it is “commentary”, it is now legally protected speech!

http://www.bloomberg.com/news/2010-12-10/moody-s-fitch-s-p-ratings-are-protected-speech-california-judge-rules.html

Bond rating agencies have some kind of chutzpuh questioning US debt after the historic role their malfeasance played in helping create the crisis that made much of the debt necessary. Treasury rates are at historic lows, indicating that investors still view US debt as the safest bet in the world.

Oh I know that and you know that and maybe even Moody’s knows that. But if there’s a US Attorney gunning for them, they’d have to count on the grand jury knowing that, and THAT would be a bad bet. :o)

beowulf, New post quotes the above comment http://fdlaction.firedoglake.com/2010/12/13/moodys-swings/#comment-13377

Here’s the link:

http://my.firedoglake.com/letsgetitdone/2010/12/14/moodys-bring-it-on/

Right now! Maybe people’s appetites will grown depending on what happens with the foreclosure fraud mess.

Let’s see; Moody’s is the outfit that gave AAA ratings to Goldman’s toxic instruments of financial mass destruction, aren’t they?

Awesome post Jane and keep on catching this MSM pump and dump nonsense going along with market changes. This is probably the best example of opinion manipulation I have seen regarding economic news so far. Truth never changes and if it changes truthful accounts mention why that changed very clearly.

I saw the second news release but missed the first one. It just shows how truth is trivialized and how markets are being manipulated. If one wants to get some small european country to shell money economic contagion news breaks out and markets do a dump till money is paid out. Iceland showed the right anti-dote to this nonsense. Simply default and take care of their people instead of cutting down pension etc for their people.

Did in one week US Economy have a whole sale migration to a totalitarian country that warranted opinion switch. So switching of opinion in one week logically deduces to intentional mendacity. Actually I believe the second news release more truthful closer to the reality based on logical reasoning. Unjustified and Unfunded War in Iraq and the majority reelect the GWB instead of putting a stop to that wreakage train by electing the opponent then everybody has to chip to pay the bills coming home. If majority allow one person in our community to do something wrong to shared resources on their behalf then everybody is affected and everybody has to chip in to fix it.

Were not rating agencies supposed to be penalized & corralled in the financial services reform bill. So much for the bills passed out as reforms now-a-days.

Since the bill passage, looks like the scale and scope has got bigger. Now they are passing judgements on the US government and changing opinions to the opposite end in a matter of week.

Lets bring back Glass-Steagall Act as is. It was a true reform and it has bi-partisan support with Sen Cantwell and Sen McCain as cosponsors. I am guessing as usual it might be having one or two anonymous blocks in the senate. Is it some staffer doing these anonymous blocks by mistake. BTW what are these anonymous senate blocks I keep hearing about in a open democracy.