America has ghetto credit: 3 Top Firms 2 Downgrade US Credit Rating

January 4, 2013
(US Faces Credit Rating Downgrade by Three Top Firms This Year)Moody’s senior credit officer declared, “To support the triple-A rating, further measures to reduce deficit levels are needed.” In other words, we’re facing a second downgrade unless entitlement reform happens this year.
Both S&P (who downgraded us last year) and Fitch’s have a negative outlook on US debt, which the administration itself projects will hit $25 trillion by 2022. Unless changes are made on entitlements, both agencies could follow Moody’s and issue a downgrade before year’s end.(MORE)

American Colleges Are Over $205 Billion in Debt, Harvard is $6 Billion in Debt

December 23, 2012

(Daniel Greenfield) The Student Loan Bubble is bad, but interestingly enough, as this New York Times article points out, the loan problem extends all the way up the ladder to the institutions of higher education who never seem to have enough money.

Remember that our financial experts come out of a system that is this deep underwater and they have a heavy investment is bailing it out.

Overall debt levels more than doubled from 2000 to 2011 at the more than 500 institutions rated by Moody’s, according to inflation-adjusted data compiled for The New York Times by the credit rating agency. In the same time, the amount of cash, pledged gifts and investments that colleges maintain declined more than 40 percent relative to the amount they owe.
While Harvard is the wealthiest university in the country, it also has $6 billion in debt, the most of any private college, the data compiled by Moody’s shows.
At the Juilliard School, which completed a major renovation a few years ago, debt climbed to $195 million last year, from $6 million in inflation-adjusted dollars in 2002. At Miami University, a public institution in Ohio that is overhauling its dormitories and student union, debt rose to $326 million in 2011, from $66 million in 2002, and at New York University, which has embarked on an ambitious expansion, debt was $2.8 billion in 2011, up from $1.2 billion in 2002, according to the Moody’s data.
The pile of debt — $205 billion outstanding in 2011 at the colleges rated by Moody’s — comes at a time of increasing uncertainty in academia. After years of robust growth, enrollment is flat or declining at many institutions, particularly in the Northeast and Midwest. With outstanding student debt exceeding $1 trillion, students and their parents are questioning the cost and value of college. And online courses threaten to upend the traditional collegiate experience and payment model.

Student debt turns out to be only 5 times as high as the accumulated college debt, and that’s only at the colleges rated at Moody’s. What would happen if we added up the entire pile of debt for all institutions of higher education in the country? Somehow I think we would arrive at some very scary numbers.
The system is broken and spending its way deeper into debt. Tuition costs have risen dramatically and hardly made a dent in the tremendous piles of debt accumulated over the last decade.
It would seem as if Academia’s brokenness amplifies the brokenness of its graduates. It acts as a predictor for the entire broken system. Academia is a deadbeat metaphor turning out deadbeat students in a deadbeat nation.

Harvard borrowed $1.5 billion to pay its bills rather than selling off assets at a sharp discount. Its interest expense more than doubled from fiscal 2008 to fiscal 2011, to nearly $300 million.

“The financial crisis has acted like a tidal wave that, as it receded, exposed certain vulnerabilities with a new clarity,” Harvard officials said in the November annual report.

That’s a fancy way of saying, “We’re morons.”


Moody’s Changes Euro Zone Rating Outlook to Negative // Be Like the Euro?

September 5, 2012
ECB Interest Rate Decision
Getty Images:
A Euro sign sculpture stands in front of the
European Central Bank’s (ECB) headquarters.
(cnbc) Moody’s Investors Service has changed its outlook on the Aaa rating of the European Union to “negative,” warning it might downgrade the bloc if it decides to cut the ratings on the EU’s four biggest budget backers: Germany, France, the U.K., and the Netherlands.
The move will add to pressure on the European Central Bank (learn more) to provide details of a new debt-buying scheme to help deeply indebted euro zone states at its policy meeting on Thursday.
Back in July, Moody’s changed its outlook for Germany, the Netherlands, and Luxembourg to “negative” as fallout from Europe’s debt crisis cast a shadow over its top-rated countries. The outlook on France and the U.K. are also “negative.”
“The negative outlook on the EU’s long-term ratings reflects the negative outlook on the Aaa ratings of the member states with large contributions to the EU budget: Germany, France, the U.K., and the Netherlands, which together account for around 45 percent of the EU’s budget revenue,” the ratings agency said.
Moody’s said the EU’s rating would be particularly sensitive to any changes in the ratings of these four Aaa member states, implying that if it downgraded these four it might also cut the EU’s rating.
Likewise, Moody’s said the outlook for the EU could go back to stable if the outlooks on the four key Aaa countries also returned to stable.
The agency also changed to negative the outlook the European Atomic Energy Community, on whose behalf the European Commission is also empowered to borrow.

@capflowwatch: Moody’s Changes Euro Zone Rating Outlook to ‘Negative’ // The path Obama wants us to follow.